JF1378: Fire Yourself From The Smaller Tasks So Your Real Estate Business Can Grow with Mark Dolfini

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Mark had worked his way to a $6 million portfolio, before losing some cash flow and properties because he was too busy taking care of everything. Once he realized that he needed to replace himself on those tasks, Mark got back on track and even grew his business. Hear the difference he says between being self-employed and being a business owner. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Mark Dolfini Real Estate Background:

  • Husband, Father, and U.S. Marine Veteran
  • Currently oversees the ownership, operation, and management of $40 Million worth of Real Estate
  • Volunteers with various veteran’s causes as well as Junior Achievement
  • Based in Lafayette, Indiana
  • Best Ever Listeners can get a free pre-release version of his new book at www.LandlordCoach.com/BestEver
  • Say hi to him at https://landlordcoach.com/
  • Best Ever Book: Think and Grow Rich

Get more real estate investing tips every week by subscribing for our newsletter at BestEverNewsLetter.com


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TRANSCRIPTION

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

With us today, Mark Dolfini. How are you doing, Mark?

Mark Dolfini: I’m doing great, and hello to all the Best Ever listeners out there.

Joe Fairless: Well, they say hello back, and looking forward to our conversation, Mark. A little bit about Mark – he is a real estate investor and a former U.S. marine. Thank you, sir, for your service, first and foremost.

Mark Dolfini: It’s my honor, thank you.

Joe Fairless: Mark currently oversees the ownership operation and management of 40 million dollars worth of real estate. He volunteers for various veteran causes, and he’s based in Lafayette, Indiana. With that being said, Mark, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Mark Dolfini: Yeah. My background, after I got out of the Marine Corps – which seems hard to believe, but it was over 20 years ago – I went to university and I got a degree in accounting; I worked in that field for a while, but I had always had a bent on something more entrepreneurial.

While I was in school, I started buying real estate, and by the time I graduated, I had about a dozen rental units. At that point, that’s where my education really started, because I proceeded to make every mistake a person can make in real estate. I worked that through, I managed that for a while and built to a fairly sizeable portfolio. The mistakes just kept on coming, but eventually I learned an awful lot from them and I was able to get to a point [unintelligible [00:02:35].08]

Joe Fairless: I introduced you as you oversee the ownership operation management of 40 million dollars worth of real estate – is that your property, or are you doing third-party management, or what’s the deal with that?

Mark Dolfini: Yeah, it’s a mix. I had accumulated at one point about six million dollars worth of real estate that I owned in my name, and then I started doing third-party management, then I got my broker’s license; in our state we’re required to have a broker’s license to do that… So I was getting approached by a lot of outside investors, because they saw how I was managing their properties and thought that I was doing a pretty decent job. They were having a lot of heartburn trying to manage their stuff, so they reached out to me and wanted me to manage it for them, but I had to get legal, of course – get my licensing, and all that stuff. I started doing third-party management and learning how to run that as a business, so now it’s a mix between what I own and what I manage.

Joe Fairless: Got it. And of the 40 million, what amount is what you own versus what you manage?

Mark Dolfini: That’s a good question. Right now, it kind of goes back to another story. So right now I have about two million dollars worth of real estate personally. I’m in kind of selling mode right now; I’m in cash accumulation, just because of people wanting to pay a lot more money for things than I think they’re worth, so I’m just gonna take advantage of it and put cash away.

People who are a motivated buyer – and in my opinion, that’s just never a good mix… There’s lots of motivated buyers out there right now, but by the time I got to the pinnacle, where I had about six million dollars’ worth of real estate – and that was until 2008 came along… That changed things significantly for me.

Joe Fairless: Fair enough, as it did a lot of people. Looking back on it, how are you structuring your portfolio differently now than you did prior to 2008, whenever you got hit pretty hard?

Mark Dolfini: Well, I think it might be easier to go back to kind of the beginning, to understand the why behind that.

Joe Fairless: Please, yeah.

Mark Dolfini: So back when I had 93 rental units, I was self-employed, and that’s an important distinction between being a business owner. So when I decided that I really needed to be more of a business, rather than some guy who’s just really busy running around, being at the beck and the call of this residence all the time, that’s when it really started to change for me… But unfortunately, it came too little, too late, because I had (I thought) enough cash sitting in the bank, I thought I had 3-4 months in reserves, I was doing good. Then later the market fell apart, and not only was I financially underwater, but I was time-wary, and I was working 20-hour days, back to back to back, with no end in sight.

So the problem was I did not have a business that was scalable, and it was all based on my labor. I didn’t do a good job of firing myself from the low end tasks so I could focus on the higher end tasks. So from that perspective, I was at 6 million dollars worth of real estate, and my revenues went from $60,000/month to about $30,000/month. That was just something that I couldn’t weather… And not much time at all; I lost about 4,5 million dollars in real estate pretty quickly, and realized that my problems were just much larger than just being financially weary; I was time-weary, I was time-bankrupt. I didn’t have much hours in the day to get things done, and I didn’t have enough (at that point in time) foresight to replace myself as quickly as possible.

The way I’m structuring things now is really about managing the highest and best use of my time. And I think that’s where a lot of entrepreneurs – especially real estate entrepreneurs – are wrong, because they think that they’re just gonna end up doing it themselves, and all they end up doing is creating a job for themselves.

Joe Fairless: Amen. I love the “managing the highest and best use of your time.” I approach my stuff the same way. What is the highest and best use of your time?

Mark Dolfini: So what dug me out of that hole was I can fix anything. That was one thing I was really good at. Now, it’s not that best and highest use of my time now, but that’s what kind of got me out of my hole. But what it was not doing was showing apartments, cleaning apartments, things like that, that were $10-$12/hour jobs.

Somebody had turned to me one time and said “Mark, you need to fire yourself from those jobs, because you realize when you’re doing those jobs, that’s what you’re paying yourself.”

At the time, my billing rate was $35-$40/hour, I don’t remember exactly. But when I was doing those $12/hour jobs, it was actually costing me opportunity cost somewhere between $28-$30/hour while doing those jobs. So once I got my head around that paradigm, then I realized “Oh, the math is really easy.” So from that perspective, that’s what helped me dig out of my hole, which at that point I was able to start turning roughly $500-$1,000/day in free cashflow, which really got me back to solid footing. Now, it was unsustainable, because it was a year’s worth of solid work in 12 hours days, but it’s really helped get me out of the whole.

I didn’t declare bankruptcy, which I do pride myself on that. And it was a mess. It was an absolute mess, and that’s where I realized “Okay, sending and returning e-mails six out of the eight hours of my day is not the highest and best use of my time.” So any job that I can replace that with someone who can do that job cheaper, to a point, you’re gonna have to do some of that work, but to a point… Then I try to focus myself and remove myself as a bottleneck as quick as possible.

