JF2337: 4 Decades Of Real Estate Experience With Paul Montelongo

Paul is a full-time investor and entrepreneur with 40 years of real estate experience and a portfolio of 555 units. Paul started when he was 17 years old and through the course of his career he did the whole gambit; wholesale, single-family, fix and flip, etc… and now he focuses on multi-unit-properties.

Paul Montelongo  Real Estate Background:

  • Full-time Investor and entrepreneur 
  • 40 years of real estate experience
  • Portfolio consists of 555 Units
  • Based in San Antonio, TX
  • Say hi to him at www.PaulMontelongo.com 

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Best Ever Tweet:

“Get a mentor, I’ve been fortunate to have 3 mentors in my career” – Paul Montelongo

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JF2334: Talking With Full-Time Investor Melissa Johnson

Melissa Johnson has been flipping houses in San Antonio, TX since 2003, growing and expanding the business into a thriving real estate investment operation. With over 1000 houses flipped, she has also built a portfolio of rental properties and real estate notes while raising five children. She provides coaching, support, and education for other high-level real estate investors nationwide. As co-founder of the San Antonio InvestHer meets up group and an active member of the Forbes Council on Real Estate, and the National Association of Women Business Owners, she is dedicated to the success and empowerment of women in business. 

Melissa Johnson  Real Estate Background: 

  • Full-time real estate investor, and the Co-Founder of San Antonio InvestHer meetup group
  • 17 years of real estate experience
  • She has completed over 1000 flips and has a portfolio of rental properties and notes
  • Based in San Antonio, TX
  • Say hi to her at www.themelissajohnson.com  
  • Best Ever Book: Everything is Figureoutable 

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Best Ever Tweet:

“Find a coach or a mentor” – Melissa Johnson

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JF2245: FireFighter & Teacher Grabbing Hold Of Real Estate With Will Pritchett

Will Pritchett is a full-time firefighter and real estate investor with 8 years of real estate investing experience. He has a portfolio of 18 rentals, private lending, and a couple flips a year. His wife was a teacher but now runs their real estate portfolio full time and they both believe if a teacher and firefighter can do this, that anyone can. They started this journey into investing because they wanted to supplement their retirement and help for future college tuition however they quickly found out they can use this to change their lifestyle.


Will Pritchett Real Estate Background:

  • Full-time firefighter and real estate investor 
  • 8 years of real estate investing experience
  • Portfolio consist of 18 rentals, private lending, and a couple flips a year
  • Based in San Antonio, TX
  • Say hi to him at: www.homeagainsa.com/blog/ 
  • Best Ever Book: The Go-Giver




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Best Ever Tweet:

“The power of private lending is what changed our business and accelerated it dramatically” – Will Pritchett


Theo Hicks: Hello best listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today we’ll be speaking with Will Pritchett. Will, how are you doing today?

Will Pritchett: I’m great. Thank you, Theo.

Theo Hicks: It’s good to hear, and I’m looking forward to our conversation. Before we get into that, a little bit about Will. He’s a full-time firefighter and a real estate investor. He’s eight years of real estate investing experience. He has a portfolio that consists of 18 rentals. He’s also done private lending and does a couple of flips per year. He’s based in San Antonio, Texas and you can say hi to him at his website https://www.homeagainsa.com/blog/.

So, Will, do you mind telling us a little bit more about your background and what you’re focused on today?

Will Pritchett: Yeah, Theo. I’m a full-time firefighter, as you mentioned, and my wife was a full-time high school administrator. We decided to try rental properties as a supplement to our retirement and to help pay for kids’ college. We have two kids. And after a couple of years of doing it kind of the old fashioned way, scraping together down payments, we decided that we could change our lifestyle and my wife might be able to stay home. After proving the process, we learned about the BRRR strategy and using private money, and it was a complete game-changer.

My wife quit her job about three years ago. She loved her job, but she was away a lot of hours from home. Now she’s with the kids and I, and she runs our business day to day from home. Real estate has changed our lives, so we spend a lot of our time sharing what we’ve learned with other friends and acquaintances to try to help them get started, because we feel if a firefighter and a teacher can do this, anyone can do this. And it’s very powerful. It’s been life-changing to us. We’re on the road right now, about a month of travel this summer in the continental US, with our kids, just exploring the country and it’s changed our lives.

So we’re currently looking for more single families and multifamily properties. We are doing a little bit of private lending. We’re teaching some classes through the brokerage that my wife has her license with, and just continuing to grow the portfolio in whichever direction that might be. This year, we attended The Best Ever Conference and learned a lot about syndications, and that’s definitely on the table for us now. We started with single-family because it was accessible and it was a way for us to get our foot in the door. We did a net worth calculation one day and realized that we had become accredited investors, almost by accident. And that was a powerful moment. And we realized we were able to invest in some of these syndications and so forth. So single-family houses have gotten us started and we’d just like to share what we’ve learned with other people.

Theo Hicks: So those 18 properties – are those are all single-family rentals?

Will Pritchett: All except one. We have one with an accessory dwelling unit in the back. But the rest are all single families in San Antonio.

Theo Hicks: Are you a private money investor yourself, or are you raising money from other investors for these deals?

Will Pritchett: Both. It was really neat when we learned about private money. We attended a conference and we were asked to speak on the BRRR strategy, and before it was over, people had come to us, wanting to lend to us, if we ever needed a lender. We already had some private lenders, but we saw the power of private lending. So they became private lenders of ours, and then later they needed private lending and we lent some IRA money back to them. So we’ve been on both sides of the transaction now. We were often the borrower and we’re just beginning to dabble in the lending side. But the power of private lending is what changed our business, and just accelerated it dramatically.

Theo Hicks: Sure, so you had mentioned how you found this private money… Do you mind walking us through how these deals are structured? Maybe you could tell us by giving us an example of the first deal that you did with a private lender.

Will Pritchett: Sure. So the way we attracted private money originally was completely by accident. We were doing this the old fashioned way. We had turned my bachelor pad into a rental to try it out, and it was way better than everyone had told us about the horror stories of rentals. We had a great tenant, and we saved for down payments, but we saw it can be a slow growth.

So after two more rentals that we bought the old-fashioned way, one of which—the first one we bought needed paint and baseboards, I think… And we were pretty sure we deserved an HGTV show. We were overwhelmed and we thought we’d done this major renovation. Since then we’ve been complete gut rehabs. But starting out, that was pretty intimidating. But we talked with enthusiasm about what we were doing with people; we just thought it was powerful. And some friends from church mentioned that they had some money they’d love to invest if we ever had a deal we wanted to partner on.

So I read up on private lending and presented to them a 10% interest-only arrangement. And because my confidence wasn’t that high, I wanted to borrow less than I needed to give them more confidence, or lower loan to value. So we borrowed less than the purchase price and used our savings to pay for the renovations and part of the purchase price.

After that first deal, those lenders have come back repeatedly, and they always get first dibs on our projects because they were there and took a risk on us. Now, they’ll fund purchase price and renovation altogether and they don’t ask questions. So the private relationship has been great, but they’re really investing in us more than they are the property. So we saw the value there.

These other investors that I mentioned at a conference reached out to us and offered to lend, and we used their money when our primary lenders money was tied up into other deals and we needed a third lender, so we used their money. And they have been the recipient of two loans from us, from our IRA. So learning how to lend and how to teach people that they can lend their IRA money is really powerful. For those people that are listening and looking for private money, don’t ever assume you know who has money. A lot of our friends, they don’t fit maybe what we might picture as someone with a lot of money, but they have money and they’re interested in investing.

So the last two deals we have funded have been from my wife’s IRA. So all of those gains are coming back into your IRA and treated like gains from any other source of investment, whether it be mutual funds or other investments in an IRA. So that was extremely powerful to start, to build that account. So all of our lending has been out of IRA. Some of our borrowing has been from IRAs and some has been from people’s cash they had on hand.

Did that answer the question you’re asking, Theo?

Theo Hicks: 100%. Just a quick follow up question though. So you are offering a 10% interest only. Is that one year term? Does that expire once the deal is sold? What’s the term on that? When do they get their money back?

Will Pritchett: Yeah, great question. And I’ve got some articles on my blog about this for the ones who want to dig deeper into it. But basically, we’ll ask for a year term… And I try to be real upfront with our lenders, because we want a great relationship. We want them to know what they’re getting into, and I want them to feel that their investment is as safe as any investment they can make, which I believe it is.

