JF1960: Starting A Real Estate Investing Business & Growing To 245 Units with Collin Schwartz

Like so many investors before him, Collin caught the real estate bug from reading Rich Dad Poor Dad. He started looking for deals while still working full time, eventually leaving the job to be a real estate investor full time. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“If you’re not constantly learning, you’ll soften a little bit” – Collin Schwartz

 

Collin Schwartz Real Estate Background:

  • Real estate investor who began investing in 2017
  • Currently owns 245 rental units (with another 70 units under contract)
  • Based in Omaha, NE
  • Say hi to him at 402-204-5552 – collinschwartz1ATgmail.com
  • Best Ever Book: Shoe Dog

 


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.


TRANSCRIPTION

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

Collin Schwartz: Doing awesome, Joe. Doing awesome.

Joe Fairless: I’m glad to hear that. A little bit about Collin – he’s a real estate investor who began investing in 2017, currently owns 245 rental units, with another 70 under contract. Based in Omaha, Nebraska. With that being said, Collin, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Collin Schwartz: Yeah. I kind of moved all over as  a kid… In 2007 I decided to move up to Nebraska, start working on my MBA. I was working at a grocery chain for about six years [unintelligible [00:02:03].17] Left there to pursue the corporate world, more of the 9-to-5 gig, got married at the time, was gonna start a family… I started working there; it was in insurance, I was in marketing, and then I started doing some IT work. I really found that I was enjoying or thought I had made it with the 9-to-5 gig, good paycheck, but was being left very unsatisfied and unfulfilled…

So as many other investors out there, I read Rich Dad, Poor Dad. That was January 1st, 2017. I knew I had to make a change, so right from then, I basically started networking, got on Bigger Pockets, started listening to your podcast, started listening to everything I could, read every book I could… And then April 24th I closed on my first threeplex with a partner.

Joe Fairless: April 24th of 2017?

Collin Schwartz: Of 2017, that’s correct. So about four months later I was able to close on it. It was a pocket listing. I actually met the agent through Bigger Pockets, he reached out to me… So it was a good start. I was in a good location. It needed some rehab, the rents were way under market. So I went through, did that rehab… At the same time, I was having trouble finding leads, I think as a lot of new investors do. Brokers don’t give you a lot of respect in the front-end, and maybe rightfully so, until you kind of prove yourself.

Joe Fairless: Sure.

Collin Schwartz: So I started sending a bunch of letters I handwrote. I think it was 191 letters. I got the list from ListSource, I filtered it down to multifamily owners that had owned their property for — I believe it was over five years… And I wrote a simple letter, sent those out. I got six deals out of that…

Joe Fairless: Huh! [laughs]

Collin Schwartz: Yeah, it was a great return on my investment. It was kind of funny, because I was still working at my full-time job then… So I would be having to leave meetings, taking phone calls, and figuring out how to negotiate… A whole new realm for me. But that actually worked out really well.

Fast-forward, I have continued buying… As you stated, I have 245 rental units. Over about 20 properties we started purchasing bigger units. One of our last ones was 87 rental units; the two that we have under contract are 48 and 23-units. I self-manage about half of those properties, a little more than half of those units, kind of trying to find the right balance as we’re growing the team, and what we can keep up with, as most of these properties need a lot of repositioning, a lot of remodeling… And now I’m just kind of looking forward to continuing to purchase more and more, and meet with other investors.

About 15 months ago I started a meetup group, and that’s been great. We have about 500 members with regular attendance of about 100 people every month.

Joe Fairless: The 101 letters that you handwrote, you got six deals from it… What were the terms of those deals?

Collin Schwartz: They were kind of all over the place. One of them basically I got a referral fee of $2,000 for passing it on. Another one was a sevenplex, and it was just me direct with the owner. I purchased it for 369k. It was a seven-unit. Rents at the time were, I think, 4,200. I went through quite a decent repositioning process. Purchased it through bank financing, I should say that. And then within – I think it was 8-9 months, we were able to refinance out of it and got it valued at 525k. So it was kind of all over the place. Almost all of them I purchased with a partner. There was one duplex I did purchase by myself.

What’s kind of funny – those six deals that I got, I’ve also gotten recommendations from those sellers, for other properties… So I’ve been able to purchase neighboring properties based on the previous landowner telling the other landowners that I actually purchased their units… So I was really looking at going in and raising the rents, and using bank financing for the 80%. For my 20% I was using a home equity line of credit.

Joe Fairless: Okay. You live in Omaha… Are these properties in Omaha?

Collin Schwartz: Yeah, everything’s in Omaha, especially when I first started. Now I have two little kids, but at the time when I started I just had one… I also help with another business as well, plus at my full-time job… And I also realized right away that if I was going to effectively do it, especially on these smaller-scale properties, I was gonna need to self-manage… So I chose things that were near my workplace. It happens to be kind of a downtown area, that’s gentrifying, expanding, going through a lot of improvements, so it was a good area to look… But there’s still a lot of tired landlords around, so everything that I started buying was in basically one-hour walking distance from my work. So if I needed to go meet a contractor over lunch, I’d hop in my car and basically run on over there and get it taken care of.

So I knew that at first if I was getting a call, I needed to go handle a situation that was two hours away from me, I was gonna get burnt out really quickly.

Joe Fairless: Sure. Did that initial list focus on that highly-targeted area?

Collin Schwartz: Yes, it was two ZIP codes that I put in there. I was around my work, and basically another ZIP code that followed the line of the Interstate, which I would have to drive back anyways to and from work, so… I kind of made it in the convenience manner, but also an area that I saw a lot of growth potential as well. It wasn’t just for that convenience.

Joe Fairless: Okay. And you said the first deal – I heard you say that it was a triplex and you did it with a partner. Is that correct?

Collin Schwartz: That is correct.

Joe Fairless: Okay. And who is this partner?

Collin Schwartz: Steven Sykes.

Joe Fairless: And how do you know Steven?

Collin Schwartz: This is kind of funny… I was sitting there with my wife – this was January/February 2017 – just saying “Who do you know that knows something about real estate?” Well, she’s like “Hey, talk to my cousin’s fiancée.” He was an attorney, he recommended me to another agent, and another agent recommended me to Steve. He had about 50 rental units under management and ownership at the time, so we just started really hitting it off; we had multiple conversations, we started talking about our goals, what we were looking for… I found this property, brought it to him and said “Hey, will you walk through this with me? What do you think?” We got along really well, so we decided to partner on it.

He had the experience, he knew some contractors… And it was absolutely paramount, because when I walked through the property, I just looked at the current rents, saw things that I had no idea what to do with, and “I don’t think this makes sense.” And lo and behold, it did. It appraised at the time of purchase for about 50k or 60k more than–

Joe Fairless: Oh, awesome.

Collin Schwartz: Yeah, and that was just that initial purchase, before we even did anything to the property.

Joe Fairless: That’s great. So he clearly brought the more seasoned experience. I imagine you brought the cash?

Collin Schwartz: We actually both brought cash to that deal, so we were 50/50 on the cash.

Joe Fairless: 50/50 on cash, okay.

Collin Schwartz: Yup. And I did the management for the property.

Joe Fairless: With all your years of expertise managing properties…

Collin Schwartz: Exactly, exactly.

Joe Fairless: [laughs]

Collin Schwartz: At first I had no plan on managing. I’d read everything about passive income, this and that… That was my goal, and he said “It’s probably gonna be good for you. If in three months you don’t like it or you don’t see it’s valuable, I’ll take it over and manage it.” Well, I ended up really liking it, which is not of the norm…

Joe Fairless: What do you like about it?

Collin Schwartz: Something’s different every day, it’s challenging. I’m also somewhat of a control freak, so having that control, being able to fill vacancies a lot quicker, being able to be more effective on the turns… Actually putting something together and being able to mold that property… And now I purchase a lot of properties in that area, and being able to mold the overall client base that’s in there, and have kind of reputation, or whatever you call it, having quality property… So yeah, it’s kind of a control thing, but it’s the same reason that I don’t prefer to invest in stocks anymore, is why I wanted to manage it myself. Because if I was gonna let somebody else manage it, it was a similar scenario. I was giving up control, similar to the reasons why I don’t enjoy the stock market as much.

Joe Fairless: I’d love to learn more about filling vacancies quicker. What do you do that would be different from a property management company that you’d hire?

