JF2391: Building a Business to a Greater Purpose with Ellis Hammond #SituationSaturday

Ellis Hammond is living proof that a real estate investor doesn’t need to have an impressive portfolio in order to inspire and attract other investors. Having a powerful story and motivation is often enough.

As a former missionary and college pastor, Ellis Hammond used to struggle with funding his ministry adequately, so he started looking for other ways to change lives for the better. Now, a full-time investor and entrepreneur, he’s built a business to a greater purpose that served others, and he helps other investors do the same.

Ellis Hammond Real Estate Background: 

  • Full time multifamily investor 
  • Previous guest on JF1866
  • Leads a mastermind community, Kingdom REI, for other faith-driven investors
  • Based in San Diego, CA
  • Say hi to him at: www.EllisHammond.com

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Best Ever Tweet:

“Most of my investors right now don’t really care about cash flow” – Ellis Hammond.


Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever. We don’t get into any fluffy stuff. First off, I hope you’re having the Best Ever weekend. Because it is the weekend and because it is Saturday, we’re going to talk about a specific situation that should you come across the situation, well, you’ll have some tools to help you solve for it.

Here’s the situation – the situation is you are looking to get more traction in your real estate investing business, you’re looking for your brand, your company to be recognized by more people, and you’re looking to grow your business. Well, that kind of probably covers a lot of us, so that’s why I wanted to have this Situation Saturday episode, where today’s guest is going to talk to us about how to use our personal story to build our brand. With us today to guide us through that conversation, Ellis Hammond. How are you doing, Ellis?

Ellis Hammond: What’s up, Joe? I’m really thankful to be here man. Excited to serve your audience in this way. I didn’t know we were doing a Situation Saturday, so I’m pumped, man. Let’s get into it.

Joe Fairless: That’s awesome. Well, sometimes I change it up right before the last second… So I figured we could probably make sense for this segment. So a little refresher… Ellis has been on the podcast before, Episode 1866. He is a full-time real estate investor. He leads a mastermind community called Kingdom REI for other faith-driven investors. He’s based in San Diego, California. Really quick, will you give us just a refresher of your background? And then let’s go right into how we can use our personal story to build our brand, because you’ve done it effectively.

Ellis Hammond: Yeah. So I’ll just set the premise real quick and then I’ll let you kind of lead through it, too… But the reason I think I’m an expert to be able to talk on this subject, Joe, is when I go to and speak at these conferences, or in front of other investors, especially when I’m in a room with other experienced operators like yourself, I don’t have the biggest track record, we don’t have the largest portfolio. As a matter of fact, it was a year ago I was a full-time college pastor. I served as a Christian pastor for six years; we started buying real estate and our first syndication deal as a full-time pastor. So when I come in front of a room, or when I get in front of a group of investors, I can’t say, “Hey, look, I’ve got 10 years of investing experience,” or “Hey, I have this massive real estate portfolio.” I don’t have any of that. But somehow I’m able to leave that room and almost always leave that conference or whatever, with people who are emailing me, or DM me on LinkedIn, or whatever, saying, “Hey, I want to learn more about you and your business and ways to invest with you.” Why? It’s because I have a powerful story that separates me from everyone else and that really resonates with my core audience. So that’s really what I’m excited to kind of hopefully get into today a little bit. So where would you like to go, Joe? How to best start that, man?

Joe Fairless: Thank you for framing it that way, because now we’re all with you on, okay, one of the toughest questions that you can get is, “How are you differentiated from your competition? Why should I invest with you?” This solves for that, I assume. So what would you say if I was a potential investor, you’re in front of the room, and before you get into your story, I ask, “Real quick, why would I invest with you over other people?”

Ellis Hammond: I think it’s knowing who I am. I always start with “Listen, my journey, my story…” something that’s going to catch their attention for me is I was a former pastor, I was a former Christian missionary. All of a sudden, they are like, “Whoa, what? That’s not what I was expecting to hear. Now, you’re a full-time investor?” Now they’re intrigued and I’ve caught their attention. So the backstory that maybe resonates with them.

Then I’ll tell them the turning point, “Listen, we wanted to figure out ways to go and create vehicles that could produce wealth, that would better serve the things that we were passionate about being a part of. I was a full-time missionary, and honestly, we were running out of money. So we went on a journey to figure out how do we go build and create wealth? And the vehicle that we figured out how to do that was through real estate. Now we have this vehicle that we can allow other investors to be a part of this journey with us.”

I’m saying, “Hey, we want to go create vehicles of wealth.” a.k.a. real estate, real estate syndication, multi-family, that can produce wealth for our investors, yes, but also impact change in the lives of our residents, but then even more so create enough cash flow, margin for us and for our investors to go and support the things that we’re passionate about serving.

So I think it’s helping them see where I come from and then showing my journey. I call it the journey that resonates with people that they want to be a part of. Because you and I both really do the same thing, but the journey you bring them on and the journey I’m bringing people on are very different.