So a year term, amd we’ll tell them that we’re probably going to refinance them in about seven months. And the reason for that is if you do the BRRR strategy and refinance with a conventional lender, most of them want you to season that loan or hold the property for six months before you refinance. So in six to seven months, I’ll be refinancing and paying off that lender, but that year gives me some wiggle room. I like to have multiple exit strategies. So if a BRRR doesn’t work, which is a rental, we could flip it and sell it and then pay them off at the end. Most of our lenders, we pay them monthly, simple interest, 10% interest, and we pay the principal at the time of refi, or if we were to sell the property, we’ll pay the principal at that time.

We also include a three-month prepayment penalty on ourselves. That kind of sweetens the deal. In case someone came and bought the house a month later, we want the investor or the lender to get at least three months worth of interest just for their hassle factor. So anything you can do to keep this investment that they’re going to want to come back and do more of, is a great thing. And it’s amazing how you only need a couple of lenders if you’re recycling that same money. And our experience after an investor gets their money back, they want to come back and lend again.

Theo Hicks: How do you officially make these partnerships? Is it the contract that you created yourself, do you download it offline, do you have a lawyer? How does that work?

Will Pritchett: That’s a good question. So early on, I was overwhelmed when I started learning about real estate, about all these terms… And then I realized, there’s professionals that do these things every day, and let’s just lean on them. So what we do is we have a great attorney at our title company, and he writes up a note and all the legal paperwork, and they are a debt partner. The lender is strictly a debt partner. They don’t have any say in how we manage the rehab or what we do to the property. All the terms are written out and agreed upon… And that has worked great for us. We’ve never had to rely on the legal documents, but it’s been a great system for us. It’s very inexpensive to have them write up these documents. And we do all of our closings at the same company, so they’ve become a team member, if you will, of ours.

Theo Hicks: How much do they charge you for these contracts, if you don’t mind?

Will Pritchett: I want to say it’s about $300 to $350. It’s pretty negligible, in my opinion.

Theo Hicks: So in effect, except for those first deals, these are no money out of your pocket, right?

Will Pritchett: You’re right. So we divide them into perfect BRRRs and imperfect BRRRs. And we have several that we did leave a little bit of capital in, a little bit of cash in… But none of that money came from our pockets. It either came from a flip we did, or the business — after the first three rentals, we have not put a penny of our own W-2 income into this business. It’s all been reinvested.

So an imperfect BRRRs is where you don’t get all of your capital back. If I leave $5,000 or $10,000 in the property, it’s a heck of a lot better to me than leaving $35,000 or $40,000 in it. And on the best cases, we have gotten all of our money back. In the recent market, it’s been tougher and tougher to do a BRRR where we get every penny back, but it does still happen.

Theo Hicks: So for that first deal that you had a private lender on with an individual from your church, how much did they loan you?

Will Pritchett: It’s about $75,000 or $70,000 if my memory serves, and they had done some other investing and much higher risk investments that didn’t pan out. And we presented them kind of a deal deck I guess you would say on this particular deal; photos, estimate ARV. After that first deal – it was so formal and we were all kind of nervous, I think – they started to trust what we were doing so much that we would just text them an address and an amount, and they would wire the funds. It really became that easy.

I think that all comes back to your reputation and doing exactly what you’re going to say, and considering the other person’s perspective in every transaction, whether it’s a purchase or a loan. If my lender is happy at the end of the day, they’re going to come back and lend to us again. So there again, you don’t need that many lenders if you’re doing one or two deals at a time.

Theo Hicks: How many deals had you done yourself before you had this individual invest?

Will Pritchett: We had one house that we already owned, that was kind of my bachelor pad. And then we bought two more where we scraped together every penny. I was working overtime, and as a firefighter, overtime means you’re gone from home three full 24-hour periods out of four. So I was away from my young kids way too much, but I was scraping together every penny to put towards the down payment for this renovation. And it was exciting but it was also been discouraging, because we thought we were going to grow pretty slowly, and that’s where that private money was like turning on a faucet or something. Our growth was one property every couple years, and then in those last four years, we’ve done most of our growing. And it was a game-changer. So I can’t emphasize the importance of private money enough in our business.

Theo Hicks: Is your plan to ultimately follow your wife by quitting your job and doing this full time?

Will Pritchett: That’s a good question. Theo, I love being a firefighter. A lot of days I wake up and think I get to have every little kid’s dream. And it does allow some flexibility. Like I mentioned, we were on the road for about a month this summer; I work for a great department, and I’m very proud of my profession. So I’m not itching to leave my profession, but I definitely want to have that option. I don’t think I’m quite there financially yet. And even when I am there financially, I don’t know if I’ll take the leap. But I think it’s great to have the option. I think that’s what I’m after more than anything. It’s to know that I have that freedom should I need it or want it at some point in time. But I still love my job, and I still love real estate investing, so I can have the best of both worlds.

Theo Hicks: What is your best real estate investing advice ever?

Will Pritchett: It’s cliché to get started, but I’ve listened to podcasts and read books, and I’m a major consumer of education… But I think my wife has balanced me in that she’s an action taker. So I might still be reading books and not taking action if it wasn’t for her. You have to have both. And if it was just her, we might have made some investments we shouldn’t have made, so I think I’ve balanced her, too. But I think you have to get started.

When we were doing that first deal and we thought we were Chip and Joanna Gaines, and we thought “We might lose a little money…”, we asked my 92-year-old grandmother at the time, “What happens if we lose money?” And she says, “It’s just tuition.” You pay tuition to go to school to learn, and if you lose a little money, you won’t make that mistake, again. It’s just tuition.

I would say take action. There’s certain lessons you can’t learn until you do something. As much as you read, try to learn online and listen to things. You’ve got to take action, and if you do lose money, it’s just tuition, and keep going.

The only thing I would say is get started and take action.

Theo Hicks: Alright, Will, are you ready for the best ever lightning round?

Will Pritchett: I am.

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

Break: [00:17:15] to [00:18:07]

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

Will Pritchett: The best ever recent book was the Go-Giver. And it’s almost a parable type. It’s about the value of just giving other people what they want. And I have found that to be so valuable. When we teach these classes for free and just give out information, we write this blog to share what we’ve learned, good things happen. And that’s basically the synopsis of the book, The Go-Giver, but I totally recommend it. It’s not about real estate investing as much as it is about a business principle that I believe in.

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

Will Pritchett: I would start right over. I had a good friend, we were growing and growing and, I was like, “What if we’re going too fast? What is going to happen?” And he’s like, “How long did it take you to build this?” And I told him, and he said, “Do you think with all you’ve learned you could do it faster next time?” And I thought, “Absolutely.”

So I would start over with exact same model. Once we learned about private money, it didn’t take much of our own capital, and we would grow faster this time. And I would lean on those relationships. Our business is based on relationships and reputation. I would lean on those reputation and relationships that we’ve fostered over these years.

Theo Hicks: What’s the best ever deal you’ve done?

Will Pritchett: The best ever deal I’ve done, I like to call it “the midnight infomercial”, because one day if I have a cheesy – they don’t sell DVDs anymore, I guess – commercial in the middle of night, it would be this house.

We were renovating a house on the street and we always knock on the neighbor’s doors. One of the neighbors said they were interested in selling, but their house was pristine; it wasn’t a distressed house. And I looked at it and I advised them they probably should list it with a realtor. They were retirement age. And I think it’s always good practice to give people options, and sometimes I’m the best one and sometimes I’m not, but my offer was about 70 cents on the dollar. And I didn’t hear from them for a while, and assumed it was a done deal, they sold it to a realtor. And then they called me back and said they’d like to sell to me. And I said, “Well, you remember, my price was pretty low, and I told you you could sell it as it is, or quite a bit more.” And they said they understood that, but they wanted to stay in the house. They wanted to rent the house back. So they essentially wanted access to their equity, because they had no heirs.

So we gave them a cash offer. Our rehab budget with about $10 for a doorknob. This house was beautiful. They’d lived in it for about 20 years. So they got their access to a big chunk of their equity, and we agreed to not raise rent, other than a percentage based on the property tax increases. That deal was a zero money down deal. We walked away from several hundred dollars. It was a $10 rehab, and they’re still there to this day, and it was a true win-win, including a private money lender who won on that deal. So a win-win-win deal, which we love to do… But it was almost too good to be true. That’s the best deal I think we’ve done to date; the easiest, smoothest. We’re dragging our kids to that house, and they got to know our kids… It was a great deal. I wish I could find more just like it.

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

Will Pritchett: We love to teach and share what we’ve learned. As I mentioned, if I’d started it earlier, I’d be so much further ahead. And I talked to people who discouraged real estate investing, I talked to some realtors… They’re great realtors, but they didn’t understand real estate investing, and they kind of discouraged me when I was younger. I didn’t take advice from the right people. I listened to the wrong people, and I want to be a voice that says, “You know what? Being a landlord can be really great.” We have great tenants; our tenants are amazing, and they’ve been our customer, so we treat them right and they treat us right. And if you provide a good product, you can attract good customers.