Collin Schwartz: We do a lot of things that are similar. I think I incentivize the people that work with me a little bit better, but we really push getting professional photos, we post it on all social media accounts… We do all that normal stuff, but we also try to contact our residents and have them provide us referrals, customer service… And then even goofy things, like me and my son dressed up like T-Rexes for Halloween… So  I decided “Well, what better use, dress up like a T-Rex and take photos and videos of the properties…?” That just increases the viralness of the actual property itself… So instead of somebody viewing it 200 times, you’re getting 5,000 views. So just things like that can really help with it.

Joe Fairless: Were you two in the unit, and people were taking pictures of the T-Rexes in the unit?

Collin Schwartz: It was actually just me and my son, and being a two-year-old, three-year-old, he was not cooperating at the time… But I had a professional photographer come in and we did funny things. Me pulling something out of the oven, taking a shower in a T-Rex costume… So just kind of a bunch of goofy stuff.

Joe Fairless: Okay.

Collin Schwartz: But yeah, do something different… And what made me think of that is actually when I was walking around with him on Halloween, and probably 50% of the people had a wow, amazement about the costume… I was like “Okay, there’s some wowness left to it. I’m gonna use it for some marketing.” It was a $50 costume, I might as well use it again.

Joe Fairless: [laughs]

Collin Schwartz: Just kind of fun stuff like that, but really pushing social media, really pushing relationships with my vendors so that they’re sharing, they’re telling other people about it… And the fact that I do self-manage and have a small management company that we manage all the properties which we own, our responsiveness is typically much faster than others.

Joe Fairless: You mentioned earlier you might incentivize more than others… What exactly do you do  from this standpoint?

Collin Schwartz: I think most property management companies just pay their leasing individuals, whether it’s a salary, and they do other things, that’s kind of secondary… At least some that I’ve talked to. I give them half a month’s rent; that’s exactly what we take in, so they get bonuses on that… And that’s if they fill it within ten days of being ready. If it’s not ready within those ten days, then it drops to 25% of first month’s rent. But that really increases the intention to get out there and lease them up right away, especially when you flip a whole building at once. So we may have ten units, and that’s a possibility for a bonus of $3,000.

Joe Fairless: That’s a large incentive.

Collin Schwartz: Yup, so that’s worked really well. At first I was just doing 25% a month, and vacancies were sticking out there, and then I said the 50%, and lo and behold the next day we have five vacancies filled.

Joe Fairless: Oh, my gosh… 50% – they had to have a signed lease within ten days, or they had to–

Collin Schwartz: They need to have the deposit from that individual, that signed lease.

Joe Fairless: A deposit…

Collin Schwartz: They need to have money from that individual.

Joe Fairless: Did you notice any decrease in qualifications once you upped it from 25% to 50%?

Collin Schwartz: I have not noticed anything yet, but that is something obviously that I’m looking at… [laughter] I’m still the one who reviews all the background checks, and credit reports, and everything like that. [unintelligible [00:12:59].14]

Joe Fairless: Sure. Yeah, you do. 245 units and you’re the person who still reviews that on all vacancies?

Collin Schwartz: That’s correct.

Joe Fairless: What system do you use within the business? Taking a step back, not just background check, but what systems do you use to help you manage 245 units?

Collin Schwartz: We used Buildium. That’s a property management software. You can enter in all the tenants, they can pay online through the portal there, it has an accounting feature, you can send off background checks… We also utilize what’s called PayLease; it’s a CashPay card. Lots of our residents are primarily Spanish speaking, or they don’t have checking accounts or anything like that, primarily cash payers they were typically (or they were before). We switched them over to a PayLease card. They can go to the local Walmart, pay with cash, and that money gets wired over… Similar to an ACH.

Joe Fairless: And PayLease?

Collin Schwartz: Yup, PayLease.

Joe Fairless: Okay, got it. When you think back with your triplex, what are some things you do differently from an acquisition front now, that you weren’t doing before?

Collin Schwartz: I would this is probably my first 7, 8, 9, 10 deals, what I would do differently… And it’s very similar to the triplex. Well, I guess there’s two things… One, always ask if they filed a hail claim. If they haven’t, get that assigned over to you. Have them open up a claim with their insurance policy. This is in the due diligence process, have them assign it over to you. The worst that happens is there’s no claim.

Second is always get a construction budget and factor something in there for something else going wrong… Because it does happen. I think we kind of put ourselves a little bit backwards, and relying on — I think we each put in an additional 5k or 10k, and we were relying on that to rehab the whole property, plus with the cashflow… Well, there’s just numerous expenses that come up, and it just creates a lot of stress. And if you can have that leveraged construction line, meaning that at closing you’re putting down an additional 20% of the 80% of the construction line that you could have access to – that provides a tremendous amount of help in getting projects done quicker, more effectively, and with less stress.

Joe Fairless: Triplex to 245 units… How did you have the money to scale to this degree, in this period of time?

Collin Schwartz: I didn’t… [laughs] Cash runs out really quickly in this business… I think I had some savings, and I had my home equity line of credit… So I think at about 18 units I started basically running out of money. And I had partnered on at least half of those units by then. So what I started doing – and I started getting a little creative – I was finding a lot of these deals off market, so I’d bring a  partner in and then I’d add acquisition fees. Now, the acquisition fees were factored into the overall purchase price, and then basically in the details I would put that XYZ LLC receives 5% acquisition fee at closing.

That would actually be consumed by the bank. I would be paying, say, 10% of the overall, my partner would be paying 10% of the overall, and then the bank would be paying the 80%. So I’d receive a chunk of that at closing, and that helped.

I’ve done about a dozen flips or so, so that has helped… A little bit of wholesaling… I’m not a professional on that, just more of if I find an opportunity and a buyer and a seller, I kind of link them together. And then obviously, the BRRRR strategy has been huge. That’s been one of the biggest ones.

And then there’s also private money, people taking second positions on the loans… There’s been quite a few different ways.

Joe Fairless: Yeah, and I’m glad that you listed those out. Has the BRRRR strategy been the biggest one where you were able to get chunks of equity out and then place in another ones? Or is there another one that would be in the first place?

Collin Schwartz: If I was looking at a dollar standpoint, it would be the BRRRR. Especially with what I have in the pipeline right now – I have a lot of things that, since I only started two years ago, there’s things that are just kind of hitting that year seasoning mark, that we’re refinancing with Freddie… But yeah, it was definitely the BRRRR strategy. But the other ones kind of came at opportune times, where I’d possibly have to pass on the projects, because I did not have the down payment, but was able to get somebody to provide a second-position loan in which I paid them 1% monthly interest, which they’d get ACH-ed into their account, with the assumption that after we reposition the property, that there’ll be that spread in there, so that I can pay them back their initial investment as a promissory note in the second position.

Joe Fairless: So you’ve found yourself in times where you needed to be really resourceful, because you didn’t have the cash in the bank account, and you saw an opportunity… Any tips for someone who is at 18 units, and now they’re out of money, what you suggest they do first, just to get started in the more creative realm of getting equity?

Collin Schwartz: I think there’s a couple different things that lead up to that. It’s definitely networking, obviously. If you don’t have the money, you need to find somebody that has the money. Start finding and really bird-dogging and searching for deals. When you find the deals, and when they’re actually deals that you can see a 30%, 40%, 50% upside in, people are gonna be attracted to that.

One of the reasons and one of the things that helped me get so many partners, I believe, is because I was doing the property management myself. Most third-party property management companies aren’t as good as the owner, and a lot of people saw that as value, so they would wanna partner with me… And some partners have paid for 100% of the down payment, which I paid back on the refinance portion… But I know property management isn’t for everybody, so I’m not telling everybody to go manage their own properties… But if you do have that bandwidth, if you’re good with people, you’re good with systems, that’s a really good route, and it’s attractive for other investors.

One other way that I’ve gotten money is hard money; so I’ve actually used just a hard money lender. But in those positions they take first position; if it’s a good enough property, you can go refinance out and get them paid back, and still own the property. So I think it’s multiple things, but networking, and — this business is all about adding value, whether it’s adding value to your properties, adding value to your partners, anything like that. Anything that you can do to add value to others.

Joe Fairless: Taking a step back, looking at your portfolio that you’ve acquired, what property have you lost the most money on and how much did you lose?