I think this is so important, Joe, that people have to get – not everyone is going to want to go on that journey with me. Because some people  all of a sudden are going to outrule me because I don’t have the track record or the experience. So many people, man, are trying to serve everyone, where I just want a few. I want the few people who resonate with my story so much that they’ll say, “I’d rather go and work with that guy, because I’m passionate about the things that he’s passionate about. I’m so convicted to his message and thought process that I’ll go work with him above everyone else, even though he doesn’t have that track record.” I think a good story, a good brand must attract the right people and it must repel the wrong people.

Joe Fairless: I love how you broke down the components of it. Perhaps it wasn’t an official breakdown, so let me recap what I heard and then you tell us what else we need to factor into it. I heard one – you didn’t say this, but I think you implied it – that you surprise them with your background of being a pastor or former pastor. Then two, you talk about in that story, a challenge that you had, which was to create wealth. Three, there’s a turning point where you discovered real estate. And then four, now we offer this to create wealth for ourselves, as well as help others to create wealth and support the things that they want to support. Are those the main components, first off?

Ellis Hammond: Yeah. I can say [unintelligible [00:09:31].20] plan. Okay, what’s our plan to go do that now? Really, the plan is also your call to action. So what’s the plan that involves the person that you’re talking to? I’ve done a longer talk on this, but I think for the sake of this podcast, Joe, of those four components, the backstory really is what gives people a vested interest in your journey. And then what was the problem that you faced, the turning point that you had, and now what’s the plan that you’ve created, and that you’re bringing or you’re inviting other people into to be a part of? I think that’s huge.

Joe Fairless: With each of those –and I’d love if you could go through each one of them individually– what are some tips for if we’re thinking about, “Okay, I can do this. I’ve got a backstory, I’ve come across a problem, there’s a turning point, and now my plan is to do apartment syndication, or fix and flip homes, or whatever it is.” Can you give us some tips for each of those that as we’re developing, if we didn’t hear from you we might not implement?

Ellis Hammond: Yeah. So the backstory – I always ask three questions when I’m thinking about a story or a brand. The first question is always “Who am I?” You’ve got to be authentic. Don’t try and make something up. But I think all of us do have a story. And typically, the more vulnerable we are, the more authentic those come out. We don’t think people will resonate with our story; you think “Well, I don’t really have an exciting story.” Well, what is exciting? If you come from the corporate world, you don’t think that’s very exciting. Well, there’s a lot of people that come from the corporate world that wanna invest in real estate.

Let’s say you’re in the medical field – well, listen… You don’t think that’s exciting or you don’t think that’s relevant, but that resonates with people. If you were a doctor, a lawyer, or a nurse, and now you’re in real estate… Again, it’s not about trying to be the biggest or the most famous, it’s trying to find your core audience who resonate with you and your journey. So I just think, be authentic to who you are.

I think the second part is struggle. This is something that I think should resonate with people. For us and for me, to be a little bit more specific, in the world of faith and religion, especially Christianity, there is this dual mindset of, “Well, if I’m going to be a pastor or in the world of nonprofit, I must be poor. The only way I can really go make money is if I have a business.” That is the overall mindset of our faith for a lot of people, but a lot of people know that mindset is wrong. So I’m really challenging that and I’m inviting those who think the same way into that. I wanted to go figure out how do we merge that together.

So go figure out again, with the people that you serve, what is that common problem that they also face, that has some tension to it? Because it’s the tension and it’s the edgy dilemma that really is going to invite people in to say, “Yes, I also struggle with that. Yes, I want to know what you’re doing.” Now they’re eager to hear how you’re fixing that problem. Does that make sense, Joe?

Joe Fairless: It does. Help me have a broader mindset than what my mind goes to initially. I think, well, if we’re talking real estate investing, then isn’t a common problem going to be that they want to make passive income?

Ellis Hammond: No, actually. I don’t think so. That’s such a good example, Joe, because we have you, for example, who’s a big name. We have Grant Cardone, who’s a big name in this space. It’s all about cash flow, it’s all about passive income, and that’s the thing where we say, “Oh, people also want that. That’s what I should be promoting.” That’s actually not always the case. Most of my investors don’t really care right now about the cash flow. That’s not their biggest need or concern. I think that’s just what we’ve heard from other people and what their investors want.

So to me, what I see what folks want is they want to be part of a vehicle that has a mission, that is purposeful and intentional about the way it serves people, but also protects their money and helps them grow that money over time. That’s what’s most important to my people. The passive income, the cash flow is honestly just a bonus. Most of these people are still working, so the passive income is really probably third or fourth on your list.

So I would just say figure out who you serve, because their needs and their wants and their desires for what they want out of this vehicle could be different. It may not be passive income.

Joe Fairless: Okay, thank you for that. I’m glad we’re talking about that, because I heard what you said, and you did include passive income and capital preservation in what you said, but you lead with “being involved with something that has a purpose and is serving.”