So we like to teach and share as much as possible. It was in-person, now, a lot of it is online due to the COVID crisis. We’re teaching classes on property management, on private money, showing people how accessible private money can be. We write about it on our blog… So teaching, blogging, sharing as much as possible about this, because we think it can change lives. We know it can change lives. It’s changed our life… So we’re kind of on a soapbox about it. But we want to inspire other people that are on the fence to say, “Hey, give it a try. It’s a lot better than a lot of people will tell you, and it’s changed our lives.”

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

Will Pritchett: I would say probably to reach us directly on Facebook @HomeAgainProp. And then our blog is where I post a lot of the things we’re learning. I don’t sell anything. I just post stories about what we’re learning and the deals we’re doing, and that’s https://www.homeagainsa.com/blog/. We’d love to help anybody that’s on the fence or has questions about private money or about how to manage your own properties. We self manage everything, and we like to help people and it’s amazing when we see someone we’ve helped go through and do a deal that’s successful. So please reach out to us.

Theo Hicks:  Perfect. Will, thanks for joining us today and telling us your best ever advice and your journey, your tips for raising private money. So we talked about how you were able to raise private money. It really came down to just talking about what you were doing with enthusiasm. So you’d only done two deals before you were able to raise that $75,000 from someone at your church.

You mentioned that on that first deal with them you were kind of nervous. You had a formal presentation, a formal package where you had case studies and things like that, and then after that investment, because you did what you said you were going to do, because you gave them their money back, it got to the point where now you just text them an address and they’ll wire you the funds.

And then you also mentioned that you’re able to raise money from people who actually came up to you at a conference you presented at, and you’ve also invested in their deals as well. You mentioned that these earlier lenders get first dibs on their deals. [unintelligible [00:23:56].08] the purchase price, they fund the purchase price and renovation. So you’re not putting your own money in the deal.

You mentioned more specifics on the structure. So 10% interest only, with a one-year term. Typically, refinance within six to seven months to pay them back. You have multiple exit strategies, so you can flip it and sell it. If you’re unable to do the refinance, you pay them monthly, and then you have a three-month prepayment penalty because you want to make sure you provide them with at least three months of interest.

You said that you have an attorney at a title company that you use for closings that helps you write up the note and all the required paperwork, and it’s about $300 to $350. You mentioned that there’s the perfect BRRRs and then there’s the imperfect BRRRs. And for the imperfect BRRRs, you might put a little bit of money in there.

You also mentioned that when you’re going out there raising money, don’t assume you know who has money and who doesn’t have money, because you never really know who can be your next investor.

And then your best ever advice which is twofold— or actually, it was threefold. Number one was to get started. Number two was to have that balance of education and action. If you have too much education and not enough action, you’re not going to go anywhere, but too much action and not enough education and you’re likely to make a lot mistakes.

And then lastly, your lesson from Grandma, I believe it was. You asked her what happens if we lose money and she’d say, “Well, it’s just tuition.” [unintelligible [00:25:11].29] pay a lot of money, and probably a lot more than what you lose on a real estate deal to go to college in order to get the education that they in turn can turn into money in the future. So Grandma told you to think of real estate the same way that you’re doing these deals, and ideally, you make money or at least breakeven… But if you do lose money because you made a mistake, then the lessons learned from that mistake will help you in the future.

So the lesson there is that – going back to the education versus action balance – some lessons you can really only learn by taking action, and sometimes that means you’re going to lose money.

So, Will, I really appreciate you taking the time to speak with us today, especially on your vacation in a hotel room. Best ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

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JF1930: Building A Real Estate Investing Business & Apartment Syndication Breakdown with Mauricio Ramos

Mauricio has been building his real estate portfolio and is invested in passively in other deals. He currently owns 48 units, we’ll hear about his first 16 unit apartment syndication, and what he’s learned along the way. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Take action, don’t wait until you have learned everything on the subject” – Mauricio Ramos


Mauricio Ramos Real Estate Background:

  • Full time real estate investor and accredited investor
  • Founder & Managing Member of de Medici Group
  • Currently controls over $2M in multifamily assets
  • Based in San Antonio, TX
  • Say hi to him at https://www.demedicigroup.com/


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

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

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


Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be your host today. Today we’ll be speaking with Mauricio Ramos. Mauricio, how are you doing today?

Mauricio Ramos: Hey, Theo. Doing great. Thanks for having me. It’s a pleasure.

Theo Hicks: Absolutely. We appreciate you coming on the show today to share your expertise. Before we get into the conversation, a little bit more about Mauricio’s background. He is a full-time real estate investor and accredited investor, founder and managing member of de Medici Group. Currently controls over two million dollars in multifamily assets. He’s based out of San Antonio, Texas, and you can say hi to him at demedicigroup.com.

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

Mauricio Ramos: For sure, and thanks for the space. My names is Mauricio Ramos, I’m from Merida Yucatan, Mexico. I grew up in Matamoros, Tamaulipas, which is also in Mexico. I went to school through high school all the way in Mexico, and I came to Texas for college, under a student visa, and obtained my civil engineering degree from Texas A&M University, and worked for ten years in the construction industry as a project manager, under different work visas.

Currently, I’m 34 years old, I live in San Antonio, like Theo mentioned, since 2014. I’m married to my wife, Dominga, since 2018. She’s a mariachi director here in San Antonio ISD. Currently, my wife and I own and manage de Medici Group, a multifamily real estate investing firm here in San Antonio.

We are currently invested in 234 units, and recently just got another 28-unit apartment complex under contract. A little bit of how I got started – I got introduced to real estate by one of my interns when I was in construction, and it  really caught my attention. I started educating myself and changing my mindset, like many people who read Rich Dad, Poor Dad and Cashflow Quadrant, and those kinds of books. So definitely  a lot of mindset changing for about a year; not really a lot of deals, but just mindset changing.

With the help of my first mentor I bought my first deal. It was  a mobile home. So I bought a mobile cash, fixed it up, and owner-financed it out in 2017. Right after that I did another mobile home, wholesaled a few single-family homes, and then this is when I came across multifamily, and I immediately fell in love with it. I started educating myself, reading books, listening to hundreds of hours of podcast, and going to seminars to start learning.

I decided to start doing my first direct mail campaign in September 2017, so by December 2017 I bought my first my first ten-unit apartment complex in Lexington, Texas, which is 34 minutes South of San Antonio. This was a seller finance deal, 0% interest, 7% down. It was a very good deal, and actually, this property — I just went full-cycle on this property 18 months later for a 159% return on investment.

Theo Hicks: Alright, thanks for sharing that story. Of the current 134 units, are those all properties that you own yourself, or is it a combination? Because I know that you said you’re an accredited investor as well. Is it a combination of deals that you own outright yourself, obviously with the loan, and deals that you are a passive investor in?

Mauricio Ramos: That’s correct. It’s 234, and it’s a combination of passive and syndicator, and that 10-unit was just me and my wife.

Theo Hicks: Of that, how many do you own yourself?

Mauricio Ramos: Currently, 48.

Theo Hicks: Okay. How many different buildings?

Mauricio Ramos: There’s a 16 and a 32-unit apartment complexes in McAllen, two separate properties that we’ve syndicated.

Theo Hicks: Okay, so you actually syndicated those deals. Do you wanna walk us through — which one was your first deal, 16 or 32?

Mauricio Ramos: The first syndication was the 16.

Theo Hicks: Alright, do you wanna walk us through that? Before you’d even found the deal, what types of things did you put in place? Did you have the capital first, did you have your team in place first, or did you find the deal and did that later? Walk us through the process of acquiring that deal.

Mauricio Ramos: For sure. At this point me and my business partner Adrien – we continued sending direct mail (postcards) to McAllen and different other cities which we were familiar with… And we found this 16-unit apartment complex. This is in a very good area in McAllen, Texas. We bought it for $570,000, and we brought four other investors, and Adrien and myself, and we just got a long-term loan on it. The plan is to hold it for 3-5 years.

Theo Hicks: How did you find those four investors?

Mauricio Ramos: People that I knew from when I was in corporate America, people  that knew that I was doing real estate and they saw how I was making progress, and having success. Then I quit my job last year, so during the last few months they said “Hey, the next one – I wanna jump in with you.”

Theo Hicks: Did those first four investors actually come to you, seeking out the opportunity, or did you bring the opportunity to them?

Mauricio Ramos: I brought the opportunity to them.