Collin Schwartz: Well, fortunately I have not lost yet, so… I just knocked on the table right here.

Joe Fairless: I’ve heard it. [laughs]

Collin Schwartz: I have not lived through a downturn yet, so that’s the reason why I’m trying to keep my property’s cash reserves into the bank, in case something does occur, and not necessarily relying on the cashflow for living purposes.

So I have not lost money yet… Now, I’ve been ready to turn my hair grey and pull them all out on quite a few properties, but… So far I have not lost money.

Joe Fairless: What was the last challenge you came across where you wanted to pull your hair out and your hair turned grey?

Collin Schwartz: [laughs] There’s a few of them, but I guess one of the first properties that I purchased – it was a duplex. Great deal, I purchased it for 100k. It was through one of those letters. It was off-market… And I did the [unintelligible [00:20:08].11] somebody had shown up; I had a For Rent sign… They showed up at the property and said “Hey, we’re really looking for a place to stay, and…”

Joe Fairless: Need it quickly?

Collin Schwartz: They needed it quickly, they had cash… But I was going on vacation the next day, the other side was vacant, and I was gonna have to tell my wife that instead of being a real estate investor, I was starting to make a second mortgage payment outside of our house…

Joe Fairless: [laughs]

Collin Schwartz: So like any foolish, young investor, I took the money. Well, six months of overdoses–

Joe Fairless: It sounds like we’ve got some professionals here…

Collin Schwartz: Yeah… You know, they actually paid rent, which was surprising, but overdoses, bed bugs, police getting called, domestic violence reports… Just about every type of nightmare. And not only that, the building was older, so some pipes burst during that time… So I highly, highly considered selling it. I was gonna sell it; I bought it for 100k, put about 15k into it… I was like, if I could sell it for 130k and make a net of 10k, that’s more than I make in a month and a half on my job. That’s not a bad deal.

Joe Fairless: Yeah…

Collin Schwartz: Anyways, I kept telling myself “I’m just gonna stick with it.” It was a couple of weeks that took me to that point… So I stuck with it, but I was able to refinance it at a valuation of 205k. But it was very, very trying and stressful during that time.

Joe Fairless: What happened with the residents?

Collin Schwartz: Oh yeah, we agreed to have them leave. It was about six months in. I told them “This is over. You guys have gotta find a new spot.” They did; with all the police reports and everything, they left… And now I have some excellent, excellent renters in there. 750 credit scores, retired individuals… So it’s very much a turnaround. But also, rather than the first person with cash, I probably went through 20 applicants this time.

Joe Fairless: Right, I imagine you went the opposite end of the spectrum with the next ones…

Collin Schwartz: Yeah. So I think even going back to what I would do differently, like that construction loan portion – if I would have had just a little bit of a buffer right there, I don’t think I would have made that rash decision. And if it was attributed to the property… But at the same time, I didn’t wanna make a second mortgage payment.

Joe Fairless: Right. Having a healthy marriage is important as well.

Collin Schwartz: Yes, absolutely. Absolutely.

Joe Fairless: [laughs] Details… So based on your experience as a real estate investor, what is your best real estate investing advice ever?

Collin Schwartz: There is a couple things, and I think it keeps changing for me, but I always go back to “You’ve gotta keep learning, you have to keep networking. You can’t stay complacent.” There’s just so much information out there that if you’re not constantly reading, if you’re not going to seminars, if you’re not listening to podcasts, you’re just gonna soften a little bit. Also, have a good daily routine, have a strong morning. For me, I get up and exercise, and it just gets the day right. So education and a strong morning routine…

Joe Fairless: You’ve got 70 units under contract… I don’t wanna talk about that one, because you haven’t closed yet, but I think I heard you say you have an 80-something unit as the largest one in your portfolio?

Collin Schwartz: Yes, we have an 87-unit property.

Joe Fairless: An 87-unit. How many partners you have on that one?

Collin Schwartz: That we have four partners. Me and another partner are the managing members, and then we have two other partners.

Joe Fairless: Okay. Money people?

Collin Schwartz: Money people, that’s correct.

Joe Fairless: Okay. So how is that structured?

Collin Schwartz: Basically, they get the equity based on what the dollars that were put in. We receive an asset management fee for managing the manager; that is one that I don’t manage in-house, so we’re actually managing the manager… There was an acquisition fee at the time of closing as well… So that’s the basic structure. It’s very simple.

Joe Fairless: And you have your managing members, so you have a portion of ownership in the general partnership as well?

Collin Schwartz: That’s correct. So we did bring equity to the deal as well.

Joe Fairless: Cool. And what’s the business plan for that?

Collin Schwartz: We actually purchased it under Freddie Mac, so we’re two years interest-only, 30-year amortization. I think it’s 7 or 10-year fixed, but… Basically, the property was in really good condition as it was, but there’s still a delta that we can raise the rents, at least 25%… So we’re going through now, we’re updating the units. They’re about 15-year-old updates, whether it’s the LVT, or the plank flooring… Just kind of more of the grayish look, versus the brown, as that’s kind of more the [unintelligible [00:24:16].25] It’s next to a university. We’re going through there, we’re repositioning, and then within two years — we can start the process at 18 months with, I believe, just a small penalty from Freddie Mac… Refinance, pull out all of our cash – that’s the obvious goal, and that’s what our projections say. Roll into another 30-year amortization, 10-year fixed, with three years of interest only.

Joe Fairless: Why have a third-party management company manage this?

Collin Schwartz: Honestly, at the time I had purchased numerous, numerous properties. It was all within one week, and those other properties required probably 30 units that needed to be updated, and the third-party management company had the place basically stabilized at that point, so now we just had to go through and raise the rents… So they already had a good system in place, and I did not have the resources at the time to bring on something like that in what I deemed an effective manner.

It doesn’t mean that at some point that won’t come in-house, but at the time it made more sense to not ruffle it, and my office is a couple blocks away, so I can still head over there, I can help with the turnovers… I can still be involved in that sense, but without having to take on the resource of another 87 residents and maintenance requests, and collecting rent, and if it was a different process – moving over leases, and everything like that.

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

Collin Schwartz: Ready.

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

Break: [00:25:45].02] to [00:26:29].13]

Joe Fairless: Best ever book you’ve recently read? You mentioned you’re a learner…

Collin Schwartz: Yup, so there’s a few of them. Shoe Dog, everybody should read that… And then the Art of War by Sun Tzu. Those two books.

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

Collin Schwartz: I’d like to start doing more, but the meetup group – I do spend a lot of time… We don’t charge for it. I’ve invested a lot of time, a lot of nights away from the family… And then I try to communicate with as many investors as possible, and help investors in the community as well.

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

Collin Schwartz: You guys can give me a call, 402-204-5552. Find me on Instagram, or Facebook. Otherwise, BrickTownManagement.com.

Joe Fairless: Well, Collin, thank you for sharing your story, how you went from using your own money and your own resources up to 18 units, and how you scaled from 18 to 245, and going through the list of tactics that you used – partnering with people… You did that all along the way, right out of the gate. Off-market deals, adding acquisition fees to those, flips, wholesaling, the BRRRR method, private money and hard money… And then talking about your approach for management and filling vacancies quicker than what’s typical… So thanks for being on the show.

I hope you have a best ever day. I really enjoyed our conversation, and we’ll talk to you again soon.

Collin Schwartz: Awesome. Thanks, Joe. I appreciate it.

 

JF1943: How This Investor Closed A MHP Deal For $1.25M 8 Months After Starting with Jason Paul Rogers

Theo and Jason are going to get into his story, and how he got into real estate. After we hear that, they will dive deeper into his mobile home park deal – which he bought just 8 months after attending a seminar. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“Do what you say and say what you do” – Jason Paul Rogers

 

Jason Paul Rogers Real Estate Background:

  • Founder and CEO of Brighter Living Properties, a real estate investment group with seven figures in assets under management
  • Acquired his first mobile home park for 1.25 million dollars 8 months after attending Dan Pena’s seminar
  • Based in Omaha, NB
  • Say hi to him at https://brighterlivingproperties.com/
  • Best Ever Book: Rockefeller Biography

 


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.


TRANSCRIPTION

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

Jason Paul Rogers: Doing awesome. I appreciate you taking the time and for having me here.

