JF2429 Taking Opportunities to the Next Level with Ward Schraeder

JF2429: Taking Opportunities To Next Level with Ward Schraeder

Ward is a dedicated and exemplary property owner who takes opportunities to the next level. He spent nine years working as a salesperson selling chemicals when he decided to put fate into his hands by building a business by acquiring real estate in bankruptcy. Ward started to take off from there up to the point where his commercial real-estate products reached almost half a million square feet! Through his patience, wisdom, and placing importance in relationship building, Ward sheds light on how he best utilized these opportunities.

Ward Schraeder Real Estate Background:

  • Develops commercial properties; primarily medical facilities
  • 35 years of real estate experience 
  • Portfolio consists of 50,000 sq ft of medical office space, 50,000 sq ft of rental properties, 2,000 acres of land holdings, and flipped 18 commercial properties
  • Based in Kansas City, KS
  • Say hi to him at: www.wardschraeder.com
  • Best Ever Book: “The Millionaire Next Door” by Thomas J. Stanley

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Best Ever Tweet:

“My life has been mostly taking advantage of opportunities.” –Ward Schraeder


Ash Patel: Hello, Best Ever listeners. Welcome to The Best Real Estate Investing Advice Ever Show. I’m Ash Patel and I’m here today with our guest, Ward Schraeder. Ward is joining us from Kansas City, Kansas. He has a portfolio that consists of 50,000 square feet of medical office space, and then another 50,000 square feet of rental properties, and then 2000 acres of land. Ward has also flipped 18 commercial properties. Ward before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Ward Schraeder: Alright. My background was science in college, chemistry and physics was my degree, primarily chemistry. I spent about nine years working as a salesperson for Union Carbide, selling chemicals and whatever. I then decided I wanted to be in business for myself. I actually acquired real estate that was in bankruptcy, and some of them were operating businesses that I took over as well. I got into real estate with a group of physicians that were having a problem with a medical office building they owned. We became great friends, and from that, I have done quite a little bit more than you described. I’ve built seven specialty hospitals and acute care hospitals. So my commercial real estate products are probably closer to half a million square feet, that I still own and operate.

The land – that came from my family, I’m a fourth-generation owner. 600 acres of it came from my family; I’ve added on to that every chance I’ve gotten. I always joke I grew up in a place that was about 20 miles from any town in western Kansas, and I had to drive about 20 miles to have a date while I was growing up, because everybody within 10 miles of me was my cousin. So as my cousins have decided to sell their land, I’ve been buying it and adding to our holdings. It’s a real pleasure. My daughter Tamara, who’s on the HGTV show with me, Bargain Mansions, her and her family just got back from there. They spent a week out there just playing; we have a lot of toys and lakes, and the kids love it.

Ash Patel: There are so many different places that we can start. Let’s go back to the medical office space and how you got into that, and then how that evolved into the acute care facilities and hospitals. Can you take us through that journey?

Ward Schraeder: Well, I wish I could tell you that this was a really well planned out process. My life has been mostly taking advantage of opportunities. The opportunity on the real estate was with the medical office building with some physicians that owned it – they were moving into a hospital space that was more convenient for them, and they couldn’t find a buyer. Fortunately, growing up on a farm and ranch, I was very aware of structures. We built everything we’ve ever needed there. When I looked at the building, I realized that it was a bunch of small office spaces or examination rooms that weren’t very conducive to office spaces.

I was able to see that you could expand that concept and move it into bigger office spaces and turn it into commercial real estate… And I just took a chance. I think it’s the biggest thing I see with young people wanting to get into business for themselves, having more than enough talent to do so, that they won’t take a chance on themselves. I did that, and because it was so successful the docs and I became good friends… And absolutely over cocktails at the country club on a Friday night, one of the doctors said “We’d really love to build a surgery center of our own.” I am like, “Well, what’s a surgery center? That’s nothing I’ve heard of.” They told me and I said, “Well, I’ve tried everything else at that point. Why wouldn’t I try this? It sounds interesting.”

Within a couple of weeks, I’d found a consultant that had an understanding of the business, put together a meeting, got the docs to bring all their doctor buddies, and we had a meeting of about 35 surgeons. Most of them walked in saying “Well, we’re never going to do this, but we’re curious what you’re selling.” By the time they walked out they had all invested, and two weeks later we were starting on a surgical hospital. It’s still in existence in Salina, Kansas. We do about 10,000 procedures a year; full facility, but small, 20 beds. We don’t really treat sick people, we treat injured or elective kinds of surgeries.

So I did that, got familiar with the industry, expanded, and decided to continue doing that. Over the last 25 years, as I said… Actually, it’s nine hospitals now. We’ve got two that are just opening up currently; probably 20 to 25 ASCs or ambulatory surgery centers, at least a dozen imaging centers… Not that I own all this, but we’ve built easily a million square feet of office space for physicians. It was one opportunity that you built off of the last one, you saw that it worked, you made some friends, you made some relationships, you got some introductions, you asked for some introductions… So that’s it in a nutshell. It’s a much longer story over 25 years, but that’s kind of it.

Ash Patel: What does a deal look like on a surgery center? You’re familiar with apartment syndications, are there similarities between the two deal structures?

Ward Schraeder: Yes, there are similarities. The structure of the hospital is that we would never build one without knowing what our business was. We went to the physicians in the community first, found those physicians, found out what their caseload history was, what their background was. After you’ve done a few of these, it’s very much mathematical; just like a performance for buying a piece of real estate. Well, this was a very mathematical formula. If I knew how many hip replacements you were going to bring, how many knee skips, tonsillectomies, and all that, I can predict on average how long an operating room is going to take a turn for each of those. That’s kind of the engine of the machine.

When you know that and you know how much time, you also then know how much recovery and how much pre-op, so you back in to how big the facility needs to be based upon the number of surgeons. You always give yourself an out, in that you build it so that it can be expanded. All of them have been expanded from what they started out as. So again, I’m a very mathematical guy, very practical. When I look at buying a piece of real estate, it’s very easy for me to identify in my mind what the right price is. The same thing with the business, it’s very easy if I have a good idea of what the revenue is going to be and how to build it to make some money.

Break: [00:07:34][00:09:35]

Ash Patel: Ward, you have a captive audience with all these physicians. Are there other investments that you bring them into? Non-medical investments?

Ward Schraeder: Yes, it’s interesting that you bring that up. We have developed our own… I hesitate to call it this, but it’s a venture capital or private equity firm that we’ve created. We have almost 400 high net worth individuals that are in that. We are into a wide variety of things; we have printed paperback books, but we no longer do that. We were in food distribution, we are in assisted living, we have almost 200 beds of assisted living, three different facilities, and two memory care units. We’re also into… You probably aren’t familiar with Freddie’s fast-food franchise. It’s a hamburger organization out of Wichita, Kansas that has spread out over the last 10 years to have about 400 plus franchisees… Or franchises, I guess I should say, not franchisees. We’re the largest single franchisee of them. We have about 70 units across the United States, all the way from Georgia to Texas.

Ash Patel: Do you own the real estate that those sit on?

Ward Schraeder: Some. Yes. It just depends. Some places people want to sell the real estate, some people want to lease it, or some people want to build the building and everything for us. We have a good enough track record and we have a fair number of those. We actually like to build them, because after we get them up and cash flowing, there are REITs out there that will buy them from us. We actually make money by selling them, as well as running the restaurants. So that’s an interesting prospect.

We also have a business, it was called Rocket Crafters, but it’s now called Vaya Space. This is a pretty far stretch for a guy that’s been in real estate most of his life, but we’ll be launching rockets, the first payload on April 24th, out of White Sands Missile Range in New Mexico. So I’m on the board of that.

Ash Patel: That’s got to be a whole other podcast. Ward, you flipped 18 commercial properties. Did you flip those with the intention of flipping them, or did that just happen?

Ward Schraeder: Most people when they go into the business, they’re saying, “What’s your exit strategy?” My entrance strategy is probably more than my exit. If I achieve what I’ve set out to do, which is to make the kind of return I expect out at that business, I don’t care whether I sell it or not. I am perfectly happy to run it, operate it, and collect what I like to refer to as mailbox money. I don’t have to do too much after it’s up and stabilized.

For example, in one of our hospitals I end up probably being a 10% to 15% owner of the operating company, not just the real estate. But there are so many people in this world who know more about running a hospital than I do, that I’m the inappropriate one to try to be the general manager or the CEO. So we’ll hire professionals that have been educated in that business. I sit on the board, I go to the meetings, I do make capital decisions and cash flow decisions… But that’s what I mean by mailbox money – I don’t really have to go to work every day to perform a function.

Ash Patel: Ward, picture this scenario – if your business collapsed your net worth went to zero or negative. What would you do?

Ward Schraeder: Well, that’s interesting… I saw that question in one of your interviews I watched before the show. I think I’d start just like I did. I’d go back and find a small commercial real estate property… Even though I did a lot of real estate for myself, homes that I built, lived in, sold, and did it again and again, commercial is by far more attractive to me. Especially if you have a good enough property that it requires good tenants, you almost never have to worry about collecting your money; you don’t have to worry about them trashing your property, leaving in the middle of the night, or something onerous happening, like drugs or something like that going on in it. It’s much easier to build a performer where I can manage the cash flow, manage the maintenance, and manage the cleanliness of the property. So I’d go right back into doing real estate.

When I got ahead, just as I did, Tamara always jokes that my children were forced into labor when they were young. But when we were young, I didn’t have enough money to really do anything else. On weekends, when we had something that needed to be done that the children could do, they worked with me. Worked with me, not for me.

Ash Patel:  Yeah. Ward, you interact with a lot of doctors… My wife is a doctor as well. What unique traits do you use to communicate with them, and how are they different when you’re pitching the investments?

Ward Schraeder: Pitching is one subject that isn’t too difficult. We’ve had a really remarkable track record. It’s pretty easy to get their attention when I need assistance with an investment. Assistance meaning capital. Physicians all work a lot of hours in general, they don’t really have time to study the economics of very many projects, so they have to have a trusted investor for them. All of them have their 401s or their IRAs or whatever they do, but this is a whole different realm of diversity for them. So they can be in a rocket company, they can be in a food distribution company, they can be in a printing company, or another real estate, or they can even be in one of our other hospitals.

The hospitals over the years have gotten bigger and more expensive, so doctors that trail with us have come from their hospital where they were successful and helped invest to get the new one off the ground. So talking to them, that side of it is relatively easy. I’m sorry, I’ve forgotten the first part of your question.

Ash Patel: Let me rephrase it just a little bit… Somebody who is wanting to solicit doctors for investment capital, what advice would you give them?

Ward Schraeder: Number one, don’t waste their time. It won’t take very long to lose their attention span. Not that they don’t have a long enough attention span, but maybe not as long as it needs to be for starting a business. My relationships with them started with some very basic kind of businesses. Real estate – very easy to understand and very limited risk. I’ve always looked at real estate and said, “Maybe I’ll lose my downpayment. But will it take my whole company and business down?” No, I don’t believe so. Even in the worst economy, I think I’ll still get out of it, maybe with no cash, but at least I won’t have to sell 10 other properties to make it work. So start off with something quite basic. Prove yourself with something not outrageous or gigantic, maybe is a better word. Once you’ve done that, then you’ve got their ear. If you’re successful, doctors are like everybody else in the world, they like to talk; they like to tell their friends how they’ve been successful with this guy out of Kansas, and you ought to meet him. That’s what I would suggest.

Ash Patel: That’s great advice. So be respectful of their time, get to the point quickly, prove yourself, and hope for a lot of word of mouth on your successful deals that you do with them.

Ward Schraeder: What better way of promoting yourself than by word of mouth? We have very little advertising in our business. We probably employ, in all of our facilities, 5,000 to 6,000 people. In all of them that were participating in. I shouldn’t say that we own 100% of them. But you don’t get that by advertising, I don’t think. I think the best way anyway to get it is the way we did it. Maybe you’d call it organic growth.

Ash Patel: Ward, the question that we typically ask is what’s your Best Ever real estate investing advice. With you, I’m going to change it up. What is your Best Ever investing advice? It doesn’t have to be real estate. As a matter of fact, let’s do both. Let’s do your real estate advice and non-real estate investing advice.

Ward Schraeder: The real Estate advice is the same old one – location, location, location. My ranch is a terrible investment, because it’s in the middle of nowhere; there’s no opportunity for growth. It’s a huge county in Kansas that has 3,000 people. In Salina, Kansas where I built the first hospital and I lived at the time, I started buying land that was one mile outside of town, paved roads on both sides, and water on both sides. I held that land for 10 years and sold it for a very high multiple of what I paid for it. So it proves the equation of location, location, location. I actually think the best advice for buying real estate is buying something that you can see as an opportunity, but is maybe dilapidated or in a state of disrepair. Maybe a good example of that would be one of the businesses we assisted in starting was a bank in Salina. We did a scratch start of a small bank, 250 million in assets when we sold it.

A gentleman came in with, let me say 50 properties; I don’t remember the exact number, but it was close. He had lived off the deferred maintenance of those properties for quite some time, several years, until the point that he was having trouble renting them. He just came in one day and threw all the keys on the desks and said “I’m 65,” or whatever it was, “I’m retiring and I’m sick and I don’t want these anymore.” It took the bank about 18 months to recover those. They needed roofs, they needed kitchens, they needed paint, they needed floors cleaned, and carpets removed… You know the story.

I came in after the 18 months that the bank had owned them and we reinvested every penny we got out of them and we were actually cash flowing, but nobody wanted to buy them. They were at a discount of 25% to county appraisal. I want to buy these; that’s actually what I started to say, it was my initial conversation. We ended up getting the 10 or 15 investors, I don’t remember the exact number, that had invested in the bank and we all got together and bought them.

What a perfect opportunity. The places were actually cash flowing. Every penny we made for the next 5, 6, 7 years needed to be put back into it… But we did it, and now we have almost 60 units. We only bought 33 or 34 of them but we now have 60 units, we still own them, we’re almost debt-free, and they’re all in tip-top shape. But nobody wanted them, because they were so beat up. But you could see it was an opportunity.

Ash Patel: Ward, are you ready for the lightning round?

Ward Schraeder: Sure.

Ash Patel: First, a quick word from our partners.

Break: [00:20:07][00:20:43]

Ash Patel: Ward, what’s the Best Ever book you recently read?

Ward Schraeder: There was one I read that I actually paid my children to read. It was called The Millionaire Next Door.

That is a great book. Ward, what’s the Best Ever way you like to give back?

Ward Schraeder: I am acting as a mentor for several young people to learn how to be in business for themselves. I get nothing economic from it. It’s just a pleasure being around young people that are motivated that want to do something with their life. I love it. It gives me encouragement for our society.

Ash Patel: That is great. Ward, how can the Best Ever listeners reach out to you?

Ward Schraeder: They can reach me on Instagram at @WardSchraeder, or Facebook, the same thing, Ward Schraeder. Just send me a note. If it’s something that requires more than a public conversation, I’d be happy to engage in a private conversation.

Ash Patel: That’s fantastic, Ward. Thank you for being on the show today. You could have written a book with all your different experiences that you have. I think the big takeaway here is you just look for opportunities and then you execute flawlessly in getting those deals done. You’ve built a great business and a great network. Congratulations on all your success and have a Best Ever day.