Ellis Hammond: Yeah, it aligns with our core values, it has a bigger purpose in life. Again, the bottom line is important, they want to know their capital — because if you can give them both… “Man – preservation of capital, equity multiplication, but I’m involved in a vehicle that I can feel good about and that I know my money is actually helping others at the same time…” That’s the kicker.

Joe Fairless: So tactically speaking, are you doing anything that other groups might not do that makes your investments — you do apartments, right?

Ellis Hammond: Yeah, we do.

Joe Fairless: …your apartment investments more purposeful and more warm and fuzzy?

Ellis Hammond: Actually, we do. So we’ve kind of built up a brand around this and we currently — and I think by the time the show goes out, this fund will be closed… We just launched a faith-driven multifamily fund; it’s essentially the way that we’ve since kind of branded and putting this out to the world. Again, is everyone going to want to be a part of a faith-driven fund, Joe? The answer is no, right? That’s the whole point, and I hope people are catching that. I’m not trying to raise a fund that everyone and their mother wants to be a part of. I want something that my people want to be part of. So yes, we have a faith-driven fund; it’s actually a feeder fund into a larger group. Really what makes this faith-driven is we’re working with an organization called Apartment Life, which is a Christian nonprofit that works and comes alongside apartment owners, and really places families and resident leaders in our apartment complexes with the intention of really caring for our residents alongside our property management team. So they’ll do anything from events, to Bible studies, they check in on all of our residents 60 days before their lease is up to see how they’re doing… So really, their goal is to connect people in that apartment community, and really love all of them and show them the love of Christ. So that is very intentional, it’s very even measured. There are metrics to what we’re doing there.

So yeah, we’re very intentional, very purposeful about what we mean by faith-driven. I would say — I know a lot of people were using [unintelligible [00:16:24].16] and you’d actually be surprised how many people use this organization Apartment Life. But I don’t want to say no one’s been bold enough, but we just said, “Hey, we’re going to use this organization, so let’s be honest about…”

Joe Fairless: You’re going all-in.

Ellis Hammond: Yeah, let’s go all in. Like “Why are we not talking about?” So we are a faith-driven fund. So that’s what we kind of said.

Joe Fairless: One, you have a backstory; two, problem; three, turning point; and four, a plan to do it. We talked about the backstory. It’s okay, you should have a core audience… And as you mentioned, that I really like, you’ve got to find the common problem that they all face, where there’s tension, and inviting them in.

Can we just pretend your background is a software engineer for a moment? What would be your best guess that if I was a software engineer, and I wanted to create a multifamily company, and I wanted to say, “Yeah, Ellis had a great point. I want to create a backstory. What’s that common problem? Let me think about this… I know Joe asked him, he said it doesn’t have to be cash flow, it could be something else.” What are some other examples besides the faith-driven component that you have, and that you can think of?

Ellis Hammond: That’s a great question. I have a buddy — and I’m going to change the example just because I can speak to this one…

Joe Fairless: Okay. Sure.

Ellis Hammond: It’s guy sure is a guy who works in San Francisco tech, typically startup company. So we have a friend — actually, Joe, you might know this guy; we don’t have to use his name, but his whole brand and mission, and we chat regularly about this, is helping people go from IPO to cash flows; that’s his tagline. So his investors are typically in the San Francisco Bay Area, and they have spent most of their life waiting for IPOs. That’s how they make their money. They are part of a startup and they kind of stake their life or their income based on the next IPO. He is helping them shift their mindset to say, “Hey, that’s good. You don’t think you should leave that job. But let me teach you about a vehicle that once you IPO, you can invest in, and it can give you passive income.” Passive income is very important now for him… “So that you aren’t always relying on the next IPO.” So he has very clear targets, that he’s helping them open their world and say, “Oh, wow.”

This was his story, by the way, he worked in San Francisco area tech. This was what he did, and he learned about syndication, and now he started investing in real estate, and having the passive income to support him in between these IPOs. So I think that’s a great example of just kind of knowing who you serve, knowing that there’s a problem there that he saw because he experienced it, of “Man, this is so unstable. What if this startup doesn’t go well? So I’m always kind of waiting for the next thing.” And that was a way that he figured out how to use his story, figure out a problem that his people had, and bring them into a journey that he’s on now, really helping people invest in multifamily syndications.