Theo Hicks: Oh, absolutely. And we appreciate you doing the same as well, and I’m looking forward to our conversation. A little bit about Jason – he is the founder and CEO of Brighter Living Properties, a real estate investment group with seven figures in assets under management. He acquired his first mobile home park for 1.275 million dollars, eight months after attending a Dan Pena seminar. He is currently based in Omaha, Nebraska, and you can say hi to him at BrighterLivingProperties.com.

Alright, Jason, do you mind telling us a little bit more about your background and what you’re focused on now?

Jason Paul Rogers: Yeah, I would love to. I’m a fairly younger guy, 28 now; I did our first deal when I was turning 28… So my background really wasn’t real estate-based; in fact, it really wasn’t business-based. At the time of recording this, just a year ago – so if you go one year in the past, I was actually something of a nomadic traveler. I was living between Denmark and Colombia, in  South America… So something of a traveler, I had a little online business, and was comfortable enough with that.

I then got a bit of a dry — single and don’t have some of those tie-downs, you may say, or some of those challenges when you have a mortgage, or have kids, or have a wife, or have a family… So I thought “You know, if I’m gonna go big and make some moves, this is the time to do it.” As you actually mentioned – I didn’t think you were gonna mention my relationship with Dan Pena, which… It’s not like we have a deep friendship, or even a real business relationship, but he does have a seminar that I decided to jump into. He teaches a mergers and acquisitions style of growing your business by buying top-line revenue… So I actually somewhat got into the real estate game not from a traditional real estate investing standpoint, but from more of an M&A (mergers and acquisitions) standpoint.

I learned everything I could from him, because at this time last year I didn’t understand what a balloon payment was, didn’t really understand how an amortization schedule worked, how I lived 27 years without knowing some of the basic things about finance that I legitimately didn’t understand, I don’t know. But I learned everything I could from him, as well as a host of other mentors and individuals in finance, and then real estate, as I decided “You know what – I really had liked real estate throughout my younger years.” I hadn’t really ever tested the waters, but it had always made sense to me to own a hard asset, something tangible, something that would never lose its intrinsic value, so I decided to go into the mobile home park sector.

I really liked the aspect of it being a recession-resistant asset, that essentially will always hold some level of value, and even if the economy has a tough time, people will always need affordable housing… And I could go through the whole story, but I built a team around me, because without my lack of real estate experience, or legal experience, or accounting experience and all these different things – I don’t have a B school background, or legal experience, or accounting experience, and all these different things, like I don’t have a B school background, or a law degree or anything like that, I figured “Let me build a team around myself to help me”, and once I had that team established, it was just a non-stop hunt for deals and for finance.

Long story short, on August 9th of 2019 we closed our first deal, that deal out here in Nebraska, where I’m talking to you right now, the 1.275 million dollar deal, and now we go on a hunt for bigger deals as we move forward.

Theo Hicks: Do you mind telling us the story of that deal? So you went to the Dan Pena seminar, you landed on mobile home parks, and you mentioned why… So from there, what were the next steps? How did you find the deal? Did you put the team together first? How did you fund it? Things like that.

Jason Paul Rogers: As I remember, when I was putting my team together, I started firstly with putting a team together, I remember explaining to these individuals I was reaching out to – I reached out to a host of individuals with a lot more background; think investment banker types, individuals with a lot of real estate experience, top accounting firm backgrounds, kind of these big four accounting firms, and top legal firms… I was reaching out to individuals of that type. When I would talk to them, they would ask me “Okay, well, do you capital fundraised?” I remember saying “We’re actually gonna be running the bases backwards. We’re gonna be running the third base first, which seems counter-intuitive…” But we figured if we build a world-class team first, it’ll be easier for us to procure financing. So it was almost a “If you build it, they will come” mentality.

So we built the team first, built some strategic partnerships with a quality accounting firm and a pretty high-quality law firm, and then after about two months of really building that team, I went all-out on calling for deals, and started to build banking relationships. We targeted the Midwest for a host of reasons… I’m actually from California originally, went to school in UCLA, so I’m a California boy… But the cap rates and the valuations of real estate in California kind of turned me off, not to mention some of the rent control things and aspects of that nature – it kind of scared me, so we really focused on the Midwest.

After probably about a month of hunting for deals, mainly through cold-calling – we weren’t really using brokers… For one, I didn’t really have any capital to my name, so when you talk to a broker, “Hey, send me proof of funds.” Well, my bank account wasn’t exactly super-sexy for a broker… So we went with the off market deal flow, mainly through cold-calling… And I went on a tour of probably about 15 to 20 mobile home parks in Kansas, Nebraska, South Dakota, all the way up into North Dakota.

I really found that Great Plains area to be advantageous for what we were looking to do. It seemed to have the most opportunity, and it seemed to be the least touched by the institutional buyers, and there  seemed to be a little less competition for deals out in that area.

I probably put 20k, 25k on rental cars, and met about 15 to 20 different sellers (or potential sellers), I looked at about 15 to 20 different mobile home parks… We then chose the one that made the most sense to us, which is the deal in Nebraska. From there, I then went on the hunt for bank finance. But as a side note, we also needed equity. You very rarely hear of a real estate deal that you are able to do without any equity.

So what actually happened there was — I can’t put it any more bluntly than to say “I was pretty darn broke.” I was actually sleeping on my grandmother’s couch for a period when I started this process… Which I don’t recommend. I don’t think what I did was exactly ideal. In fact, it certainly wasn’t. But it’s my story, and it’s just the way it happens.

So I knew I needed equity from somewhere, and I had a bit of a social media presence, which I leaned on too a good bit. I shared that I was looking to do a high-quality deal, and that we’re gonna offer a preferred rate of return, as well as en equity stake in the acquisition that we made… And I actually started by going to friends and family, and I was sincerely looking to practice my pitch.

So I went through my pitch, and said “Look, economic occupancy over the last three years has been over 95% (which was true), over the last two years it’s been over 97%. This is a local area without a lot of inventory as far as real estate, so the affordable housing demand is super-strong, you’re next to all these big manufacturers…” And I was going through pitch, and I’m pretending, when I’m talking to friends and family, that they’re the investors. “So if I was to give you, say, 15% to 20% of this deal and to give you a preferred rate of return of 8%, would that be something that would interest you?” And I didn’t actually have to get to this big list of investors that had actually raised their hand as investors (I’d found them on LinkedIn). I didn’t have to get to that list, practicing my pitch, to actually come up with the capital we needed, because very quickly within my network there was some very local interest, if you will, in the deal.

So within a pretty short amount of time I was able to procure $150,000 in equity, and then from there I went on a fundraising tear… Because with the 1.275 million dollar deal, 150k is only 12% of the capital stack; normally, you’re looking for 25%, 30% perhaps on a down payment for a real estate deal.

So my 12% down payment wasn’t exactly great, but what the seller initially did in this Nebraska deal – he had initially said to me “Hey look, I like you…” and this and that and the other, “…I’ll carry the paper.” He was gonna carry 275k on a second-position note, with a matching interest rate to the first lien note. So what that was gonna do is if you could get the seller carryback to count as equity, we had the 150k in total between transaction costs and the down payment that we were gonna use, the seller was gonna match the interest rate to the first lien note for 275k… So it took our “equity” up to – depending on if we used between 100k to 150k of our capital as a down payment versus transaction costs, it was only gonna require the bank going for about 900k of the 1.275.

So I pitched every single bank in town, literally called every bank within a 100-mile radius of the asset… There was certainly some pushback, because my financials weren’t super strong, and that team I’d built – I had told them initially “Hey look, I just want your advice, I just want your insight. I’m not looking for you to guarantee a loan, I’m not looking for you to put in money. Just give me the insight and stand behind me if you will, and give me pointers on how to go forth.”

That was all fine and dandy, they were impressed with the team I had built, but they were like “Well, these folks are gonna guarantee the loan; then we’ll be really impressed, and then we’ll push this thing through. But with you being the guarantor, you guys are bringing a little bit of money into the deal, but how do we de-risk this thing?” So that was a challenge for us. But kept pushing, and there were some banks that were getting more interested.