Probably the highest and best use of my time right now is coaching and inspiring others, and helping to educate others avoiding the mistakes that I had made, and being time-wary.

Joe Fairless: The two million in real estate you have right now, what type of properties are they?

Mark Dolfini: They’re all residential. Most of them are single-family properties.

Joe Fairless: Okay. And where are they located?

Mark Dolfini: Central Indiana. Many of them are in Lafayette, but we have some around the Indianapolis market as well.

Joe Fairless: How do you determine which ones to sell off to those motivated buyers, as you mentioned, versus keep?

Mark Dolfini: Well, I don’t have an exact metric on that [unintelligible [00:08:35].21] there’s a tax consideration there as well, just what makes the most sense to keep and transition to a different ownership, sell it on contract, that sort of thing, to help defer the capital gains. But realistically, it’s just a simple “What can I get that cash-on-cash return for?” The cash that’s gonna be sitting in my account right now… Am I gonna get to a point where — right now I’m hoarding cash, because I feel that there’s gonna be a lot of deals that are gonna be coming down the pipeline, not now, but in the future, and I wanna be sitting heavy on cash… Because the cash-on-cash returns that I see right now that people are just paying for just flat don’t make sense to me.

So when I see the opportunity cost that I have for getting to cash — and I don’t mind it sitting idle for a little bit… But I wish I could answer that question a little bit better; I don’t have an exact metric. I just see if someone’s willing to pay something more than what I think the property is worth, I’m willing to let them pay it.

Joe Fairless: Would there be an evolution in your buying process whenever the downward cycle hits? For example, would you go more apartment buildings, or would you stick to what you have experience in, primarily in the single-family homes?

Mark Dolfini: I always recommend people to go with what you know. I like the single-family dwelling market, and I hear the multifamily people screaming at me, saying “No, the returns aren’t there…” But the thing that I like about single-family dwellings is that, at least in my town, there’s hardly ever an issue of vacancy. A lot of times I have three or four people lined up to see the property before the property is even vacant. So from that perspective, when you’re dealing with multifamily, that’s a different bird, and a lot of times I see a lot of people wanting to get in multifamily and they vastly underestimate any vacancy expense.

My perspective to vacancy expense does exist with a single-family dwelling, but if you manage that properly, you can get easily 11,5 to 12,5 months of rent from a property, and the cashflow running well. And at 12,5 months you’re thinking “Well, how do you get a half month extra cashflow?” – that’s just from good management… Because sometimes people will move out early and you still have possession of the property, but they still paid to the end of the month. So if you can get that pre-possession and then go ahead and get it re-rented, there’s nothing wrong with that.

So it really just depends on what it is that you’re good at. Personally, I’m a single-family dwelling guy, I’ve always been that. The one thing I do like about the single-family dwelling is that they’re much, much easier to find buyers for if you have to, because not only could you reach out to investors to buy that property, but people who want to buy a home to live in… Whereas if you have a 16-unit – yeah, the returns potentially are different, but it could take two years to find a buyer for something like that, even in a good market.

Joe Fairless: How has your experience as an investor influenced how you approach property management?

Mark Dolfini: It makes me realize that a lot of property managers that are out there forget what it’s like to be an investor. They often will feel like the property manager almost has a blank check to go do with the property whatever they feel like, and they don’t really act as their fiduciary. So from my perspective, I’m always looking at when money needs to be spent, are we doing a good job of keeping the owner of a property in the loop on things?

From that side of things, I think — there’s a lot of property managers out there that just don’t do a good job of that, and I think from that perspective, that’s why I’ve built the infrastructure of my business to do the best job that we can to make sure that we as a property manager are keeping our owners in [unintelligible [00:12:07].07] and I think we do a good job of that.

Joe Fairless: How does that bring itself to life? Can you perhaps give a story or an example?

Mark Dolfini: Yeah. One of the things that we’ve done — I wrote about this in my book, The Time-Wealthy Investor… One of the things that we do, just as an example, we recognize pretty early that most of the investors that do come to us, they are investing out of state because they can buy a property almost outright here in Indiana, where they would have to certainly leverage a property if it was in California, or West Coast, or East Coast, or something along those lines. But if they’re investing here, they can almost buy a property outright.

So almost by default they’re living out of state, and sometimes three timezones away. So one of the things that we do is we started doing a video inspection at every change of possession. For example, whenever the resident would move in, we’re changing possession from us to them, we do a video inspection of the property, usually with the resident [unintelligible [00:13:08].26] they’re usually there for that.

That really gives an overall view of how the property was given to the resident, and it captures a lot of things… It doesn’t capture everything, but it captures a lot of things. It also helps set a base standard with the resident that “Hey, this is the property. We’re taking this very seriously, and we’re letting you know that we’ve got documentation on how the property is being given to you.”

Then, of course, when they change possession again, when they are moving out of the property, we do a video inspection of the property then. Why that’s important is because, again, documentation, and they may say “Oh, no, this was damaged when I moved in” and so on and so forth. But the real critical thing is that the owner sees that video and they see it saying “Okay, yeah, we’re gonna have to replace carpet, we’re gonna have to do this” or “This is just worn out.” So when they see the follow-up video for the next move-in, they can actually see the work that’s been done. They’re gonna see that new refrigerator sitting in the kitchen, they’re gonna see that new vinyl that was replaced in the bathroom, and not just rely on the word of the property manager that it actually got done.

We’re finding out there’s a lot of that that goes on, where the transparency of the transactions and the transparency of actions, what’s going on in their property just doesn’t exist a lot of the times. So we do that, and that really enables owners that live on the other side of the planet – they might live in Singapore, or they might be Americans that are living in different countries, working abroad… Or not – they might be foreign investors… They’re actually getting to see what they’re actually paying for, and I think that’s a big deal. I think that transparency is something that we brought to the arena. That flat didn’t exist in the industry.

Joe Fairless: Oh yeah, I definitely could see how that would be beneficial for many different reasons – for the resident, as well as the owner, and your company. Is there anything with that video that you’ve done that you’ve evolved – perhaps you weren’t videoing a certain aspect of the property before, but after coming up with some discrepancy with the resident who’s moving out, now you video that part of the property? Or anything that you’ve evolved with that process?

Mark Dolfini: The main thing that we’ve figured out is that it really gives an opportunity for the whole transaction — and it really wasn’t intended this way, but the whole transaction is kept at an arm’s length, both from the resident to the owner, and us to the owner, and us to the resident… It really keeps it at arm’s length, because there’s a lot of times owners might wanna charge a resident for something, and we have to say “Look, the carpet really wasn’t in great shape when they moved in.” Let’s be fair, it’s not about always [unintelligible [00:15:40].28] resident for something, because when they moved in the carpet wasn’t brand new, but it was okay… But if they lived there for three years, there’s gonna be normal wear and tear, and there’s a lot of owners that would otherwise say “There’s nothing wrong with the carpet. The carpet should be perfectly fine for them to move in. They should pay for it.” Well, not necessarily. There has to be some accountability that runs in both directions.