Theo Hicks: Can you walk us through how you presented that to your co-workers? Did you do it at work? Did you do it at a bar after work? I’m just curious… I know a lot of people that are listening probably have their W-2 jobs, have a lot of people who are the ideal passive investor, but might not necessarily know how to properly go about presenting deals, especially when they’re still working at  the company… So do you wanna walk us through that process?

Mauricio Ramos: For sure. I put a package together, my investor package, which is a ten-page deal where I explain all the ins and outs of the deal. I presented it to my investors, met for lunch with them and said “Hey, I have this opportunity. This is how much I’m looking for, this is the return on your money. If you’re interested, this is how it’s gonna look like”, and they decided to jump in. But it was definitely a combination of doing things while at work, then at lunch, and then definitely a lot of work after five, after my job.

Theo Hicks: Yeah, I figured. And what was your structure for those passive investors? What types of returns did you offer them?

Mauricio Ramos: This one is a 9% cash-on-cash average, and 96% ROI over the life of the project, for a 3-5 year hold. It’s a 70/30 split GP/LP.

Theo Hicks: So the GP gets 70%, or the LP gets 70%?

Mauricio Ramos: The LP gets 70%.

Theo Hicks: Okay, okay. Are those the actual numbers? Is 9% cash-on-cash, 96% ROI over the life of the project, or is that what your projections were, that you presented to them, and said “Hey, if you invest, here’s what our projections are.”

Mauricio Ramos: Those are the projections. We’re six months into the deal, so we’re still working through it.

Theo Hicks: You said 96% ROI?

Mauricio Ramos: Yes.

Theo Hicks: So essentially doubling your money, okay. What about the second deal? Do you wanna walk us through that one?

Mauricio Ramos: For sure. This 32-unit we found through cold-calling. We called the seller (he’s out of state). After probably two months of following up, we finally agreed on a number, got it under contract… And this one is a little over a million, so we were able to get agency debt on it. Similar situation, 70/30 split, brought seven investors, and then my business partner and I, to the deal.

This one is a little better, because since it’s an off-market deal, the price was pretty good compared to the area… So this is a 10% cash-on-cash average for 3-5 years the life of the project, and 100% return. We’re pretty confident that this one — we should be able to turn it around in two years max.

Theo Hicks: Why did you decide to transition from the direct mail to the cold calling?

Mauricio Ramos: We had both going on… We just had the resources to do some skip tracing and have some good properties to call. So we just had the resources to do it.

Theo Hicks: So you’ve done three deals so far: the 10-unit, the 6-unit, and the 32-unit that came from a combination of cold calling and direct mail. How many marketing contacts – combination of direct mail and cold calling – would you say you did in order to get those three closed deals?

Mauricio Ramos: I’m gonna back up real quick, and I’ll get to the question; it’s a great question. So after I did my 10-unit through direct mail, I found an 8-unit in Kingsville, Texas, and I wholesaled that for a five-figure fee. Then I found a 24-unit in downtown San Antonio, and with that one I did a six-figure fee, which was twice my annual W-2 income… So this is the one that really put me in a different position to be able to get into some mentorship programs, get into a couple of Airbnbs and get some additional cashflow. I also basically quit my job. At that point is when I decided to marry my wife, and quit my job and just went full-time into real estate.

So to answer your question, I’d say the response of the postcards is pretty good compared to what typically single-family people see. I’d say probably 5%-8% response. We have a good 150 to 200 leads that got offers in our system to get to those five deals or so.

Theo Hicks: Do you wanna walk us through that 24-unit that you got the six-figure fee on? Obviously, you mentioned that you got it through your direct mail… Why did you decide to wholesale it, as opposed to buy it yourself? And then how did you find the person who ended up buying that property from you?

Mauricio Ramos: For sure. And a little bit of that I have prepared to one of the questions further, but I’ll try to not spoil it…

Theo Hicks: It’s your best ever deal… You can go over it now, and I’ll ask a different question.

Mauricio Ramos: Okay, I’ll just go through it. We found it through a postcard, it was a mom and pop owner… They were just tired. My postcard was delivered just at the right time. It was actually the right color. My postcard is pink, and the owners of the property are gay, so for some reason they decided to call my postcard. So they called my postcard, we met, great people, they liked me, and we went under contract.

I wasn’t sure what I was gonna do with it. I was going to either wholesale it, or try to kind of syndicate it, bring some investors in and do it. It was a very old building; there’s two buildings, one of them built in 1896 and the other one in 1928… So there’s a lot of historic character in it.

I wasn’t prepared to syndicate it at the time; I didn’t have the resources to do it. So at the same time I attempted to wholesale it. I put a package together, put it on Facebook, and within 24 hours I had it under contract to sell.

Theo Hicks: That’s amazing. And then you said you got a six-figure fee. Was there negotiation back and forth, or did you just say “Hey, this is how much money I want for wholesaling this”?

Mauricio Ramos: I double-closed, so the buyer didn’t know how much I was making until the very end… But I double-closed, and actually there was my asking price, and the buyer really wanted it; it’s a buyer from California that has a strong presence in San Antonio. They really wanted it, so they were like “What do you need to put this under contract with us right now?” So I said “Alright, just throw in 50k and then I’ll do it”, and they did.

Theo Hicks: Perfect. Alright, so before I ask you the money question, I had asked you — for those who are listening, I’ll describe it, but those watching will understand… So Mauricio has a whiteboard behind him, with a bunch of different color codes on it. I can’t read it, but it’s got a statement at the top. Do you wanna walk us through what that is?

Mauricio Ramos: Yeah, the statement at the top says “Keep God first place.” I’m a Christian, and ever since I really started taking that to heart and really putting God first, my life really started making a transition and making a change for good.

Theo Hicks: But below that, are those like your goals, or is that strategies for your business? Is that like a goal board/vision board?

Mauricio Ramos: No, it’s really just everything that I have going on in my mind… Everything just floating in my head, I put it on the board, and that way I get everything every morning, and I just know where I’m at. Just different things that I have going on at the same time; so it’s not necessarily goals, but just ongoing deals.

Theo Hicks: Okay, Mauricio, what is your best real estate investing advice ever?

Mauricio Ramos: Best advice for the Best Ever listeners is to take action. Don’t wait until you have learned everything, all the ins and outs on the subject. Just take action, jump, and build the parachute on your way down. Just do it. For example, you don’t have to wait to learn how to do a 1031 exchange if you haven’t even submitted an offer on a property.

Theo Hicks: Alright. Are you ready for the best ever lightning round?

Mauricio Ramos: Ready.

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

Break: [00:14:07].26] to [00:14:50].05]

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

Mauricio Ramos: It’s called “Am I being too subtle?” by Sam Zell.

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

Mauricio Ramos: I would go straight into  multifamily.

Theo Hicks: What deal have you done that you’ve lost money on?

Mauricio Ramos: I haven’t done a deal that I’ve lost money on, but maybe I can think of a few deals that I could have done it, I just wasn’t ready; I didn’t have the knowledge at the time to do them. So now that I know, it’s like “Oh, man, I could have done that”, I just didn’t know.

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

Mauricio Ramos: Anonymously. I believe in Matthew 6, so I give to my church and other charities, but I don’t announce it to social media.

Theo Hicks: I like that. What is the best ever place the Best Ever  listeners can reach you?

Mauricio Ramos: It’s on my Instagram. I’m at @maurms, and my webpage, demedicigroup.com, and mauricio@demedicigroup.com.

Theo Hicks: Mauricio, I really appreciate you coming on. A very inspiring conversation; you’ve come quite the journey. I’m sure things are just getting started for you. Just a summary of what we talked about – we went into how you got into real estate, and you were actually introduced to it by an intern at one of your companies. That’s a first I’ve ever heard that one. You mentioned how you started off with buying a mobile home, which you owner-financed out after you bought it, and then you wholesaled some single-family homes before you came across multifamily.

You started sending out your direct mailing campaigns, and your first deal was that 10-unit in Texas. Again, another seller finance deal, 7% down, sold it 18 months later for a very high return on investment.

We went through two of your syndication deals. One was that 16-unit, which was your first one; you got that through direct mail. Four investors, all co-workers, and you kind of walked us through how to present investment deals to people that you’re working with, while still at that company. You also gave us the returns on that one.

We talked about your second deal, which was that 32-unit that you got through cold-calling back and forth for two months and ended up putting it under contract. It was a better opportunity because it was off-market, and again, you walked us through the returns on those as well. You told us that you get about a 5% to 8% response rate on those direct mail that you sent out, and for those five or so deals that you either bought yourself or wholesaled, you said that you had to go through about 150 to 200 offers before you got those five.