Ward Schraeder: Well, thank you. Thank you for having me on your show. I love doing this. It’s fun to talk to people that have had different experiences. I didn’t get to ask you enough questions about your business, but maybe there’ll be another opportunity.

Ash Patel: Awesome, Ward, thank you again.

Ward Schraeder: Take care.

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JF2208: Veteran To Founder With Seth Wilson

Seth is the Founder and Managing Director of Clarity Equity Group and is a four-time combat veteran of 14 years and currently serving in the Missouri Air National Guard as a pilot of a C-130 tactical airlift aircraft. Seth shares his background of over 12 years of real estate experience and his journey into this new venture. 

Seth Wilson  Real Estate Background:

  • Founder and Managing Director of Clarity Equity Group
  • A four-time combat veteran of 14 years and currently serves in the Missouri Air National Guard as a pilot of the C-130 tactical airlift aircraft
  • Has over 12 years of real estate experience from mobile homes to ground-up development on Class A luxury properties
  • Portfolio consists of $65MM in assets under management
  • Based in Kansas City, KS
  • Say hi to him at: https://clarityequitygroup.com/ 
  • Best Ever Book: Invest in Debt

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Best Ever Tweet:

“Jumping off a cliff and then trying to build your parachute is a strategy I really don’t recommend, it’s better to have money put together first and then go and find a property” – Seth Wilson


Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’ll be speaking with Seth Wilson. Seth, how are you doing today?

Seth Wilson: I’m doing very well. Thank you.

Theo Hicks: Well, thanks for joining us. Looking forward to our conversation. Before we dive into that, a little bit about Seth’s background. He is the founder and Managing Director of Clarity Equity Group. He is a four-time combat veteran of 14 years and currently serves in the Missouri Air National Guard as a pilot of the C-130 tactical airlift aircraft. He has over 12 years of real estate experience, from mobile homes to ground-up development to Class A luxury properties. His portfolio consists of $65 million in assets under management. He is based in Kansas City, Missouri and you can say hi to him at clarityequitygroup.com. So Seth, do you mind telling us a little bit more about your background and what you’re focused on now?

Seth Wilson: Yeah. So I was really excited to get into real estate once upon a time ago because of the book Rich Dad, Poor Dad. I’m sure plenty of listeners have heard of that book or read it. The challenge was I was 19 years old, I was a college student, I didn’t have any money to actually buy the book. So I sat in the Barnes and Noble aisle and I read the book cover to cover over the course of about two days. So that started my journey on real estate. From there, I did my first deal. It was a VA loan on a house in Omaha, Nebraska, 100% leveraged. I timed the market perfectly. I bought it at the exact top of the market in 2007 right before the crash. So lessons learned there, and from there, I started getting into mobile homes on the rent to own model. And before I knew it, I was in apartment buildings and raising money from friends and family.

The challenge that I had then was that the friends and family rubber band only stretches so far as a lot of people know, and I had to go out and learn to raise money from other,  primarily high net-worth individuals and family offices. So that’s where I am today, and we’re focusing on building out the management company. Even during this global pandemic, we have a great team. They’ve increased the occupancy and decreased delinquency in our portfolio properties. So that’s sustaining. So right now, we focus primarily on raising debt and equity for investors that have run out of funds from their friends and family. It’s a tough step to take, and I’ve been there and done that. And that’s the main focus right now.

Theo Hicks: Thanks for sharing. So of that $65 million in assets under management, what portion of that is apartments? And then what portion of that is the mobile homes? Or are you out of the mobile homes and just doing apartments now?

Seth Wilson: Yes, I’m out in mobile homes. I’m just doing apartments now. So we third party manage one of those properties and we’re trading out of the portfolio that I own now. It’s actually under contract to sell. So that’s where I am now.

Theo Hicks: Okay. So you’re focused exclusively on multifamily. So that $65 million – how many different buildings is that and how many units is it total?

Seth Wilson: That’s three properties and about 500 units.

Theo Hicks: Okay. So three properties, 500 units. So walk us through your first deal and then walk us through the most recent deal. So for that first deal, do you mind telling us how you found it, what the numbers were, maybe walk us through the process of raising money from friends and family for the first time, and then what the business plan was for that deal?

Seth Wilson: Yeah. So I bought a 12-unit, and I used that with my life savings to acquire that. I bought another 12-unit, and that was family money; nothing spectacular there. And then I went to the 44-unit. So that’s probably where the journey really starts. I raised friends and family money from there, from old Air Force buddies, as well as some other friends that I had. Those are generally called Country Club type raises. That was not too terribly difficult to do. The challenge was that I came up short on the equity side, and that’s when I realized that I really need to get smart on being able to raise capital and things along those lines. I ended up only being able to close on that property because the owner took a carry back on it, which I then cashed out of about eight or nine months later.

From there, things got interesting because I knew I was stuck. Maybe some of the other Best Ever listeners know this, that you get to a point and the rubber band, as I said, it only stretches so far. You know you can go to the next level, you have it in you. You have the time, you have the energy, you have the experience and expertise; you just don’t know how to do it, and that’s where raising money from outside investors is very important.

So the next one was a 93-unit property. I absolutely had no ability to raise money at this point. I had built up a pitch deck, which is something that we build for people now, and I did some marketing. A gentleman saw some of the marketing materials that we had and he said, “Hey, I’m interested in getting involved in your next deal,” and I said, “Well, that’s great, because I actually have one under contract, and I have no idea how I’m going to be able to close on it, and this is why I’m very interested, and let’s figure something out.” So he came in, he brought the equity that was required to close on that property. And then since then, we’ve done a few more deals together.

Theo Hicks: So you got a deal under contract, didn’t know how you’re gonna raise money, and then this guy put forth all the funds?

Seth Wilson: Yeah. I did bring some money to that deal. That’s like jumping off a cliff and then trying to build a parachute on the way down. I really don’t recommend that strategy. It is better to have the money put together first and then go about finding the property, and I know that you guys preach that.

Theo Hicks: So you said– and this must have been a pretty amazing pitch deck that you had if the guy put forth all the funds for that deal. So do you mind walking us through the marketing material that he saw? Did he email you? Did you meet him in person? I’m just curious of how this whole situation unfolded.

Seth Wilson: Okay. If you really want to get to the deep parts of the story… The marketing piece was am article that was in the Kansas City Business Journal. It came out on Black Friday, 2016, I believe. I was actually in Las Vegas on an Air Force trip. It was a real hardship tour, but I made it through and we stayed up all night. We actually were flying all through the night during a very large exercise. I get to my hotel room about two in the morning. Some of the crew goes out and hits the strip. I went to bed. The next morning, I woke up, and there was an email waiting for me and it says, “Hey, we saw your article, and we would like to meet with you,” and that was it. There were some punctuation and grammar issues involved in it, so I wasn’t too– I was like, “Okay, who are these guys?” A lot of people were calling me trying to sell me insurance. These insurance salesmen.

Theo Hicks: I didn’t think about that.

Seth Wilson: Very persistent. But I had this rule where if they take the time to reach out to me, I will do the courtesy of calling them back. We went to lunch when I came back in town, and it wasn’t so much a meeting as it was an interrogation. The pitch deck that I had is very antiquated, and I don’t even use it anymore, but it just showed my experience, and what it was that I was going to do going forward. I didn’t think that the meeting went well at all initially, and about a week later, he called and said, “Yeah, I’m interested in doing this. Let’s get some terms together.” So that’s the real story there.

Theo Hicks: Nice.

Seth Wilson: To back up a little bit more, to get in that business journal, my wife knew that I was trying to get in the business journal and get a piece done on me, and she was actually at a media mixer. She worked in a local television at the time. She found the guy, she cornered him at this mixer and says, “My husband’s been trying to call you and you need to call him right away, and you’re gonna do a great story on him.” And he’s like, “Oh, man. Okay.” So the next day, the gentleman calls me says, “Hey, I met your wife last night.” I was like, “Yeah, I heard. Sorry about that.” But it was a great relationship and great opportunities.

Theo Hicks: That’s hilarious. Wow.

Seth Wilson: Very lucky to have that, yeah.

Theo Hicks: Grateful to her for that. So you’ve got a 93-unit. Can you walk us through how you did that one. So you said 93-unit, 44-unit… Were those the two, and the third one brought you to 500 total units? So it must have been a pretty big deal.

Seth Wilson: Well, the 44-unit I traded out of last fall.

Theo Hicks: Okay.

Seth Wilson: So I don’t own that any longer. The next one was a 144-unit property, and the same investor was interested, and he brought some friends into that deal. So those two, the 93-unit and the 144-unit, the ones that we’re trading out of, and those should close here in the next couple of months, which is great, because of the pandemic and everything else. But those properties are doing outstanding. And then there is a brand new development that we third party manage for, and that’s here in Kansas City as well. That was a ground-up Class A development, and it’s only about 50% occupied as of today, but it’s rapidly increasing from there.

Theo Hicks: You mentioned in your intro that you were also raising money from family office. Is that this guy, or is that something different?

Seth Wilson: No, he’s not out of family office. He has had a liquidity event from a sale of his business, and he manages his own capital. So family offices are generally a little bit of a different flavor than the high net worth individual.

Theo Hicks: Do you mind walking us through how you started working with these family offices?

Seth Wilson: Sure. So first off, I built a track record of success. I showed that I was an expert in what I was talking about. I could certainly hold my ground when I ask a lot of questions. And these are really a list of tips, really. First is I had the relevant experience. Air Force training does not convert to managing apartments or acquiring apartments or meeting with bankers. So you have to have relevant experience. I showed that I was an expert. I was able to stand my ground. I understood my numbers inside and out. I understood the market, I understood the demographics. I put together the look. So books are judged by their cover; I’m sorry to tell you this, but it’s true.

I had the marketing materials through the pitch deck, and when it came time to answer these questions or work with people, I was prepared, because that’s what experts do. And then I just trusted the process of reaching out and networking the best I could, and then took a lot of action from there, and I still continue to do that to this day, actually. So those are really some tips going down the line of how to work with these kinds of people. So your next question is going to be “Well, why did you decide to work with family offices and–“

Theo Hicks: Well before that, the first one totally makes sense. Make sure you have the relevant experience to show that you’re an expert, which involves being prepared, having the look. So you said having the look and then reaching out and networking, taking massive action. I’d like you to elaborate on those. So the look. Are you talking about suit and tie look? Or you’re talking about from a more branding marketing perspective?

Seth Wilson: The answer is yes. There’s lots of guys and I know that especially in coastal cities, the hoodie and jeans and flip flops is the look and certainly they can get away with that. I’ve never found and that’s been congruent with my personality. So when I do meet with a family office, one of the things I’ll do is I’ll call and speak to the receptionist or someone else lower on the totem pole and ask them what their dress code is there. And then I’ll just dress one notch higher than that; unless they’re already wearing suit and tie, then that’s what I’ll wear.

So for example, if it’s Colorado-based, all these guys wear all Patagonia. So you don’t want to be a suit and tie guy there, because you’re not gonna fit. It’s adapting to your audience and knowing who they are. So if you go to a New York office, you don’t even need to ask. You’re gonna wear a suit and tie, open collar, depending. So we have that kind of stuff. And these guys, the Mark Zuckerbergs of the world don’t have to do that, but unfortunately, I’m not him.

Theo Hicks: Okay, so we got that one down. So then next, reach out and networking. So you already mentioned that you call the receptionist to schedule a meeting. How do I get a meeting with the family office, assuming I have that relevant experience, I’m prepared, and I’ve got the look down? How do I actually get in there?

Seth Wilson: Well, you’re gonna want to talk to someone that’s on the committee. The patriarch or matriarch is always the best. However, you’re probably not going to have access to call them, if you’re trying to cold call, and they’re not receptive to that anyway. There’s a lot of groups out there where the Chief Investment Officer, acquisitions and dispositions, they’re out there, they’re searching for business and deal flow. So you connect with those people. And then they also generally sit on the Investment Committee, before they make a decision on to invest in a deal or not. The patriarch or matriarch, especially if they’re generation one, they don’t need an investment committee. They say, “Hey, this is what I’m going to do,” and that’s the way it goes. But anywhere else that they’re aggregating deal flow and you’re not speaking to the person that was the wealth creator, you’re going to have to go through generally a committee. So Chief Investment Officer or acquisition dispositions is really where you want to start.

Theo Hicks: Okay. And then the last one was taking massive action. So what exactly is an action you’re taking? Is it getting more experience or is it continually following up with them? What does that look like?

Seth Wilson: When you’re working with those types of investors, you’re put together, you look good, you have the experience, you trust the process, and taking massive action. So you’re on the phone, you’re contacting these people, you’re using the resources you already have out there, you’re taking care of them, and then asking for referrals, obviously, anything along those lines, and then you’re putting yourself out there. So I used to believe that having one good phone call week was good enough. Like, “Hey, I had a great phone call this week, and that’s great.” Or, “I had a great meeting, and that’s great.” But it’s not. You need to be having one or two great phone calls a day.

And then let’s talk about the meeting. So it’s a relationship business. It’s not transactional. If you’re going to be transactional with your investors, it’s probably not a very good fit going forward. You won’t have a relationship with them, you won’t be able to text them, you won’t be able to call them. “Hey, I saw this article. I know you’re into bodyboarding, and I thought this would be cool for you. What are your thoughts on that?” Those kinds of things.

Also going out and physically meeting with them. There’s times that– obviously not during these pandemic times, but there’s times where I go out and fly to, say, Chicago. I’m there for one meeting, and I turn around and fly home the next day. That’s it. So maybe people think that’s crazy that you’re spending the day to fly that far to just do one meeting, but that’s how these relationships get started, and that shows that you’re a dedicated person and an expert as well.

Theo Hicks: Yeah. Thanks for sharing those tips. Alright, Seth, what is your best real estate investing advice ever?

Seth Wilson: Think big, but act small. So think big on what they’re gonna do, but make sure that you’re paying attention to the details.

Theo Hicks: Okay. Are you ready for the Best Ever lightning round?

Seth Wilson: I think I’m prepared.

Theo Hicks: Ah, you’re prepared. Let’s do it.

Break [00:18:44]:04] to [00:20:17]:07]

Theo Hicks: Okay, Seth, what is the best ever book you’ve recently read?

Seth Wilson: I’ve recently been interested in investing in debt. So two books – Invest in Debt and The Banker’s Code.

Theo Hicks: If your business were to collapse today, what would you do next?

Seth Wilson: I wasn’t expecting that question. If my business was to collapse today, what would I do next? I’d probably take my lessons learned, lick my wounds and get back up and try again.

Theo Hicks: Is there any deals you lost money on? If so, how much and what lessons did you learn?

Seth Wilson: I have not lost any money on any deals and I haven’t even come close.

Theo Hicks: Well, then let’s talk about the deal you made the most money on. How much did you make and give us the details?

Seth Wilson: Well, we’re looking to close out on these two properties now. It’s gonna be a very healthy check coming my way. The details, value add deals, everything that I look to invest in, I want to see a 2x return at the partnership level, and 1.7x, 1.8x at the LP level, and that attracts the investors that I need, and we share in the upside. The investors do well first, and then I do well.