So I really feel that — that was an unintended consequence, but it really was nice that it really provided that buffer and protection for both the owner and the resident. So it’s really nice that that evolved in that way. It certainly wasn’t intended when it started.

Joe Fairless: That’s interesting. An additional benefit for the resident, and just the overall process. In terms of taking the video itself, does the video that you took the first time – is that the same type of structure that you take today, or has that format or what you video changed at all?

Mark Dolfini: We’ve always been really intentional with it. Like anything, we would have to go back to the person doing the video and say “Hey, slow down, you’re going too fast.” I know one thing — there’s a hilarious YouTube video out there about “no vertical videos” which is hysterical; I don’t know if you’ve ever seen it, but it’s absolutely priceless… Don’t do vertical videos. You wanna make sure the camera is held in the proper orientation; make sure you’re going slow if you’re gonna do videos like that.

Again, I wrote about this in the book – this isn’t a reality TV show; don’t walk through and be surprised, like “Oh my gosh, I can’t believe –” Like, this is [unintelligible [00:17:13].25] video. [laughter] Don’t make it look like reality TV. You wanna walk through the property first, you wanna know what you’re walking into… We’ve never done that; we’ve always been intentional. Start outside, at the street; make sure you get the whole property. You wanna be at the outside of the property first. Make sure you get the address. Ideally, you might catch the residents being seen in the video, but keep their kids out of it, because that’s just creepy. Don’t do that.

As you’re walking through the video — probably the best evolution I would say is that we had to slow down. When you’re there and you just wanna get the thing done… It’s gotta have to be a 12-15 minute video if it’s a 1,500 square foot house; there’s lots of nooks and crannies, and you wanna open all the drawers, you wanna make sure [unintelligible [00:17:54].03] and check everything.

So that’s probably been the biggest evolution, but the biggest problem that you can have when getting these videos is how to archive them so you know where to find them. Because if you have to find them eight months later, when you have to record for this stuff, and then you’re like “Okay, now I’ve got to go find this video that’s buried somewhere”, either on someone’s phone, or wherever… So you do need to be intentional with it from the beginning.

Joe Fairless: Is there a voiceover, or is there no voice?

Mark Dolfini: You want a narrative, you wanna talk through it. Let’s just say for argument’s sake you’re gonna move in, and you open up the oven and it hasn’t been cleaned. Don’t try to be like, “Oh yeah, the oven’s fine.” Just own it. Say “Oh, it looks like we missed the oven. We’re gonna go ahead and make sure that gets taken care of.” Walk through it. It’s a narrative, and you’re gonna miss stuff. If there’s just too many balls in the air… Maybe your cleaner was just off that day, or you just missed it; it happens… But own the mistake, because then it’s just gonna make you look really disingenuous if you ever have to show that video, and especially if you’re showing that to an owner and they’re paying for the place to be cleaned, and obviously something significant got missed.

Joe Fairless: Let’s use that example – the oven’s filthy, and you say “Oh, it looks like the cleaner missed this. We’ll have to get to it.” Do you then take another video or pictures of the clean oven, so that you show that you actually did that, so the resident can’t later say “Well, you never cleaned the oven”, even though perhaps you did?

Mark Dolfini: Well, what we will do at that point – we’ll create a supplemental work order and we’ll send the cleaner back over to do that, and then the cleaner would come… This is where it gets into another part of our system – he’ll come back, give us back the work order, and at that point in time our resident resources person would reach back out to the resident and say “Hey, did that get cleaned to your satisfaction?”

We do everything on a recorded line, so there usually isn’t an issue with that, but that’s how we follow up with that. We don’t do another video because again, we wanna make it right, even though — doing another video just isn’t something that we feel is necessary. We’ve addressed it, we’ve put a work order on it, and that’s how we do it.

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

Mark Dolfini: In terms of real estate, the best advice I’ve ever gotten and I would love to pass along is to learn to value your free time. Fire yourself as quick as you possibly can from the job that you’re doing. You’re gonna have to do some of the jobs in the beginning; you’re probably gonna have to do all the jobs in the beginning, and it’s important for you to do those jobs, because as much as you’re able to do — I mean, there’s some people that just should not do accounting and they should not do the other stuff, but whatever it is, if you’re gonna do the work yourself, learn to value your free time and fire yourself as quick as possible. Once I did that, it really opened up a world to me, and it really opened up my business, as well.

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

Mark Dolfini: I am ready for the Best Ever Lightning Round.

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

Break: [[00:20:53].27] to [[00:21:41].22]

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

Mark Dolfini: The best ever book – Think and Grow Rich, by Napoleon Hill.

Joe Fairless: Best ever deal you’ve done?

Mark Dolfini: The best ever deal that I’ve done would actually be a collaboration with another property manager. I thought about an abundance mentality, and I got hooked up with a property manager that was similar to what we did, but not the same… And I ended up renting an office within their own office, and even though that property manager never as much as gave me a dollar, that mentoring relationship and that partnership paid me over and over and over, and they did well with that, too. So I extended my network [unintelligible [00:22:16].20]

Joe Fairless: Oh, wow. So it wasn’t a transaction — or I guess perhaps in an indirect way it was  a transaction, because you rented an office with someone who you learned from? Did I capture that correctly?

Mark Dolfini: Yeah, so if I can — I know this is the lightning round, so maybe if I can…

Joe Fairless: Yeah, please elaborate.

Mark Dolfini: So it’s really important, because I learned in my networking that you’re gonna get more referrals from people who are more like you than are less like you. So I ended up having this relationship – we would share referrals back and forth between people that were looking for places, but since I was a single-family dwelling guy and they were more multifamily, we would often be able to share… Like, the house that the person was living in was just getting too expensive for them, I could send them over to a guy whose rates were significantly less, and the apartment would work out better for them… Or vice-versa – if they were somebody who was looking for more space, they could go into our house.

So that was a referral relationship that really worked out, and I eventually rented a single office from them when I was starting to establish a more robust infrastructure for my business, to the point where I ended up growing out of that office, within a couple years… But we’re only about a hundred yards from each other in terms of actual distance now, but it’s been a relationship that has since just paid over, and over, and over.

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

Mark Dolfini: On an actual transaction? Oh, Lord… I’ve paid too much for properties. That’s probably the biggest thing. I paid too much and did not consider the value of my time of having to maintain the property.

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

Mark Dolfini: Junior Achievement. I just did a Junior [unintelligible [00:23:52].01] and I love it. I really recommend people do that. Junior Achievement is fantastic. If you don’t know about it, look into it.