Then we also talked about your best ever deal, which was that six-figure fee on the 24-unit. Mom and pop owner who you sent the pink letter to, so perfect letter, perfect timing… You didn’t really know whether you’d wholesale it or syndicate it. Older building, historical building. You decided to wholesale it. A company came to you once you posted on Facebook within 24 hours. You got to add a nice little $50,000 fee to that to close it quickly.

Then you talked about your whiteboard, which I like how you’re just kind of like journaling, but you see it; it’s much more present in your office. And then your best ever advice, which was to take action. I liked how you said “Don’t wait until you know everything. Just jump and then build your parachute on the way down.”

Mauricio, I appreciate you coming on the show. Great advice, again. Best Ever listeners, thanks for listening. Have a Best Ever day, and we will talk to you tomorrow.

Mauricio Ramos: Thanks, Theo. Thanks for having me. It’s such a pleasure.

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JF1714: Dividing Tasks & Partnering To Raise Money More Efficiently with Mitch Stephen

Mitch has built quite a large real estate investing company, doing at least one deal every four days. His strategy is to seller finance properties that he buys with his private investors. He raises the money and keeps them legal, while his team take care of the rest. He’ll share how he’s been able to grow such a large business, and raise a large amount money. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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“If the house is worth $100k, I get a loan for about $58k” – Mitch Stephen


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

Mitch Stephen: Doing great, Joe! How are you?

Joe Fairless: I am doing great as well, and welcome back to the show. If you recognize Mitch’s name, that’s probably because you’re a loyal Best Ever listener… And a very loyal listener, because he and I spoke way back in episode #95, and we’re on episode #1,600 right now, so – long, long time ago… Three, four, five years ago, or I don’t know.

Today we’re gonna be talking about how to successfully raise private money. A little bit about Mitch – he is a self-employed real estate investor, he’s been one for 20+ years. He’s bought and sold over 1,500 properties, owns over 1,100 storage doors in 16 locations, and I’ve personally read his book, “My life in 1,000 houses”, and I highly recommend it. Very entertaining book. I read it when I was getting started in real estate, and it opened up my eyes to a lot of things, so I highly recommend his book. Go get that on Amazon.

With that being said, Mitch, do you wanna give the Best Ever listeners a refresher on your background and what your current focus is?

Mitch Stephen: Well, for 22 years I’ve been borrowing other people’s money and then selling my houses with seller financing. In other words, taking a down payment and agreeing to take 30 years’ worth of payments. It’s a way of creating some money today, so that I can live, because I get to keep that down payment money. I usually charge about 10%. My average down payment is 12%. My average down payment is around $12,000, so if you do 2-3 of those a month, you don’t have any problem living… And then my average cashflow – the spread between what I owe my private lenders and what I collect – is around $535. Let’s just call it $500 for easy math.

So I collect 10k-12k down on most of my houses, and then these people in most of my houses owe me 360 months of positive cashflow of $500, which is $180,000 if they still owe me out in the future. And I do that kind of deal about every four days.

Joe Fairless: Well, that’s a lot of volume, and that’s a lot of money coming in, and I imagine it’s a lot of logistics too, so how do you handle that logistically?

Mitch Stephen: Well, first you have to learn how to be a business owner and not an entrepreneur, [laughs] with a glorified job… Which took a while. I had to go to a mastermind and pay my 20k – which ends up being 30k by the time the plane tickets and the rooms are paid for – and you’ve gotta learn from these people that are already at where you wanna be, and you’ve gotta let them unwind you, and you’ve gotta let them wind you back up a different way. You’ve gotta be willing to let that happen. And even more than just willing, you’ve gotta really help them help that happen.

Today I can say that I’ve not seen the last 300 houses I’ve bought, and I’ve not seen the last 300 people that bought my houses. But to do that, I had to learn a lot of new skills. I had to learn how to hire the right people, I had to learn how to hire people and give compensation plans in such a manner that I was not on a hamster wheel. I only have two people in my entire organization that get a regular paycheck. Everybody else gets paid upon success. So that’s one thing. I have about seven people that make this particular planet spin around, and they’ve been with me for a long time, most of them.

Joe Fairless: Let’s talk about those seven people – what are their roles?

Mitch Stephen: Well, one of them is my business partner. We have uniquely different talents. I’m responsible for funding everything, and the infrastructure. I have the office and the administrators and the computers and the softwares and the tracking, and all that; the contract-generating stuff. My partner goes out and he sets up a sales team and an acquisition team and manages that, without having to worry about funding, which is a huge part of the program.

He watches over two acquisition managers and two salespeople, and I watch over the office and the private lenders. I have 14 million dollars in private lenders.

Joe Fairless: So you watch over the office and the private lenders, so you’re money and he’s execution, basically.

Mitch Stephen: Yeah. And I’m also the senior. He’s 32, I’m 58. I’m the one that keeps us out of trouble, because I know where all the trouble spots are in my career. I know what happens in certain situations. So I’m kind of like the advisor, to make sure we don’t get into trouble with anything.

Joe Fairless: Yup.

Mitch Stephen: Shannon is my daughter, she’s the central administrator. She’s the only person with a real paycheck… Although her paycheck is really pretty small for what she does. We like to tie everybody to the success of the company, so instead of giving her a large paycheck like she deserves, we give her a small paycheck and then she participates in every deal in and out, so that the carrots are in the right place for everybody, every morning, when they get up.

She has a personal assistant to help her, and those are the only two people in my office that get a paycheck. I don’t get a paycheck, Mike doesn’t get a paycheck… We all get paid when the deals hit the table. And Mike and I only take $1,250 a piece every time a deal sells. So if we get $12,000 down, I get $1,250 and he gets $1,250; that’s $2,500. The rest stays in the company and is rolling.

Joe Fairless: The trouble spots that you can look for and see ahead, that you’ve seen in your 20+ years of being in the business – what are some examples of those?

Mitch Stephen: There’s too many to even get into.

Joe Fairless: Or maybe some specific ones that you’ve come across recently, that you navigated through?

Mitch Stephen: Well, I don’t make that many mistakes anymore, but that’s probably because I’m experienced… But a lot of it was putting the wrong people in the house, not handling evictions or foreclosures the right way, not getting paperwork just right and now we do… Sometimes you can get running so fast that you start to get sloppy, and that’s a really big no-no… Because you start getting sloppy and sooner or later it’s gonna jump up and bite you. And it might be years down the road.

Also, we had some troubles hiring people, so we finally started testing people, or doing personality tests. The people that the personality tests told me to hire I wouldn’t have picked in a million years, and those are the ones that are still working for me. The ones I picked are long gone.

Joe Fairless: [laughs] What personality tests do you use?

Mitch Stephen: I think we’re using DISC right now, but sometimes you can ask me these questions and I don’t know… I knew the day we made the decision or I told someone to make a decision, but I just don’t remember what it is.

Joe Fairless: Yeah, I get that. Well, let’s talk about the 14 million dollars’ worth of private lenders that you have… How many private lenders comprise of that 14 million dollars?

Mitch Stephen: Not a whole lot. Probably 20-25. I don’t co-mingle funds. Every deal is a one-off deal. If someone has $500,000 they wanna get out, they don’t send me $500,000. I send them a house, “Here’s a house I need 60k on. Here’s a house I need 100k on. Here’s a house I need 40k.” It’s one lender, one borrower, one piece of collateral, and every deal stands on its own. You either get paid, or you get the house. Now, that being said, I’ve never given a house to anybody, and I think I’m approaching about 2,000 in my career now, or 2,000 transactions… But I’ve never given a house back, I’ve never filed for bankruptcy, I’ve never been foreclosed on… By the grace of God, I’ve always kept big enough margins and policed myself good enough that even in the worst of times I’ve never had to give anything back.

I will not let my private lenders in over 65% of what I can sell the house for. And I average 58%. So these are huge margins.

A lot of people – even a lot of the gurus out there – have gone bankrupt, and it all ended up when they overleveraged. They were borrowing 85%-90%, they were cashing out on houses, and then when the economy rolled over and went upside down, they were upside down and they couldn’t sustain it. And of course, the money is long gone. It got spent on boats etc.

The only way it makes any sense at all if you’re overleveraging is if you take everything you cash out with and you go buy an asset with it that makes money. That’s the only it ever makes sense, and I don’t even like that, but it’s the only way you can possibly survive through a down cycle if you’re overleveraging.

I don’t think 65% on a property is overleveraging. I think it’s very conservative. I average 58% leverage, so that means if the house is worth 100k (for easy math), [unintelligible [00:09:32].08] 58k. I give my private lender a first lien position, I send monthly payments, interest-only, five years, non-recourse, collateral only loan, payable monthly.