Theo Hicks: What is the best ever way you like to give back?

Seth Wilson: Giving back to the community. My wife and I are involved in numerous charitable organizations, as well as donating our time. Unfortunately, getting out and meeting people isn’t really happening right now, and we also have two small children under the age of three. So unfortunately, we don’t get to go out as much as we’d like to help out, but there’s numerous local charities that we donate to.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Seth Wilson: That’s the website. Please go to the website, with how much money we spent on it – clarityequitygroup.com. It’s spelled exactly how it sounds, and there’s all sorts of great resources on there as well.

Theo Hicks: Perfect. Well, Seth, thank you very much for joining us today and telling us about your journey. I think the biggest takeaway that most people are going to get from this– well, the first one was how you were able to raise money for your first deal. The story about getting into the Kansas City Business Journal is funny, but also, I think, enlightening and gives people idea of creative ways to get your name out there in order to attract investors.

And then the second thing was your five tips for raising money from family offices with them being one, making sure that you have the relevant experience; two, displaying your expertise; three, having the right look; four, reaching out and networking; and five, taking massive action. And for each of those, you went into more detail. And then I guess, thirdly, would be your best ever advice, which was to think big, but act small and make sure you’re paying attention to the details. So Seth, again, thanks for joining us. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Seth Wilson: Alright. Thanks, Theo.


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JF2000: The Hybrid Turnkey Model with William Robison #SkillsetSunday

William is a returning guest from one of our very first episodes, JF09. William has been focusing his efforts on growing his Hybrid Turnkey Business and shares some of the benefits of having a successful business that purchases many deals a year including discounts with local contractors, plumbers, electricians, and materials. He also shares how he prepares to negotiate the terms of a bulk deal with a vendor. You would think it would be easy but it takes a lot of work and many no’s before he finds the right partner.

William Robison Real Estate Background:

Best Ever Tweet:

“They get too comfortable with their cushion job, and we have to sometimes rein them back into a good spot or move on to another.” – William Robison


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, William Robison. How are you doing, William?

William Robison: Doing great, how are you?

Joe Fairless: I am doing great, and looking forward to our conversation. Because today is Sunday, we’ve got a special segment for you, Best Ever listeners, called Skillset Sunday. The skillset you’re going to learn is a hybrid turnkey model. We might have talked about it on the show before, but it’s always good to get an additional perspective on this from a different person.

First off, if you recognize William’s name as a loyal Best Ever listeners, props to you, because I interviewed William one other time, and that one other time was episode 9. It was titled “One critical component of building a real estate business.” I have no clue, I do not remember what that critical component is… It’s been five years, so if you wanna know what that is, then go listen to episode number 9.

William has been in real estate for 15 years. He started a brokerage in 2008… Maybe I should listen to that, too. It’s important that I know what that critical component is building a business. He’s helped dozens of investors to purchase hybrid turnkey investments totaling over 500 acquisitions, renovations and daily property management. Based in Kansas City, Missouri. William, do you wanna give the listeners just a refresher of your background? …and then let’s roll right into talking about the hybrid turnkey model.

William Robison: You bet. As you mentioned, 15 years in real estate; that was after two corporate downsizings I decided to jump out of the corporate world and go into the much more exciting and lucrative opportunity of real estate. I have never looked back. It’s been an exciting ride. I’ve worked with investors for the majority of those 15 years. I did a little bit of REO during the debacle and bust in ’08, plus or minus, and for the last 6 years I’ve been working with investors to build out their own personal portfolios.

Joe Fairless: Got it. So what is the hybrid turnkey model?

William Robison: Sure. A lot of people are very familiar with what a turnkey real estate investment is. It’s typically a single-family house, where a company has gone out, acquired the property, done some renovations, got that property leased up, and then selling it out to investors as a passive investment.

What a hybrid turnkey property does is it offers them a little bit more transparency, and it gives them the opportunity to capture that built-in equity that can be built through that process. So what we do is we help an investor capture a property from the open market, whether it be an off-market transaction, from the courthouse steps or MLS, we put them through a renovation process using our construction department, and then finally we put them into the property management for the long-term. So what that does is it gives them transparency of the process, they get to know exactly what’s going on going into that property, and then they get to capture some equity along the way.

Joe Fairless: Yeah, so that’s the ideal model if you’re looking to buy single-family homes… Because if you buy on the MLS and it’s move-in ready, then you’ll be paying a premium, whereas here you can capture some of that equity, as you mentioned, through the renovation process… Assuming that the  renovation process goes according to plan. Yeah, that’s a big variable in this… What are some ways that you’ve seen it go wrong, and then how do you mitigate that from happening?

William Robison: There’s always the hidden items that you’re not going to know when you start. There’s rarely ever going to be the $10,000 [unintelligible [00:04:33].07] against the sheetrock inside the wall that we find on HDTV… But there’s rarely ever a surprise; usually, it’s just a decision-making process of “Hey, this roof has 5-7 years of life left. Do you wanna continue forward and have a cap ex later, or do you wanna take care of it now and have a durable product for a long time?” And there’s several more examples like that…

Joe Fairless: What are some more?

William Robison: Some more might be opening up the flooring and finding the sub-flooring needs to be wiped out, opening up a wall in the shower and we have to replace a shower valve, rather than just retiling the shower out… That’s a couple hundred dollar difference, so it’s never anything that’s just outlandishly going to completely blow a budget. And we do bake in a little bit of  a contingency budget; the majority of the time, that’s going to be covered through that.

Joe Fairless: How do you know what contingency budget to bake in?

William Robison: Typically, just a few percentage points of the overall budget. After going through roughly 10,000 houses in  my career, I have a pretty keen knowledge of what we’re looking for on a property. We typically have a pretty solid understanding of what we’re going to have. Sometimes we’re gonna estimate on the high side and come in a little bit less if we don’t know exactly what we’re going to find; we’re going to make an assumption that it’s failed, and we need to fix it.

For example, buying an REO in the wintertime in Kansas City, where the pipes freeze – I’m gonna assume that the pipes are broken, and we’re gonna plan an expense for that. If we get in there and we like the lines, and the lines hold pressure – fantastic, we’ve just saved $1,500.

Joe Fairless: When did you start doing the hybrid turnkey model?

William Robison: Hybrid turnkey started almost six years ago today.

Joe Fairless: Okay. When you think about the business, six years ago, as far as this business model goes to today, what are some things that have been optimized on your side?

William Robison: Volume pricing. We’re able to capture some volume business from various contractors, from some suppliers… Rather than buying a stainless steel appliance package that is a very good, mid-grade brand, and paying $2,100 on the shelf, I’ve got that negotiated down to $1,400. So there’s just some volume priced in by buying dozens or hundreds of x on the marketplace… Same thing happens with our plumber. We went and looked and saw how much we were spending in plumbing in a given year – it was about 80k – so we were able to go out to a variety of different plumber vendors and say “This is the amount of money that you can capture. Are you willing to give us some volume pricing discounts?” etc. Same thing with our electricians, and our roofers etc.

Joe Fairless: On that plumbing example, you spent 80k a year on plumbing… What’s a reasonable discount to ask for?

William Robison: It depends on exactly what’s it gonna be doing for you. A lot of what we’re doing in that 80k is sump pumps, and line clearing, and water heater change-outs… Small items; nothing that’s ever hugely drastic… But we’re able to capture usually a 30% discount to what we would have paid out in the market.

Joe Fairless: That’s substantial.

William Robison: Yes. Line clearance, for example, costs you $100 to $120 for a main stack; we’re paying $65. So it’s just  cost savings that you  get by doing more than 100 a year.

Joe Fairless: Do you have to go to multiple plumbers before you get one that says “Yes, I’m good with that.”

William Robison: Dozens.

Joe Fairless: Dozens? [laughs]

William Robison: Literally, dozens. Yes.

Joe Fairless: You go through literally dozens, and then you finally find a taker?

William Robison: You know, America has done a fantastic job of bringing STEM (science, technology, engineering and mathematics) to the educational world. It’s been a fantastic thing to help put America on the map, but…

Joe Fairless: Not the trades though.

William Robison: On the flipside, on the trade side we’re stalling a lot. So all of our trades are highly maximized on the amount of business that they have, and the only way that we can go in and capture a discount from them is to offer them an opportunity to have more consistent work, less advertising budget, and find ways to help them save money, so that they can help us save money on the flip.

Joe Fairless: I’m glad we talked through this. So your talking point to them is you have more consistent work, and maybe you ask them “How much do you spend on an advertising budget?” and they say “X amount.” And you say “Well, you’ll spend X amount less, as a result of that.”

William Robison: Right.

Joe Fairless: Any other talking points that you give them?

William Robison: WE try our very best to do the majority of our work Monday through Friday, 8 to 5… So we’re gonna have that rare phone call that’s gonna be Saturday night at midnight with a flooded basement that we need help with, but the majority of the business that we’re gonna be giving them is during their optimal times that they want to have business anyway. So if there’s an emergency type plumber, we can offer them the opportunity to have a little bit more family time at home, and give them some volume during the daytime.

Joe Fairless: I’m glad that we talked about this, because it might be counter-intuitive to some listeners that you had to go through dozens and dozens of plumbers to find one that was qualified, and would accept your deal of “Hey, I want 30% off.” Because on the surface, people might think “Oh, well – yeah, if you give someone a lot of business, then you would get a discount”, and that makes sense, and you just have to go to a plumber, or maybe two, if the first idiot turns you down… But the reality is, as you said, they’re in such high demand – the good ones are, especially – in such high demand… And they don’t need this type of structure, because they can go and be busy Monday through Friday already, and get premium pricing through single-family home primary residence owners.

William Robison: Another good point is that our plumbers rarely stay with us for a very long time. Every once in a while you’re gonna run into somebody that has price creep; they get way too comfortable and they try to increase their prices, and some of the standards that you set in place for a few different items, that you can… The rest of the items start to  have a little bit of price creep, and they get too comfortable with a cushion job. We have to sometimes wrangle them back into a good spot, or move on to another.

And sometimes it becomes very comfortable, they outsource it, they hire somebody else to take on our business, that person doesn’t take care of us well, and we have a staffing issue that we have to correct. And half the time, that means we have to change our vendor.

Joe Fairless: Good info for really anyone working with vendors over the long-term, or contractors and subcontractors… Just to keep a watchful eye for price creep, and just check — if you’re doing the same type of stuff, keep those invoices and check them over time if they are going up… Which I would expect them to go up a certain amount over time, just because of inflation… But make sure that it’s still in line with the market and you’re also still getting whatever discount or agreement that you had agreed upon with them.

William Robison: Exactly. A question that we get often is why don’t we have 3 plumbing bids on the sump pump. And as you can see, if you have a vendor who’s willing to give you really good pricing, and only do it at this amount of volume, if I go and spread that out over three, then I’m gonna get less of a discount. So if I take that 80k and drop it down to 27k per vendor, I’m no gonna get that same level of attention, I’m not gonna get the same level of service, and I’m certainly not gonna get the same level of discount.

So yes, we want to make sure that we’re on point on price, but we also want to make sure that we’re maximizing for the vendor that is giving us the discount for that volume. So it becomes a little bit entrusting, working with a variety of our investors, especially on the property management side, where they’re looking for “Hey, can I get three bids on this?” “Sure. Push comes to shovel, I’ll get you two  more retail bids that are gonna be 30%-40% higher.” But having trust in your vendors if you’ve built a good, solid relationship with those people, have a little bit of faith in what they can do, but also make sure that there’s transparency of what’s happening at the same time.

Joe Fairless: Anything else that we haven’t talked about as it relates to the hybrid turnkey model that you think we should?

William Robison: You know, six years ago when the market was coming out of a big downturn and there was a lot of foreclosure inventory on the market, and people were able to BRRRR and do all kinds of fantastic financing methods, and purchase properties at extreme discounts – that was a fantastic time, and if you bought during that time, kudos to you. I still believe that we’re in a good market; not only Kansas City but several other good markets around the country offer the same… But we don’t have that same discount that we had five years ago.

Recognizing where we’re at in the market is an important factor, and I also still think that we have quite a bit of upside, because we don’t have enough inventory out there to take care of the demand that exists for rentals. We’ve got a new generation coming to the marketplace, looking for rental properties because they don’t wanna be tied down to any particular location… And within that, we’ve gotta be able to provide them with the supply, and get that sent out to them.

Specifically in Kansas City, there’s a lot of class A multifamily built out in the downtown area. Fantastic, great location, close to everything, lots of entertainment… But those same people are now having children, and when they’re 2, 3 and 4 years old, they start thinking “I need to go to the suburbs, where there’s parks and sidewalks and good schools.” And that is where we’ve built our business.

So within that, let’s say that we’ve got a hybrid turnkey property that we’re gonna have an all-in of 150k; that’s gonna be quite a bit more than we had five years ago, but the ability to replace that is still substantially higher. I cannot build a house for less than 190k in the market areas where these houses exist. That means we still have a window of appreciation available for those that are willing to look at  appreciation as part of that investment model.

Joe Fairless: Is that what you look at, the replacement value?

William Robison: That’s just one of the factors. Obviously, we’re looking at cashflow. Cashflow is getting compressed. All across the country we’ve got a large group of the national Wall Street players (like BlackStone) that are buying up thousands and thousands of properties around the country… So we’ve gotta be able to compete with those guys. But the replacements scenario is definitely still a piece of the puzzle.

There’s two different factors to look at in an investment – what’s  your cashflow, whether that’s positive, flat or negative; what is your appreciation historically and what’s expected… And what kind of equity can you gain out of the investment. So there’s two different ways to look at it, and we try to make sure that we’re amplifying that for the particular investor’s needs… And sometimes we need to modify their needs. If they’re thinking “I need cashflow today” and they’re 25 years old, getting ready to go into their prime earning years, they don’t really need that investment to perform for them until years down the road.

So we try to educate them into the direction of looking at IRR, that it’s gonna perform for them much better over the course of the next couple of decades.

Joe Fairless: As long as it’s cash-flowing out the gate though, and you’ve got the right management in place… 2008 hits and if it’s cash-flowing and you have the right management and you have a long-term loan on it, you still should be fine.

William Robison: You’re stable, right. You’re in great shape, and you’ve got more [unintelligible [00:16:45].19] coming into play for those that are unfortunate enough to fall to the next recession.

Joe Fairless: Yup. 3 immutable laws of real estate investing – if you google that, Best Ever listeners, I have a bunch of articles on that. 3 immutable laws of real estate investing, Joe Fairless.

Well, William, I enjoyed our conversation. How can the Best Ever listeners learn more about what you’re doing?

William Robison: They can certainly reach out to us, they can check out our website, which is very long, designed for Google – KansasCityInvestmentRealEstate.com. It’s the best place to find out some information. They can also email me directly at william@kcinvre.com.

Joe Fairless: William, thanks for being on the show, talking about the hybrid turnkey model, talking about the biggest risk in that, which is the execution of the improvements on the property, and then how you mitigate that… And then we got into the weeds on volume pricing and contractors, and I’m glad we did, because that is relevant, as I mentioned earlier, to really anyone who’s looking to negotiate a discount with a vendor.