Joe Fairless: Thank you. I appreciate that additional example. The thing that comes to mind, just to play the other side of the fence with this… The thing that comes to mind is its cash flow. No matter how you’re packaging it, the problem is ultimately, in this example at least, it’s IPO meaning “I don’t have the cash flow.” And now, “Hey, apartment investing. You get cash flow”, which is totally fine. But that to me is the challenge in this, is that when you say a common problem that they all have – that makes sense, but ultimately, it sounds like it’s always going to lead to cash flow. Allow me to put words in your mouth and then you can correct me… Now that it’s ultimately really about cash flow, except for your example, which I would argue is an outlier, but we can talk about it… If the problem is cash flow, like from IPO to cash flow, then really, it’s about — okay, let’s think about our background. I was in advertising before this. We would make a salary, and then we would need to jump from one employer to another, most likely, if we were going to get a significant salary bump. Because that’s just how the advertising world works, generally speaking. So if I were to apply this, then I could say, “Hey, advertising people, I know the stress that’s involved with needing to go from one job to another and completely start over with a new company just to get this extra bump of income.” So that’s the problem I came across. And now here’s real estate, where that solves for that. So it’s just repackaging, which is fine, but I think it sounds like you’re ultimately always solving for the cash flow and capital preservation. But I would like to hear your thoughts.

Ellis Hammond: That’s a great point. I don’t actually disagree. I think, though, to make the caveat, you and I, the vehicle we’re talking about is multifamily. [unintelligible [00:21:23].16]

Joe Fairless: Correct.

Ellis Hammond: …to this that aren’t in multifamily and cash flow is not part of their business model. So I totally agree with you, the vehicle that you and I are in, a huge component of why we’re in this is because we like the cash flow. That is also part of our story in the story that we’re working with. I’m sure there are people listening to your show that aren’t in multifamily, and they may have something else in real estate that cash flow isn’t that. So I just wanted to make the point that it doesn’t have to be cash flow; figure out what that is. But I think when it comes to multifamily, you’re right, it’s probably in the top three of whatever problem that you’re trying to solve,

Joe Fairless: Ultimately, money. Replace cash flow for “make more money” and “preserve the money that you have,” and not in that order. So I don’t think it changes much. I think yours is a bit of an outlier, but even in your example, you said cash flow and capital preservation, even when you said, “Here’s what we offer.”

Ellis Hammond: You could change [unintelligible [00:22:21].13] all you want, but again, we’re still not having an investment vehicle, right?

Joe Fairless: Right. That’s my whole point. So with backstory, it’s identifying the core audience who we are a part of, and the common problem that they face – that has to do with money, quite frankly. And then thinking about what are the unique situations that they’re in.

Ellis Hammond: We’ve got to point out here, I think – I think this is important before we finish here… Yes, we started with the preface of, let’s say, you’re listening to this show today, and you get asked to speak at the Best Ever Real Estate Conference, and you’re going to be in front of all of these people… And you get on the stage and talk about why they should invest with you is because you preserve their capital and you give them cash flow…

Joe Fairless: Not going to work, right.

Ellis Hammond: Right, because you are not Joe; he owns the state, and if they want preservation of capital and cash flow, they’re going to go invest with Joe. You have to give them a different outcome. And it may be still preservation capital and cash flow, Joe, is my point… But for example, when that guy said, “Well, I was in San Francisco tech, and this is who I served” and he’s able to speak to them in such a way that he knows their problems; he knows their struggles, he knows their journey. He’s not just selling cash flow and capital preservation.

Joe Fairless: I get that.

Ellis Hammond: He’s selling them away out of this lifestyle from just living on IPO. That’s what people have to realize. You have to sell the benefit. You’re selling the outcome of what capital preservation and cash flow provide that person. I think that really would separate anyone knowing what do your core people really want whenever they get capital preservation and cash flow, to use those as an example? What is the outcome of them getting cash flow? I’m telling you, that’s probably different from everyone who’s listening to this show, because we all serve different audiences.

Joe Fairless: That’s helpful. I’m glad that we dug in deep there, and I heard your perspective; that’s very helpful, and everyone heard the thought process. So backstory, identify core audience… And it is our backstory; it’s who we are, and what audience can we serve based off of who we are, thinking about the problems they have, as it relates to what we can help them solve for. They might be colorblind – well, we can’t do a whole lot about that. But as it relates to the business that we’re in, what can we help them solve for related to those problems. Then our personal story about the turning point, and then our plan for how to do it, and then opening it up. It personalizes the brand, resonates with that audience, it might not rise with other audiences, but who cares? I have a loyal group of a thousand people every day, over 100,000 generally passively interested people. You want a thousand raving fans.

Ellis Hammond: I’m fine with 100 committed people who would invest 50k with you every single year. You can build something pretty massive over the next decade.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing, Ellis?

Ellis Hammond: Absolutely, man. If you want a really great example of this, I wrote actually a book about my story and kind of walk through this in more detail. Missionofmultifamily.com is actually where you can grab a free copy, Joe. It’s our book link. And then just email me; I would love to connect with you. Invest@ellishammond.com.

Joe Fairless: Ellis, thanks for being on the show. I really appreciate it. Hope you have a Best Ever weekend and talk to you again soon.

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JF2341: Starting Off Fast With Chris Thomas

Chris Thomas is a full-time short-term rental investor with two and half years of experience and quickly built a portfolio of 257 rentals, and managing 70 others. He has a great story of what hard work can get you in a short time period. 