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

Mark Dolfini: Through Facebook, at Landlord Coach, that’s probably the best way. But you can reach out to me on LinkedIn, at Mark Dolfini, Landlord Coach, or at landlordcoach.com.

Joe Fairless: Awesome, and we also have a unique URL, landlordcoach.com/bestever to get a pre-release version of your new book… Congrats on that. Mark, thank you so much for being on the show, talking about some unique ways that you differentiate your property management company. One is, from a macro level, remembering what it’s like to be an investor, and then having the communication process with your investor clients. Be very transparent, and one of the ways that comes to life is through the video inspection that you do.

Some tips for anyone on that: 1) no vertical videos. 2) Go slow. 3) Start on the outside of the street, work your way up, and make sure you get the address. You mentioned in passing you were opening up all drawers, so clearly it’s a very detailed video… And have some narration going on along the way.

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

Mark Dolfini: Thanks again. Take care, and good luck to your Best Ever listeners.

JF1374: From Engineer To Gas Station Entrepreneur To Real Estate Investor with Kay Kay Singh

Listen to the Episode Below (23:42)
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Kay Kay came to the U.S. to pursue the American Dream and work full time as an engineer for Microsoft. Unfortunately, he lost his job, fortunately he found a great business in the gas station niche. Kay Kay grew that portfolio to 15 gas stations before being approached to buy a 33 unit portfolio of single family homes. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Krishan Singh (Kay Kay Singh) Real Estate Background:

  • Came to US as a Microsoft Certified System Engineer
  • Shortly after arriving in the US, he was in the gas station business and grew to 10 gas stations in 15 years
  • Real estate career began when a church member offered him a portfolio of 33 SFR’s
  • Based in Ft. Wayne, IN
  • Say hi to him at hoosierrentals@hotmail.com
  • Best Ever Book: Multi Family Millions

Get more real estate investing tips every week by subscribing for our newsletter at BestEverNewsLetter.com


Made Possible Because of Our Best Ever Sponsor:

List and manage your property all from one platform with Rentler. Once listed you can: accept applications, screen tenants, accept payments and receive maintenance tickets all in one place – and all free for landlords. Go to tryrentler.com/bestever to get started today!


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, Kay Kay Singh. How are you doing, Kay Kay?

Kay Kay Singh: I’m doing great, and I’m thrilled to be here on the Best Ever Show, and thanks for having me.

Joe Fairless: I’m grateful that you’re on the show as well, and it’s our pleasure. A little bit about Kay Kay – he came to the United States, and shortly after arriving, he was in the gas station business and grew the gas station portfolio to ten gas stations in 15 years. He came to the U.S. as a Microsoft Certified System Engineer. His real estate investing career began when a church member actually offered him a portfolio of 33 single-family rentals. He’s based in Ft. Wayne, Indiana. With that being said, Kay Kay, do you wanna tell us a little bit more about your background and your current focus?

Kay Kay Singh: Sure. My background is in gas stations, as you said. I came to the U.S. as a Microsoft Certified System Engineer to pursue the American dream in 2000. Immediately after I came here, on 9/11 I lost my job and landed in the gas station business. I did my gas station business for about 15 years, and in 2015 my real estate career started at our church when an 82-year-old landlord walked up to me and said that he wanted to sell his 33 rental houses to me.

I had never thought of this and think that I was gonna buy the rental properties, but he said that he wants to sell them to me, and then he gave me another push by saying that he will help me for a year, and also he won’t charge us anything for a year.

I liked that idea, and I started thinking, and I asked him to give me a day to think over and get back to him. I came home and started doing my research on the computer, and starting comparing with the gas station business. He gave me a pretty good deal, and we decided to buy.

Joe Fairless: Wow.

Kay Kay Singh: The next day I called him in the evening and told him “We’ll buy your properties. Let’s sit and talk about it a little bit.” He came to my house and he brought some paperwork, and he showed me some paperwork which I didn’t know how to look at, and do any underwriting or anything… But I decided to sign the purchase agreement, so that’s how I bought these properties.

After a few days of the purchase agreement he changed his mind and he said that he can’t do a loan for a year, but he will still help me manage the properties for a year. I had to go to the bank, and see how we can get a loan. I went to two banks, and both of them approved me for the loan, so we went ahead and bought these 33 properties in about a month and a half.

Joe Fairless: Wow… We’ve got a lot to talk about here. Just to back-track a little bit, you lost your job initially when you came to the U.S., and then you got into the gas station business. How did you just get into the gas station business?

Kay Kay Singh: Well, I had friends in the gas station business. I got a 40% share in the gas station, and I agreed to manage the gas station. So I didn’t have to put much money into the gas station, because they brought the money in, and I managed the gas station.

Joe Fairless: If you did not have an existing relationship with that person, just purely looking at it from a numbers standpoint, would that have been a good deal for them to offer a 40% share in order for you to manage it? I’m not aware of how operations work for gas stations…

Kay Kay Singh: Well, I knew that person; I went to college with them, so he knew me well, and he decided to put the money down, and I decided to work, so that’s how I got into the gas station business.

Joe Fairless: Was it a good deal for them to do that, or were they just doing you a favor?

Kay Kay Singh: Well, it was a good deal for them because they were passive investors, and I had some money too out of that… And it was a good deal for them because they didn’t have to — they were living in Indianapolis, and they bought a gas station here in Ft. Wayne, and they didn’t have to move, because I moved here.

Joe Fairless: Okay. Now, let’s fast-forward to the 82-year-old landlord who walked up to you at church… Why you? Why not someone else?

Kay Kay Singh: Well, after a while I came to know that he sold it to somebody else, and for some reason he couldn’t get the loan, and he didn’t trust him to do the same thing that he did to me… And he knew me for several years, and he knew that I was an entrepreneur, I had money, and I could get a loan, so that’s why I think he chose me.

Joe Fairless: Do you remember the terms for that deal?

Kay Kay Singh: Well, we didn’t talk much about the terms, because I didn’t know how these [unintelligible [00:06:22].23] worked, but before we talked about the terms, he said that his son doesn’t want him to do this, because he said he’s already 82 years old, and he said “I don’t know how long I’m gonna live [unintelligible [00:06:37].02] I asked for one free house.

Joe Fairless: [laughs] And you got it?

Kay Kay Singh: And I got it. I used that as earnest money. So I didn’t give him any earnest money; whatever that price was, I used that as earnest money.

Joe Fairless: Wow… What did you end up paying for the portfolio and what was it actually worth at closing?

Kay Kay Singh: Well, it was about $900,000 that we paid for the portfolio. We got an appraisal when we get to get a loan, and it was about 1.2 million.

Joe Fairless: Okay. Do you still have the 33 single-family homes?