The three talking points that you have is more consistent work, less advertising budget, and doing the work during the hours that they want to work.

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

William Robison: Sounds great. Thanks so much.

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JF1873: Working Through A Sticky Real Estate Investing Situation #SituationSaturday with Colin Douthit

Colin and Theo will work through a situation that Colin is currently going through right now. A 16 portfolio of 16 homes is giving Colin a tough time and he’s currently trying to refinance as this project has cost him too much money and time. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Our biggest takeaway has been doing the construction loan up front” – Colin Douthit


Colin Douthit Real Estate Background:

  • Real estate investor, general contractor, and property manager
  • Owns 70+ doors all acquired in the past 24 months, manages 50+ doors for other real estate investors
  • Based in Kansas City, MO
  • Say hi to him at colinATatlas.rentals


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

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

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


Theo Hicks: Best Ever listeners, welcome to the best real estate investing advice ever show. I am your host today, Theo Hicks, and today we have a repeat guest. We’ll be speaking with Colin Douthit. Colin, how are you doing today?

Colin Douthit: I’m doing well, Theo. And yourself?

Theo Hicks: I am doing fantastic, I’m looking forward to speaking with you again. This time, as you guys know, it’s Saturday, so we’re doing Situation Saturday. We’re going to talk about a sticky situation that Colin is currently in, and dive into the details on that, some lessons learned that can hopefully help you avoid a similar situation in your real estate business. But before  we begin, a little bit of background.

Colin is a real estate investor, general contractor and property manager. He currently owns over 70 doors, which he’s actually acquired in the past 24 months, as well as manages over 50 doors for other real estate investors. To learn more about how he was able to acquire those 70+ doors in 24 months, make sure you check out his first episode, which aired on October 6th.

Colin is based in Kansas City, Missouri, and you can say hi to him at ColinATatlas.rentals.

Colin, before we get into the situation, do you mind providing us a little bit more about your background and what you’re focused on now?

Colin Douthit: Sure, Theo. As you stated, I started off as an investor, I started acquiring properties, and as I was going along, I was having some troubles finding reliable contractors… So I went ahead and started a contracting company that really just focuses on rehabbing rental properties and working third-party maintenance as well for any other investors that are out there, or property management companies that need that service.

With that, we just kind of specialized in what we knew, and what we were comfortable with, which was rental properties. Additionally, we had  already incorporated a Buildium, so a property management software that we had been using, so we decided to go ahead and roll that out as well to investors, so we could be a one-stop-shop for out-of-state investors if they needed to do a rehab on a home, to do property management, or whatever they needed, to help take care of them… But it was really developed out of my own personal needs.

Theo Hicks: And again, if you wanna  learn more about Colin’s background, we talked about how to find property managers, how to find GCs, about raising money… We talked about all that on the episode on the 6th of October, so definitely check that out. As I said, on this episode – it is Saturday, so we’re gonna talk about a specific situation that Colin is actually currently in. Colin, do you mind just diving in and kind of painting a picture for us about this situation?

Colin Douthit: Yeah, absolutely. We were looking to acquire properties – this was back in 2018; we were still buying a lot, and buying as fast as we could find them, frankly… And we were presented with a package of homes in a smaller town near where we live. We do co-investing in the city, in Kansas City, as well as out in some of the smaller, rural towns. This was in one of those smaller, rural towns; there was a gentleman that was getting out of the real estate business. He had a number of investment properties, but due to health reasons he was leaving the business and the industry… So we said “Okay, let’s do some analysis on this.” There were 16 single-family homes in this package.

So we did our analysis, we did our cash-on-cash return, it was great… We had plugged in 20-year amortization on our calculator, making sure we’re gonna have plenty of cashflow. We knew that there was  a lot of deferred maintenance. They were class C properties, and we have every intention of taking them up to a class B property, so that we had a nicer asset. We would add value and we’d be able to increase the rents over what they currently were.

During that process we didn’t really get a hard commitment from the bank, and when we were on the banking side of things, we said “Okay, we’re just gonna take out a loan for the purchase price. We’re not gonna have any additional funds out there for rehab or construction, because most of the properties are occupied.” We thought we’ll just cashflow the rehab; it won’t be a big deal. We’d just spend a few thousand dollars on each one, and that’s all that needs to be done.

As that process goes along, we get to the closing table, and we didn’t have an LOI or a commitment from the bank. They had just been kind of wishy-washy, “Yeah, that’s what we’ll do. 20 years, that’s all good…” And we get to the closing table and they throw a 15-year amortization at us. So that was the first issue that we came into – on the closing day we get that 15-year instead of 20-year amortization. We look at the cashflow, we know that we’re gonna take a hit on cashflow, but we still feel like it’s a good deal, so we still continue to pursue it, and go ahead and go through the closing process, and buy it… Because it was really either we lose all the money and time we had into it at that point, or we just go ahead and go forward with it.

We buy the properties, and then as we are going through the rehabs of these properties, taking them over and starting to do management, we start getting a few more vacancies than we were expecting. It turns out the previous landlord was a very poor landlord, and had upset quite a few of the tenants just due to deferred maintenance, due to lack of contact, or any host of reasons… He was just really poor landlord in general, so we start getting these vacancies.

Then we start going in them and seeing what needs to be done, and our initial estimate on what needs to be done was maybe a little bit lower than what was actual, but we were banking on having more cashflow, so it shouldn’t have been a problem. But when you compound the fact that we have a shorter amortization and higher vacancies, that starts to make the cashflow a real issue for getting into these rehabs.

So the next step is – that kind of brings us up to present day, and right now we have been cash-flowing a number of these rehabs as they go along, doing what we can to add value to these properties as soon as they become vacant. We paint, we repair, fix broken stuff, and then when the major things come along, that’s when we really notice and really miss not having had done that construction loan initially, which is what we would have done looking back and knowing what we now know to be able to tackle some of these bigger items – putting in all new HVAC systems, putting on numerous roofs.

What we’re doing right now is we’re actively searching for another bank to work with us to do a refi out on it. We do have a lot of equity in there; plenty of equity that we could still go up to 70%  loan-to-value and have a large chunk of money to then put back into the properties, and have them up and running at full speed and where we want them relatively quickly. However, not all the bankers want to lend in a smaller rural town, with a little bit lower price point on all these houses [unintelligible [00:08:19].10] closer to the city by about 30 minutes, we’d have no problem with it.

So that kind of summarizes it and brings us up to date, and that’s kind of the whole back-story on this situation that we are in.

Theo Hicks: Alright, I appreciate you going into extreme detail on that situation… So it sounds like these few challenges were 1) the loan itself, and then 2) the previous owner, and then 3) the deferred maintenance. Let’s take a step back and — so you’ve mentioned that this is an owner who was leaving due to health reasons… Was this an off market deal that you found, or was this owner actually listing these properties for sale?

Colin Douthit: This was brought to us by a realtor. It was on the MLS. They had each property listed individually, but then they had — essentially, they wanna sell this whole thing as a package was the goal.

Theo Hicks: Okay.

Colin Douthit: And the realtor knew that we were looking; he is a realtor out in one of these small towns that we work in. I actually live in one of the smaller towns, but then work in the city… So he was the connection, and that’s how we came across it. The owner actually was a realtor on the side. He basically had it just so he could buy and sell rental properties.

Theo Hicks: Yeah. Okay. So before the closing table, what sort of due diligence did you do on these 16 properties? Did someone go out and inspect all of them? Did you guys go look at all of them? What was your overall due diligence on these properties?

Colin Douthit: A little bit of background on myself – I am an engineer, and I was a project manager for commercial construction companies, and then my partner on this job as well; we actually met in school, he’s an engineer as well, and he’s a practicing structural engineer, so we have a fairly good handle on any major structural issues and general construction practices… So we were walking through the house, we went and walked every single house, we took pictures and we made notes on “Hey, this is what will need to be done once the property becomes vacant.” We didn’t note any major structural issues. We did note “Okay, these roofs are probably on their last leg, and they’re gonna need to be done pretty soon. These interiors on these units are pretty rough, but we’re not gonna go rock the boat and kick tenants out right away to start rehabbing these units.” Our due diligence was essentially just walking all the properties, taking photos and making notes.

Theo Hicks: Okay. So compared to your initial estimates from that entire process — or not even really initial estimates, but just a list of things like “Okay, here are the 20 things that we need to do”, after you took on the property, did that list remain that 20, it’s just the prices were wrong? Or did that list grow from 20 to 30 or 40? Were there things that you didn’t identify upfront that ended up being an issue after you actually closed? …just from a strictly renovations standpoint.

Colin Douthit: Yeah, from strictly a renovations standpoint I would say that it was some of the unseen stuff that  really started getting us. Water leaks, soft spots in the floors that we weren’t expecting… Once we got the previous tenants out – stuff we hadn’t seen before. HVAC issues was another one that came up and was an oversight on our part for not inspecting them thoroughly enough. It’s now something that we take a much harder look at, and try [unintelligible [00:11:22].13] and budget; even if it doesn’t need to be done, we now budget for those.

I actually just had a phone call with my A/C repairman today, that a compressor on one of the houses that’s vacant right now [unintelligible [00:11:30].28] and the air conditioner wouldn’t fire off… And the air conditioner compressor is completely locked up, so we’re actually having a new compressor installed this week.

Theo Hicks: Best Ever listeners know, I can totally relate with the HVAC issues. I don’t wanna talk about it too much, but I bought three fourplexes and the boilers were all completely shut, so I had to drop like 20k in the first few months to get the boilers to actually work… So I totally understand. Moving forward, I’m getting a boiler expert and an HVAC expert to inspect all of that stuff. So I can relate with you on that front.

Moving forward, just to wrap up with renovations – what are some things besides obviously making sure that you’ve got an HVAC person (or  you) inspecting those more…? Do you have any other lessons you’ll apply moving forward? Do you need to have a contingency just to cover these unexpected things?

Colin Douthit: Yeah, we’ll put a much larger contingency in the construction budget, knowing that on a class C property there’s gonna be more stuff that you don’t see, that’s gonna pop up once you get the tenant out and start digging into it. There’s gonna be roof leaks or pipe leaks that you weren’t expecting, HVAC is probably gonna be dated… Single-pane windows or storm windows are really common out in this area with a certain aged home, so if you replace all those, are they all working? A larger contingency and a larger construction budget would be what we would do now, going forward.

Theo Hicks: Alright, so that was one of the aspects. The other one was the loan. You’ve mentioned that you didn’t necessarily have a hard commitment from the bank up until closing, because they kind of pulled a switcheroo on you, and said one thing and ended up doing another thing… So what are some lessons learned, some safeguards to put in place for a future deal, so that you don’t have that switcheroo happen at closing?

Colin Douthit: Basically, now that bank still has our loan, but we’re not pursuing any new loans with this bank… But we are making sure that the lenders will give us some sort of commitment, an LOI if it’s a bigger package or commercial loan. Even if it’s a smaller property through a hard money lender, they give us a terms sheet; they analyze the property and give us a terms sheet within 24 hours, and say “Yeah, here’s what we can do, here’s what you’ll need to bring to the table, here’s what your monthly payment is gonna be, and here’s what your interest and amortization are.”

Theo Hicks: Yeah, because 20 to 15 – that’s a huge difference in debt service, for sure.

Colin Douthit: Yeah, 15 to 20 is a bigger jump than 20 to 30. So yeah, that was a real kick in the teeth.

Theo Hicks: And then on the construction loan aspect – so you’re looking at a deal… How are you going to determine in the future whether you’re going to do what you did for this deal, which was just take out a loan for the purchase price and just front the renovations with the cashflow, or maybe a budget threshold or a per-unit threshold that you say “Okay, we’re gonna go ahead and include renovations in this loan and then refinance out once we’re done”?

Colin Douthit: It’s very much a case-by-case basis. If it’s gonna be a property that just needs $5,000, maybe a fresh coat of paint and a little bit of touch-up here and there to get it rent-ready, we’d probably just roll it right into a typical, traditional 30-year loan. If it’s something that’s gonna need more extensive work, we are starting with construction loans right away, putting together estimates, putting cushions on those estimates, and then making sure all those numbers still work when we put it in our proforma, to make sure it’s gonna be a good deal and that we have plenty of give…

And frankly, when we are doing a lot of stuff for our turnkey or hyper-turnkey customers that we work with (out-of-state investors), we’re gonna tell them “Hey, let’s start out with a rehab loan here, and if we think the work is gonna cost 15k, we’re gonna put 20k-25k on the spreadsheet to make it work”, and hope that we can overdeliver and cut their construction costs.

Theo Hicks: Exactly. Alright, and then the third point was — I guess we’ll call it previous management. Obviously, when you’re dealing with single-family homes… I know on the one hand you can look at this as a 16-unit building, but it’s really not, because on a 16-unit building you’ve only got one roof, maybe a few water heaters, a few boilers or HVAC systems, whereas for SFRs you’ve got one of everything: 16 roofs, 16 HVACs, 16 yards… So whether you’re looking at multifamily or you’re looking — I guess my point of saying that is one vacancy on 16 single-family homes is a lot bigger deal than one vacancy on a 16-unit building, especially when you’re doing rehabs.

Colin Douthit: Yeah, it can be. At the end of the day though, we have enough (and still try to have enough) cushion that we can sustain a 25% vacancy rate and still be just fine.

Theo Hicks: Okay.

Colin Douthit: But one vacancy – it is very similar if you have a 16-unit multifamily building, just from the debt service aspect and the financial aspect… You’re still getting paid the same note, because it’s a portfolio loan. If you have 16 different individual loans, they’re owned by different LLC, if you put each property in an LLC; then you might feel the pinch a little bit more. But since it’s all in one company… We own a few other properties – this is the bulk of the properties that this company owns – we can  kind of wash the vacancies out a little bit. While we’re not gonna be making the money that we want to be making, we’re still gonna be able to cover all of our expenses and then continue to slowly cashflow the rehabs on the other properties.

Theo Hicks: Okay. Earlier we talked about the physical due diligence of a property… Is there anything you can do to determine the mindset of the tenants that you’re inheriting, and estimate “Okay, on average, if we’re buying 100 units, we expect 10 to leave. But if we do this, and find more details, and we figure out that the previous owner was really bad, a lot of deferred maintenance, half the tenants have issues that haven’t been addressed in years, so instead of 10 people leaving, let’s project that 25 are going to leave.” Is there anything you can put in place to do that, or is that something that’s just kind of random, and if it happens, you’ve gotta figure it out?

Colin Douthit: I think that you need to go into it with a plan, instead of just winging it. And we’ve done this on future renovations, with properties that we’ve owned, as well as with out-of-state investors that we’ve worked with. Personally, we’re working on the rehab of six duplexes, all in one package, all in one area, and a lot of deferred maintenance; 60% and — 75% vacancy, actually. So there was only four occupied units at the time of the purchase, and we knew we were gonna be getting rid of them… So we did cash for keys for one, and then one split, one is still there, and one just decided to leave recently as well.