Then at some point during the negotiation process – I don’t wanna get into the skinny of the deal (there’s some things I’ll keep a little confidential, mainly as it relates to the nuance of the deal, and some of the nuance of what the seller had going on on his end; I don’t wanna speak on that behalf), but what ultimately happened was the seller came back to me, and at this point he and I had built a good rapport, which if we had longer, I would talk more about the importance of building a great rapport with a potential seller, for a host of reasons, including the financial piece… Because he came to me and said “Look, I see the way you’re hunting for bank finance, I also see that if you pay me this big sum of (say) a million dollars or whatever it would be upfront in cash, what’s gonna happen as far as capital gains tax, and all this stuff…”

Long story short, he came back with a seller carryback option, and there was a whole bunch of negotiation – how would that be structured, and at what interest rate, and the amortization, and there was actually a period where he wanted me to run the thing for two years if we were gonna do that deal… And there was a whole bunch of negotiation that happened, but ultimately I was able to not be required to run the thing, and we procured a competitive rate of 6% from the seller… So the deal ultimately closed with an 88% seller carryback, which means we’re pretty darn leveraged. But even at that loan-to-value, if you will, our debt service coverage ratio was really high. That thing freely cash-flows extremely well, and I think that was in part because we went a little bit more rural; our deal is a little bit outside of Omaha, and we were willing to go into a slightly more rural area, that was actually a really strong local economy, agriculturally-based, very stable… But it was one of those deals that was a little under the 50,000 person metro population, so even the midsized investment groups just weren’t quite looking at it seriously… So we were able to find a deal that allowed us to go higher on that leverage than what you would traditionally want to do, yet without — let’s just say our free cashflow was really comfortable, as if we were doing a deal at maybe only 65% or 70% leverage.

So it really has been a good deal. Now, it is park-owned homes, which is the one wrinkle, which means you have to be a little bit more maintenance-savvy… So it’s not a perfect deal, but it got our foot in the door and now it gives us a base to go on and do subsequent deals, which is what we’re planning now.

So that’s in 5-7 minutes or whatever that took, that’s pretty much the story of how it came to be.

Theo Hicks: Yeah, very detailed, thank you for sharing. I’ve got a few follow-up questions before I move on… The first thing that comes to mind – as you mentioned, when you were first starting out you’re like “Okay, I’m gonna build a team first, and then basically leverage their relationships to raise capital, in a sense, and get financing from banks.” And you mentioned that you were reaching out to some pretty top-tier legal, accountants, things like that… How did you win them over to your side? You mentioned you didn’t have any experience, you didn’t have any money… How were you able to get them onto your team?

Jason Paul Rogers: Candor, and a big vision. I would say those were the two main things. First thing — I remember my pitch really well, because I made it over 50 times. I remember starting with saying “Hey, thank you so much for your time”, and then there was this “Look, I know I can do this, but I know I can’t do it alone. Let me be real transparent with who I am and who I’m not, firstly. No real estate background, no B school degree, no law degree… I don’t have those traditional white-collar degrees. I just wanna be clear about it, I don’t have that; that’s in fact why I’m reaching out to you. But what I do have is a relentless work ethic, and more importantly, I believe the ability to make this thing happen. Again, I know I can do this, I just know I can’t do it alone, and I think it’s gonna be a lot easier for us to be successful, because we’ve found this asset class in the manufactured housing industry, or the mobile home park space, that’s ripe for consolidation, that is a real strong asset that will be a joy to fundraise for.”

So I talked a lot about the money. The big question you have when you’re reaching out to individuals like that, especially in the early stages before you really have a track record, and when you really don’t have much capital to talk about, is “Okay, well how are  you gonna get the money?” I can guarantee you that’s gonna be the question if you follow anywhere near a model of what I did. It’s “Okay, where is the money?” And I made a pretty strong point that if we have a strong enough deal and a strong enough team, the finance will come… Which ultimately did prove to be true. The bank financing our deal, like I talked about a minute ago, was difficult, but ultimately what I didn’t share is finally a bank did get involved, and albeit the terms weren’t exactly ideal, which is why we went with the seller carryback note, a bank finally did throw their hat in the ring. It took two months of jumping the bones of every bank in greater Lincoln and Omaha metros to get that to happen, but it did happen.

But again, I would say it’s the big vision – I talked about the big vision that I have for Brighter Living, to grow it to be a very successful company, and I told them I would do anything and everything in my power to make sure this was a success… And I made it really clear to them – “I’m just looking for a little bit of your time. I’m not looking for your capital, I’m not even looking to tap into your network for this first deal. Let me prove myself, and then we’ll tap into your network”, which is actually about a year later almost of now recording this, that team now has confidence in me… “Wow, if this kid was able to pull that  off without any of our real hope other than a couple of pointers, imagine what would happen if we all opened up our collective Rolodex”, which is why we’re really excited about the future. But hopefully those were some valuable pointers about how I was able to build that team from scratch.

Theo Hicks: Absolutely. I’m gonna wrap the next question into the best ever advice question… So the second thing you mentioned that seemed to be the most important for this deal, because the seller ended up basically funding 88% of the deal… You mentioned that you wanted to talk about this anyways, which is building rapport… So what is your best real estate investing advice ever as it relates to building rapport with a seller?

Jason Paul Rogers: I would say the best advice I can give about building rapport with sellers is 1) do it in person, 2) do it honestly, but 3) even if you don’t have a super-strong base to stand on, don’t sell yourself short. There’s this tough blend on “Hey, I don’t have the world of experience…” I’m talking assuming our listener here doesn’t have a ton of experience. If you have experience, then it’s even easier for you. Then it’s just as simple as “Spend time with a seller and ensure the seller that your goals overlap.” It’s really that building rapport over time, figuring out what are your goals, Mr. or Mr. Seller, what are my goals, and can we bridge them in a way that allows for us both to get what we want out of life… But the best way to do that is through shared time together.

I probably spent 10 to 20 hours in-person with the seller before that seller carry-back offer went through. And the other half – I know this is a multi-part answer, but I don’t believe in the “just one thing.” There’s a lot of factors that go into procuring over a million dollars in bank finance when you don’t really have too much as far as your reputation at that point.

The other thing that goes into this is every single thing I told the seller I would do, I did. “Hey, I’ll see you at 11 AM.”  I was there. “Hey, we’ll do a Zoom call at 9 AM.” I was there. “Hey, I’m gonna talk to every single bank in town.” Four days later his realtor was saying “Man, I got a call from two different banks, two bankers that I knew locally, that this guy Jason Rogers was talking about your deal.” So do what you say and say what you do.

When you blend all of those things together, you give yourself the best chance possible to have rapport. But don’t get me wrong, also part of it is just a human thing. There were 15 or 20 other sellers I talked to that I probably didn’t have as good a rapport with any of them as I did with the one seller that we ultimately did the deal with.

There was a shared mindset regarding business and how it should be done, so when you take all of those things together, it’s not just one ingredient that makes the cake, but you put all these ingredients together and then – yeah, it’s a happy birthday, and a delightful cake to go along with it.

Theo Hicks: Alright, Jason, are you ready for the Best Ever Lightning Round?

Jason Paul Rogers: Let’s roll.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:17:34].26] to [00:18:10].21]

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

Jason Paul Rogers: This one’s not gonna be super-delightful for  your audience… I haven’t read a book in quite some time, and I used to be a voracious reader. We can talk about books all day long. I love Rockefeller’s biography, I love Alexander the Great’s Biography, I love Relentless by Tim Grover, I love Meditations by Marcus Aurelius… That being said, I’ve not read a book in probably six months or more. I’ve just been so darn focused on business that I really haven’t got to that.

So there’s  a couple of books that I like, but I’d be lying if I said I read a book recently. I just don’t wanna BS the audience here.

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

Jason Paul Rogers: If my business were to collapse today, what would I do next… I’d probably go into sales of some kind. I like sales… Only if you’re selling something you believe in. By the way, on the prior question, I would also read the shareholder reports [unintelligible [00:18:54].19] That’s not exactly a book, but I do read those. But yeah, I’d probably go into sales.

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

Jason Paul Rogers: I do a whole bunch of – this is a bit self-promotional – free content on YouTube. I’ve been somebody that’s loved YouTube for a long time. So I’d say producing YouTube content that is free, that really is not holding anything back, that tries to add as much value as humanly possible – that’s what I like to do when I’m not working, to give back.