Kay Kay Singh: Yes, we do.

Joe Fairless: Why do you have them, versus selling them and doing a 1031, or just selling them off individually?

Kay Kay Singh: Well, the cashflow is good. When I took over — there’s another story, because he promised to help me for a year, and after about 10 days I said “I’m gonna do something different. I’m not going to be doing it this way; I’ll be doing everything [unintelligible [00:07:45].18]” So I let him go after ten days. I moved all my properties to Buildium and started running them from there. I read a lot of books and a lot of online research.

Also, after I took over, I realized that he was charging less rent, and he was charging much less deposits, so I started raising rents. In about a year, my rent roll was $22,000.

Joe Fairless: What was it before?

Kay Kay Singh: $18,000.

Joe Fairless: Wow. In one year you increased the rent roll by $4,000.

Kay Kay Singh: Correct.

Joe Fairless: Did you have to invest money into those properties to do that, or was it just —

Kay Kay Singh: No.

Joe Fairless: What is the rent roll today?

Kay Kay Singh: Today the rent roll is around $25,000, because I bought seven more properties last year.

Joe Fairless: Well, just the original 33 properties – what would be the rent roll today?

Kay Kay Singh: $22,000.

Joe Fairless: When did you get the portfolio?

Kay Kay Singh: June, ’15.

Joe Fairless: June 2015?

Kay Kay Singh: Correct.

Joe Fairless: Okay. So I wanna make sure I heard you correctly – you got this property in June of 2015, originally the rent roll was $18,000, then within one year, so approximately June of 2016, it was $22,000, right?

Kay Kay Singh: Correct.

Joe Fairless: And then today, with those 33 original properties, the rent roll is still $22,000?

Kay Kay Singh: Approximately, because we added seven more properties, so now the rent roll is — I haven’t figured out how much it is just for those 33. But with the seven more properties that we bought last year, now the rent roll is about $26,000.

Joe Fairless: Okay, 26k. Have you increased rent on the original 33 since that one year anniversary?

Kay Kay Singh: Yes, anytime we had a turnover, I increased it by $22.50.

Joe Fairless: What are some tips that you have for the Best Ever listeners who have portfolios of this size, or maybe a little bit smaller or maybe a little bit larger, in terms of management?

Kay Kay Singh: Well, I wanted to learn the business, so I’ve been managing it myself, and I’m spending only nine hours a week.

Joe Fairless: That’s outstanding.

Kay Kay Singh: Yeah, everything is online, and I spend nine hours… I go there three days a week and three hours per day, so nine hours a week.

Joe Fairless: You go there three hours a day, three days a week… So where do you go exactly when you go there?

Kay Kay Singh: It’s 20 miles from my home. They are not in Ft. Wayne, they are in Huntington, Indiana.

Joe Fairless: Okay, but when you say you go somewhere – I mean, you’ve got single-family homes, so are you going to each of the homes, or are you doing something else?

Kay Kay Singh: No, we have an office.

Joe Fairless: Okay, got it. And are you still using Buildium?

Kay Kay Singh: Yes, still using Buildium.

Joe Fairless: What other tools do you use to help you manage the properties?

Kay Kay Singh: I use PDF Filler for all my leases, and evictions, my notices… Everything else, I use PDF Filler.

Joe Fairless: PDF Filler, okay.

Kay Kay Singh: Correct.

Joe Fairless: So between Buildium and PDF Filler – those are the two primary tools you use?

Kay Kay Singh: Correct.

Joe Fairless: With your acquisitions, the seven that you’ve purchased since the original portfolio – can you give us an example of one of those properties? Price point, what it rents for, that sort of thing…

Kay Kay Singh: Well, I bought six from his son, again. His son had six houses. I bought one house at an auction for $23,000, and then I used that house as collateral to buy six more from his son.

Joe Fairless: [laughs] Okay. So you bought one house at an auction for $23,000, and then you used that as collateral to buy six more… So those are the seven that you purchased.

Kay Kay Singh: Yes. The house that I bought for 23k was appraised for 56k, so I used that to buy his son’s six more houses. The average rent on those was $650.

Joe Fairless: Will you elaborate on exactly how you used the house for collateral in order to purchase six additional homes?

Kay Kay Singh: Well, on 23rd May, I was there for another flip house to buy at the sheriff’s sale. This house – nobody bidded on this, but I knew it was by my property; I had seen that house. Nobody bidded on it, so I went ahead and bidded on it, and I got it for $23,000.

Then I went to the bank and got it appraised, and used that as collateral to buy six other properties from the previous owner’s son.

Joe Fairless: And by using it as collateral – you’re getting a loan from the bank and then you’re pledging that house for the loan… What was the value of each of the homes, approximately? Those six.

Kay Kay Singh: 210k.

Joe Fairless: Total.

Kay Kay Singh: $210,000, yes.

Joe Fairless: In total, for six of them. Okay, cool. Any unique deal structure with his son that you did?

Kay Kay Singh: No, we went to the bank and got the loan, and we just bought from him directly.

Joe Fairless: So did you have to put any money out of pocket, besides the $23,000 that you used to buy the house that was collateral?

Kay Kay Singh: No, we didn’t use any cash from our pocket.

Joe Fairless: I imagine this was a local community bank or credit union that’s in Ft. Wayne…?

Kay Kay Singh: Correct. Midwest Federal Credit Union. Our previous loan was from the same bank too, so they were happy; we were paying on time, and we had cashflow, so the bank was pretty happy about it.

Joe Fairless: You’ve got the single-family homes… Do you still do any gas station business?

Kay Kay Singh: Yes, I do. Actually, in my gas stations I have partners and each partner runs two gas stations. It’s kind of a family — my daughter, my son-in-law, my nephew… They are my partners. My daughter and my nephew are partners in this corporation, too. We bought all these houses in the same corporation, and they are my partners here, too. They are working for me, and I am working for them.

Joe Fairless: What do we need to know — if I’m gonna look at buying a gas station for the first time… I’ve never purchased one, I’ve never looked at the numbers… I know this is such a big, broad question, I recognize that, but what do I need to know going into the transaction, if I’m looking to purchase a gas station?

Kay Kay Singh: Well, there are two different ways to buy a gas station. Either you can lease it, or you can buy the real stake. The simple formula is that we want our money back in at least 4-5 years. So if you are leasing it, then you don’t get a bank loan. If you’re buying a real stake, then you have to put 20%-25% down.

Joe Fairless: Which one did you do, the lease or the buy?

Kay Kay Singh: Well, we did both. We own four properties, and six of them are leased.

Joe Fairless: When does it make sense to do one over the other?

Kay Kay Singh: Well, I like leasing. The problem with the gas stations is sometimes there’s a leak, so if the property is contaminated, it’s a big risk, it’s hard to sell.