But if we’re rehabbing this property and bringing it up probably two levels, to be honest with you – if you’re gonna be doing that and you have an extensive renovation, and you have properties that are really dilapidated, and it’s multifamily, I would go ahead and plan on kicking all of them out, or asking them to leave, or cash for keys; if they’re month-to-month, give them a 30-day notice. We’re doing that with an out-of-state investor that’s got an 8-unit building and had one vacancy… So we’re starting this week on the rehab for this one vacant unit, but we’re gonna go ahead and give 30-day notices to two of them, probably the two lowest-paying tenants, and start rehabbing those units, and then start doing two at a time… So we’ll get two vacant, rehab those… It won’t take too long – about a week, a week-and-a-half per unit –  then get them back on the market and get them occupied, and give the 30-day notice to the next set. We’ll kind of phase it in and out… But I would plan ahead of time on a complete turnover, and that’s what we plan on all the future projects. If it’s already occupied and we’re gonna be bringing it up a class level and renovating it, I’d just plan on at some point having every unit go vacant.

Theo Hicks: Well, Colin, is there any lesson learned as it relates to this situation that we haven’t talked about already?

Colin Douthit: I would say no, not really. We dove into all aspects of it. Our biggest takeaway has honestly been just doing the construction loan upfront, instead of trying to cashflow it. That’s the most important thing that we learned. When we were coming up and learning the game a year ago, we hadn’t been exposed to that idea. Then we got exposed to the  idea and it made total sense. So I guess it’s one of those “learn the hard way” things, but we try to share it with as many investors as we can.

Theo Hicks: Alright, Colin, I appreciate you coming on the show and sharing this situation with us. Again, some of the lessons you learned from this deal, as you’ve just mentioned – pursuing that construction loan if there’s going to be a lot of repairs that need to be. You’ve had the switcheroo from the bank at closing, so the lesson there was to get an LOI or some sort of harder commitment from your bank, so you know specifically what the debt service is going to be, what’s the amortization, down payment… Essentially, all the loan terms before you go to closing, so you’re not surprised and feel rushed and have to make that decision around the closing table.

We’ve talked about from a vacancy perspective – if you’re doing a value-add, going in there with a plan, and that plan might be getting rid of all the residents, and renovating all those units and bringing in people completely new.

And then lastly, we talked about the actual physical due diligence, and some of the things that you look at in more detail now, as well as making sure that you are having a contingency budget, especially when you are looking at the C-class, lower-class properties.

Again, Colin, I really appreciate it, I enjoyed the conversation. Again, as always, Best Ever listeners, thanks for listening. Have a best ever weekend, and we will talk to you tomorrow.

Colin Douthit: Thank you, Theo. Have a good night.

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Nathan Brooks Being a Better Leader in Your Business Best Ever Show

JF1356: Being A Better Leader In Your Business #SkillSetSunday with Nathan Brooks

Nathan is on track to more than double his business this year and can track that growth down to a couple of big things. The first being knowing where the problems are, and addressing them with his team. In order to do that, a lot of smaller steps are involved, including listening to your team. Hear more about what it takes to lead an efficient team everyday in this #SkillSetSunday episode! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Nathan Brooks Real Estate Background:

-Owner of Bridge Turn Key Investments

Flips about 150 properties a year, providing exceptionally high quality turn key properties

-Recently started their own retail real estate team

-Based in Kansas City, Kansas

-Say hi to him at https://www.bridgeturnkey.com/

-Listen to his Best Ever Advice here: https://joefairless.com/podcast/jf475-his-first-purchase-was-2-homes/ 

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

First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment for you called Skillset Sunday. The skill we’re gonna be talking about today is how to be a better leader in your business. With us to talk about that – Nathan Brooks. How are you doing, Nathan?

Nathan Brooks: I’m great, Joe. How are you today?

Joe Fairless: I’m doing great, and nice to have you back on the show. Best Ever listeners, if you wanna hear Nathan’s best ever advice, check out episode #475. It’s been so long ago I had to double-check that… Almost like a thousand days ago. #475, titled “His first purchase was two homes.” Today we’re gonna focus more on how to be a leader.

A little bit about Nathan to refresh your memory, in case you can’t remember one thousand days ago – he is the owner of Bridge Turnkey Investments. Him and his team flip more than 150 properties a year. They are based in Kansas City, Kansas, and recently started their own retail real estate team.

With that being said, Nathan, do you wanna catch us up to speed with your business now and your leadership role within it? Then that will frame the conversation for what we’re gonna be talking about.

Nathan Brooks: Absolutely. Thank you again for having me; however many days you mentioned had too many zeroes, so we shouldn’t [unintelligible [00:02:33].09] I can’t count that high. So yeah, our team at Bridge Turnkey Investments – over the last couple of years basically we’ve doubled in size every year; I don’t remember the exact date of that show, but knowing that last year we had well under 100 and this year in the first quarter [unintelligible [00:02:50].11] nearly the number we did last year, which is pretty crazy…

So for me, it has been understanding where the problems lie within that business, whether it’s our business we do – mainly turnkey – but we also flip and put stuff on MLS as well… And it’s about understanding where the problems lie and having the willingness to listen to your team and people you put in place, but also then suss out the information, understand that problem, and tear it apart, look at it, suss it out, understand what the answers are, but then also put those pieces into a process, so that you don’t have to try to rethink, relearn, re-educate your team and yourself on those problems.

Joe Fairless: Okay, those are the components of it, it sounds like, what you’ve just laid out – understanding the problem, listening to the team, dissecting the information to determine what information is relevant, and then putting a solution in place, as well as a process, so you don’t have to come across this multiple times. Can you give a specific example just to color this in a little bit?

Nathan Brooks: I’d love to. So one of the challenges that we’ve had — one of the things we talk about in our business is having our projects on time, quality and budget… So hitting all three of those components, meaning we start and stop the project on time, and we have scope of work, and a budget, and we’re within acceptable parameters of that within, say, 90% of our expected cost of that project. And then the quality piece too, where visually it’s appealing, we’ve got the landscape right, we’ve got the exterior right, we’ve got the color selections right, and then inside the same kind of concept.

So we have dug in on a number of things. One was inspection reports – we started dissecting every single inspection report over, say, 2-4 months, and looking at things that were repeatedly missed, whether it was a downspout, or insulation in an attic, or something like that… And based around those items, we took that lesson and we started incorporating that into our actual scope document. So when we went through it, we said “Hey, let’s look at the attic. What does it need? Let’s look at all the downspouts. How many are there?” We get hit on this every single time – what is it, and let’s nail it on the front-end, so we’re not trying to chase it on the back-end.

Joe Fairless: That makes sense, and that can be something that anyone does who’s buying properties, not just someone who’s rehabbing property… I’m thinking about with my business, buying apartment communities – if we don’t do the proper due diligence on the way the seller is screening the residence, and then we buy a property and lo and behold there’s a bunch of criminals and some bad actors in there, then we write that down and then on the front-end for future stuff we put that into the due diligence; we basically make due diligence a living, breathing document.

Nathan Brooks: Yes, exactly. And the key piece of that, which you mentioned, not only applies to a single-family house or a small multi, or an apartment deal, or whatever, but whatever that lesson is, whatever that learning was, you actually learned a lesson, and you didn’t just have that moment that you were in that deal and maybe you missed something… Don’t keep missing it; take time to look at it and learn the lesson.

Joe Fairless: Yeah, that’s a struggle I have with Ashcroft – not my apartment business, but with my other business, like the podcast and the consulting stuff… Putting pieces in place so that there’s a process, so we don’t have to continually address the same stuff over and over again. What are some tips that you have for that aspect?

Nathan Brooks: This is a great question… Are you familiar with the book Traction by Gino Wickman?

Joe Fairless: Traction – I have heard of it, I have not read it.

Nathan Brooks: Okay – great book, well worth the read, and if I had to guess with just having that same struggle in that area… It’s something I struggle with too, and what I realized was I was trying to do stuff that a) I didn’t like, and b) I wasn’t very good at, and therefore it did get dropped a lot and those lessons weren’t getting put in their place, because I didn’t have a great system to deal with them… And then even more importantly, I hated doing it, so I was naturally picking those pieces up, putting them in the proper folder, giving them a title, blah-blah-blah.

My business partner and I read the book Traction, and they use language which we didn’t have yet, which was really helpful – they talked about an integrator and a visionary relationship… And I squarely sat in their little test in the visionary seat, and my business partner, although he has some visionary qualities, absolutely sat in that integrator seat. And all that to say, you have to have people on your team who can do that. Part of being in the CEO seat, the visionary seat, is being able to say “This is what we have, this is who we are, this is the type of product we wanna be”, and then you put yourself in the position — and it might be just you, right? So you need to find somebody to help you administratively or otherwise… But if you already have multiple people on your team – it might not be your business partner, it might be a key admin or someone like that, but you have to find the people who will help you do that, and hold you accountable personally, as well as the actual information accountable.

So once we started processing this — we do all of our stuff in Podio, so we would build these systems around, say, just the one thing… So for instance, we have selection sheets on the color tile, and the wall color and all that kind of stuff – we have it built out in Podio, and that links to every property that we flipped. So when you go back, although for me trying to remember any of that stuff is crazy, but I know that because we built a process to say “Hey, if we’re rehabbing a house, it’s gonna have all these selections built out, and someone on my team goes in and looks before we start that rehab, and says hey, Selection 123 Main Street is not filled out. What’s going on?” Boom, she pings our team and we check it.

Joe Fairless: When we started out our conversation we said we’d be talking about what it means to be a leader of a business and how to be a better leader, and you started out the conversation by talking about “You’ve gotta understand where the problems are, listen to the team, suss out what information is important, and then put the pieces in place and a process for not having that reoccur.” How come you started out talking about understanding problems, versus any other area that you could have addressed, as it relates to being a better leader?

Nathan Brooks: I think it all starts with the problems, and not even just problems, but the right problems. I think a lot of times people think of problems in the negative; I think of them in the positive. As a CEO of my business and as a visionary of my business, my responsibility is to see things that other people can’t see. It’s to be able to talk about, explain, suss out the things that people on my team – that’s their day-to-day operation of writing contracts, or running construction sites, or picking selections… So they have day-to-day minutiae that I don’t know, but I can ask great questions and understand where the roadblocks are… And one of the things that I discovered was the more I pulled out of that day-to-day minutiae and helped my team figure out, whether it was language in the way that they communicated to clients, or owners, or whatever that would be – that was a process problem, and that was a language problem, so we could help solve it.

So although I am not the one having that conversation, the problem was “What do I do when X happens?” So by taking that time upfront, we wrote it down, we talked about it, it’s now in my voice… Not that they don’t communicate in their own voices, because that’d be crazy to say that they don’t, but I got to have influence in the way that we approach, because as a business, Nathan Brooks, or as a business, Bridge Turnkey Investments, this is how we approach a client when this happens.

So by approaching it from the problem, we could say “Okay, cool. Well, when this happens, this is what we do.” And then, guess what? …because anything that you don’t know how to do is a disruptor to the negative in your business. So when you come to something like that and your people on your team don’t know how to do it, you didn’t prepare them. So that’s your problem, you need to address it, and then by you addressing it, putting it in play — and then, by the way, you have to practice it with your team and make sure they got it… And now you’ve set them up to do that; they’re doing it exactly the way you want it done, and they’re probably gonna do it better than what you could do anyway.

Joe Fairless: I love that. Anytime someone on your team doesn’t know how to do something, it’s your fault, and it’s a problem that you’ve gotta solve for.

Nathan Brooks: Absolutely, yeah. Then you took ownership on it, rather than saying “Gosh, my team doesn’t know how to do blah-blah-blah.” That’s crazy. It’s not their fault.

Joe Fairless: True. So true. That is a great distinction. I’m glad we continued down that path. Anything else as it relates to being a better leader for our business, that we haven’t talked about, that we should?

Nathan Brooks: You know, I think the other piece of it is a lot of times – and I have the distinction of having CEO behind my name, and I don’t remember who it was, but I remember distinctly hearing somebody that I looked up to talk about the fact that the letter behind your name don’t mean anything. It’s all the actions behind it, and it’s the way you operate, and there are plenty of people out there – and I’m sure people will connect to – that it says “Administrative assistant”, or “Assistant to blah-blah-blah”, and those people do a ton of work, and they keep all those little nuts and bolts together… And it’s so easy as a leader to stop listening, because we feel like we have some authority based on the title that we have or we gave ourselves… And I have found the more I stop talking and the better questions that I ask, and then I close my mouth and I listen, the better off my team does, and then the better off they are, because they have autonomy in their workplace, they have autonomy in their job, and they had influence in what they did.

When you think about that, what does that build? It’s building a culture within your organization that says “Hey, if somebody’s talking, I’m gonna listen”, and that goes from the top down. I don’t care if it’s the landscape cleanup guys, all the way up to my VP of construction on my team; it doesn’t matter. If you’ve got something to say, I wanna hear what it is, and I’m gonna sit there and listen, I’m gonna understand, even if — hey, I put this in play years ago; well, it might be wrong now. Let’s find out.

Joe Fairless: Any tips for listening well?

Nathan Brooks: Yeah, I think the concept of listening is to me characterized with — you and I, Joe, we’re having a conversation, and you’re listening to me, I’m listening to you, I’m understanding the kind of questions you’re asking, and we’re talking to each other… And in order to listen, that means you have to be actively engaged as to what that person is saying to you, and first, we’re not formulating a response, first we’re actually formulating the ability to rephrase the question back, so that we understand a) that we listen to them, that person that you’re talking with knows that you know what they asked, because you’re gonna rephrase it to him…

And it doesn’t have to be a whole long question; you could just say “Hey, let me make sure I understand what this is. You said blah-blah-blah-blah, and I just wanna make sure I got your question right.” Holy cow! I might say your name, “Joe, let me make sure I got your question right.” Because I’ve now said your name, you’ve heard me say it, I’ve now stated your question back to you, which means you understand that I heard it, or maybe I didn’t hear it correctly – now you can correct it… And then you, as the person who are asking the question, has that feeling of worth, that you were being engaged with and you’re being heard, which is huge just to start from that place.

Joe Fairless: I love this stuff, and I am appreciative of you sharing this with us, and I know a lot of the Best Ever listeners are as well. How can the Best Ever listeners get a hold of you?

Nathan Brooks: A couple places… My team, you can check us out on BridgeTurnkey.com. We also have the Facebook page, Bridge Turnkey. It’s at facebook.com/fixfliprentkc, so you can connect with us there as well.

Joe Fairless: Nathan, thank you for being on the show again and talking about the different characteristics of a leader, and helping to provide value to help others be better leaders, myself included. Some tactical things – well, from a high level it’s to listen to the team (that’s been a theme throughout) and to listen well, and put the pieces in place to have a process implemented, so that things don’t reoccur.

Also, if any team member does not know how to do something, that is not a team member’s fault, unless you’ve told them multiple times; that is not the team member’s fault, that is your fault, and there needs to be a way to address that. Also, taking a look at and evaluating past projects that we’ve been a part of – anyone can do this who’s listening… Just evaluate the past projects you’ve done/been a part of, and what issues showed up, and writing it down in a document of the issues, and then taking that and putting it into a due diligence document on the front-end for your next deal.

It’s a very simple process, and it’s a somewhat obvious thing to do, but I imagine 50% of the people haven’t actually written that into the due diligence process for their next deal. They probably know “Hey, I need to make sure I address this”, but actually do an assessment of it, and write it into the due diligence process.

