Best Real Estate Investing Advice Ever Show Podcast

JF1177: An Engineer Is Refining The House Flipping Process To Factory-Like Efficiency with Geremy Heath

Listen to the Episode Below (24:21)
Join + receive...
Best Real Estate Investing Crash Course Ever!

When he came to America for work, he shortly realized he was here for good. Geremy almost immediately started looking for ways out of the corporate world. He enjoys house flipping, he has flipped over 250 houses and knows where in the process each house is at any time, thanks to the system he uses to keep track of everything. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

 

Geremy Heath Real Estate Background:

  • Owner and director of Texas All Cash Home Buyers, which he founded with his wife Melanie in 2009
  • Primary focus is the redevelopment of single family homes in the San Antonio area
  • Flipped over 250 properties, currently has a goal with his team to complete more than 100 rehabs this year
  • Originally from Sydney Australia, Geremy moved to the US in 2006
  • Prior to real estate, he worked as a management consultant for 12 years
  • Based in San Antonio, Texas
  • Say hi to him at www.TexasAllCash.com
  • Best Ever Book: The Master Key System

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.


TRANSCRIPTION

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

Today we’re gonna be talking to a fix and flipper or redeveloper of single-family homes who’s based in San Antonio, Texas. How are you doing, Geremy Heath?

Geremy Heath: Hi, how are you doing?

Joe Fairless: I’m doing well, and nice to have you on the show. A little bit about Geremy – he is the owner and director of Texas All Cash Home Buyers, which he founded with his wife in 2009. Primary focus is the redevelopment of single-family homes in the San Antonio area. He has flipped over 250 properties and currently has a goal with his team to complete more than 100 rehabs this year. Originally from Sydney, Australia, and he moved to the U.S. in 2006. We also have a couple mutual friends – one is someone who I worked with in New York City, his cousin is friends with Geremy, and then someone else who I currently work with, they are in an Australian group. I said that “All you Australians stick together, don’t you?” and he said, “Yup!”
With that being said, Geremy, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Geremy Heath: Yeah, thanks Joe, and thanks to the Best Ever listeners out there. My background is — I originally came from the corporate world, so that’s what brought me over to the U.S. back in 2006. I met my wife here in San Antonio, Texas. It was around the time that we went on our honeymoon that I realized I was gonna be stuck in the U.S. probably for the rest of my life I was committed, so that’s when I ended up kind of thinking about my exit strategy from the corporate world and what I can get involved in, and real estate is where I landed.

Joe Fairless: Okay. Tell us about your business – what have you been up to since you landed here in the U.S. in 2006?

Geremy Heath: Our main focus is buy, fix and sell. We primarily rehab properties. We do do some wholesaling of properties as well, but we’re really trying to [unintelligible [00:02:54].11] effective rehabbing model focused on doing a large volume of rehab transactions per year.

Joe Fairless: You do buy, fix and sell, versus wholesaling; why buy, fix and sell versus wholesaling? I’m just gonna play devil’s advocate, because when you buy, fix and sell you have more risk associated to it, longer timelines…? Versus wholesaling where you’re simply signing a contract.

Geremy Heath: I guess for me – I originally studied civil engineering, even though my career was never in that space; my career was in management consulting, but I came from my career work of having a big process and process improvement background, and so for me it was really a challenge. I really enjoyed the challenge and the complexity of the remodeling, and the way that I’ve always seen it from the beginning is just like a factory, because I used to do supply chain management, and so I’d always view this business as a factory, where a finished product that I’m putting out is a high-quality retail property [unintelligible [00:03:53].02] qualified buyers, and the raw materials coming in are the distressed properties.

Over the last few years I’ve really been just trying to refine my processes so that we can get the product out there as quickly as possible at the highest level of quality, for the best cost.

Joe Fairless: Let’s dig in there. What are some of the things that you’ve done throughout your process to refine, so that you now have a well-oiled machine?

Geremy Heath: I think through my evolution I identified early on that there were always just three main constraints for me to be managing in the rehabbing business. The first is the deal flow – you need enough leads and you need enough deals coming into your pipeline, and I think when people get started, that’s often the first challenge.

Once you get the deals coming in, the next challenge is having enough cash or enough capital to close on those deals, and then if you have those two going, the third challenge is gonna be your capacity to remodel the houses.

I always found that it was always one of those three that was a constraint, so whichever one was the constraint would get the majority of my focus to remove that constraint, and then that would enable the business to grow to the next level until the next constraint kicked in, and that’s still the way that I’m looking at it.

Joe Fairless: With your civil engineering background, what’s something that you’ve implemented in either one of those three constraints that you’d probably track back to your civil engineering experience?

Geremy Heath: I think in civil engineering – that helped me just from an overall construction background. But the main thing that I’ve really bought from my past is the way that I view things from a process perspective. When you’re looking at any process, the end goal is to produce something that has a high level of quality, that’s done quickly, and that’s done at the best cost. Those are the three dimensions that an output of a process would be measured on.
I’ve really focused on having a lot of systems and checklists to really drive quality and to reduce the amount of failures that occur in that process, and I think the simple tool, the checklist has been the cornerstone of how I’ve really built my business.

Joe Fairless: Give us an example of a checklist.