Joe Fairless: Has that happened for one of your properties?

Kay Kay Singh: Well, we bought a property that was contaminated before, but we didn’t have the liability. The previous owner had the liability, so they had to take care of it, and they are still doing it, and we have owned that gas station for five years.

Joe Fairless: Wow.

Kay Kay Singh: Yeah, it’s a long process.

Joe Fairless: I guess that it depends on the scope of the contamination, but in general, how much does it cost?

Kay Kay Singh: Sometimes it’s millions. There is a state insurance, and you have to pay only the down payment, which is $35,000 in the state of Indiana, $60,000 in the state of Ohio. You just pay that, and the state takes care of the rest of it. But it runs into millions.

Joe Fairless: Wow. You pay that every year?

Kay Kay Singh: No, we pay them insurance premiums.

Joe Fairless: Okay. So you have some that you leased, some that you bought… Your goal is to get your money back in 4-5 years. Can you give us the numbers on a property that did that, and then maybe give us numbers on a property that did not?

Kay Kay Singh: One or two properties did not do it in five years. One or two out of ten. But on one gas station – my first gas station – we got our money back in eight months.

Joe Fairless: Wow. And that was a lease or a buy?

Kay Kay Singh: That was a lease, and then eventually we bought the property, too.

Joe Fairless: The ones that you did not achieve that goal – which is tremendous; even if you don’t achieve it in five, you achieve it in seven, you’re still doing pretty darn well – why did you not achieve it on those couple?

Kay Kay Singh: Well, this was a brand new gas station, so we had to build our business from day one. It took us five years to get steady profit, and it cash-flowing.

Joe Fairless: Some would say that a brand new gas station, if it’s in the right area, is more desirable than one that’s more established, but in that same area.

Kay Kay Singh: Well, there was plenty of competition. It took us five years to get it cash-flowing, but now it’s doing great, and we have made up all our money. We bought it in 2009, so we got our money back in 2016. After five years, the next two years we made up all our money.

Joe Fairless: Did any of those gas stations just completely fall flat?

Kay Kay Singh: That was the worst one we had.

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

Kay Kay Singh: Well, my best advice would be invest in yourself before investing in any kind of real estate. We did everything wrong, but we still made some money… But that doesn’t mean it happens all the time.

Joe Fairless: What are some expert tips for making money with gas stations?

Kay Kay Singh: You should have good marketing, clean, and good customer service.

Joe Fairless: What type of marketing tends to work for gas stations?

Kay Kay Singh: Well, normally people do just the gas, but we try to do the inside sales, because that’s where we make money; we don’t make money on gas. We have digital displays on our gas stations, we try to display the deals, and we try to change the deals every week, so that they have something new.

Joe Fairless: It’s typical not to make money on gas, right?

Kay Kay Singh: Correct.

Joe Fairless: Would it be advantageous for you to always be the lowest in price for gas, that way you drive more traffic?

Kay Kay Singh: Well, the competition drops the price too, so you have to match the street.

Joe Fairless: Okay.

Kay Kay Singh: Yeah, if you drop three pennies, somebody else will drop three pennies. Then you’ll have to drop three pennies again. The best practice is to match the street price.

Joe Fairless: Based on your experience, you mentioned that you recommend working on yourself before you invest in any type of real estate. What’s one way that you work on yourself?

Kay Kay Singh: Well, I’m doing this now, after three years. You need to read a lot, you need to learn from the people who have walked this path before, rather than just walking by yourselves. It’s much better to learn from the experienced people; have some mentors, read some books, read some forums, like Bigger Pockets… That’s what I’m doing for my multifamily investment now.

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

Kay Kay Singh: Sure.

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

Break: [[00:20:00].22] to [[00:20:47].28]

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

Kay Kay Singh: Multi-family Millions.

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

Kay Kay Singh: Well, we bought a house – I already discussed – at an auction for 23k, and it appraised for 56k, and we used that as collateral to buy six more cash-flowing rentals.

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

Kay Kay Singh: The biggest mistake we did in the second year of our real estate career – we bought it at Auction.com for 91k, and we rehabbed it and spent about 20k before the closing happened.

Joe Fairless: How did you end up with the house?

Kay Kay Singh: Finally, the closing did happen, after 45 days. Then we put it on sale, and it was sold to the first customer for 139k.

Joe Fairless: So you made a little bit of money on that.

Kay Kay Singh: Yeah, we made about 23k on it.

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

Kay Kay Singh: Well, we have a charity. We have had a charity since 2009, and we adopted 15 children since 2009, and we organized medical camps through that charity, and cancer awareness, and [unintelligible [00:22:05].29]

Joe Fairless: How many children do you have living with you now?

Kay Kay Singh: The children adopted are through Forgotten Children Worldwide; they are in South India. Fifteen.

Joe Fairless: Do you legally adopt them, or are you sponsoring them?

Kay Kay Singh: We are paying for their education, school, lodging.

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

Kay Kay Singh: HoosierRentals@hotmail.com, and I am pretty active on Facebook and LinkedIn.

Joe Fairless: Well, Kay Kay, thank you so much for being on the show. You gave us three keys to making money with gas stations: good marketing, make them clean, and have good customer service. You also talked about a creative way that you got into the residential business, by having a conversation with someone at your church, and then doing the deal with him. Then talking about how you manage that portfolio that you’ve since added to using PDF Filler and Buildium.

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

Kay Kay Singh: Thank you very much.

David Lecko and Joe Fairless

JF1225: DealMachine Helps Investors Find Property Owners Faster with David Lecko

Listen to the Episode Below (19:51)
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David started like a lot of us, read Rich Dad Poor Dad and started taking action with real estate. He started driving for dollars, and looking up the owners at home after driving. Realizing that finding the owners was taking too long, David went to work on a solution. The outcome was the DealMachine app, which can look up a property owners information for you in real time, while you’re still in front of the property. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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David Lecko Background:

– CEO of DealMachine, a real estate investing app that puts you in touch with any property owner via direct mail, phone, and email

– When you see a house, simply take a photo and instantly see who owns it, then choose how you want to get in touch with the owner

DealMachine launched in the summer of 2017, and users report making as much as $25,000 over the last 4 months

– App finds houses that are run down, and contact the owner via dealmachine and then sells the properties to an investor

– Based in Carmel, Indiana

– Say hi to him at: https://dealmachineapp.com/

– Best Ever Book: Top of Mind by John Hall

 


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TRANSCRIPTION

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

With us today, David Lecko. How are you doing, David?

David Lecko: Hey, I’m doing great. How are you?

Joe Fairless: I’m doing well, and nice to have you on the show, my friend. A little bit about David – he is the CEO of DealMachine, which is a real estate investing application that puts you in touch with any property owner via direct mail, phone and e-mail. So when you see a house, you can take a picture and instantly see who owns it and then choose how you want to get in touch with the owner.