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

Nathan Brooks: Thanks, Joe. You too.

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JF1320: Purchasing a 41 House Portfolio #SituationSaturday with Andrew Syrios

Andrew is a returning guest on the show and has a story to share that we can learn from. We’ll hear about his recent 41 house portfolio purchase, what he learned, and how we can apply those lessons to our businesses. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Andrew Syrios Real Estate Background:

  • Real estate investor at Stewardship Properties
  • Company owns around 600 units in four states
  • Has three branches in four states (Oregon, Missouri, Kansas and Texas)
  • Oversees over 100 properties and 170 units in the Kansas City metro area
  • Based in Kansas City, Missouri
  • Say hi to him at http://stewardshipproperties.com/

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

First off, I hope you’re having a best ever weekend, and because today is Saturday, we’ve got a special segment called Situation Saturday, where a returning Best Ever guest talks about a challenging and/or interesting – ideally both – situation and how they overcame it. And it’s not just to hear a story, but it is to learn what we can learn from their experience and apply it towards our stuff that we’re doing as real estate investor and entrepreneurs.

With us today to talk about a portfolio of 41 houses he purchased about a year ago, and how that came about and what the heck is up with it right now, Andrew Syrios. How are you doing, Andrew?

Andrew Syrios: Good, how about yourself?

Joe Fairless: I am doing well, and nice to have you back on the show. If you want to hear Andrew’s best ever advice, then go to episode 571, titled “Did he pay cash or terms for a 97 SFR portfolio?”

A little bit about Andrew – he is a real estate investor (obviously) at Stewardship Properties. His companies owns around 600 units in four states, and oversees around 100 properties and 170 units in the Kansas City Metro Area. Based in Kansas City, Missouri. With that being said, Andrew, tell us about the 41-unit portfolio.

Andrew Syrios: Yeah, first of all, thank you for having me back on. This 41-unit portfolio was an interesting one. I guess the lesson is that sometimes the best deals are the ones you want the least. You always have to be willing to walk away, sort of thing; that’s probably the greatest leverage you can have in a negotiation.

With this particular deal, we got it sent to us from basically a contact of our, a friend of ours… He met a real estate agent who had this deal and sent it to us. It was one of those deals where there’s a handful of stuff that looked interesting, and then there’s some stuff that’s just a big, long sigh… A lot of properties are in rough areas, or areas that we have a few in, but we don’t really want to put much of a presence.

So the first thing I asked him was “Would you be willing to parse out this portfolio?” There were 18 that we liked, and there were 23 that we didn’t, and can we just make an offer on the 18? And they had no interest.

I think it was like a small hedge fund, or a small group of investors who had bought a bunch of foreclosure, or notes — I think they bought some notes and foreclosed on them and they had to just kind of hodgepodge a portfolio with a handful of good properties in decent areas. One of these houses — we call it the Kramer House, from the levels… Do you remember that episode? He was gonna make them at various levels; every room is on a different level. You walk up a step, then you walk down… So there’s goofy houses in there, and there’s also some great houses – beautiful, Victorian houses in one of the best areas of town, and then a bunch of these ranches in this kind of sketchy area called Ruskin that’s good for cashflow, but it’s also pretty tough, you’re gonna have some property management issues.

A lot of people lost their shirts there, a lot of out of staters. They looked okay, and they bought these properties for inflated values; that was happening a couple years ago. But they didn’t want anything to do with that. They were like “It needs to be purchased all or nothing.”

We kind of looked at a few of them… The portfolio was kind of semi-performing; it was like 80% occupied, but it had a lot of turnover, a lot of rehab when these tenants left. It was very under-rented, but at the same time we knew there was a lot of deferred maintenance that was gonna kind of add up.

But one of the things I think about the portfolio – it’s kind of one of those things where you can be right in the middle, right in the weird middle. It’s too big for a lot of smaller investors, but it’s also too small for a lot of the hedge funds, and it’s also in areas that they usually don’t buy in, so there’s not a lot of buyers for this type of deal.

It’s kind of helpful thinking in those terms – what kind of deals can we purchase that most people aren’t interested in? They’re either too big, too small, they have to close too quick, they need to much work… Whatever.

Maybe you’re really good at investing in a particular area that’s fairly rough; gotten in with Section 8, you know that kind of thing… So if you have that kind of advantage, it really works for you.

So finally I was just talking to my brother, who does our property management [unintelligible [00:06:47].05] “I don’t really want this.” So I said, “Let’s just make a low offer and see what they say.” So we made this offer that we thought was very low. I think it was on at 2 million, and we made an offer about 1.45, or something like that. They came back at like 1.5, so we were just about there. I was shocked they came down so much… Of course, we were like, “We’ll see if we can split the difference…” [laughs] and take a little bit more on it, but we talked to them again… And again, it’s always advantageous to talk to the seller, not just the agent; the seller, if you can.

We kind of skipped over the first part where we talked to the seller, just briefly getting some information about the property; we talked to him again in between then, and what [unintelligible [00:07:34].08] is one of the biggest problems with this – we didn’t do a syndication or a partnership or anything like that, because then we were having to split the equity two ways… And also, because it’s a long, drawn-out turnover rehab situation. It was kind of like “How much money do we have to sit in the escrow, just sitting there waiting for the rehabs, or are we just gonna have to have virtually no cashflow for that first year and a half, or whatever?”

So for those reasons, 1) the weird cashflow situation with a semi-performant group of properties that would need rehab as you went, and the fact that we just don’t want to split any equity… We didn’t wanna do that, but I guess to take a little bit of a step back to explain how we ended up financing this thing, which I think is a fairly creative method… Our normal strategy is the so-called BRRR strategy – Buy, Rehab, Rent, Refinance. So what we do is we buy properties, usually REOs or fixers or absentee owners, or whatever. We fix them up, we rent them out, and then we take a group of them, usually between five and ten, and we bring them to a bank and we refinance it. We get private loans on it upfront, 8% or 9% interest, and then we refinance those out and then we try to put those private lenders onto new properties. It’s just kind of like a wheel that spins around. We get the property with a private lender, rehab it, rent it, refinance it with a bank, put that private lender on a new property.

Well, this is a little bit lucky on our part, but we just happened to have a very large one of these going through… We had 25 properties being refinanced.

Joe Fairless: Okay.

Andrew Syrios: And these were a little bit more expensive too, so it was not quite the same price, but very close. We had a couple other private lenders that we thought we could reach out to. But the advantage here was we could set it where these properties would refinance just before these other properties were set to close, so we could just take these private lenders and move them over to these other properties. Now, one problem with that, since we didn’t wanna cross-collateralize and create this giant mess, nor would these private lenders wanna be cross-collateralized with a bunch of other people that some of them probably didn’t even know… So we wanted to take [unintelligible [00:09:37].11] and move them over to this house, which is an arduous process when you’re trying to put together — I don’t think we ended up financing everyone, but we had something like 30+ trust deeds on 30+ different properties. I think we left a couple free and clear.

So we asked the seller if we could set the closing in four stages; so we closed — there’s 41; 33 of them were in Missouri, and 8 were in Kansas (Kansas City, in both sides, right on the border). So we took that 8 in Kansas and made that one closing, and then the remaining 33 we split into three groups of 11, and we closed each one two weeks apart. We split it up so each portfolio was about the same value, same couple good houses, a couple that are not so good and whatnot… And they approved that.

This allowed us to not try to put together 30+ trust deeds on the same exact day, which would have been just a logistical and accounting — well [unintelligible [00:10:37].10]  which would have been just an incredible nightmare. So we were able to split this up over the course of a couple of weeks, and that way it wasn’t such a logistical nightmare and we were able to basically split this package of 41 into four separate, smaller closes.

That also — it wasn’t a big thing, but it gave us a little bit of time to parse out the turnovers and rehabs and the ones that we knew were just vacant and ready to go right away… So we kind of had a double advantage; it was particularly advantageous because we were able to use a form of financing that is predominantly used on just this one-off house, buying it with the trustee from a private lender and then going through the BRRR strategy.

We were able to do that because we had a large portfolio being refinanced, and then turned over into this large portfolio that we were purchasing. We were able to do it on a larger scale using what’s usually a smaller type of financing on them.

Joe Fairless: Who did you go to for that? Financing…

Andrew Syrios: A local bank that we have here that we’ve done a lot of work with, called Bank 21. If you’re in the Kansas City area, I highly recommend looking them up… But they’re unfortunately not a national branch.

Joe Fairless: And they did all four?

Andrew Syrios: No, they’ve refinanced a bunch of properties we already owned and we had been renting out. They refinanced that package of 25. Then we had a bunch of private lenders just sort of [unintelligible [00:12:02].07] that had been paid off from that refinance, and we put them onto the various houses within the package of 41. Does that make sense?

Joe Fairless: It does. From a seller standpoint, was there any downside for you structuring it this way?

Andrew Syrios: For them? I’d say the only downside for them – there’s two minor downsides. One – usually sellers prefer cash out versus financing, just because there’s a possibility with financing that the financing doesn’t come through, and they have to put the property back on the market.

The other downside is that because we’ve split it up into four groups, it took a  little bit longer for it to close in that respect, and they could have been caught — it’s presumable that we could have… Not presumable – it’s possible that we could have bought the first two and then not been able to close the last two. We were able to pretty much [unintelligible [00:12:50].18] any concerns they had. They were basically saying that none of our earnest money that we’ve put down upfront would go towards anything but the last closing… So they could have gone on where they closed the first two groups, and then if we backed out then, [unintelligible [00:13:04].22] all the earnest money, plus they had already sold half the package… And because we split it up and got their approval on what groups have closed first, they were basically each very similar groups of properties that closed each time.
So I think as far as closing groups like this, you could even do this if you’re on a smaller scale, with a couple of houses, assuming the seller is having some trouble selling the properties. That was our advantage here, is that this was a weird package of properties to sell. It’s too small for the institutions and too big for most investors, but certainly not all.

Joe Fairless: And that was a year and a half ago?

Andrew Syrios: Yeah, about a year and a half ago.

Joe Fairless: What’s the status of the portfolio now?

Andrew Syrios: Well, it took a while to get through them all, because some of the tenants that were there — I think there’s even a couple that are still there from the original… There’s still a few properties that need to be turned over. But we have turned them all over and rehabbed them all to our specifications and brought them up.

We debated for a while whether to sell the  properties that were in the rougher areas, because we actually made them two offers. One was on the stuff that we wanted, and the other was on everything; and the one on everything… We’re paying like $20,000/house for the ones we don’t want, or something like that… [laughs] Very little. And eventually, it’s like — we have properties in these areas, we know how to manage them; they’re good cashflow areas if you do it right. So we decided to keep them, and they’ve done well for us.

At this stage, the portfolio is basically humming along. It took a while to get there, it was definitely a project; if you talk about it in terms of apartments, it would certainly have been a repositioning… At least a minor repositioning. But we also were able to increase the rents substantially. I mean, they were renting houses for $700 that we’re renting for $1,000 or more now.

Joe Fairless: Now that you are a year and a half into it, are you glad that you bought the houses that you didn’t initially want?

Andrew Syrios: I would say absolutely at the prices that we offered for them. [laughs] I think it goes back to the point where — the very first point I was making. If you’re not needy for the deal — you don’t want to be a motivated buyer, even you’ve [unintelligible [00:15:11].21] You don’t wanna become a motivated buyer and be like “I’ve gotta close this thing.” If you keep your distance emotionally from this, like “Well, you know, I don’t even want it…” That was the way we approached it at the beginning; we didn’t really want it, and that made our offer extremely [unintelligible [00:15:27].20] in the eye of the beholder, but it was an offer that we were very happy for them to accept or come close to accepting.

So if you are willing to walk away, that makes a deal all the better if you make that offer. Now, you don’t wanna just say like — you wanna give them some sort of hint that this isn’t something that’s hugely interesting; you don’t wanna just throw out low balls left and right, unless you’re throwing them out to banks… But explain why your offer is going to be low; that makes it a lot easier for people to stomach it, and those who [unintelligible [00:15:54].08] You make a low offer, and then they’ll say no, and then two months later you’ll hear back from them and you’ll get the deal done.

But if you just come up [unintelligible [00:16:05].00] that might offend the person if you can justify the case. In our case, we took the ones we wanted, we made a more competitive offer on them. On the  ones we didn’t want, we said we’re not really willing to pay much for these, so we had a low number attached to them. We kind of explained our case to them, and they just wanted them all gone, so they were willing to come down to a number that made it — so it was a very good price for us, even on the properties that we didn’t want.

Joe Fairless: And you said never wanting to be a motivated buyer; from taking that standpoint, what about the thought in your head or in someone’s head of “Yeah, but if I don’t buy it, then I know they’ve got a whole lot of other people who will, so… I do wanna get this deal done.”

Andrew Syrios: I think the key is does the deal make sense on paper? If it’s a deal that works – yeah, go ahead and get it done. But there’s a tendency… It’s like being at the auction; you have your strike price, but once they start jabbering as fast as they normally jabber and whatnot, you kind of get in this sense where you want to “win”… And you don’t win by buying, you win by buying it right. So the key is to keep sort of an emotional distance, I would say, where it doesn’t matter whether — well, it does matter whether you get it, but it only matters whether you get it below your strike price.

If there’s other people willing to buy it above what makes sense for you, let them buy it. There’ll be another one. The key is to do it as dispassionately as possible, I guess.

Joe Fairless: If a Best Ever listener is listening to this, what would be the perfect scenario to implement this approach again? …with the creative financing, and all the stuff that you talked about.

Andrew Syrios: I’d say with regards to small portfolios – small portfolios are often tough… Institutions, the big banks, the big B2R [unintelligible [00:17:46].04] they have no interest in this kind of stuff. A lot of investors who are working around it don’t have really the ability to buy even four houses, five houses, six houses. Or sometimes a seller will be like “I’ll sell all of them, or I’ll sell them in pieces”, but they’d rather sell all of them. So if you can find situations like that, you have an advantage if you can find a way to purchase them all together.

Let’s say you start using the BRRR strategy, or you flip and you have some private lenders… We’ve seen a lot of portfolios, a lot of them are junk, but every once in a while there’s some good ones, and just being able to put together the financing for those gives you a distinct advantage, because often when somebody wants to sell a portfolio of houses, even if they’re willing to sell them in pieces, they’d much rather sell them together. They’re pretty much stating that by listing it as a portfolio.

So if you can find a way to finance them, that gives you a distinct advantage over a lot of investors who can’t. And also, if you can buy some of the junkier ones and justify a lower offer by saying you don’t really want these, that can be an advantage too, because every property has got a value, even if you just wanna sell it. So if you put a very low value on those junky properties and sell it for a little bit over that after you get it – great… Especially if you’re willing to buy bulk, in wholesale, and to sell retail, individually. There’s profit to be made there if you do it right.

This is a deal we’re working on right now, so it’s too early to give any specifics, because I don’t even know if we’re gonna get it done. It’s just an idea… These various situations where it’s an odd deal or it’s a portfolio, and if you do what most people aren’t interested in doing or can’t do, there’s an advantage. We’re looking at a group of condos right now. This guy–

Joe Fairless: And just to clarify… You did this deal a year and a half ago, but you just said that this is a deal that you are trying to get done, so were you referencing the story you are about to tell with the condos?