Geremy Heath: For example, an important process for us is when we sign off on the rehab process with a contractor. One of the frustrations for people that get into rehabbing houses is they finish the rehab, [unintelligible [00:06:09].18] final check, they then put it on the market, they sell the house, and the end buyer gets an inspection and a bunch of issues come up on that inspection report, and it’s always a bit of a hassle working through that. We’ve really used the checklist mindset to build in all of those errors that were coming at the end in the final inspection, and make them inspection points for us at the sign-off stage with the contractor, so that we could get the first time the quality of that property right, and get it done right at the time when the guys are actually on the job and working, not having to deal with it a month or two later when they’ve moved on to other things.

Joe Fairless: Anything on that particular checklist where you sign off on the rehab work that wasn’t on it initially, and then after going through a couple experiences – or one experience – you added it?

Geremy Heath: Yeah, a big one — there’s tons of things; one was water heaters, for example, having like the drain pan and having it lifted at the right elevation and the drain lining up, pouring to the outside of the house. On electrical there’s always tons of little nitpicking things that the inspectors bring up on electrical, like having anti-oxidant on the connections and having the panel labeled, or even things like open splices in the attic on the electrical as well.

What I really love about the checklist is that the checklist has an in-built memory, so anything that you learn, you add to that checklist and it avoids that mistake happening again, and it’s kind of like the checklist gets smarter and smarter all the time.

Joe Fairless: From an administrative standpoint with this checklist, is it a piece of paper, or is it on an iPad, or is it a program you created? What is it?

Geremy Heath: I’ve gravitated to a tool which is called Process Street. You can find it online on Process.st. It’s a really simple, cool, online software that I use in every area of my business, and it’s really enabled me to build out systems in every single function over time. What’s really cool about it is once you’ve created a checklist template, you can then open up that template for a specific property.

For me, for example, at the moment I have 38 properties in my pipeline, but I could go into Process Street at the moment and I could see where every single one of those properties are at and specifically within each process what’s been completed and what hasn’t.

Joe Fairless: How did you come across Process Street?

Geremy Heath: That was through a buddy of mine that was in a real estate mastermind group. We just met up for the weekend and he started sharing it to me, and I was like “Dude, this is awesome. I’m stealing it.”

Joe Fairless: [laughs] Do you know how much it cost?

Geremy Heath: You can get a free trial subscription, but for me at the moment I think I’m paying somewhere in the order for $70, and that allows me to have multiple users accessing it.

Joe Fairless: Got it, $70/month, right?

Geremy Heath: Yeah, yeah.

Joe Fairless: Cool.

Geremy Heath: And the cool thing about it is at the moment I’m actually looking into building out my rental side and setting up like a property management function, so the first place that I’d start now is I think “What are my high-level processes for that particular function?” and then I start building out checklists. The checklists are not something that you necessarily have to sit down and build in one hit. You can slowly build them over time, and I’ve found that having that online tool made it so easy… Whenever you had an idea, you could just quickly log on and throw the task in there that you were thinking about and keep building it.

Joe Fairless: Let’s talk about a specific deal that you have done… Maybe it’s the last deal, or just one that comes to mind. It doesn’t have to be your best ever, but just a typical one that you do in San Antonio.

Geremy Heath: A typical deal for us would be — I guess my best deal ever would be my first deal, just because it was my first deal, and overcoming… When people get started, there’s always those fears and doubts, so just to overcome that, take action to get leads coming in, take action to make the offers and to lock a deal down… I’ll always remember that.

I bought a nice watch after to [unintelligible [00:10:01].25] so it’ll always be special to me. But for typical deals now in San Antonio, we’re typically in an ARV range of between 150k to 300k, which is where most of the ARVs are for retail, and we typically like to buy them at 65%-70% of the ARV.

On average, we’re looking at between  a 30k to 50k+ profit on our deals.

Joe Fairless: With the three constraints… You said 1) deal flow (you’ve gotta get leads), 2) cash to close and remodel, and 3) capacity to actually implement the business plan, so remodel the houses – what’s one way you have enhanced number one, the deal flow to get leads?

Geremy Heath: I think with deal flow it comes down to — the basic thing it comes down to is you have to spend money on marketing, and that’s what I’ve learned more and more, and I think that most people’s fear is… Particularly, most people get started in real estate as a part-time gig; they’ve got their regular job to keep them going, and they’ve gotta spend some money. But if they’re gonna cut the cord on that full-time job and commit to spending money to make the business work, it’s a very difficult thing to do. But I guess what I’ve learned is that that is the most critical thing to do, because without it there’s no business.

Joe Fairless: What about the having cash to close and remodel…? How do you get the cash and make sure that you are properly funded?

Geremy Heath: I work with several private investors that I have personal relationships with. The relationships have sort of been built over time, and I guess they’ve evolved through improving the record. I guess at the beginning — because finding capital for a lot of people getting started is often a constraint, but my approach to it was to just get super focused at the times when I needed money, and pound the phone and try to find the investors. And as I got more experienced, I got more of a track record, I found that the capital was actually the easiest part, because I think once you’ve shown success with certain people, they speak to their friends and it kind of continues on from that point. But I think in the beginning if you take massive action and believe that you’ll get it and take action until you do, you’ll be able to find the capital that you need.

Joe Fairless: What are your terms that you have been getting from investors?

Geremy Heath: I range between 8% to 12% with my investors, it’s typically where I’m at. It depends on the type of deals that they’re doing, but that’s kind of the range.