David is also a real estate investor. He has a five-bedroom primary residence and he rents out three of those bedrooms, and he’s also about to close on another property. He’s based outside of Indianapolis, Indiana, in Carmel, Indiana, and you can say hi to him or learn more about his application at DealMachineApp.com, which is in the show notes.
With that being said, David, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

David Lecko: Yeah, of course. I read Rich Dad, Poor Dad back in 2015, and I got interested in real estate. I went to my very first meetup, and they actually had this segment of the meetup that everyone would share their goals for the upcoming year, and the crowd would vote on who had the best goals, and they would win an iPad. I actually won the iPad on my very first meeting. My goal was to earn $3,000 a month in passive income, because I knew that that was my expensive, and then once I got to that point, my living expenses would be zero and I would be free to work on some of my passion projects and crafts, which is software development.

So along that path of looking for how do I get a few homes that are going to produce $3,000/month, I started doing this deal finding technique called driving for dollars. I’m sure a lot of you have heard of that before, but if you haven’t, it’s basically a technique where you look for an abandoned home, and you want to get in touch with the property owner and offer to buy it, because if it’s abandoned, they’re probably making money on it and they might need to sell it quickly.

So basically, I was doing this technique and writing down all these addresses, and I just realized I kept procrastinating looking up the owner and setting up the printer. I didn’t even have my printer set up. It took me a whole episode of Friends to sit down and look up all the information that I needed. That’s when I realized the driving for dollars process was just taking me too long, and that’s why I built an app. I had a software background and I just built it for myself. Then some friends wanted to use it too, and that’s what became DealMachine.

Joe Fairless: So take us through how it works.

David Lecko: If you’re in front of the house, you can just use your app to take a picture of the house; then it will look up the property owner right there. You can tell if they bought it recently or if they’ve owned it for a while, and how much they own on their mortgage, to decide if you want to send direct mail. If you do wanna send a direct mail to the owner, you can just press a button in your app.

The direct mail is actually a lot more personable than a traditional postcard or yellow letter than an investor might send, mainly because it features a picture of the house that you took with your smartphone, and that leads to a little bit higher response rate, we’ve noticed.

Joe Fairless: Is there a way to simply take the picture of the property, have the owner be pulled up with their contact information and then not send them a direct mail, but then export that spreadsheet to your desktop?

David Lecko: There is. There is a website companion to the application on your smartphone that you can actually export all of your data to if you wanted to. But we found a lot of the users that are doing really well with DealMachine appreciate the one-click and then they’re done, and they don’t have to take any additional steps, or use any spreadsheets to handle the direct mail or follow-up.

Joe Fairless: Oh yeah, absolutely. That certainly serves a need, and bravo for you coming up with it and identifying the need through your own experience and then actually doing it. It’s one thing to have the idea, it’s another to actually execute the idea. Money is always made in the execution, not in the idea.

The reason I was asking about that is because that would be your typical consumer, because I imagine most of your clients are single-family home investors, whereas I’m thinking of apartment communities, and I wouldn’t want a postcard being automatically sent out to the owner, I’d want to personalize it a lot more, since I would do much less outreach, but I’d want it to be really high-quality… But it would certainly save my team time if we had the ability to be in front of the property, the apartment community, take a picture, and then it automatically looks up the information so that we don’t have to then go on the county website to do it.

David Lecko: Right, right. I think another thing that your team might use, since you are doing more targeted, is if you wanted to get in touch with the owner right away, or if the county record showed the owner as living there, but you can obviously tell they don’t, we offer an enhanced search option; a lot of listeners may be familiar with the skip trace terminology, which basically means you can obtain the user’s landline and mobile phone number, e-mail addresses, as well as any other properties that they own, and that’s also possible within the app… So again, you don’t have to submit a bulk list, or you can just get the information right there in front of you.

Joe Fairless: That’s great stuff. I’m on your site. For that skip tracing component – what’s the cost for that type of service?

David Lecko: Actually, we have a couple monthly plans. I’ll start with saying if you just wanna try the app, it is a couple free postcards that you can send to yourself just to test it out, and then after that it’s $2/postcard, and if you wanna do 55 or more, then you can start getting a significant discount in those postcards. So we have a $99/month plan that includes 55 postcards per month, as well as all the owner lookups, and that includes 15 of those skip traces as well. Additional skip traces are 99 cents.

Joe Fairless: Cool, that’s interesting. How has it been received so far?

David Lecko: We are about four months old on the app store, and we have 30 subscribers that are on the $100/month or on the $250/month plan. We’ve noticed that the best users are the ones who are part of a coaching program, or they already know what they’re doing. We also have a lot of users that are just like trying it out, but we’ve really noticed that a lot of people have success when they already have a plan and they’re already driving for dollars.

They can just really appreciate the convenience of what the app does.

Joe Fairless: Bravo! What are you doing to get the word out, besides having conversations on podcasts?

David Lecko: We’ve started using Facebook ads, and we turned those off about three weeks ago and it’s grown organically through some of those coaching programs where some of our Facebook ad viewers were already a part of. So they’ve just been sharing it — you actually get $6 of credit each time you share the deal machine app with your own promo code, and then you earn $6 of credit, as well as the other person who uses your promo code to sign up. So that’s how we’ve actually gotten a lot of our users, is through that sharing.

Joe Fairless: Let’s talk about the mechanics of the technology and how you’re able to pull in this data… I believe you’re scraping the county websites in order to get that information. How does that work exactly?

David Lecko: We have three different types of data sources, and the very first level, you’re absolutely right, is we have links in order to get that information from the counties. Some counties don’t have all their info online, and that’s when we rely on the second tier data provider, that is already built a system to gather that information, even if it’s not available online.

Then the third tier of information is coming from a skip trace type provider where we can actually find out their phone number, e-mail, and then any additional properties they own, which is especially helpful if the county record says they live in a property that you can clearly see as vacant. You can kind of expand your reach using those other addresses.

Joe Fairless: First level – county. Second level is what?

David Lecko: Data provider.

Joe Fairless: Data provider. So you have to pay for a service on your side to get access to that information, and then you provide it through the application?

David Lecko: Yes, that’s true. And we actually don’t technically charge for the owner look-up, and we really just eat that cost and pass it on to somebody who’s using our app.

Joe Fairless: And then the third is the skip trace where you partner with a company that does skip tracing, and the same is number two?

David Lecko: Exactly. So the benefit is since we can partner with a skip tracing company, we can provide the one-off skip traces as part of the monthly plans, and then the additional ones at a lower cost than you traditionally would be able to just doing like a one-off skip trace.

Joe Fairless: What’s an aspect of the app that has evolved since you’ve launched it, and why?