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

Jason Paul Rogers: I would say the best ever place to reach me would be my LinkedIn, which is LinkedIn.com/in/jasonpaulrogers1. I know that’s a very long URL, but basically just search my name, Jason Paul Rogers, on LinkedIn. I’ll probably be the first one that shows up. So I would say LinkedIn is probably the best ever place to find me.

Theo Hicks: Perfect. Well, Jason, I really appreciate you coming on the show today and giving us really a lot of information in such a short period of time. Very detailed… You walked us through, again, in great detail, your first deal, that 1.275 million dollar mobile home park. You mentioned how you started from being a nomadic traveler, to attending a seminar, to learning all you possibly could about the mobile home park asset class, starting by putting a team together, then focused on financing second… You talked about why you focused on the Midwest as opposed to where you are from, which is California. You talked about how you found the deal, through hunting for deals, through cold-calling, and touring across the Midwest, 15-20 mobile home parks.

After you found the deal, you talked about the entire process of funding the deal, and how you ended up landing on an 88% seller carry-back note with the owner. We also talked about how you partnered with the top-tier people in the market and how others can do the same. You said it was candor and a big vision. Something I really liked about what you said was when you were talking to them you didn’t go in there saying “Hey, I want your network, I want your money”, instead you just said “I’m just looking for your time, and I wanna prove myself first before I start asking for these big things from you.”

And then lastly, your Best Ever advice for how to build rapport with the seller was do it in person, do it honestly, don’t sell yourself short. Make sure that your goals overlap, which is accomplished by shared time together. You spent 10-20 hours in-person with the seller… And then the biggest thing I think is doing everything you said that you’re going to do, you actually did. And I think a really good example was you said you were gonna reach out to every bank within a 100-mile radius, and then the broker called the owner and said “Hey, I got a call from these banks. Jason reached out to them.” I’m sure that was a great way to build rapport with the seller.

Again, Jason, I really appreciate you coming on the show today. Best Ever listeners, thank you for listening. Have a best ever day, and we’ll talk to you tomorrow.

Jason Paul Rogers: It’s been a pleasure. Have a great one.

Best Real Estate Investing Advice Ever Show Podcast

JF1115: Strategically Partnering So You Can Move Faster With Your Investing with Jeff Cohn and Clint Bartlett

Jeff and Clint knew each other for a long time before deciding to partner up. They have been able to do a lot more deals as a result of their partnership, with one of them being full time with investing, and the other being part time while also running a brokerage. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

Jeff Cohn and Clint Bartlett Real Estate Background:
-Founder of Omaha’s Elite Real Estate Group Nebraska’s #1 selling residential team for last 3 years
-Went from 80 to 600 transactions in 5 years
-Creator of Omaha’s Largest Real Estate Mastermind
-50 full-time agents on track to sell over 750 homes in 2017, making it the #1 team at Berkshire Hathaway HomeServices worldwide
-Based in Omaha, Nebraska
-Say hi to them at www.omahaseliterealestategroup.com/
-Best Ever Book: Unbroken and How to Win Friends and Influence People


Made Possible Because of Our Best Ever Sponsors:

Fund That Flip provides short-term fix and flip loans to experienced investors. If you’re looking for a reliable funding partner, their online platform makes the entire process super easy, and they can get you funded in as few as 7 days.

They’ve also partnered with best-selling author, J Scott to provide Bestever listeners a free chapter from his new book on negotiating real estate. If you’d like to improve your bestever negotiating skills, visit www.fundthatflip.com/bestever to download your free negotiating guide today.


 

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, Jeff Cohn and Clint Bartlett. How are you two doing?

Jeff Cohn: Really good, Joe. Super pumped to be here.

Clint Bartlett: Great, Joe. Thank you.

Joe Fairless: Nice to have you two on the show. A little bit about the gentlemen who we’re talking to. They are with Omaha’s Elite Real Estate Group; it’s Nebraska’s #1 selling residential team for the last three years. Went from 80 transactions to 600 transactions in five years. Based in Omaha, Nebraska. With that being said, do you two wanna give the Best Ever listeners a little bit more about your background and your current focus?

Jeff Cohn: Yeah, absolutely. Our real estate team launched five years ago, this will be our sixth year. We’re on track to do a little over 750 transactions this year, in 2017. My business partner, Clint Bartlett, who’s on the call with us, he and I started a company last year called Dynamic Properties, with the intent to buy rental properties and then also flip and wholesale and wholetail. It’s interesting, a lot of people listening are probably in that world, but for anyone listening that’s not, it’s really challenging working another job and flipping a house at the same time; you might have some people that identify with that.

I knew personally I didn’t wanna have to do the legwork and all the day-to-day management of a flip and/or rental acquisition business, but I knew all the strategies around doing it, I just needed the right person. When Clint Bartlett ended up moving back to Omaha – this is where we grew up and where we met – a couple of years ago, I said to him “Take your full-time job that you’re already doing and help me do a couple flips a year just working nights and weekends, and if we can make good enough money at it, maybe you’ll be at a point where you could quit your full-time job altogether and go all in.” Clint, why don’t you take it from there? Last summer Clint quit his full-time job… Why don’t you share with the listeners what’s happened?

Clint Bartlett: Yeah, one year ago I quit my full-time corporate role here in Omaha. Jeff and I, up to that point in 2014, we did three deals; this was all just part-time. In 2015 we did five deals, then in 2016 half-way through the year I quit my job. We did 14 deals last year, we kept five of those as rentals, and part of our strategy coming into this year was to really keep — about one-third of every deal would be a keeper, we’d hold it as a rental.

2017, year-to-date we’ve done 18 deals and we have kept eight of those, and this year we’ve also bought a few multifamily, so this year we’re at about 20 doors that we’ve purchased as rentals.

Joe Fairless: Is this in Omaha or all of Nebraska?

Clint Bartlett: This is the Greater Omaha Metro Area. We have a couple of properties that are a little outside of the Omaha Metro, but generally speaking, yes, Omaha, Nebraska.

Jeff Cohn: The original strategy going into 2017 was Clint as a full-time person; we also have a superintendent that oversees the job sites who’s in a full-time capacity and he has an assistant in a full-time capactiy, so really we have three people full-time, with Clint providing oversight to everything. My role is strategy, and I have a weekly meeting with Clint, and then Clint’s holding his super and his super’s assistant accountable.

Where Clint and I found some great synergy is the fact that I have a real estate team of 30 agents who have been selling real estate for a very long time and being very effective at that. Up until 2017 the majority of my agents focused on three lead buckets – one is their sphere of influence, two is outbound prospecting and three is internet leads… But I had a few key people that I thought would work better with rental acquisition leads rather than internet leads, so they converted a third of their residential sales to rental acquisition. So we now have three full-time rental acquisitionists – two in Omaha, one in Lincoln, Nebraska – that we’re sending all the rental opportunities to.

Where the synergy really comes into play, 1) they know how to evaluate all the properties because they’ve been selling houses for a long time, but 2) every appointment they go on, if there’s not a fit from a flipping standpoint or rental acquisition standpoint, they can just simply list the house traditionally and then our investment company can charge them a 50% referral fee.

Joe Fairless: So you’ve evolved the business model and you’ve also incorporated it so that you can gain a competitive advantage and involve more people.

The typical – maybe not typical deal, but just an example of a deal… Can you give us a case study of “Bought it for this much, put in this much, sold it for this much”?

Clint Bartlett: Yes. Our average deal – we’ll buy somewhere between 60k-80k, and it’s usually about anywhere from 15k-25k input in terms of rehab, and then we try to be anywhere from 125k to 175k price point for our ARV. Generally speaking, this year we’re averaging about $25,000 of profit per deal.

We love to buy under the $100,000 price point because, as you know, there’s less square footage, there’s less risk when you have a lower down payment… So when we can, we stay at a lower price point.

Joe Fairless: That’s helpful for the types of deals. Now can you give us a specific example of one deal and just give us the numbers of that particular deal?

Clint Bartlett: Sure, we could even take one of our more recent ones. We bought a house in a decent part of Omaha; we try to focus on areas that are good school districts, where we know they’re gonna have good resell value. We bought a little three-bedroom, one-bath home for $40,000. This was an off-market deal that actually came through our network, through our accountant who knew somebody in the state that they needed to get rid of quickly, and it was distressed, so we took on the project. We just actually sold it yesterday for $125,000, and I think we had to give a few thousand dollars back in closing.