Chris Thomas Real Estate Background:

  • Full-time short term rental investor
  • 2.5 years of experience
  • Portfolio consist of 257 rentals, 70 managed
  • Based in San Diego, CA
  • Say hi to him at www.getchristhomas.com 
  • Best Ever Book: Build to Sell

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Never lose money on a deal. Reverse engineer every deal to make sure you minimize your risk.” – Chris Thomas


Theo Hicks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Chris Thomas.

Chris, how are you doing today?

Chris Thomas: Man, I’m fired up. Man, we should have done this interview a long time ago.

Theo Hicks: Well, we’re finally here. I appreciate you taking the time to join me today. Chris is at one of his rental properties right now. So a little bit about Chris — he is a full-time short-term rental investor with 2½ years of experience. Portfolio is 257 rentals; 70 of those are managed for other people. He is based in San Diego and his website right now is http://www.getchristhomas.com/, but it might be different when this airs, and so it’s either that or the one that’s in the show notes below.

So Chris, do you mind telling us some more about your background and what you’re focused on today?

Chris Thomas: 100%. I’m from East San Diego, North Park. So born and raised in North Park, San Diego. And pretty much what I’m doing now is—I come from the corporate world, I’ve been through two failed startups, to being back at my family’s house, in a bad situation, to now having a ton of Airbnb rentals and just absolutely crushing it.

Theo Hicks: Awesome.  2½ years when you started investing, right? 2½ years ago?

Chris Thomas: Correct.

Theo Hicks: And so obviously, corporate world, tried the startups, back at home. Tell us about the process of selecting real estate in general, and then tell us why short-term rentals.

Chris Thomas: Great questions, Theo. Hey, man, let me tell you, it was first of all out of desperation. But I’ve always wanted to be a real estate investor since I was like eight years old. That’s crazy, right? I knew I was going to be into something, into business, and I knew that the way to get rich when I eventually became more than an adolescent was being a real estate investor. So I saw this opportunity for Airbnb rentals and I saw how much it got in, I didn’t have any money. I saw that this opportunity was booming, so I started my venture by getting investors. That’s how I started.

Theo Hicks: So you got into real estate because you wanted to do it since you were a kid. For Airbnb, you saw the growth potential, the profit potential… So you mentioned raising money. Had you done real estate at all upto this point?

Chris Thomas: Never. I never did real estate. I did sales calls for a loan company when I was like 17 years old making sales calls. But I didn’t even know what I was doing at that time. But I’d always wanted to be in real estate since, gosh, 18 years old, by actually knowing what it can do for you. I just didn’t have the mindset for it or the know-how.

Theo Hicks: So how did you raise money then? Who did you go to and then how did you convince them to invest with someone who’s never done this before?

Chris Thomas: Great question, man. Hey, let me tell you, I was fully transparent with these investors. How do I reach investors? I manually reached out to these investors via LinkedIn, 500 messages via LinkedIn. I didn’t have LinkedIn premium or none of that crazy stuff, and for 48 hours straight, I think I had four hours of sleep between two days, and I was literally sending out messages to 500 investors and their tagline was “investor”. And I reached out to 500 people, 40 of them reached back out to me saying, “What is it? Tell me about it.” And then 11 of them moved forward and got 3-5 rentals each. And I was in debt, $40,000, I had -13 cents in my bank account. And then just imagine a couple weeks later, that I had 38K in my bank account from all these rentals I was doing. And then I was making 11K every month after that, managing their rentals. So it’s incredible man, I was—imagine I was on welfare; I had the yellow card here in California, and transitioning into managing rentals.

Theo Hicks: What did your message say? Was it the same message to all 500 people or was it custom?

Chris Thomas: Each message was custom. Because with LinkedIn, if you copy and paste messages, it goes up under their spam. So I had to manually say, “Hey, Theo, I saw that you liked this article. I like that article too.” So I made it relevant, boom. So I went in there, searched their profile, looked at stuff that they like and said, “Hey, I like that, what he said too here. I don’t know if you’ve noticed, but I’m in the Airbnb rental space and I’d love to pick up a rental for you.”

Theo Hicks: Okay.

Chris Thomas: And I’m new to this; I told these people, “This is my first time doing this, but I know there’s an awesome opportunity. But here I’m working with my buddy who already has a rental.” So I used that leverage that my buddy already had a rental in San Juan Capistrano and that I’m managing it.

Theo Hicks: There you go.

Chris Thomas: So I had some leeway.

Theo Hicks: And then they’ve reached back out. What was that process like? Was it just immediately boom, ready to go? Was there some additional courting? Walk us through what happened after that. How long it took, was it a lot of back and forth, did they want to talk on the phone, meet in person?