Joe Fairless: Any points at closing on top of the 8% to 12%, or just straight 8% to 12%.

Geremy Heath: Yeah, straight 8% to 12%, and note points and interest paid at the end when the deal closes.

Joe Fairless: You mentioned the capacity to actually remodel the houses… What is something that we haven’t talked about that you wanna mention in terms of that constraint so that it’s not a constraint for you?

Geremy Heath: I think for most people if trying to do remodeling on a significant scale – even a decent scale – that’s where most of the issues come up. People can spend on marketing on the deals, and get the deal flows, and have the capital, but then they have a ton of rehabs going on and the execution, to be able to go from a trashed house to a pretty house – there’s so much execution that goes into that… So you definitely need to be very systematic about what you’re doing, but you also need to understand… Like, if you’re the real estate investor who’s building the business, you need to get yourself out of that tactical execution as quickly as possible, because if you’re focused on that, you can’t focus on the other things at your business.

For me, when I had enough deals coming through, I added in a project manager to support with that, and the level of skill of that project manager was much less and I was paying him much less than my current project manager, but what I found was over time as I grew I had the ability to pay more for that role and hire a stronger skillset. It has just evolved over time.

Joe Fairless: What does a project manager cost in terms of what we should budget if we were to hire one?

Geremy Heath: I think that if someone’s just getting started and they’re doing something like 25 deals a year, 25 rehabs and are looking for a project manager, you can probably look at getting someone in that 40k range. But I think if you’re looking for a more seasoned guy, who has the ability to build houses from the ground-up himself, and really has that deep construction expertise, you’re looking more in the range of 55k to 70k for somebody like that.

Joe Fairless: In terms of San Antonio – you’ve been there since 2006, you founded your company with your wife in 2009… What have you seen in the market as you’ve been there from 2009 when you started to today?

Geremy Heath: It’s been pretty crazy actually, the last few years. When I first got started it was pretty flat. The country was going through a downturn, but I think San Antonio was pretty resilient. It didn’t really go down, it just stayed flat for a few years there… But probably over the last five or six years it’s been incredible how houses have been appreciating, particularly in the range under 100k.

Just to throw some data out there, about five years ago, I think around 27% of the houses in San Antonio were worth less than 100k, and today it’s probably only about 7%-8% that are worth less than 100k. So it’s been like a huge shift in that bottom end, and with that you’ve seen houses that may have been worth 80k or 90k five or six years ago is now worth 140k. So we’ve seen increases of like 50%. But then the funny thing is on the upper end, if you start to get above 250k or 300k, there really hasn’t been that much appreciation on the higher end, so it’s kind of like the bottom end is just squashed up and the top end has stayed pretty flat.

Joe Fairless: What do you attribute that to?

Geremy Heath: I think that San Antonio is definitely a fast-growing city, so there’s a lot of growth here with companies moving here, migration… So I do believe that a lot of that growth is really more like — I’d call it a base growth. It’s probably younger people, first-time homebuyers who are coming into the market, whereas the top end  – there’s just not as much demand for those particular houses. And I think as the population is growing, it’s more common for young people who are getting started here, rather than those high-end, seasoned people.

Joe Fairless: What are the areas — if we were to divide San Antonio into quadrants… North-East, North-West, South-East, South-West – what would be the quadrants where the growth is happening?

Geremy Heath: There’s huge growth — if you look North-East, that’s the direction that heads up I-35 to Austin, and Austin is less than an hour away, and that corridor through there is just growing like crazy. We have San Marcos between the two cities, but there’s tons of growth up in that direction. And then just generally more in the North direction, San Antonio is continually pushing up in the North. The higher value properties are more on the North side of the city, whereas the Southside of the city is more Hispanic… But that South side is also the area that used to have a lot under 100k, and which have now gone up into that 150k range. They’ve had a ton of appreciation down in the South.

Joe Fairless: Where are your deals typically found?

Geremy Heath: We look all over the city. For us, we’re not so focused on location. Our main criteria is that it’s within a 45-minute drive from our office, but we’ll look at things in any direction. And it’s really because we look at the opportunities from the perspective of value. I always use the example – and my accent sounds bad when I use this example, but there’s the TV show Pawn Stars… [laughter] I can never say it the way I’m supposed to…

Joe Fairless: I think you kind of maybe slide in a little bit of ‘porn’ instead of ‘pawn’ whenever you say that, don’t you? [laughter] Is some of that intentional?

Geremy Heath: Yeah, in Australia we say it the same way.

Joe Fairless: Alright, fair enough.

Geremy Heath: Yeah, but that show — and to be honest, when I first started getting into real estate and buying and selling, I used to watch that show a lot, and the thing I learned from that show is that everything has a value, and you can profit from it as long as you can get it under-valued. Somebody was trying to sell an old baseball jersey – you need to know what the retail value is and then you need to be able to get it for a discount on that.

Real estate is exactly the same, whether it’s a $15,000 house or a million dollar house. If you can find the discount from the retail and then have a way to sell at retail, you can always make a spread.

Joe Fairless: What is your best real estate investing advice ever?

Geremy Heath: I would say the best advice ever… I think that you should always dream big and you should have unwavering faith and belief in [unintelligible [00:18:45].19] vision and then you should take massive action every day to get there, even if things aren’t going 100% according to plan, you need to just keep taking those actions forward and keep your vision strong and you’ll get there.