Jeff Cohn: We closed on it yesterday.

Clint Bartlett: We closed yesterday.

Joe Fairless: Congratulations.

Clint Bartlett: Thank you.

Joe Fairless: What did you buy it for and how much did you put into it again?

Clint Bartlett: We bought that one for 40k, we put about 22k into it and sold it for 125k, so that was a good one. That one ups our overall average. I think we’re clear about 45k-50k on that one.

Joe Fairless: What would you attribute the higher than average profit on that deal to?

Clint Bartlett: That’s purchase price. Most investors in Omaha, if you were to go buy that even at the auction at the Courthouse, you’d have to pay 80k for that house, and we were able to just get a great deal because it was off-market and it was a direct buyer to seller transaction.

Jeff Cohn: It was a seller’s life situation. You will attribute low purchases prices every single time to the seller’s life situation. If it’s bank-owned and we’re in a buyer’s market, banks will give their properties away at 50 cents on the dollar. When you’re in a seller’s market, we’re not seeing as much success at the Courthouse; those are usually going really close to market here in Omaha, and what I’ve heard from other investors across the country… So where we’re having the most success right now it’s happening into our sphere of influence, letting everyone know we can buy now in cash in seven days or in 600 days – whatever that works best for the client; we don’t really care if we have to sit around and wait.

But our unique acquisition process right now has been using virtual assistants out of the Philippines to acquire a property. We have about eight full-time callers through 1000callsaday.com that are making all of our outbound calls for us, and then we re-route all of the lead opportunities to our acquisition team in Southern California, Lincoln, Nebraska and Omaha, Nebraska, and then we have those agents going out. That’s how we’ve acquired probably 80% or 90% of our properties so far this year.

Joe Fairless: Thanks for mentioning that… Let’s dig in there. Walk us through the process for how that works.

Jeff Cohn: 1000callsaday.com – you essentially reach out to them. There’s a link on the site and you let them know you want a caller. It takes about 30 days to get the caller onboarded, and then they get the data through several different sources; one of which we used is ExactData. They have predictable analytics that go through 100-150 different quadrants to determine who’s most likely to sell below market value. We bought a list from them of 50,000 people for around $3,000.

Then we take that list and we break it off into segments and we give each caller around 2,000 phone numbers a month, and the expectation is that they call through every single phone number a total of 10 times in a 30-day period. Once they’ve called through someone 10 times with no one answering, they move that person off the list and they add someone new to the list. The list is always revolving.

What we’ve found is in one month 22,000 outbound calls through 1,000 calls/day gets us about a 10% connect ratio with the decision-maker. When we have about 2,200 people that are answering the phone, out of 2,200 people we have six people (six!) that say “Yeah, we’d sell our property”, and out of those six, the acquisitionists on average have only thought about half of them are worth our time to even go out to the property to do a video and to run all the comps and really make a determination as to if we wanna make an offer.

We always make offers if we go to a house; every property should be purchased 99% of the time… So out of the three deals that we go to and we make offers on, we’ve been averaging one acquisition a month.

Breaking it all the way from 22,000 calls to 2,200 contacts to six people saying they wanna sell, to three people letting us in their door that we actually were interested in, to making three lowball offers — it’s usually 70% ARV?

Clint Bartlett: In between 50% and 70%.

Jeff Cohn: And then one of those takes the offer, it still ends up only being — $1,800 is the cost of the caller, so we’re spending $1,800 to get a deal that on average we’ve been netting about $20,000 per transaction, which is a 10x return on our overall acquisition strategy.

Joe Fairless: You mentioned that it takes about 30 days to get the caller up to speed… What’s that training process look like?

Jeff Cohn: So this isn’t just me pitching this third-party company; I’m one of the owners in 1000callsaday…

Clint Bartlett: Shameless plug.

Jeff Cohn: Exactly. [laughs]

Joe Fairless: Oh, I got it…

Jeff Cohn: But I actually didn’t use callers for myself through 1000calls just until January of this year and we’ve been around for a couple of years… But we started learning about some of our clients that we’re using this for rental acquisition… Some top guys across the country that I’m not gonna name, because they didn’t give me their permission. So because of a lot of the successes we saw them experiencing I said to Clint “Hey, let’s try this strategy in Omaha and see if it works”, and we’ve been only doing it for about six months. It’s been wildly successful, so we’re gonna just continue to scale out.

But the training process is 1) we get them synced up with our acquisition sales team in the Philippines, and so they’re listening to live calls for 30 days day after day, to learn and listen to the dialogues that the callers are making that are already working for us. Then we’re training them on the CRM we use. In residential real estate a lot of agents use BoomTown; it’s one of the top CRMs. You can use anything – SalesForce, Real Geeks… There’s lots of systems out there, but it’s a place where all of these leads live, so we can have documentation of every phone call, every text message, every e-mail if we have an e-mail address etc.

Then we also have my dialogue coach in Omaha that coaches all of my agents. He does a live stream every Wednesday at 10 o’clock Central through another business I own called Livestream.com… It’s ERSLivestream.com. What that does is it gives us the ability to train the callers the exact same way that we would train our own individual agents, so that they are then empowered with the exact dialogues that my agents would use when engaging with leads.

It’s a pretty robust training process in that 30-day period. Some people come out of it quicker, some people take a little bit longer, but they can be hitting the phone within 30 days.

Joe Fairless: Jeff, it sounds like you’ve got your hands in multiple cookie jars… How do you focus your time and prioritize your time?

Jeff Cohn: I have about 10 businesses and my focus is always on helping people become leaders within all of the different organizations [unintelligible [00:12:22].16] so anything I wanna do I put it on a calendar so I make sure that I do it. The thing that I have passion about is helping people grow within their positions, and then taking on the higher level strategy conversations and decisions. I love the marketing side of all of the different businesses – Facebook advertising, Google ads… I like all the analytics, I like to get into a lot of the numbers…

I use the same CPA for all of my businesses, so she provides me with a monthly P&L statement. I’m always looking at the numbers, because they tell you a lot of information. I guess timeblocking would be the easiest short answer for how you keep everything organized.

Joe Fairless: You’ve got 10 businesses… Which one is the most and which one is the least profitable?

Jeff Cohn: Most profitable is the real estate business; it’s been around the longest. Last year we made 2.6 million dollars gross commission income, and I kept 30% of that. Least profitable would have to be one of the newest ventures. I’d probably pick my insurance business. I started about eight months ago. I own a property and casualty insurance business, and it’s only the least profitable because we’ve just started, and in the insurance business you make your money based on residuals and you have to be around a couple of years to really generate a profit.

Joe Fairless: Have you started a company that you have identified is not a good long-term play so you’ve stopped it?

Jeff Cohn: I’m sure I have… Let me think of it.

Joe Fairless: The reason I ask is you’ve got 10 businesses, so when does one not make sense and how do you identify that?

Jeff Cohn: Great question. Most of the businesses that I started I was able to direct leads to those businesses through the success of Omaha’s Elite… Not all of them. 1000callsaday can grow [unintelligible [00:13:59].22] Omaha’s Elite success; so can our flipping business, so can our rental acquisition business and multifamily acquisition… But a lot of the other businesses are title and escrow – insurance, coaching… The coaching business can live on its own as well, but having a lot of sales in the residential spaces gives us a little bit more credibility when people are thinking of joining us.

One of the biggest fails was actually a test… Everything we do, we believe strongly in failing forward. Last year the big buzz in the residential space was talking about expansion, and I know there’s a lot of investors that wanna move into different markets and expand as well. And we don’t think that it necessarily doesn’t work, we just challenge the idea that — we think if there’s enough opportunity right in your own backyard that maybe is not being tapped the way it needs to be… So last year we said “Hey, let’s try this expansion idea out”, and I started real estate teams in Salt Lake City, Boston Massachusetts, Lincoln, Nebraska and San Diego, California, and all four of the teams gave me a positive return on investment, none of the teams gave me a positive return on my time. So while it was worth the investment monetarily, it was not worth the investment from time, and had I just put all the energy I had put in all those locations into my team in Omaha, I think we’d be a year or two further along than we’re at right now. We are growing right now, but obviously creating a second location takes a lot of time from you.