Chris Thomas: It was all phone. So most of them were here in California, some in Arizona. So the nature of the initial conversation was the vetting process, do they have an LLC, how much capital they have, how much capital that they have in their business, to show financials to potential property managers and owners, to make sure that they have the financials to back up, about 2-5 times the rent. So it was that vetting process.

Once we got through that vetting process, some were like, “Meh… I don’t know,” typical sales. And then to some of them were like, “Let’s do it. You’re going to do everything?” “Yes, I’ll do everything. I’ll manage everything. I’ll set everything up, and all you’ll see is the money going to your account, and all you have to pay me is $500 to $750 a month.”

Theo Hicks: Is that a percentage or is it just flat fee?

Chris Thomas: Flat fee; that’s for paid for cleaners and all this other stuff that goes into the business. So they’re paying $750 per rental, Theo.

Theo Hicks: Okay.

Chris Thomas: So per rental that they had, they paid me $750 per rental. So that was pretty cool. That’s how I raised capital, just finding people with money.

Theo Hicks: Okay, so you’ve got the money now. At what point in the process did you start looking for deals and how did you find them?

Chris Thomas: Good question. So how did I start looking for deals? Within eight months, I had 20 plus rentals myself. So I had 20 plus rentals, and I just went to the same places that we already had rentals in; smartest way to do it, right? We’re already in the building. So I just went back to them with another LLC, like, “Hey, my company – I would like to get three more rentals or four more rentals,” depending on the building that we’re in. So I went to the rental. So check this out. I went to the best places that were performing the best for my clients, and I just went to those buildings and got rentals in those places.

Theo Hicks: I’m kind of confused. So what kind of properties are these that you’re buying?

Chris Thomas: I’m not buying, renting. Yeah, we’re renting, renting to rent.

Theo Hicks: Okay, I don’t think I fully understood that. Okay, let me get back to that. So you say, you’re not buying them. You’re leasing them from—

Chris Thomas: Correct.

Theo Hicks: I see.

Chris Thomas: Yeah. So we’re leasing the apartment. And then the decision-maker – we’re using a subject to put this on short-term rental sites, and then we’re putting it under an LLC to put it back on vacation rental sites such as Airbnb, VRBO, go down the list.

Theo Hicks: So you’ll go in there — is your name on the lease, or do you have a buyer already whose LLC goes on the lease?

Chris Thomas: Correct.

Theo Hicks: Okay.

Chris Thomas: So when I initially started, it was their LLC, and they’re representing that LLC and that’s it, man. It used to be nothing personal; it’s be all under the companyies.

Theo Hicks: Okay, so you put the buyer’s LLC on the lease—

Chris Thomas: Investors.

Theo Hicks: Yep. So the investors do it, and then you’re just automatically allowed to do short-term rentals or does the lease need to be a specific way? Do you need to ask the landlord, or it’s just whatever?

Chris Thomas: No, no, no, it has to be 100% legitimate. You have to let these people know, we’re going into the building and we’re going to be putting this on Airbnb. So it’s 100% legal, and they understand what we’re going to be doing there. So that’s pretty much it. We got a lot of no’s and we got a lot of yes-es. And we just vetted out the yes-es and moved forward with those buildings in downtown San Diego, Chula Vista, California and some up north, Escondido, stuff like that. But primarily San Diego, California, Metro, North Park.

Theo Hicks: Okay. So once you’ve secured this lease, then I’m assuming you’re furnishing them. Who pays for all that?

Chris Thomas: Great question. The investor. So they would write us a check for $7,500, which would include their rents, their deposits… Pretty much per rental would be about 5-7K, and that would include their rents, their deposits and the furniture. And then we would take, of course, our portion, a fulfillment fee, which can range from $1,500 to 2K per rental.

Theo Hicks: Okay. And then you’ll go in there with the furniture and then you’ll post it on Airbnb and then you’re kind of responsible for just kind of managing that—

Chris Thomas: Day-to-day.

Theo Hicks: — day-to-day stuff.

Chris Thomas: Yes.

Theo Hicks: Okay. When you first started, were you doing everything yourself, or did you immediately outsource things like the cleaning and stuff like that?

Chris Thomas: I always recommend if anybody’s going to get in this business for the first couple months, do it yourself, so you understand the questions that your guests are asking, or all the stuff that you’re going to be going through with cleaners and the frustrations – you want to fill that, so that when you’re ready to outsource this or give that project to someone else, delegate that process, that you have all the answers ready for any questions that that person that’s doing the task, they understand the whole process.

So yes, in the beginning, the first three months, I was doing everything, before I hired a channel manager through Desti. And we weren’t doing the cleaning, of course. I’m—come on, I can’t swing a mop. [laughs] So we hired some cleaners. Man, we went through so many cleaners. But yes, we were doing everything when it comes to guests communication and managing the unit.

Theo Hicks: Okay. And then does that $7,500 that the investor gives you — how much rent does that cover?

Chris Thomas: It covers the first month’s rent and the deposit primarily, and then they’re responsible for the monthly rents.