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

Geremy Heath: Yeah, let’s do it.

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

Break: [[00:19:06].05] to [[00:20:08].14]

Joe Fairless: Best ever book you’ve read?

Geremy Heath: I’m reading one at the moment called The Master Key System by Charles Haanel.

Joe Fairless: The Master Key System?

Geremy Heath: Yeah, and it was actually a [unintelligible [00:20:18].12] to Napoleon Hill’s Think And Grow Rich, but he also had the laws of success… And if you listen to The Master Key System, it was written before that and you can see a lot of the ideas that Napoleon Hill actually has [unintelligible [00:20:29].24] It’s awesome, it’s a great book.

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

Geremy Heath: I would say that there was one time when I went big on three bigger houses, like higher ARV houses that were all around the 500k, and I hadn’t really had experience in that realm. I should have just taken one on to see how it worked out, but I took on three at once and I ended up losing on all three of those houses. It taught me that if you go into a new space, it’s okay to scale, but you’ve gotta prove that it works first.

Joe Fairless: Yeah. What was the reason why it didn’t work?

Geremy Heath: I think when you get into those higher ARVs, the rehab model was off, because finishes needed to be better-quality finishes. I think when we tried to sell it, people were way more picky, and it took longer to sell. Then we were also off on ARVs, so it was kind of all three things happening.

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

Geremy Heath: Personally, I really enjoy coaching, and a lot of that comes through the people that work with us. I’ll get a lot of satisfaction out of it. For me, the business is about building a team, setting a big goal and then going for it, but then helping the team to grow so that they can do their best. There’s nothing I love more than to see them really producing and doing well through the advice and coaching and mentoring I’ve been able to give them.

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

Geremy Heath: The best way to get a hold of me – you could go through the Contact Us form on my website, which is TexasAllCash.com, or you could e-mail me directly at Geremy@TexaAllCash.com.

Joe Fairless: I love how you walked us through the three main constraints that you have and how you are addressing them. And that’s not just you, but any fix and flipper. That is deal flow, how to get the cash to close and remodel, and the capacity to actually implement the business plan.
Some tips that you gave within those three along the way would be that with the cash, you’re providing an 8%-12% return to your partners on those. With the marketing and leads you’ve gotta just spend some money in your case to get those leads… And what’s the number one place you spend money to get the leads, by the way?

Geremy Heath: We do some radio marketing…

Joe Fairless: Radio?

Geremy Heath: Yeah.

Joe Fairless: Huh.

Geremy Heath: We do a lot of radio. Then we do a bunch of other things, like direct mail and some online stuff, things like that.

Joe Fairless: But radio has been the number one best ROI for you?

Geremy Heath: What radio gives you is the ability to have a large marketing spend without a lot of effort; you’ve just gotta pay for the spots and let it roll.

Joe Fairless: Okay. And then the last thing is the checklist that you created in terms of you’ve gotta have the capacity to remodel the houses, and one of the resources you gave us is Process.st. I always say ‘process’ [prawcess], but now I’m spelling it out, it really is process; I don’t know why I say process [prawcess]. I think a lot of Americans say process [prawcess], but I think we’re wrong; I think it’s process.

Geremy Heath: I’m glad I had this positive influence on you.

Joe Fairless: Yeah, yeah… Process.st, and then also we have the salary range for a project manager. Depending on experience, it could be around 40k if you have around 25 rehabs a year he/she is overseeing, or as high as 55k-70k for someone more seasoned.

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

Geremy Heath: Yeah, no worries. Thanks, Joe, and thanks to the Best Ever listeners.

Best Real Estate Investing Advice Ever Show Podcast

JF1078: Focusing on Not Losing Money with Business Consultant D. Anthony Miles

Listen to the Episode Below (24:20)
Join + receive...
Best Real Estate Investing Crash Course Ever!

Sometimes it’s best to have someone in your corner advising you on investing decisions. A consultant like D. Anthony Miles is here for exactly that reason. As he says, the most important thing is not losing money vs. how much you make on one deal. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

Anthony Miles Background: ‎
-CEO and Founder at Miles Development Industries Corporation©, a consulting practice and venture capital acquisition firm
-Host and executive producer of Game On Business Talk® Radio Show
-He has over 20 years in the retail industry, banking and financial services industry
-Award-winning researcher, professor, statistician, legal expert witness, and best-selling author
-Featured on nationally syndicated media such as: Forbes, NBC News, Fox News, CBS News and others.
-Based in San Antonio, Texas
-Say hi to him at http://mdicorpventures.com/
-Best Ever Book:The Cashflow Quadrant

Made Possible Because of Our Best Ever Sponsors:

Are you an investor who is tired of self-managing? Save time, increase productivity, lower your stress and LET THE LANDLORD HELPER DO THE WORK FOR YOU!

Schedule Your FREE TRIAL SESSION at mylandlordhelper.com/joe with Linda at Secure Pay One THE Landlord Helper 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, Dr. D. Anthony Miles. How are you doing, D.?

Dr. D. Anthony Miles: How are you doing today?