Andrew Syrios: Yes, the 41 is done.

Joe Fairless: Got it, just to clarify. Okay, cool.

Andrew Syrios: We’ve basically refinanced every house in that portfolio, or all but a couple of them, with banks.

Joe Fairless: Okay.

Andrew Syrios: So that’s done more or less, and it’s all performing. The condo deal is sort of similar. I don’t know if we’re gonna get it; we’re negotiating. But I can give the broad strokes on why it’s a deal that most aren’t interested in or can’t do, and thereby there’s an opportunity.

So it’s 17 condos in a condominium complex. That’s about twice that size. The guy turned an upscale apartment complex into a bunch of condos ten years ago. He sold off about half of them, and then stopped, and now he wants to move his money elsewhere, so he’s selling the rest of them. But the problem is for him if he sells them individually, it’ll take — you can’t put every condo on the market at the same time, otherwise [unintelligible [00:20:19].22] Then he has also rented them all, so he has all these lease in place that makes it tricky in that respect.

Apartment buyers and institutions and stuff like that – they’re not interested, because it’s not the entire apartment complex. They want an apartment complex, not half of one. We on the other hand mostly focus on single-family houses and small multis, and then we do buy larger multifamily properties…
I think actually our first podcast together we talked about the 32-unit apartment complex we did right, and the 29-unit apartment we did wrong… But normally, we’re buying houses. So we bought some condos too, and this kind of fits in like “Okay, we’re basically buying 17 houses or condos in this complex.” They first listed it at about what the average price would be for each of those condos on the market, based on the few comps that have sold recently in that area… But who’s gonna buy it? Institutions, apartment buyers – they’re not interested in that kind of stuff.

Joe Fairless: Yeah, it’s gotta be a local investor, like you.

Andrew Syrios: Yeah, and homeowners are not interested, and small investors – it’s probably too big for them.

Joe Fairless: Yup.

Andrew Syrios: So there’s not many people that wanna buy that, especially since there’s an HOA there, and HOAs – they make condos tough; they can eat away your cashflow and make it pretty tight. But we think we can actually pull a similar financing “trick” with this property as we did with the 41, moving into private lenders there. It won’t cash-flow great, but it’ll cash-flow [unintelligible [00:21:44].28] brought the price down quite a bit, to the point where we’ll have some built-in equity, assuming we’re willing to hold them… Or (which we might do) hold them slowly selling one at a time and getting cashflow, because we’d be getting a good, solid equity position upfront. But it’s one of those things where there’s definitely equity there at the price they wanna sell them, but you can’t extract it quickly… Because you can’t list them all at the same time, and if you’re gonna put them on the market at the same time, you’re gonna crash that market because there’s just too much inventory, right?

The way I put it – the whole is worth less than the sum of its parts… But there are deals like that in that mid-range; small portfolios of houses, portfolios of condos, things like that that the big players aren’t looking for, they’re not interested, and most normal investors just can’t put it together to finance it. So if you can find a way to do that, because there’s less competition, there’s often plays you can make to get pretty good equity margins right up front.

Joe Fairless: The key besides being savvy enough to identify this as an opportunity and then put the pieces in place – the key really is in the financing, because that’s the big hurdle that most people have who are small or medium… Because if you are typically buying one or two properties at a time, you’re gonna have a hard time getting financing for this Frankenstein project. But if you’re too large, then you wouldn’t want to touch this for scalability reasons, and it just seems messy. So the question – and then we’ll wrap up here – is how can someone who’s listening get their financing prepared, so that if they were to come across a portfolio of, say, 45 single-families scattered throughout, or a condo community offering up, say, 30% of the condos, they can strike and act on it?

Andrew Syrios: I’d say there’s a couple ways. The first one is you wanna constantly be building your financing network on both sides. We have it on two sides, basically – private lenders (or private investors, too; it could be equity, too) on the one side, and then your list of banks or other types of lending [unintelligible [00:23:46].09] that can refinance your property of long-term debt. So I’ll always be talking to banks, taking them out to lunch, figuring out what their criteria are, what they’re willing to offer, what kind of properties they’re interested in, and whether or not they have a seasoning requirement. A seasoning requirement is how long you have to own the property before they’re willing to refinance it at the appraised value, instead of just how much money you have into it, which is critical.

Often times these days banks are willing to do it as soon as you have the property rehabbed and rented, they’ll refinance at whatever it appraises at, and the amount of money you have into it doesn’t matter. But we’ve had banks that have been great lenders for us, and all of a sudden they just fall off and get really conservative, or we hit their lending limit and we can’t do anymore… So we have to constantly be finding new banks.

We also always constantly wanna be looking for potential private lenders or private equity investors. That way you’re just talking to people, networking, going to various events… Always be telling people what you do. One way that my dad recommended which I think is great is just sit down with a pen and pad and see “Can I put down ten names of people that might have money sitting in the CD that’s doing nothing, that’s making 0.1% of whatever?” If you put down ten names, see if you can put down 20, see if you can put down 30, and then start talking to these people.

Put together a perspective or a business plan, or if you have done some deals in the past, [unintelligible [00:25:01].24] Give your resume – both your resume in terms of your actual resume, but also your resume in terms of what you’ve done and your business plan, too. Take them out, mention it, see if they’re interested, take them out for lunch…

We’re just constantly trying to grow this list. Once you have a couple people – maybe you have a couple private lenders – you might be in a position for that. If you have four private lenders and you’re looking at a portfolio of five, then all of a sudden that might be something that you can transition over.

Or maybe you have a private lender who’s lent you 100k, but you know they have a million, and then they could lend on more… And also, I’m sure you’ve talked to some people about syndications or partnerships and things like that… If we didn’t have the private lenders to do that portfolio – or this upcoming one with the condos that, again, we might not get, but we’re trying to – you might be able to get a bank to loan 75%, get a partner to bring in either all or most of the down payment, and then you split the equity with them or maybe you give them a preferred return or an interest rate. So maybe you give like 4% interest plus half of the profits, or whatever; there’s a million different ways you can arrange it.

So the more contacts you have, the more people that would be interested in lending to you, the more people that have already lent to you, the more opportunities and possibilities you have to make a deal like this work. If you don’t have very many people that you built these networks with, that you built these relationships with, your options are fewer. And that’s fine, that’s how everybody starts. But as you work, you wanna build that up, and that presents more and more opportunities for these types of creative deals.

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

Andrew Syrios: The best way to get in touch with me is probably on my weekly column for Bigger Pockets. They can also go to my website, which is AndrewSyrios.com, which is pretty small right now; maybe someday I’ll do something more with it. And then again, I have  a column on Bigger Pockets.

Joe Fairless: Well, thank you for talking to us about the creative solution and the closing of the 41 single-family home portfolio, and some takeaways… One is if you don’t need to do the deal, then good things can happen from the deal, because you won’t be a motivated buyer. Two – this is I think more important than one, in my opinion – is that as we’re acquiring properties, we’ve got to think about the end at the beginning… Because then if we are doing a good job of buying some single-family homes and then we’re amassing a portfolio, and then “Oh, I need to liquidate!”, if we’re in that in-between stage, then it’s gonna be tough for us to get maximum value for our portfolio, because it’s gonna be a non-traditional buyer who is creative and who is savvy enough to put a deal like this together, like you… But also you and others like you, Andrew, aren’t gonna do it at a premium, because you’re providing a solution to a challenge that others have not been able to solve.

Andrew Syrios: If you’re selling, you don’t wanna be selling to a small market. If you’re selling in that in-between area, or a weird deal, or something like that, you are selling to a small market.

Joe Fairless: And then on the flipside, as active investors we should position ourselves to be able to capitalize on those types of opportunities, and how we do that is we need to 1) find those opportunities, but before that we should focus on the financing network, both debt and equity partners, and you walked through ways to do that… And in particular, I like some of those questions that you ask the banks, with seasoning requirements and if they can refinance at the appraised value, or what their limit is, things like that.

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

Andrew Syrios: Thank you.

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Best Real Estate Investing Advice Ever Show Podcast

JF1075: How to Reach Financial Freedom in 7 Years with Austin Fruechting

Like many other real estate investors, Austin was bit by the bug after reading Rich Dad Poor Dad. He got started and never looked back. Now Austin owns enough property to live off of the income the produce! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Austin Fruechting Real Estate Background:
-Full-time real estate investor First real estate investment was in 2010 (age 25) and is financially free at age 32
-Have everything from single family to two 12-unit buildings, 107 rental units across 49 properties
-Have some cash investors for bigger portfolios, my ownership equals 70 units 32 more units under contract right now
-Based in Kansas City, Missouri
-Say hi to him at www.goodlifeinten.com
-Best Ever Book: Thinking Fast and Slow

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

With us today, Austin Fruechting. How are you doing, Austin?

Austin Fruechting: I’m doing good, how are you doing, Joe?

Joe Fairless: I am doing well, and nice to have on the show. A little bit about Austin – he is a full-time real estate investor. He started in 2010 when he was 25 years old, and is now financially free, at 32 years old. He has a whole lot of stuff, here we go.

He’s had everything from single-family homes to two-units or to two 12-unit buildings; 107 rental units across 49 properties. He’s got some cash investors in his larger portfolios, and he has right now a 32-unit under contract. He’s based in Kansas City, Missouri. With that being said, Austin, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Austin Fruechting: Sure, absolutely. In early fall of 2009 I had a friend who told me “Hey, you really need to check out Rich Dad, Poor Dad by Robert Kiyosaki. I got into that, and as a lot of real estate investors, that was something that kind of changed my perspective on everything and kind of kicked everything off.

I ran a big spreadsheet to financial projections for different financial strategies, and real estate investing always came out the winner. After that I just purchased every book I could find and just spent the next many months just educating myself. Then I was able to close on my first property in June 2010.

Fast-forward, I would pick up some properties here and there; my favorite type of investment was purchasing something that was run down, fixing it up, getting it rented out at a much higher rental rate and then refinancing it so I could move on to the next one and keep doing stuff like that.

Over time, now I’m at 107 rental units across the 49 properties, as you said. In total, I only have $150,000 of my own personal cash left in any of these investments.

Joe Fairless: Wow. And what’s the portfolio worth?

Austin Fruechting: I would say the market-appraised value right now is approximately seven million.

Joe Fairless: Cool. Congratulations on that! How many of the 107 units do you have partners in?

Austin Fruechting: Most recently we picked up 80 rental units in the past little while, that I’ve brought in some larger cash investors in on. On one of them I put a lot of my own cash to get us to our goal of financial freedom, so I would have a larger ownership in that. In that one I have 70% on some of the others, and 50% when using all investor money.

Joe Fairless: When using all investor money, does that mean you didn’t have any of your own money in those deals?

Austin Fruechting: Correct. I will give them a 7% preferred return, and then on that particular portfolio 7% preferred return on their cash, and then everything above that, it’s 50/50.

Joe Fairless: How do you answer the question from an investor – and I know you got this question before, in that particular deal – “Well, you don’t have any of your money in the deal… If it’s not good enough for you, why is it good for me?”

Austin Fruechting: Well, actually I haven’t really had to answer that question, because I’ve been very selective on bringing investors along. I’ve had opportunities for investors over many years, but I would always just try to do it myself if I could. These were just large enough that I wasn’t able to do it myself, so I took it to them and some of the people that approached me over the time.

They were familiar enough with what I’ve done over the years that they didn’t have any question that if I was looking to do a deal that it was gonna be a solid deal.

Joe Fairless: If you hypothetically had been asked that question, how would you respond?

Austin Fruechting: I would say I’m still signing personal guarantees on all of these loans. With the bank that I’m working with, even though the loan’s on an LLC, I’m still signing personal guarantees on it, so that means I’m risking the entire rest of everything that I own and putting my name on it.

Joe Fairless: Plus the preferred return the investors get paid first, that’s be another good one. So you’re signing — are they recourse loans?

Austin Fruechting: Yes. I’ve been working with the same portfolio bank since the beginning, and they do some special things for me that are not standard and which allows me to bring less cash down; as part of their thing, they’re servicing all the investment loans in-house, so they still want the personal guarantees.

Joe Fairless: What bank are you using that’s local and what are some of the unique things that they’ve done to help you grow your portfolio?

Austin Fruechting: This is a bank in Leavenworth, Kansas, just a small community bank. They’ve been able to do a lot of packaging together on some properties that I was fixing up. I could get a certain percentage of the purchase, the fix-ups and the closing as long as their loan never exceeded 70% loan-to-value and as long as I was putting the minimum 10% down. So as opposed to having to put 20%-25% down, and then fix up in cash and then have a long seasoning period, we could roll it all into one thing, with as little as 10% down sometimes.

Joe Fairless: How did you come across them?

Austin Fruechting: That’s where I got started investing in rental property. I just started the connection with them; I knew them before I even bought my first one. When I went to buy my first one, they were one of the banks I talked to, and they’ve been great to work with, so I’ve just continued to grow with them.

Joe Fairless: You’ve got 32 units under contract right now… Can you tell us about that deal, the numbers and the projected returns, and if you have investors in it?

Austin Fruechting: This is another portfolio deal; it’s across eight properties. So there’s two duplexes, two 4-units, 12 town homes, and then one 8-unit building. We’re getting at just over a million dollars; currently, it’s pulling in $16,700 in rents, but it’s being rented under market. Within a short period of time, even without having to fix up much, we should be able to raise the rents to approximately 19k-20k, with very minimal upgrades.

If we do a higher level of finish on turning some of these units over, we can easily be looking at probably 22k/month in gross rents.

Joe Fairless: It’s interesting that you went straight to the upside potential that you’re realizing in this, and that goes back to what you said earlier about the types of properties that you like to buy – the run down ones; you fix them up, you rent out at a higher rate, then you refinance.

Is your plan to refinance after a certain period of time with this one, too?

Austin Fruechting: There’s a good chance we will, I’ll discuss that. I do have investors along with this, so I’ll discuss what they would prefer to do on that. This one is not as crucial to refinance, just because the cashflow is going to fund anything we need to do. If we go for the higher level finishes to capture that 22k in gross rents, as opposed to 19k-20k, then I think we would definitely look at refinancing in two or three years when that’s done, pulling all the cash, plus — I would say we’ll be able to pull out all our cash plus an extra 200k or so with the new value.

Joe Fairless: And how much (if any) of your own money in this one?

Austin Fruechting: This one will be another where I have not put in any of my own cash.

Joe Fairless: What type of structure do you have with investors?

Austin Fruechting: This one will probably be at a 50/50, and this one we will probably forego the preferred return, just because it’s gonna take a little more time on my part than just putting the deal together. It will take some more time on the back-end, as far as getting all the units turned over and helping manage that process.

Joe Fairless: What type of management do you have in place? Is it your own company?

Austin Fruechting: It’s actually a company that I started years ago. When I was first getting into real estate investing, I knew my goal was always to have a passive income, but I didn’t necessarily trust the property managers that were in the area at the time, so I decided to start my own company. Then I sold that back in 2013, and they’ve continued to manage my property since then.

Joe Fairless: You don’t have any ownership interest in it anymore?