Joe Fairless: At what rate?

Mitch Stephen: 6% to 8%, and the difference is if I only borrow 50% or less, it’s 6%, because there’s no risk in this deal. Sometimes I borrow 40%. Sometimes I buy houses at extraordinary prices, and when you loan $40,000 on a $100,000 house, the rate of return is relevant to risk and reward, right? Well, there’s hardly any risk in that kind of deal where a house is worth 100k and you’re loaning 40k in a first lien position. So those pay 6%. But the majority of my properties I’m borrowing between 50% and 65%, and those pay 8%.

I could probably fight for a little lesser interest rate, and my lender could fight for a little more interest rate, but at the end of the day 8% seems to be really decent for everybody. It’s not the best for me, but it’s not the worst, and it’s not the best for them, and it’s not the worst… I guess what I’m saying is if either one of us got a better deal, one of us would be shopping all the time. At 8% you just don’t wanna shop. You don’t wanna shop, I don’t wanna shop… It’s good enough.

Joe Fairless: And the 20 to 25 people who are investing with you – how did you come across them?

Mitch Stephen: Well, you know, it’s been 22 years… Mostly what happens is they start off very small, just putting their little thing and running with it. 25k, 30k, 50k loan. Then what really makes a difference is that you make sure that you give them fantastic paperwork, you make sure that it gets filed at the courthouse in a timely fashion, show them where it’s time/date-stamped, so it was actually filed at the courthouse, and where there’s a notary county clerk signature. Then you pay on time. Every time, always, forever. Eventually, they bring you more and more and more.

A lot of the people that I have, I’ve had for going on two decades now. A lot of them don’t need the money, so they just let it roll, and they keep putting it back in. Then when they run out of money, they’re not opposed at all to recommending me anyone they think that might need that kind of 8% return. They recommend me wholeheartedly, and it’s always easier to talk to people when you get a first-hand recommendation from one of your existing clients. That’s how it’s pretty much done.

I have raised a lot of money though from strangers that I never knew before I got introduced to them through some way. Then over a period of time they might start talking about my business, and then when they start talking about my business, it’s funny how it always kind of works around to what I’m paying my investors, and how I’m paying them, and why I’m paying them, and why they loan me money.

Joe Fairless: For someone who has a track record and is looking to evolve their business to bring on more private money lenders, what are some tips that you have for them?

Mitch Stephen: Well, it can work for new people, too. When I’m coaching somebody on how to find the money, the first thing is I have to figure out where their mental block is… Because almost everyone has one when it comes to this subject. If they haven’t raised private money before, they have a mental block somewhere. That mental block might be “I don’t have any experience”, or “I have a bankruptcy. Who’s gonna want to loan me money?” Or “I don’t have good credit. Who’s gonna want to loan me money? I don’t have any experience. Who’s gonna want to loan me money?” “I’m not a very good salesman. How am I gonna talk people into loaning me money?” “I don’t know people with money.” They have all these obstacles.

In fact, my partner, when I met him he was 25, and today he’s 32. But around 26 he started getting private money… But he was getting it from his family or his close relatives. And as soon as that dried up, he stopped being able to get money — or he stopped getting money; he didn’t stop being able to, but he stopped getting it… And I was asking him, “What’s going on here? What’s holding you back? Something’s holding you back”, and I was trying to find out what his mental block was… And I told him to go back and think about it, and tell me what’s holding you back; I’ve gotta know. And he came back, and surprisingly enough, it was one I hadn’t heard… He said “I’m 26 years old. I’m talking to these people that are seniors, in their 60’s and 70’s, and they have these money, and why in the hell would they loan a 24-year-old their money?” He said, “I don’t even own my own home that I live in. I live in an apartment. Why is someone gonna loan me money?”

That’s when I gave him the answer that solves everybody’s answer – “It’s not about you. It has nothing to do with you. Charles Manson should have been able to get these loans. Who cares if killed a bunch of people? It doesn’t matter.” The lender wants to know “If it doesn’t go the way we do in writing, what happens?” “You get that house.” “That one right there?” “Yeah, the one that’s worth 100k.” “And you wanna borrow how much?” “I wanna borrow 58k.” “And you’re gonna give me a first lien.” “Yes sir, I am.” “So if  you don’t pay me, I’m gonna get that house?” “Yeah.” “What’s the chances you won’t pay me?” “Not very good. So if you’re thinking you’re gonna get that house, I wouldn’t count on it… But if you do, can you live with it?” And he goes, “Hell yeah, I can live with it. I’d rather you not paying me.” I said, “I know that, but it’s not gonna happen.” “Yeah, I’ll do the loan.”

If someone asks about my credit, I say “You can look at my credit if you want to. You can look at my financials if you want to, but these aren’t here, nor there. You’re either gonna get paid, or you’re gonna get that house.” As a matter of fact, I relieve myself from a bunch of emotional stress by making sure that I look my lenders right in the eye and tell them this before they loan me money – “I’ve got two rights every day of my life when you make this loan. The two rights I have between you and me is one is I can pay you as agreed. Two, I can walk this deed to this house over to your house any day of the week, and that’s one of my viable options that we’re agreeing on… And I can hold my chin high either one of those options I wanna do.”

How I got to that conclusion was I was so conscious of my good name and my good reputation that I never wanted to tarnish it… But if you sign a personal guarantee, you’re signing for all the things that could happen in the world. You’re signing for raging fires in California, and earthquakes in California, and landslides in Colorado, and draught, and lead in water, and if North Korea detonates a dirty bomb in downtown San Antonio and pollutes every house on a ten-mile radius… You’re signing for all that, and that’s not my fault. I don’t have any control over that. So if you’re gonna make 8% with me, you’ve gotta share in part of that risk. And that risk is I have the right to hand you that house any day of the week. Like I said, it’s never happened, not in almost 2,000 houses, but I’m not gonna ruin everything that I’ve ever done for my entire life, all the other assets I have that have nothing to do with this – put all that to risk if there’s some kind of act of terrorism or something and I’m just not willing to risk my life’s work over something that I could never control… So that’s how I got through that, and that’s why they’re non-recourse; that’s why I have huge margins, because I ask for non-recourse. And if you’re gonna ask me for a non-recourse loan or a collateral-only loan, there has to be  a really decent margin to protect me.

Joe Fairless: Yeah, that all makes sense. Very logical. When we take a step back – you’ve been in the industry for 20+ years – what is your best real estate investing advice ever for the listeners?

Mitch Stephen: You make your money when you buy. The deal is pretty much decided upfront, 95% of the time. It’s all right there. So make sure you’ve done your homework before you get in. And make sure you can live with the worst-case scenario, whatever that may be… And don’t get in over your head on things. If something’s gonna go bad and it’s gonna crush you, then take on a partner. Make sure that you can carry your weight if things don’t go right.

I guess this is a form of saying “Don’t sign up and borrow a million dollars to close something in 30 days if losing a million dollars i sgonna kill you.” Do you know what I mean?

Joe Fairless: Yeah. Very good advice, that’s for sure.

Mitch Stephen: I do deals today that I wouldn’t have done before, but what’s the most I can lose? You lose 250k. Alright, I don’t think I’m gonna, but if that’s as bad as it is, that ain’t gonna kill me; that ain’t even gonna slow me down. But 10-15 years ago, I wouldn’t have done that deal to save my life, because I wasn’t big enough to handle it.

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

Mitch Stephen: Alright!

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

Break: [00:17:57].21] to [00:18:37].16]

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

Mitch Stephen: Nothing Down, by Robert Allen.

Joe Fairless: Best ever deal you’ve done?

Mitch Stephen: I flipped a car lot once.

Joe Fairless: Why is it the best ever?

Mitch Stephen: Because it made $340,000.

Joe Fairless: What’s a mistake you’ve made on a transaction that you can think of?

Mitch Stephen: I loaned a million dollars on some raw land right before the crash in a gated community, where they had high restrictions, and no one walked on those 15 lots for 2,5 years, and I had to make a $8,000 payment per month. Then I finally sold the first lot after 2,5 years of making an $8,000/month payment. By the way, it was all private money, and my lenders never knew that I had a hard time, but I was stroking a check for $8,000 every month and not even getting a penny from it… And not to mention the taxes and the insurance due every year, too.

Then in 2,5 years the first lot sold, and by the end of four years I’d sold all of the 15 lots. That was my worst deal ever. The lesson was don’t get out of your lane. That wasn’t what I do for a living. I didn’t loan money on raw land for a living, I loaned money on houses, or I bought houses and borrowed money on houses. Those things had the potential to produce an income. Raw land in a gated community with high restrictions has zero chance of making any money.