David Lecko: It really started with just direct mail, and that’s all it did. So the most recent evolution is just finding more data with the skip tracing option, and that’s mainly because the more data you have and the more ways that you can reach out to the owner… We’re answering the questions and the requests that our users have. So everything that we’re adding is a request from what the users are telling us.

Joe Fairless: Based on your experience as a real estate entrepreneur, what is your best real estate investing advice ever? It doesn’t necessarily have to be as an investor, but as someone who has created a real estate-focused company, what’s your best advice ever?

David Lecko: Oh, man… I am reading this book called Top Of Mind by John Hall, which is not a real estate investing book, but he talks about whenever you have a product or a company, somebody else may copy that product or the service your company provides, but the thing they can’t copy is how you communicate to your customers. So I’m just becoming more and more passionate about helping real estate investor apply that to their business, especially because I see a lot of the postcards that say “Urgent notice! We buy houses!”, and I think that they can really start to cut through their competition if they communicate in a more natural way, that’s in line with their natural voice. So that’s one piece of advice that is just top of mind for me right now.

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

David Lecko: Absolutely!

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

Break: [[00:14:12].01] to [[00:15:04].22]

Joe Fairless: Best ever book you’ve read?

David Lecko: Well, I’d say Top of Mind by John Hall is right now what I’d say.

Joe Fairless: Let’s talk about quickly the primary residence that you purchased… Five-bedroom, you’re renting out three. Tell us about the business model of that.

David Lecko: Of course. I was super interested in real estate, and I was also renting a room, so I figured the best way for me to get started in real estate and investing was to buy a primary residence and have some other people help me pay the mortgage, and get used to what it’s like to have tenants and to respond when something’s wrong in the house. Basically, my primary mortgage is $1,300/month, and each of my tenants in each room pays $550. That allows me to provide them the best possible place in our neighborhood, where there’s not affordable housing, and it also helps me build equity in my property without costing me any money directly.

Joe Fairless: Oh yeah, you’re basically covering your mortgage. You rent out three, and each of them is $550, so you’re more than covering your mortgage.

David Lecko: Exactly. I actually pay the utilities too, so I don’t have a ton of cashflow, but what it did is it reduced my living expenses and allowed me to build equity.

Joe Fairless: That’s great. And are you at your $3,000/month income through real estate yet, or is that still a goal?

David Lecko: I’m still working towards the goal, and what I am really excited about though is that I don’t have any rents or living expenses, and I actually do cashflow a little bit from that property. I have saved up some cash to buy a second house with four bedrooms in an area that’s very popular for recent college grads to live. It’s a property that would traditionally rent for $1,100, but since it has four bedrooms, which is a rare find in this area, what I wanna do is I wanna rent out to a recent college grad for $1,500, and then he can rent to each of his buddies for $500. So as long as he keeps the house full, then he actually would live for free. That’s something that so far has worked for my primary residence, and I’m really anxious to try it for this rental property as well.

Joe Fairless: What’s a mistake you made on the transaction of that five-bedroom?

David Lecko: I can’t say there was a huge mistake. I knew the property was owned by an investor before I bought it, so I wish I would have slow-played the purchase a little bit more… But I was just really anxious for my first deal, so I probably played a little more than I would have had to. That said, it was the cheapest house in the neighborhood, so I still think I got a good deal; I just feel like I could have even paid less if I had just been less rushed in the transaction.

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

David Lecko: I feel like it’s really addicting for me to continue working on the deal machine app, and totally let that be driven by what investors want. So I’ve just really been spending a lot of time talking with people, even if it’s somebody who’s not going to buy the app, or has bought the app, and just generally provide anything that I absolutely can to be helpful, whether it’s to build a feature in the app, or make an introduction to somebody that’s gonna be able to help them, such as find a lender, or find somebody that they could partner with on their first deal.

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

David Lecko: They can e-mail me at David@DealMachineApp.com.

Joe Fairless: David, I’ve really enjoyed learning about this and learning about the origin of how it came about, as well as the functionality and just different technology in apps as real estate investors that we should be aware of… Because as real estate investors we’re looking to get some deals done, and if there’s a tool that can help us get it done more efficiently, then by all means, we should be aware of it. I’m grateful that you were on the show.

Thanks for talking about your business, how you make money, the evolution of it, and lessons learned along the way. I appreciate your time. I hope you have a best ever day, and we’ll talk to you soon!

David Lecko: Okay, thanks so much!

Joe Fairless's real estate podcast

JF919: Why You MUST Start Investing NOW and Not Wait

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Best Real Estate Investing Crash Course Ever!

Our guest has multiple properties that total in value of over 3 million! He started late in the game, but he finally figured it out. He rehabs multiple properties a year and will share one of his condo deals he bought below half price!

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Shawn Holsapple Real Estate Background:

– Active full time real estate investor and licensed Indiana Real Estate Broker
– Wholesale over 150 properties annually while doing a few buy/fix/resell projects as time and inventory allows
– 15-20 rehabs per year, own 45 single family rentals and rent to own
– Started with nothing in 2011, now have over $3m in property, most with no money down bank loans
– Specialties: Out of State/Country Real Estate Investors and knows the challenges of hand-off investing
– Does JV & wholesale deals with local & international investors
– Based in Indianapolis, Indiana
– Say hi to him at shawn@hoosier-solutions.com
– Best Ever Book: Rich Dad, Poor Dad

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JF862: Landlord Paying for Utilities? Plus Large Multifamily Acquisitions

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Are you a landlord, and would you pay for the tenant’s utilities? Our guest talks about an acquisition that he slowly convert it into a largely accommodated stay while he covers some of the electric bill due to high utility prices. It works out in his business as he has developed a reimbursement program, hear how he is doing it!

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Ivan Barratt Real Estate Background:

– Founder and CEO of Barratt Asset Management
– His companies manage 100 million in assets comprising over 1,300 units
– Since 2010, he has raised over $10 million in equity
– Focuses on the acquisition, redevelopment and management of multi-family income producing properties
– Based in Indianapolis, Indiana
– Say hi to him at BarrattAssetManagement.com
– Best Ever Book: Antifragile by Nassim Nicholas Taleb

Made Possible Because of Our Best Ever Sponsors:

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

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

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JF655: How This Company Allows Anybody to Invest in Their Portfolio

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Interested in plugging in the cash to get a return without dealing with the common stresses of being a real estate entrepreneur? Today’s guest has a solution for you and invite you to invest in his portfolio to earn a better income on your investment than any CD or money market out there.

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Sterling White Real Estate Background:

– Co-founder of Holdfolio, a buy and hold platform
– Buy and hold investor
– Based in Indianapolis, Indiana
– Say hi at Holdfolio.com

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

Made Possible Because of Our Best Ever Sponsors:

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

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

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

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