Joe Fairless: I’m doing well, nice to have you on the show. A little bit more about D. – he is the CEO and founder at Miles Development Industries Corporation, which is a consulting practice and venture capital acquisition firm. He is the host and executive producer of Game On Business Talk Radio Show. He has a book called Risk Factors and Business Models, and he has over 20 years in the retail industry banking and financial services. Based in San Antonio, Texas… With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Dr. D. Anthony Miles: Sure. I’m an entrepreneur, award-winning professor, award-winning researcher, a statistician, legal expert witness, best-selling author, I’m a nationally-known expert in my field of entrepreneurship and marketing, I have appeared in the national media, I  have been interviewed in Forbes, I’ve been on CBS News, I’ve been on Fox News, I’ve been on the other major news networks, and what I do is I share my experience with startups in marketing. That’s my story, and I’m sticking to it. [laughter]

Joe Fairless: Specifically, how do you make the most amount of your money?

Dr. D. Anthony Miles: Most of my money comes from my consulting work, and I have a really interesting business – I deal with professional athletes and high net worth individuals or lottery winners. Those are the bulk of my clients.

Joe Fairless: Okay. And what value do you provide to them?

Dr. D. Anthony Miles: I work in a capacity with my clients — I’m a business advisor. I have a unique practice – I prevent my clients from investing in business scams, or businesses that I would not recommend they invest in, because you have the horror stories in the media about a guy investing in a business, and he did not know that they were losing money and they were taking his money, and his return on investment [unintelligible [00:04:26].21] A lot of these stories are making it to the media, and I try to be a voice of reason, I try to protect my clients. That’s what I do.

Joe Fairless: I know you have experience in the real estate field, because in another life you used to be a loan officer and you used to do foreclosures… So knowing that your primary source of income is the consulting work and dealing with professional athletes and lottery winners on preventing them from losing money on bad investments, what are some investments that you personally have made or are currently making that are good?

Dr. D. Anthony Miles: Oh, goodness… That are good? [laughs] With my venture capital side of my business I try to look for businesses that are underworked, meaning they have potential to get more business outside of where they are, and a lot of times when I look at a business, I look and see if I can take them global, I look and see if I can exploit another market segment that they had not been exploiting, and I also try to stay away from businesses that are in a declining industry. Some of the successes that I’ve had have been small businesses that I try to take global, particularly some of the services industries.

Sometimes I actually partner with other businesses, and if I have a partner and we take on a business, I may come in as the marketing expert, my partner may come in as an accounting or finance expert, and then we try to close all the gaps that would make the business unsuccessful, we look at certain things…

So a lot of businesses that I deal with, I find them that they’re underperforming, and find out what’s wrong and how to [unintelligible [00:05:58].08] I try to get the businesses under what the guy selling the business (the seller) is trying to ask for. That’s primarily what I do.

I’ve had some hits and misses. One of the mistakes — it’s probably more interesting to tell you some of the mistakes that I made, as opposed to successes… [laughter] One of the mistakes that I made – this will probably be interesting to your listeners – is look at the facts and don’t try to go on passion when you’re looking at something to invest in. Because you may like something, and it may not represent the facts when you read the financials or whatever, and it may not be a good picture; some people see what they wanna see.

I could tell you seven ways till Sunday why you shouldn’t buy this business, and the guy is gonna sit there and go “Well, I still wanna get it.” Then he finds out he got a duck, or a lemon. That usually happens, and I’ve made that mistake.

Sometimes you’ve gotta look at the facts, you’ve gotta be Joe Friday. If they’re not making money and they are in a declining market or the market shifted on them, why do you think you’re gonna try to make something out of nothing? That’s the mistake that I’ve made in certain ventures, and I’ve lost money… And I think I’ve lost money on some of the ones that I’ve made mistakes at because I was passionate and I didn’t read the fine facts and I didn’t do my due diligence. That’s what I would say – you’ve gotta do your due diligence. If it doesn’t reflect in the numbers, the profitability that you’re looking for, you may not wanna pursue this.

I go by the mantra what Warren Buffet says. Rule number one – don’t lose money. Rule number two – don’t forget rule number one.

Joe Fairless: Yeah, I love his two rules as well. I love focusing on that. You’ve mentioned some of your good investments… Basically, you need either to turn them around or to maximize the potential because they have some upside opportunity, which is the same exact thing that we do as real estate investors. Can you give us a specific example of a good investment where you did this, just to add some color to the framework?

Dr. D. Anthony Miles: This is probably endemic of all the good investments that I’ve made and it’s probably a good example… This really wasn’t a company; I looked at some stock, and I tried to buy stock in a company, because I’m actually gonna be the investor and I actually partnered with another investor, and the success that I had with this was I had a team of people behind me: I had a CPA, and I had an attorney check things out, because obviously I’m not a CPA… And why this was successful was because they did the groundwork and they did their due diligence, and that prevented me from making a bad business move.

Sometimes in business you’re gonna see some things that are apparent to you, and sometimes you’re gonna see things that are not apparent to you. Case in point – another successful business we partnered on acquisition was the owner was getting ready to get out of the business; he was on the point of franchising the business and he didn’t know where he was gonna go with it. The guy just wanted to get out of the game, so we said, “Okay, how we can make this successful for both parties is why don’t you tell us about your market, tell us about where you’re going with the business, tell us about who’s on your board of directors and those types of things?” We found out he was a solid company, he had made profit several years; he had one down year over a ten-year period. When we got into the business, we found out that his market segment was declining. Sometimes when you have a guy working at a business, Joe, he doesn’t look at all sides of the business; he’s just worried about what’s going on in the business, he doesn’t look at the potential.