So I would say the same thing from an investment standpoint – we are actually expanding around Southern California right now, so it’s a lot easier to hold someone accountable when they have to come to a physical, face-to-face accountability meeting where you can actually drive to the properties that they’re putting offers in on once a month and just kind of check their work, check their numbers, make sure that you think what they’re doing is right. So it’s all about the people if you are gonna expand far, but my worry always with any expansion of any business if it’s not a franchise – that individual with whom you expand with at any point and take all that intellectual property and just simply do your strategy on their own.

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

Clint Bartlett: I’ll go first. My best real estate advice ever is that your entire real estate investing business hinges on your ability to market for deals. Any investor who tries to do it full-time knows that properties don’t just fall in your lap – you’re not gonna be able to go find them on the MLS – so your ability to understand what marketing is critical and how to do that marketing and then how to capture those leads, your entire business hinges on that. I think a lot of people who are new in the business think that being able to rehab a property, to make it look really nice is the key part, but that is really just an afterthought when you look at the marketing end of any investing business.

Joe Fairless: And just a follow-up question before Jeff gets into his best ever advice… What would you recommend to an investor who has a bit of experience – a couple deals under their belt – but wants to take their marketing for deals to another level?

Clint Bartlett: My best advice would be to listen to some awesome podcast, the Best Ever podcast being an example… But there’s so much free content out there about how to go market on a budget, whether it be bandit signs starting out, or doing a simple mailer… With the age of today, there’s so much content out there that is free, from a google search to a podcast; you can learn a lot.

Joe Fairless: What are the top three lead generators that you’re doing to get your deals?

Clint Bartlett: Jeff talked about our calling process – that is 90% of what we do. This year otherwise it has been our network. We’ve had people within our network bring deals to us that know what we’re doing, because we talk about what we’re doing all the time.

Joe Fairless: Got it – like the accountant and the state sale you mentioned earlier.

Clint Bartlett: Exactly.

Jeff Cohn: Yeah, I have a huge database; I have 60,000 people in my network. We use a company called Viral Marketing and we create a video every single month that gets sent out to all of those individuals. All of the different business entities I own, I can create a message that goes out to my database and lets them know about the value of whatever that business venture that I’m in offers to them.

A lot of people know people in distress, they know homeowners that need to get out of their properties quick, and we want them to think of us as the solution to that problem. The biggest challenge is just getting that messaging out, and obviously, you can do it a lot of different ways, and we feel like the caller way is probably one of our best. Another one that Clint didn’t bring up – we have a few of the top short sale agents in Omaha as agents on my real estate team, so everytime a short sale hits the market, we always go in with an offer, every single time. That’s been another strategy where we picked up a lot of houses last year.

We’re doubling down on the call center, we’ve got a lot of success with that… And we’re not selling anything, so for those out there listening that are worried “You can’t be doing that”, my attorney says there’s no issue because we’re calling to offer them money for their house. So we’re not calling selling them anything, we want them to sell us something. But we don’t call cell phone numbers, we just call land lines, and ExactData can control all that.

So my answer, Joe, in terms of “What’s the best thing someone can do?” first is to just do it – I’ll steal Nike’s slogan. I know so many investors that we’ve met at like REIA, or have reached out to us for lunches, that will ask us for our time and advice, and they’ve never done one deal. I know there’s people listening to this that just haven’t done that first deal. Even if you do the first deal and you lose money, you will have learned more in that first deal than what you’re probably gonna learn in listening to 100 podcasts. No offense to Joe, because he’s a great [unintelligible [00:19:17].23] I’m on probably five podcasts a week, and Joe, you’ve done an awesome job already on this call.

So my number one thing is just go do your first deal, because that’s how you’re gonna learn; it’s the school of hard knocks. And then number two – birds of a feather flock together; surround yourself with the type of people you wanna be like, and as much as you think that the people that are succeeding at the highest level might not be willing to give you the time of day, it’s actually the very opposite. We find the wannabe investors are the ones that think that they have private ideas that they’re not gonna share with other people; it’s the ones that have the abundance mindset, that are sharing on podcasts and giving all their information out for free that are succeeding at a high level and are willing to sit down with you.

Find the person in your market that’s doing really big things and align yourself with them, and that’s the best way to learn and to grow.

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

Jeff Cohn: Go!

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

Break: [00:20:11].00] to [00:21:24].09]

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

Clint Bartlett: I’ll go first – Unbroken, written by Laura Hillenbrand, about Louis Zamperini World War II experience.

Jeff Cohn: How To Win Friends And Influence People, Dale Carnegie.

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

Clint Bartlett: We had a wholetail deal that we bought a big old mansion that we intended to rehab. Instead, we just put it on the market in as is condition and made $80,000, so it was a good turn in three months.

Jeff Cohn: And I’ll take to one before we had started Dynamic Properties; about a year and a half ago we got a deal through a friend of a friend for $40,000, and Clint and I were gonna flip and put about $40,000 in and list it for 120k; we were getting ready to go on a family trip to Mexico and I said “Hey, what would happen if we just wholetailed it and put it on the market for a week, take close bids, and we will review all the offers when we get home?” And we sold it for 82k and made 42k, so we didn’t have to go through all the work of fixing it up and got the same net out of it.

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

Clint Bartlett: We’ve lost money on a deal, Joe; it was only a few thousand dollars. The biggest mistake on that deal was the length of time in the project. It took us way too much time. But that’s not a huge regret of mine; my biggest regret are a couple of deals that I’ve passed on because we were tied up in too many other transactions. Looking back on a couple of deals that I’ve passed on, I now wish that I had either owned those properties as rentals, or I’d flipped them.

Jeff Cohn: We bought a property last year – I was actually the decision-maker on this one, and I don’t go to very many properties. Clint was gonna be out of town, and it was one of the — what was it…? Like a tax sale? An IRS sale. IRS sells a few houses a year in Douglas County… So I went to it, we picked it up for really low below market, like 80k below market, but it had been smoked in excessively; everything was yellow on the ceilings and on the drapes and everything, so Clint researched as much as he could on how to fix the smoking issue, and we did a lot of due diligence to get the smoke out, and we never got the smoke smell out. It still smelled smoky, and it was on the market for about four months and in the end we were like “Screw it!”, we threw our hands in the air and just rented it out.

We’re hoping whoever rented it from us that they take on all the smoke smell when they move out. We’ll see what it’s like when they’re gonna vacate this summer.

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

Clint Bartlett: I’d love to say that I was giving back all the time; I’m a pretty selfish person. But when I do give back, Joe, I think working in the food pantry downtown is one of the best ways to give back, because you’re helping people with the essentials of life, basic necessities.

Jeff Cohn: Clint and I both are involved with the Boy Scouts of America, we’re both Eagle Scouts, so we do a lot within our church… Volunteer work with Boy Scouts, camping and camp out… I serve a lot with kids, youth 12 years old to 18 years old – I spend about an hour a week. But I think the greatest way to give back, it’s like you can give a man a fish or teach him to fish; for me, it’s giving people advice on how to scale their businesses. That’s where my greatest passion is. I have a podcast called The Teambuilding Podcast by Jeff Cohn, and that’s where I give back. It’s my greatest contribution to help people take their lives to a level they never dreamed possible.

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

Jeff Cohn: On Facebook you can just search “Jeff Cohn” – that’s how you get in touch with me. Or you can e-mail Jeff@omahaselite.com.

Clint Bartlett: For me it’s Clint@dpomaha.com.

Joe Fairless: Well, thanks for talking about your business models — you’ve got 10 businesses across the board, Jeff, and Clint, thanks for going deep with us on some case studies and acquisition criteria. I love to hear when people are fixing and flipping that they’re setting money aside and pumping that back into long-term rentals. I think that’s a trap that a lot of fix and flippers get into, where they just keep churning and they’re not building a portfolio for a long-term growth and wealth. And then also talking about how you’re getting the leads; granted, there’s some conflict of interest there with that, but I appreciate the disclosure. But really, if it’s working, it’s working; that’s the most important thing.

Then lastly, I love your point about focusing on helping people become leaders; that is a major focus and that’s something that I’m gonna implement in my business too, just reinforce that mentality, so thank you personally for that.

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

Clint Bartlett: Awesome, thank you.

Jeff Cohn: Thanks, Joe. Have a good one!

Joe Fairless