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

Mitch Stephen: I like to help people learn about money and their finances in real estate, and be able to quit their J.O.B. There’s a guy on TV that does the final scream when people get that free; we ring a bell really loud when people quit their jobs, walk in and tell their boss that they no longer need their boss’ services. I get a kick out of that… I don’t know why, I just do.

Joe Fairless: [laughs] How can the Best Ever listeners learn more about what you’ve got going on?

Mitch Stephen: Just go to 1000houses.com, click on the Free Stuff tab right there. People chastise me all the time for  giving away an hour and forty-five minute webinars on how I do owner financing, or give away the first hundred pages of my book, or give away two hours and forty-five minutes of recorded coaching calls, so you can see what it’s like, with all these different people asking all these different real-life questions… So that’s the easiest way, 1000houses.com.

Joe Fairless: Well, Mitch, I enjoyed our conversation, as always, and thank you so much for being on the show, talking about your business model, but then how you implement that business model through the right people, the roles, and how you structure your agreements with your private investors, get paid, or get the house at 65% loan-to-value at most, with an average of less than that… And just your overall approach. You’ve got more than two decades in the business, so it’s important to listen to someone who has that experience, and hear what they’ve learned, and I appreciate you sharing that with us.

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

Mitch Stephen: It has been a best ever day, man. Thank you very much!

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JF1667: The Ins & Outs Of Commercial Real Estate From A Top 10 Commercial Broker with Bethany Babcock

We get to hear from a commercial broker today who is top 10 in both leasing and investment sales in San Antonio. Bethany founded and is the co-owner of a full service commercial firm. We’ll also hear from her on the importance of finding a good mentor to help your business. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Integrity first and foremost, after that persistence” – Bethany Babcock on what separates a good broker from a great broker.


Bethany Babcock Real Estate Background:

  • Founder and Co-Owner of Foresite Commercial Real Estate, a full service real estate firm in San Antonio
  • Named one of the top 10 Brokers in San Antonio in the categories of both leasing and investment sales
  • Based in San Antonio, TX
  • Say hi to her at https://foresitecre.com/
  • Best Ever Book: Secrets of Closing The Deal by Zig Ziglar


Sponsored by Stessa – Maximize tax deductions on your rental properties. Get your free tax guide from Stessa, the essential tool for rental property owners.


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, Bethany Babcock. How are you doing, Bethany?

Bethany Babcock: I’m doing well, thanks for having me.

Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Bethany – she is the founder and co-owner of Foresite Commercial Real Estate, which is a full-service real estate firm in San Antonio, Texas. Named one of the top ten brokers in San Antonio in the categories of leasing and investment sales. With that being said, Bethany, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Bethany Babcock: Sure, thanks for having me. We are a full-service firm based in San Antonio; we started about four years ago. I started my career in management and leasing, by going on the wrong job interview and kind of landed in commercial real estate.

Then I ended up going into investment sales, working at Marcus & Millichap for about five years. Then after that I decided to branch out and start a full-service brokerage firm here in San Antonio, [unintelligible [00:03:09].09]

Joe Fairless: A wrong interview… What happened?

Bethany Babcock: I was 18 years old, I got sent to a temp agency, and the temp agency said “Hey, we’ve got  a job interview lined up for you.” I went to it; they told me it was an insurance firm, and I was gonna do something administrative. I ended up going to the interview and they said “No, they lined up the wrong candidate”, and it was actually a commercial real estate firm for an owner here in town, that owned a few office buildings and shopping centers. But I interviewed anyways, and got the job.

Joe Fairless: That’s awesome. [laughs] And with your five years at Marcus & Millichap in investment sales, I know that can be a lot of hard work, especially at Marcus & Millichap, with their process, with constantly following up with people… What were some takeaways you got from that experience?

Bethany Babcock: It was a really amazing experience. I really do recommend it for anybody that’s looking to get into commercial real estate, because they just kind of throw you in, and you’ve gotta think or swim. Really the success of the experience will hinge on whether or not you have a good mentor, which I did… And it’s really a phenomenal opportunity, because you get to talk to so many investors, and learn about all the different strategies that people have, and you get to see their successes and their failures, and learn from all of them… And it’s really an incredible opportunity to be able to see things from that perspective. It’s something you wouldn’t get in a classroom, or reading any books.

Joe Fairless: What made your mentor good?

Bethany Babcock: Time. He spent a lot of time with us, and a lot of time with the clients, but he’s very much a one-on-one person with different people that he’s mentoring; he doesn’t take a lot of mentees. And the thing that I admired the most about him was the fact that he put his clients first, and it was really clear, even during the recession when things were really tough and everyone was struggling to put food on their table – and we specialized in retail, so you can only imagine how much fun that was – he would consistently put the clients first, and say “Hey, you know what – we’re gonna wait on selling. [unintelligible [00:04:59].02]” Clients really respected him for that. I admired that a lot; he’s been a great mentor.

Joe Fairless: And how did you get connected with him?

Bethany Babcock: I actually went in and I was planning on doing office, because that’s kind of what I had done originally; they kind of make you choose the product type when you’re starting… I thought “I’ll focus on office.” And when I met him, I knew I needed a good mentor, and I thought “He’s the best of the best”, and so I thought “I’ll do retail, if that means I can be his mentee.” So I switched over to retail.

Joe Fairless: Oh, okay. And now with the firm that you founded, what is your focus?

Bethany Babcock: Probably 80% of what we do is retail. We have some office, a little bit of industrial as well; the vast majority is retail. And we have a really active property management and leasing division. As of last year, my mentor came over and joined us full-time, and he’s running our investment and sales division, and we have a very successful investment and sales team.

Joe Fairless: Oh, wow. Nice. It comes full circle.

Bethany Babcock: Yeah.

Joe Fairless: With retail, tell us more about that industry. We know what the headlines say, so what are you seeing?

Bethany Babcock: Well, I think it’s really actually an exciting time to be in retail. And yeah, there’s  a lot of negativity and people focus on the big bucks. A lot of those concepts, in my opinion, are failing, because of poor business practice and a lot of debt. Really, when you’re looking at it, the smaller guys are thriving. Everything from the internet and social media is really actually leveling the playing field, in my opinion, and allowing a lot of the local guys the opportunity to thrive and show off their products, and be able to compete. And it’s really fun to see those guys do well, and exceed and excel in this environment. I think it’s an exciting time to be retail.

Yeah, it’s changing quite a bit. We’re not seeing the focus on anchors, we’re seeing the focus on experience, and the environment that a shopping center creates, but it’s all good change, and I’m excited.

Joe Fairless: What separates a good retail broker from a great retail broker?

Bethany Babcock: That’s a good question… I would say integrity first and foremost. After that, I would say persistence. Having someone be able to just stay on top of things is really the challenge when you have a lot of irons in the fire, and being able to focus… But persistence wins a lot of times, and that can make the difference.

Joe Fairless: Can you tell us a story of a time where in your role as retail broker you were needing to be persistent and it paid off?

Bethany Babcock: Sure. There was a time when I had first started the firm and I really wanted to be associated with nicer projects. Usually, when you’re starting, you have to just take whatever and prove your way, and kind of go up the food chain by taking higher-quality properties… And there was one particular project I really wanted to work on. It was a beautiful class A construction deal, and it was really visible. I was like, “If I can get associated with that, the firm will start off on a great foot.” So I told the owner, the developer, I said “Hire me, I’ll do it for free. I just wanna be associated with it.” He laughed at me and said “You have no idea what you are asking. This is going to take up every minute of your time, it’s going to consume your life for the next few years with this pre-leasing and unanchored center… And you have no idea what you’re asking.” I said, “I do, I do. Just give it to me. I’ll do it. I promise I’ll do a good job.”

He was right, I had no clue what I was offering… And he was gracious enough to not take me up on the offer to do it for free and ended up paying me, but… I decided to be consistently available on that project, and I had to be very proactive. That was a really fun opportunity because it was a great project… But because it was un-anchored, the only way to get it done was to go out and talk to tenants directly every day, all day long, for years. It finally got leased up, and it’s a very successful project; I’m really proud that I’ve been able to work on it… But I look back and I kind of shake my head; the owner was correct, I had no clue what I was offering to do at the time.

Joe Fairless: [laughs] Oh, wow… But you’re glad you did it.

Bethany Babcock: No doubt, yeah. Definitely. It showed that we were able to take on some high-quality projects, and I didn’t have to start off leasing warehouses in the sketchy parts of town.

Joe Fairless: What is involved? Please talk to us a little bit more about the work that’s involved when you take over a project for a client. Tell us about what you’re supposed to do, and what do you do?