So we brought a fresh pair of eyes and we said, “Okay, we see an opportunity to pursue this for a foreign country that’s next to Texas; you had never considered exploiting the Mexico market? You have a product that they need over there, and you have probably one or two competitors, so you would be one of the three main competitors in that market.”

What we did was we acquired the business, we bought them out, and we went over there and not only did we penetrate the Mexico market, we almost dominated it within the first four years. What’s the moral to that story? Sometimes when opportunity speaks to you, you have to take advantage of it. We were just lucky to come in at a time when a guy wanted to get out of the business, and we totally reinvented the business and reinvigorated it, and we got into a new market and we almost doubled and quadrupled our profit margins.

Joe Fairless: What was the business?

Dr. D. Anthony Miles: It was a manufacturing supply company that manufactures goods for vegetables, and a sort of items to their product line. It was like a food company, like manufactured goods and those types of things.

Joe Fairless: Okay, and how did he get in touch with you or you get in touch with him originally?

Dr. D. Anthony Miles: When we got in touch with him it was kind of like — I work with a broker that finds business that are up. My broker contacted me, and he also contacted a couple other partners, and asked us to take a look at it. I believe the guy just wanted to get his money and get out of the game, and that’s how we found out about the business.

Joe Fairless: Your previous experience as a loan officer and doing foreclosures – what did you learn from that experience that you’re applying now in your business as a venture capitalist, buying businesses and then repositioning them and making money?

Dr. D. Anthony Miles: I had trained in real estate in Baltimore, Maryland when I was with a company right out of college, and I spent about 2-3 years studying real estate, and some of the things that I learned that I wasn’t aware of is how grueling the foreclosure process is, when you’re trying to get out of a bad deal because there’s a lot of federal and state regulations that you have to deal with.

What I learned was reading credit reports when you get a person, when you do a loan application for a mortgage or whatever, and people can lose their job, and that just really makes everything bad, and you never saw that coming. Case in point – the state that I’m in, Texas, we have a lot of military bases here in San Antonio, and one of the military bases got [unintelligible [00:12:05].10] So all of the loans that we had, that we made – I was part officer on them and on some of them I wasn’t – and a lot of the loans that were made to people, they lived in this particular area, and when they shut down the military base, a lot of those people lost their jobs… And they had pretty good, high salaries – we’re talking 70k, 80k/year – and some of them refused to move because they transferred their jobs I think to Georgia.

So what we had to do – the lessons that I learned from that is sometimes you have to work with people where they are, sometimes you’re just gonna have to eat a loss. A guy that was making 80k a year, and he loses his job and he has to go get unemployment, and that’s only temporary, and then when you do get another job, they don’t wanna pay you what you were making, so your debt ratio is not in alignment to what you were making before, and we had to eat a lot of foreclosures. What I learned from that is you have to really work with people, then you also have to look at the bottom line. If you can’t keep a guy in the house that you no longer can afford, you’re just kind of delaying the pain, or the inevitable. So you wanna try to be a human person, you don’t wanna try to just go “Well, you can’t make the payment, we’re gonna shut it down.” There’s alternative things they could do, and a lot of the guys that were working at this particular installation were the only persons working, their wives weren’t working. So when they lost that income, they didn’t have a two-income home, it was a one-income home, and how do you negotiate that with a guy who just lost his job and he can’t make any money, he’s not even close to that, unless he relocates.

We  used to always have a saying with this, and what I learned from a guy that trained me in real estate and also lending – he said if a guy doesn’t pay for his house, he doesn’t care about anything. If he lets his house go into foreclosure, he’s not gonna pay his credit cards, he’s not gonna pay his car payment”, because you know, real estate is the most secure type of collateral in lending, and if a man doesn’t care about his house, he doesn’t care about anything, and we ran into people like that when I was trying in the business… And you just try to make it as less painful as possible for you, and also the other party.

So what I learned from that is try to negotiate, try to find the optimal solution before it gets to the foreclosure, because there are alternative things that people can do. It’s just a matter of “What’s the optimal situation for that particular person in that particular situation?” One thing that works for one person doesn’t work for another person.

That’s what I learned from that, and I’ve seen people get their stuff put out when it was raining and cold, and their kids — it’s really depressing when you actually do foreclosures. There’s a human element that you have to deal with, because it’s not about numbers and quads, it’s also about these people are losing their homes and you have to have some type of empathy about it. You just can’t be a guy going in there saying, “Well, we’re gonna take your property. We’ll send a sheriff over there to serve an eviction notice or a [unintelligible [00:15:14].28]” You have to be a human being when you deal with a situation like that.

That shaped how I do business in my business. I always try to bring it back to “Let’s be human about it, let’s negotiate, let’s try to prevent this before it gets to that point.” Because you have to understand, when a guy is losing his house and you have a foreclosure, he’s not in his rational mind. The other part of it too is he doesn’t feel like a man, and you don’t make it any better by making him feel like he has no alternative and he has no options. There’s always options when you do this, Joe, like in real estate… There’s always options, and you’ve gotta work with people.