Austin Fruechting: No, I just found people that I would trust with my properties and we worked out a good deal for both of us.

Joe Fairless: Okay, so you’ve had it for about three years, then you sold it.

Austin Fruechting: Yes.

Joe Fairless: Did you make money on it? What type of return did you get on that one?

Austin Fruechting: On that one I probably only broke even; I might have even lost a little bit of money, but I would have been close to a breakeven on everything it took to build that company, versus what I sold it on. But the more important thing is it was only three years; even if I lost a little bit of money on the property management company, I now have property managers I can trust going forward indefinitely.

Joe Fairless: With your project, the 32-unit, how long do you plan on having it and what are the overall project’s projected returns?

Austin Fruechting: Pretty much everything I do is a long-term buy and hold, like no real plans to sell. My investors always know [unintelligible [00:11:37].26] Again, I’ve been super selective on who I work with, and I’ve never actually even sought investors. They’ve come to me, and whenever I see that our interests do align, then we’ll talk more about moving forward.

I would say in two years the cashflow might support everything that needs to be done, so we might just take zero cashflow for the first two years, and then we’ll be at 22k in gross rents.

Joe Fairless: What happens if an investor wants out?

Austin Fruechting: We have a very solid LLC agreement that’s written up. I could buy them up, or one of my two investors or the other investor could buy them out. Or they could get a qualified offer for their share, and we would have [unintelligible [00:12:21].28] If they sell their share to another investor, the new investor doesn’t have any voting rights, because that’s not who we agreed to get into business with. So if they could sell it to somebody else that is okay with that, they’re allowed to do that.

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

Austin Fruechting: I would say my best advice ever is that quick is costly. Looking for the quick answer is how you end up with the wrong math, or even the completely wrong investment strategy for you. You should always let the numbers make the decision, but more importantly, know the Why behind everything you do, from the smallest scale of why you should use X instead of Y for each expense factor on a particular property, all the way to the biggest scale of knowing why one investment path is better for your personal goals than another path.

Joe Fairless: Using that example, why you should use X instead of Y on an investment property – maybe it’s an improvement or something that you’ve done, can you give us a specific example of something that you used and why you used it?

Austin Fruechting: Well, a lot of times I see people wanting to just say “What percent should I add in for capital expenditures on a long-term buy and hold?” and that just doesn’t work. You can’t just throw in a percent for it, because if you’re looking at a 4-unit that’s maybe in this area, with rents of $750/unit, your capital expenditures are going to be probably a lot higher percentage on that than they would be a 40-unit over here, where you’re getting $1,200/month per unit. So just knowing why you’re putting every number into your calculations and analysis is crucial, or knowing that the vacancy is this percentage in this type of property in the area, or this percentage at this type of property in an area that’s maybe an A area, versus the C area that’s just a couple miles away.

Joe Fairless: Going back in time to when you got started, how did you come up with the money to buy your first property?

Austin Fruechting: I’ve gotten creative from the beginning… I didn’t have much liquid at the time, and I had read through a lot of Kiyosaki’s books, so I had set up lines of credit before I ever needed them, and I used a lot of that for the purchasing and fix-ups, and I’ve continued to use a lot from lines of credit along the way to do the work, and then I would refinance and pull the equity back out.

Joe Fairless: Was that with your bank that you did the line of credit initially?

Austin Fruechting: I’ve had a couple other banking relationships, and actually one of my lines of credit was at another bank, or other times our cars were paid off, so we just got a personal line of credit against the cars, and some other personal assets and things like that as well.

Joe Fairless: Can you tell us on that first deal with the line of credit how much did you borrow, what was the interest rate and what were the acquisition costs, and just give us the numbers on that first one? As best as you can remember…

Austin Fruechting: I don’t have them top of mind, but I can give another example on a 6-unit building that I bought. This was probably one of the best deals that I’ve done… I was able to purchase it for less than 60k. Initially I was able to get a loan for 120k total, but the working purchase total came to about 180k, so I pulled 40k from a line of credit; that was at 5%, and I could pay interest only. Then I had a lot of material and stuff like that, probably another 15k that I just put on a credit card, and I was able to refinance it at 195k within about four months after we fixed it up and put some tenants in.

So the 195k covered the 60k purchase, the 120k renovation, and put an extra $15,000 in my pocket.

Joe Fairless: Are you doing the work yourself?

Austin Fruechting: I act more as a project manager. I’ve hired pretty much everything out, most of the time. At the very beginning I did a little bit of the work myself, because I did work construction during college. Since then I realized the size of the projects I was doing, it was very much worth it to pay somebody else. I could get in and do this $120,000 project and we were done in six weeks. It would have taken me years.

Joe Fairless: Wow, that’s unique that you are not getting in there and swinging the hammer. You did initially, but you learned quickly that you wanted to scale, and you’re not the one doing it.

Austin Fruechting: Time is money. Every day additional, if I’m trying to do the work, that’s extra utilities, taxes, insurance, interests, payments – everything accumulates over time. If there’s a significant time saving in paying somebody else, you’ve gotta weigh that against what your time is worth, and your daily or weekly carrying cost on a property. Often times you’ll find out that it’s worth paying somebody else that can get it done in a quarter of the time, and you’ll probably come close to a breakeven on your carrying costs versus what you had to pay them.

Joe Fairless: A Best Ever listener is listening to this and he/she wants to essentially replicate what you’ve done, because you’ve got a seven million dollar portfolio, you’ve got only – $150,000 is a lot of money, but when you look at the portfolio size, it’s not a lot of money relative to what you control/own. So what would be something that you think they might spend time doing, but would be a complete waste of time when trying to replicate what you’re doing?

Austin Fruechting: That’s a good question.

Joe Fairless: Do you know where I got that from?

Austin Fruechting: I do not.

Joe Fairless: Tools of Titans, Tim Ferriss. [laughs]

Austin Fruechting: I haven’t read a lot of that book…

Joe Fairless: I’m gonna start asking this question more.
Austin Fruechting: I have it on my desk, sitting over here. I’ve started digging into it a little bit, but…

Joe Fairless: Yeah, yeah. When he talks about how to get better at a sport, he lists a bunch of questions, and this is one of the questions; I figured I’d pop it up, and you’re actually the first person I’ve asked this question to… [laughs] Welcome!

Austin Fruechting: Yeah, [unintelligible [00:18:50].11] Boy, I would say spend your time truly knowing the numbers, and if you’re gonna try to spend your time learning how to redo electrical or redo the plumbing, or things like that, if you’re gonna scale, you have to be the big picture guy and you have to be able to manage the little stuff. But if you’re spending your time just doing the little stuff, you’re spending your time trying to save a few pennies, when there’s thousands to be made if you spend your time on the big picture.

Joe Fairless: You have taken your own advice, that’s for sure. Are you ready for the Best Ever Lightning Round?

Austin Fruechting: Sure, let’s do it.

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

Break: [00:19:37].09] to [00:20:37].18]

Joe Fairless: Best ever book you’ve read?

Austin Fruechting: I would say Thinking, Fast And Slow. It’s an excellent study into how the mind works and how decisions are made, and it can help you make much better decisions and also know where the other people are coming from in their decision-making, which is a big advantage in real estate.

Joe Fairless: Best ever deal you’ve done that you haven’t talked about already?

Austin Fruechting: I’m loving this 32-unit deal I have under contract right here. We’re getting it in at about 1.6% monthly rents-to-purchase, but with minimal work we can be right at 2%. The returns on this are gonna be a killer.

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

Austin Fruechting: On a transaction I can’t really say that I’ve made a big mistake; I’m such a numbers nerd that I put them through the ringer, run the numbers every which way I can. But as far as biggest mistake in real estate that I’ve made – at the beginning I was introducing myself as the owner of the property, instead of the property manager. It’s so much easier to treat it as a business if the relationship is the tenant to property manager instead of the tenant to owner… Since they know like “Oh, you’re the owner, you have full decision-making ability to grant me leniency, or do every little repair that I ask for, or whatever.”
I wasn’t really treating that part of it as a business, so I learned that lesson really quickly.

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

Austin Fruechting: I started up a little blog, Good Life In Ten. It’s just sharing what I’ve learned over the years and trying to help other people get started and go down the same path that I did.

Joe Fairless: And that’s GoodLifeInTen.com?

Austin Fruechting: Yes.

Joe Fairless: Cool.

Austin Fruechting: I got to this point within seven years, so I think anybody can in ten.

Joe Fairless: Cool. I’ll have that in the show notes page. What’s the best ever way the listeners can get in touch with you?

Austin Fruechting: I would say through the blog. You can contact me via e-mail there, and that’s GoodLifeInTen@gmail.com, or just checking out the stuff at the blog.

Joe Fairless: Austin, thank you for being on this show, for talking through how you’ve gone so quickly in a relatively short amount of time. Your main business model is buying the rundown, or properties that need to be fixed up; then you fix them up, you rent them out at a higher rental rate, then you refinance it. Tried and true approach that many investor before you and many in the future will do and have a lot of success doing.

How you have a relationship with a portfolio lender – a local one – in Leavenworth, Kansas, and how you approach your deals, the “quick is costly” approach, and knowing why you’re doing something instead of just doing it. Then when someone wants to replicate what you’re doing, don’t spend time on the micro-level stuff that you can hire someone for, but rather make sure that you’re a big picture person. Know how to be competent in the areas – I think you would agree with that, but you don’t have to be a skilled expert in every single facet; you’ll go freaking crazy if you try to do that.

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

Austin Fruechting: Alright, sounds good. Thank you, Joe!



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JF877: He Started with LITTLE and Now Creates >12% CR MONEY MAKERS!

He started in an office and then later began to buy properties! He looks for the C class value add edifices and does just that, adds value! Hear how he gets it done and what he’s up to now.

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Sean Tarpenning Real Estate Background:

– Owner at US Real Estate Equity Builder (USREEB), a turnkey company
– Owns over 125 single family and multifamily units
– In 2016, his company sold over 250 properties and went from $5M in sales in 2015 to $13M in 2016
– His company provides over 300 jobs to Kansas City between the office staff to the construction crew
– Based in Kansas City, Missouri
– Say hi to him at http://www.usreeb.com
– Best Ever Book: Real Estate Developers Handbook

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JF756: Making QUICK Decisions, Prioritizing Activities, Company Building and Real Estate

It’s hard to pick one thing that our guest is good at, but if you’re looking for someone who is dynamic, creative, and can build multiple brands and companies this is the show for you! Oh, by the way, he has also done real estate. This is an intriguing episode with insights as to how to prioritize time and make quick decisions. This is a must listen!

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Eddie Wilson Real Estate Background:

– President at Affinity Enterprise Group
– Pepsi was his client
– Based in Kansas City, Missouri
– Say hi at www.affinityenterprisegroup.com
– Best Ever Book: Outliers by Malcolm Gladwell

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JF741: How He Decreased his Wholesale Risk and Increased His Income

Today’s guest is newer to the Wholesale game but was a genius when he decided to split the marketing budget on a direct-mail campaign to lower his risk of loss. Hear how he found his partnerships and which homes he targets!

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Brooks Mosier Real Estate Background:

– Co owner of Kansas City Property Group; A turnkey real estate company
– $180,000 revenue in his first year of flipping
– Based in Kansas City, MO
– Say hi at kcpropertygroup.com
– Best Ever Book: Rich Dad Poor Dad by Robert Kiyosaki

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JF715: MYTHS of Portfolio Property Insurance

You probably think you are covered if your tenant trips and falls, think again! You will need to check your insurance policy, but our guest is here to share that not all are created equal. He is a national speaker and consultant for insurance on portfolios and all property types. Be sure to reach out to him to get a free consultation!

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Shawn Woedl Real Estate Background:

–   Senior VP National Real Estate Insurance Group
–   Speaker and Consultant
–   Based in Kansas City, Missouri
–   Say hi at Shawn@reiguard.com or www.nreinsurance.com
–   Get a FREE insurance consultation
–   Best Ever Book How The Mighty Fall by Jim Collins

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JF571: Did He Pay Cash or Terms for a 97 SFR Portfolio? #situationsaturday

He buys, flips, holds, and refinances SFR’s and has been doing so for over 10 years. He was caught off guard with an opportunity to buy a portfolio of 97 homes, which would have been a record. He approached the opportunity at many angles, so you’ll need to listen to know how he decided to acquire the investment!

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Andrew Syrios real estate background:

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Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

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JF543: What to Do When Your Property Management Company Underperforms #situationsaturday

What is your vacancy rate? What is your turnover? Do you know the answer to these questions? If you’re not sure, then your property management company may not be keeping track. Reports are necessary for added value and improvement, tune in to hear how our guest took care of a sticky situation with his property management company.

Best Ever Tweet:

Spencer Cullor real estate background:

  • Director of Commercial Acquisitions at Apartmentvestors
  • Say hi to him at apartmentvestors.com
  • Been involved in over $20,000,000 worth of deals including a multifamily and a retail center
  • Based in Kansas City, Kansas
  • Here’s a copy of Spencer’s letter that helped him find on his first two apartment communities:
  • His Best Ever book is: The One Thing by Gary Keller and Jay Papasan

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

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

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:

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JF531: How His Experience in Spec Homes Lead Him to COMMERCIAL Deals

He didn’t start with office retail and apartment deals—he learned how to put these deals together stating with spec home building. His transactions evolved into bigger deals with mini mistakes made along the way that gave him the experience needed to master his niche. Hear how he made the transition!

Best Ever Tweet:

Spencer Cullor real estate background:

  • Director of Commercial Acquisitions at Apartmentvestors
  • Say hi to him at apartmentvestors.com
  • Been involved in over $20,000,000 worth of deals including a multifamily and a retail center
  • Based in Kansas City, Kansas
  • Doc that helped him profit over $2M: https://goo.gl/AwJGZk (mentioned during our interview)

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

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

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Have you tried REFM’s Valuate software yet? It makes investment analyses a breeze, and makes you look like you spent all week on them. Go to app.getrefm.com to sign up today.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:

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

Follow Me:  

Share this:  
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JF446: Conquer Your Cold Call Fear!

It’s frightening! You have a fresh list of delinquent tax properties and your cell…what do you say? Our Best Ever guest is walking us through the cold call and how to make a deal happen. He explains the importance of transparency and simply being “up front” and helpful. Improve your cold call game now!

Best Ever Tweet:

Adam Doran’s real estate background:

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

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.

What’s the Best Ever health plan for YOU?

Go to http://www.stridehealth.com/bestever and find a better health plan in 10 minutes or less. On average you’ll save $418 on coverage and care.

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Best Ever Show Real Estate Advice

JF228: Why You Shouldn’t Give Up After ONE Bad Investment

Are you overwhelmed by the amount of data and statistics you find while conducting your due diligence? If so, you better crank up your speakers because today’s Best Ever guest shares with us where to find everything you need to conduct your due diligence in ONE PLACE and why one bad investment DOESN’T make or break you.

Best Ever Tweet:

Shane Sauer’s real estate background:

–          Co-Founder and COO of RentFax based in Kansas City, Kansas

–          Over 15 years of experience in the real estate industry

–          Licensed civil engineer, general contractor and appraiser

–          Loves to travel and scuba dive in Bora Bora

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 Land – Want 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

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Joe Fairless