Theo Hicks: So are they submitting that to you, or are they sending that in themselves?

Chris Thomas: They direct deposit it into the company. So they’re automatically—

Theo Hicks: Okay, pretty easy.

Chris Thomas: Yeah, they would direct deposit it to the company, and if they don’t have direct deposit, they would find a way to send them a check. So everybody that has a rental property, hopefully they have a direct deposit option. But all of ours did, luckily.

Theo Hicks: How much money — because you said that they’re actually paying the rent, plus they’re paying you $500 to $750 per month, so how much are these units generating?

Chris Thomas: On average right now? Are you saying after they’ve paid me?

Theo Hicks: I guess both. So how much are you bringing in total, and then how much are the investors making?

Chris Thomas: So to answer your question appropriately, the investors are making an average of $2,700 per rental. And after paying us, of course, it’d be 2K to $2200, depending on what type of rental it is. If it’s a three-bedroom, they’re paying $750 to manage it. Two bedrooms is roughly around 600 bucks, and one bedroom is 500 bucks to manage.

Theo Hicks: I think the fascinating thing about this is that, as you said, you kind of have the proof of concept already once you’ve gotten one. So you know, “Okay, well, if this one’s working, then I can just get more deals in the same building.”

Chris Thomas: That’s what we did for my portfolio.

Theo Hicks: Okay.

Chris Thomas: The whole vetting process was done. So I used these investors for my benefit, as well… Because check it out, Theo – we saw the best performing rentals, we saw the revenues that these people are bringing in, and what do you think I did? I went to the same buildings that had the best performers and invested my earnings into these buildings.

Theo Hicks: How long did it take until you started doing it yourself?

Chris Thomas: It took about six months.

Theo Hicks: Okay. So essentially you’re just buying the [unintelligible [00:14:28].18]

Chris Thomas: Correct.

Theo Hicks: I guess a little bit less than that because of the fulfillment fee. How much money are you paying upfront per investment? How much money are you making per rental?

Chris Thomas: How much am I making per rental on the management?

Theo Hicks: No, no, the one that your own.

Chris Thomas: Oh, currently?

Theo Hicks: Yeah, yours, just per.

Chris Thomas: Oh, just per. We’re bout $2,700 to 4K on average. $3,667 per rental. $2700 to $3667 average a month.

Theo Hicks: It is a very fascinating. I’m glad—I’m halfway through, and I realized what you are actually saying. I was like, I think I’ve heard this one or two more times before. Whenever I hear this, it’s so interesting to me, because it seems so obvious, but I never heard of that many people doing this.

Chris Thomas: Well, now you’ve met the don, man. You’ve met the King Kong of Airbnb rentals.

Theo Hicks: Your upfront work is impressive, with all those messages. Alright, Chris, what is your best real estate investing advice ever?

Chris Thomas: That’s a great question. [unintelligible [00:15:22].14] Number one is you want to minimize your risks. And the way to minimize your risks is to find somebody who’s already done it, and to find the softwares and tools—you can agree with this, you’re an engineer… Find all the backend stuff to reverse-engineer it and work backwards before you sign anything on the deal. The deal is done in the data. And I’m a huge data guy. So if the numbers aren’t attractive for a particular rental property, using tools like https://www.airdna.co/ – this is a short term rental site that analyzes short term rentals to make sure you’re making money before you even get into a deal.

The second piece of advice that I have for real estate is find a way to get there faster. Airbnb doesn’t cost a ridiculous amount. I have a guy in Nashville, Tennessee, who was one of my students that took my short term rental Academy. This dude has 11 rentals in Nashville. He started with 3,500 bucks, and he only went in with $500 for a deposit… Because people are struggling with the Coronavirus.

Theo Hicks: Exactly.

Chris Thomas: People are struggling in Tennessee right now, man. And in Nashville, this guy walked into a luxury spot in Nashville, Tennessee, downtown Nashville… And I was impressed. He walked in with $500 in a deposit, didn’t pay the first month’s rent. Now that guy has 11 rentals, making like 60k a month, and he’s a 19-year-old kid. That’s crazy.

Theo Hicks: Yeah. Alright, Chris, are you ready for the best ever lightning round?

Chris Thomas: Let’s do it.

Theo Hicks: Alright. Let’s hear a quick word from our sponsor.

Break: [00:16:44] to [00:17:37]

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

Chris Thomas: The best ever book I’ve recently read is Built to Sell by John Warrillow. That’s a really good book. Have you read it?

Theo Hicks: No, I have not. I don’t think I’ve heard of it, so I’ll look into that for sure. If your business were to collapse today, what would you do next?

Chris Thomas: The same thing.

Theo Hicks: The exact same thing. I agree. I would, too. What is the best deal you’ve done so far?

Chris Thomas: The deal I made with myself to never quit.

Theo Hicks: I’ve never heard that answer before. I like that. What is the best ever way you like to give back?