Sometimes it’s not about what’s on the paper, it’s about the person you see before you. How can you help this person? That’s a critical component of how I get clients – I try to protect my clients and I always take that approach – how can I optimize the best possible situation for this person?

Joe Fairless: Yeah, one of my deep-seated beliefs is that there’s a solution to any problem. It might not be the solution that everyone wants; everyone might want that 25% of the actual solution, so no one’s really happy with the solution, but I believe there’s a solution to anything, and I love how you’re focusing on the human element.

Based on your experience as a businessperson and previous real estate professional, what is your best advice ever for real estate investors?

Dr. D. Anthony Miles: Well, that’s a good one. My best advice is when you look at a property – and I see a lot of similarities between venture capital where you buy a business and then when you buy a property… You always wanna look at “Okay, if I buy this property, what plan do I have for it? Can I make more money, can I open up a new market?” Case in point, you buy a property that’s near a university, and you can say “Okay, these kids need a place to stay during a semester. What if you cut the rent $100 cheaper than the competitors in that area, just to get a man there?” Obviously, you wanna make your money back, because remember, when you look at opportunities, especially in real estate, it’s very similar to when you’re looking at a business – you always have to look at “If I buy this property, what plan do I have for it? Am I gonna make money, or am I just switching hands? Is there a market that I’m not considering when I’m buying a property? Can I get people in here that had no idea that the property was [unintelligible [00:17:41].27]?” That would be my advice. What plan do you have for the property?

Joe Fairless: Yes, I love that. I can tell you that that is a question that I didn’t ask myself after I bought my single-family homes, transitioning into multifamily, because I just figured I would do the same thing with single-families as I did multifamily, and that is I buy it and I forget about it, and I don’t really have a business plan. But you can’t do that with multifamily. Or if you have a fixer upper, you certainly can’t do that. If you have a turnkey property that you’re buying and you’re making a  couple hundred bucks and you just hold on to it forever, then that’s the plan; as you said, you just switch hands. But if you wanna make some real money and you’re trying to turn it, then you need to have a business plan.

Are you ready for the Best Ever Lightning Round?

Dr. D. Anthony Miles: Yes, I’m ready.

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

Break: [[00:18:40].14] to [[00:19:38].16]

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

Dr. D. Anthony Miles: The best book I read – and your audience is gonna really love this… This is a book called The Cashflow Quadrant by Robert Kiyosaki, the author of Rich Dad, Poor Dad. That book changed my life.

Joe Fairless: Yeah, love it. Get out of the employee quadrant and get into the business owner quadrant?

Dr. D. Anthony Miles: Everybody should have that book that goes to business school. I used to teach that in my entrepreneurship MBA classes. I actually made my students buy that book. Excellent book.

Joe Fairless: Best ever deal you’ve done?

Dr. D. Anthony Miles: The best deal that I’ve done – I saw a little business; the guy was trying to give me a price that I didn’t like, and I actually got it for half the price that he was asking for from a competitor. I closed on the business and I didn’t look back.

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

Dr. D. Anthony Miles: A mistake that I made on a transaction was I didn’t pay attention to the previous five years, why the company was in the dumper, and I got greedy, like everybody else does. I saw potential, I got greedy, and I didn’t look at why the sales were in the dumper the past five years. And there was a reason the sales were in the dumper the past five years – because they had a product that was no longer needed in the marketplace. They had to do a shift in technology, and the product was obsolete.

Joe Fairless: That would be a problem. [laughs]

Dr. D. Anthony Miles: Oh, I think so. That’s an A-track situation. [laughter]

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

Dr. D. Anthony Miles: I like to go to schools and I like to do workshops on basic business things. I work with some schools, universities and some high schools, and I have a workshop called Business Sense. We wanna instill financial business principles with these kids coming out of school. It’s not sexy anymore to have a $130,000 student loan, it’s sexy to be able to pay off your bills and have a little business on the side and try to niche what you learned in school. You have to look at school as an apprenticeship.

We wanna create entrepreneurs, we wanna create millionaires, we don’t wanna create more employees. That’s not the business.

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

Dr. D. Anthony Miles: Oh, easy. I’m on LinkedIn, and my company’s website – mdicorpventures.com. My e-mail and my business cell is on there. I’m also with my books on Amazon.com, and I’m also on ResearchGate – I have some free materials and some workshops that I’ve done around the country, so if they wanna download a copy, they’re welcome to do that. That’s pretty much it.

Joe Fairless: I love how you’ve gone from previously working in real estate and then applying those lessons learned to what you’re doing now, because it absolutely is an apples to apples comparison for what real estate investors do, as we buy properties or really businesses, if you think about it that way – a single-family house is a business… As you buy a business, you make sure that you have a business plan, and that you’re dealing with humans, and just use a common sense approach along the way. And comparing that to what you’re doing, which is you’re buying companies and you’re looking at what the upside potential is, and determining how can you optimize it, whether it is taking something global, doing a new market segment, having different partners in the business, staying away from declining or obsolete industries or products…

So thanks for making that parallel or the connection on those different industries and the lessons that you’ve learned, because for any Best Ever listeners who have been in real estate, it’s just not scratching their itch like they thought it would, then perhaps you do something similar to what D. is doing, and you start looking at maybe businesses versus properties that you buy. And I know I said just a second ago that properties are basically businesses, but for this context, businesses versus properties – maybe you do something like The Profit on CNBC (Marcus Lemonis) does.