Bethany Babcock: Sure. Well, it really depends on the project… If it’s something that’s already built or not built.

Joe Fairless: We’ll go with that one, that project specifically.

Bethany Babcock: Okay. So when it comes to something that’s not built yet, you’re selling a product that doesn’t exist, and you’re selling the vision, and you’re trying to explain to tenants and no one wants to be the first mover… Because their first question is gonna be “Well, who’s the anchor? Who’s the other tenant?” Someone has to be first, and you have to get someone on board and excited about it… So it’s a lot of selling the vision and trying to take an [unintelligible [00:09:34].06] and saying “Look, this is the potential for the area. This is the developer’s vision, this is how you fit into it”, and trying to get those pieces in place.

Once you get the first couple people in place, it really clicks in really quick, and it can get leased up if it’s the right project… But getting those first players in is really the hardest part.

Joe Fairless: I imagine those first players are also very important from a marketing standpoint, because if you pick the wrong first players, then you could sink the whole thing… Because then they’ll be like, “Well who’s in? Oh… A bookstore? A mom-and-pop bookstore? Hm… I don’t know about that.”

Bethany Babcock: Definitely. And we were really fortunate, because our developer who had that particular project – he had a great reputation in the market for being a good developer, and the tenants believed in the project, but there are a lot of people that are pre-leasing out there, and then they never build it. So a lot of people are like, “I’m not gonna mess with the lease negotiation if you’re not gonna be able to actually build it.” We have that problem a lot in our market… So you’re kind of fighting against that. But I had a good developer that I was working with on that one.

The other thing that made it really key was the tenants that we went to, just like you said – if we lease it to the wrong one, it can kill the project. So we looked a lot at reviews… And we didn’t just focus on the nationals, because we were only a mile away from a cluster of power centers where most of the nationals already were… So for this particular case we had to be really creative and go and find the local and regional chains that the reviews were off the charts, people were excited about it, and we had to approach them and be like “Are you guys ready for your second, third, or fourth location?” We had to take a little bit of a different approach, since we weren’t gonna get that one national.

Joe Fairless: How many businesses moved into this shopping center?

Bethany Babcock: Off the top of my head I’d say about 20.

Joe Fairless: About 20?

Bethany Babcock: Yes.

Joe Fairless: You did have your work cut out for you… [laughs] Who was the first one? I know you remember the first one.

Bethany Babcock: Yeah, the first one was a pizza chain here in San Antonio.

Joe Fairless: A pizza chain… A local pizza chain?

Bethany Babcock: Yeah, they had a couple of locations, but the reason that we approached them actually is I found them, believe it or not, on Yelp! Their reviews were off the charts, people loved them and got excited about them, and I thought “I’ve never seen this [unintelligible [00:11:35].19]” and I saw they were doing really well in a bad location… And I thought, “Well, if they can do well with no visibility, no traffic, nothing drawing them there, they will kill it if I can put them in the hard corner of one of the fastest-growing markets in San Antonio.” So I went to them about it.

It took about three or four times to finally get to the right point of contact, but then I phoned them and I was like, “Look, if you can do well here, imagine what  your second or third location can do in these locations.” The developer was building two projects at the time, and he ended up going to both of them. He took the first spot, and then we ended up needing five tenants that we had to get in place before we were able to actually start turning dirt. And once the dirt started turning, people saw it and they realized it’s gonna be a fun place, with some good chains that were already established… It got done pretty quickly thereafter.

Joe Fairless: Was that your primary way of doing initial research, looking on Yelp?

Bethany Babcock: Well, not primary, but it was an important part of it. Sure, yeah, I like to look and see what people are excited about. You can have tenants that have great, fancy websites, and look really nice, and they’ve got all the branding, they can be in the really highly visible shopping centers, but if they’ve got two or three stars and bad reviews and people don’t like them, they’re not gonna be doing that great; they’re not gonna have the capital to grow into another location, and they’re probably not gonna survive in the end.

Joe Fairless: If you were mentoring a broker who’s entering the retail industry, what are some things you’d make sure to tell him or her?

Bethany Babcock: Focus on the relationship more than anything. It’s really easy to get caught up in the deal, and especially when you’re first starting… Like, “I’ve gotta make that book, I’ve gotta get that first deal done.” But plant the seeds for years three, four and five. A lot of the deals that I’m working on today were things that were planted five, six, seven years ago. You just have to be in it for the long run. It’s not a short-end deal.

The other thing I would say is keep your lifestyle in check. It doesn’t seem like real estate advice, but most of the failures I see in the industry really are because investors or agents have cashflow needs pertaining to their lifestyle more than anything.

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

Bethany Babcock: I would go back to that – keep your lifestyle in check, really. If you have this lifestyle creep, it restrains your cash, and cash is king, and you’re not able to invest, you’re not able to stay in the business. It can take you out quicker than anything. And for some people I would say marry right, as well; you know, if you have a frugal spouse, it can really help  extend your life in this field, as well.

Joe Fairless: So I’m guessing it’s gonna be this class A project that you volunteered for initially – you got paid, but you initially volunteered for. If it’s this one, then what’s the next one – what’s the most challenging project you’ve worked on?

Bethany Babcock: Let’s see… That would be the first one; it was probably key there. But other than that, when I first started in the business, when I was 18, 19 years old, I started as an admin and they quickly put me into leasing fortunately, because I was a horrible admin… But they let me go into leasing; it was a tough assignment, because it was a class B or B- office building with a bad reputation in town for not fixing things, and it was really a challenge to get it leased up. I had my work cut out for me, but eventually we were able to get it done… But it was an uphill battle.

Then after I got to prove myself through those ones, I got to be on better projects… But I had to kind of pay my dues with the more challenging properties in the beginning.

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

Bethany Babcock: Sure.

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

Break: [00:15:02].00] to [00:16:08].12]

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

Bethany Babcock: I’m kind of a junkie for all business books, I love them all… I would say I love all the Zig Ziglar books, and John Maxwell books, Patrick Lencioni. It’s hard for me to narrow it down to just one; I just finished reading The Ideal Team Player. I thought that was great.

Joe Fairless: Who’s the third person you said? Patrick who?

Bethany Babcock: Lencioni. I hope I’m pronouncing his name right.

Joe Fairless: Okay… It’s a new name for me. I hadn’t come across him before. What’s the best ever transaction you’ve been a part of?

Bethany Babcock: That’s a good question… I was really fortunate to be not the primary agent [unintelligible [00:16:37].11] involved in a transaction where we were able to do a portfolio grocery store when I was at Marcus & Millichap. That was really exciting, because I think the buyer and the seller already knew each other, and the team was able to create a competitive environment to really drive the price up and get the best price for the owner. In the end, that deal — some of these deals can drag on for years, and that deal ended up closing in all-cash in ten days. It was really unusual, and really fun to be a part of.

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

Bethany Babcock: Where do I begin…? I made a lot of mistakes over the years… [laughs] I would say not acknowledging my shortcomings and bringing on partners. I know now that if I’m not the most skilled and I don’t know that particular product type, or I don’t really know that particular property, it’s in everybody’s best interest (including my own) to bring someone on that is, that can fill in those gaps… To be able to work within our strengths and weaknesses, I think that’s really important.

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

Bethany Babcock: I love serving on the board of Adult and Teen Challenge of Texas, and I’m really passionate about the work they do. They are a drug rehabilitation program. Aside from that, I love mentoring college-aged kids on how to avoid student loans and set up a career path and stay out of debt.

Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on?

Bethany Babcock: They can visit our website at foresitecre.com. Our office number is 210-816-2734.

Joe Fairless: I loved hearing the story of the class A project where you found 20 tenants, and the challenges that came with that, and how you approached the solution, and just the idea of starting out strong with a nice product, and then just figuring out how to make it work, regardless of what you got paid… And fortunately you did get paid, but I’m sure you got paid more in the life experience than any commission you could have received… But I’m sure it was also nice to get the commission.

Bethany Babcock: Yeah, honestly, if I hadn’t gotten a dollar, I still would have gone back and done it. It was that worth it.

Joe Fairless: Well, thank you so much, Bethany, for being on the show. I really appreciate you spending some time with us and teaching us some things that you’ve come across. I hope you have e best ever day, and we’ll talk to you soon.

Bethany Babcock: Okay, great. Thank you so much for having me.

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Best Real Estate Investing Advice Ever Show Podcast

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

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!


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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:

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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.

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.

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Best Real Estate Investing Advice Ever Show Podcast

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

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!

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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

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

With us today, 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!


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

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!

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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.

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

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.

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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

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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.

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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

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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

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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!

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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

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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.

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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!

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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

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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

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Joe Fairless