D., thank you for being on the show. I hope you have a best ever day, my friend, and we’ll talk to you soon.

Dr. D. Anthony Miles: Thank you so much for having me, Joe. I really appreciate it. Thank you so much, I really enjoyed. [unintelligible [00:23:46].18] Take care, have a good one!

 

Subscribe in iTunes and Stitcher so you don’t miss an episode!   https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

JF884: How He Grabbed a 38 Unit Apartment Complex UNDER CONTRACT!

Listen to the Episode Below (26:24)
Join + receive...
Best Real Estate Investing Crash Course Ever!

The due diligence period is on! One of the biggest struggles for our guest is not having comparable financials for this purchase. You know has to rely on the land value, potential rent, and repositioning. He’s doing his best to mitigate his risk right now before he has to close, hear what he’s up to!

Best Ever Tweet:

Chris Gill Real Estate Background:

–  Owner of CGre Ltd. Company
–  Launched #DeconstructingTheHomeShow, an inside look at running a successful real estate development company
–  Been investing for 2.5 years, starting with just $15,000 of capital to a business that owns $500,000 of assets
–  Has an achieved R.O.I. of over 3,000%
–  Based in San Antonio, Texas
–  Say hi to him at www.chrisfgill.com
–  Best Ever Book: Books about Biographies

Made Possible Because of Our Best Ever Sponsors:

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

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

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

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

JF880: How to Create an REI System and LEAVE Your Full-Time Job #SkillSetSunday

Listen to the Episode Below (25:43)
Join + receive...
Best Real Estate Investing Crash Course Ever!

He left his full-time job by purchasing rental properties and light fix and flip. He slowly gained the confidence to set up shop all on his own and hiring out many of the pieces that were necessary. Hear how he did it and what he is doing out to grow.

Best Ever Tweet:

Devin Elder Real Estate Background:

– ‎Managing Partner at DJE Texas Management Group LLC
– Multifamily owner and partner in a number of Multifamily projects
– Done over 50 deals since 2012
– Currently purchasing 2-5 single family projects per month to flip, rent, and wholesale
– Based in San Antonio, Texas
– Say hi to him at http://www.devinelder.com/
– Best Ever Book: Think and Grow Rich by Napolean Hill

Made Possible Because of Our Best Ever Sponsors:

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

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

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

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

Best Ever Show Real Estate Advice

JF311: Why A Mobile Home Isn’t Exactly Mobile and Why YOU Should Be Investing in Them

Today’s Best Ever guest uses her knowledge about mobile home investing and all she has done to make build her fortune. We discuss what to do in the event of a mobile home disaster, and why you should NEVER stop being yourself and letting your personality shine in your business.

Best Ever Tweet:

Rachel Hernandez’s real estate background:

–          Author of “Adventures in Mobile Homes: How I got Started in Mobile Home Investing and How You Can Too!”

–          Has been investing in mobile homes since 2002

–          Started out bird dogging and wholesaling then switched to mobile homes

–          Based in San Antonio, Texas

–          She used to work at Disney Land and was her hardest job interview ever!

–          Say hi to her at http://www.adventuresinmobilehomes.com

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

Made Possible Because of Our Best Ever Sponsor:

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

Listen to the Episode Below (30:16)
Join + receive...
Best Real Estate Investing Crash Course Ever!
Best Ever Show Real Estate Advice

JF294: How to Prove That YOU Are a Credible Investor and Why It’s So Important to Prove

Now, I know if you’re a Best Ever listener you’re certainly not lazy, but today’s Best Ever guest was and now look at him. He shares with us how to quickly estimate the cost for a flip, what YOU need to do to ensure sellers that you are a credible buyer. He is a world class flipper, so listen up because your path to financial freedom is here!

Best Ever Tweet:

Danny Johnson’s real estate background:

–          Professional house flipper, and has flipped hundreds of houses over the past 11 years

–          Based in San Antonio, TX

–          Author of “Flipping Houses Exposed: 34 weeks in the life of a successful house flipper”

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

–          Here is Danny’s Scope of Work doc:  FlippingJunkie.com Scope of Work

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

Made Possible Because of Our Best Ever Sponsor:

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

Fire Damage Property – Have a fire damaged property or an insurance claim to take care of? Call firedamagepropertyaz.com and they will give you options insurance companies don’t want you to know about. Call 602-753-8289 and ask for Elijah for more information.

Listen to the Episode Below (29:52)
Join + receive...
Best Real Estate Investing Crash Course Ever!
Best Ever Show Real Estate Advice

JF225: Not an Accredited Investor? No Problem!

Go ahead and put on your ten-gallon hat and slip on your cowboy boots, because this Texan knows a little something about real estate. Learn why today’s Best Ever guest ended up in the Governor’s office while trying to start his crowdfunding company and how YOU can get your next deal done!

 Best Ever Tweet:

Nathan Roach’s real estate background:

–          Co-Founder of MassVenture Texas’ first approved equity crowdfunding  platform

–          Attorney and also has the distinction of being Rackspace’s 1st webmaster

–          Computer programmer turned attorney

–          Based in San Antonio, Texas

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

Made Possible Because of Our Best Ever Sponsors:

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

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

Listen to the Episode Below (19:43)
Join + receive...
Best Real Estate Investing Crash Course Ever!