Chris Thomas: Through teaching – YouTube, my training, that’s the best way, is through education. Education is the greatest foundation and formula to wealth.

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

Chris Thomas: Everything’s @getchristhomas. Everything you can think of, any social media platform is @getchristhomas; YouTube, Instagram, Facebook, Snapchat… Whatever it is, wherever you’re, I’m at. It’s @getchristhomas.

Theo Hicks: Awesome, Chris. Well, thank you so much for joining us today and explaining your very unique strategy of essentially finding really well-placed apartment units that would work well for short term rentals, renting those out and then using other people’s money to furnish and pay the rent and then you just collect a fee upfront, and then each month based off of managing the entire short-term rental process for them.

You talked about how you first got started and you manually went on LinkedIn and spent two days straight manually messaging 500 people who had investor in their tagline; 40 had reached back out and 11 moved forward with 3-5 of these types of rentals.

You talked about how you initially messaged these people, making sure that it was relevant based off of what you found on their profile or something they’d recently liked. You were kind of transparent and letting them know that you personally hadn’t done this yet, but that you’re working with a friend who had a short-term rental for that proof of concept. And you said that once people invest their money, then you make $500 to $750 per month per rental. And that within eight months, you had a lot of rentals yourself.

And I really like this, how you’re finding these deals. You said you use some tech to make sure that certain places are good for short-term rentals. But then once an investor has bought one of these units and you see how well it’s doing, then you use that as proof of concept and then go and buy other rentals in that same building, because you already know they’re performing really well. You went into a lot more in detail on how this process works, but that’s kind of the gist of it.

And then your best ever advice was to never lose money on a deal by minimizing risks, which involves finding someone who’s already done it before and then reverse-engineering the process using data and technology. And then you said to find a way to get there faster, and clearly you are living that advice.

So Chris, I really appreciate it. Thanks for coming on the show. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Chris Thomas: Yes, thank you so much, Theo man. This has been one of the best podcasts I’ve ever been on, man. You guys really do make that name shine, the Best Ever Real Estate investing podcast ever, and the questions you asked were just second to none. I absolutely enjoyed being on here today, and hopefully you’re making it an electrifying day.

Theo Hicks: I appreciate it, Chris.

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JF2299: Out-of-State Turnkey Properties With Axel Meierhoefer

Axel is the founder of AMC and Ideal Wealth Grower. He originally came over from Germany through the Air Force and had a successful executive role for a software company and has founded a consulting company as well. As he grew in his career he started to wonder how he could grow real wealth so his first idea was the stock market until he saw the dot com bubble burst and he quickly pivoted to focus on real estate. Now he focuses on helping others grow their own passive income through real estate consulting.

Axel Meierhoefer Real Estate Background:

  • Founder of AMC and Ideal Wealth Grower
  • 9 years of real estate experience
  • Portfolio consist of 8 turnkey properties in two locations plus his home in San Diego, and a Cocoa investment in Belize
  • Based in San Diego, CA
  • Say hi to him at: www.idealwealthgrower.com/free for mindset manual
  • Best Ever Book: Wealthy Gardener

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Look for the best balance deal” – Axel Meierhoefer


Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Axel Meierhoefer.

Axel, how are you doing today?

Axel Meierhoefer: Great, Theo. Thank you for having me. I’ve really been looking forward to being on the show.

Theo Hicks: Well, thank you for joining us, looking forward to our conversation as well. A little bit about Axel, he is the founder of AMC and Ideal Wealth Grower. He has nine years of real estate experience, and his portfolio consists of eight turnkey properties in two locations, plus his home in San Diego, and a cocoa investment in Belize. He’s based in San Diego, his website is idealwealthgrower.com.

Axel, do you mind telling us some more about your background and what you’re focused on today?

Axel Meierhoefer: Absolutely. So you can probably still hear the accent a little bit… I came over here 25 years ago from Germany with the Air Force, I was serving in the US Air Force here. coming from Germany. Around 2000, I was getting to retire from the Air Force, and being familiar with the system in Europe, you typically have some kind of government-organized retirement system. When I came here, and shortly after working for a company as an executive, started the consulting company you mentioned, it became very obvious that I needed to do something for my retirement. And initially, I thought that could be maybe in stock investments, because that was what most other people were talking about… But I realized, especially at that time – keep in mind, we had the Dot-com bust around 2003… A lot of people got wiped out, and I was like, “That’s probably not what I really want to be part of.”

I started researching, and really got fascinated with the longevity and all the things that you can do, all the benefits that you get with real estate. So that’s how I got into real estate investing, and in the last few years, more and more as I started creating Ideal Wealth Grower, it became obvious that there are many, many people who would like to do something, but there are sometimes mental and other hurdles in the way, and that’s what we are around for, trying to help people, to take them by the hand, help them to set themselves up and really get a little bit more confident in pretty much anybody can do it; maybe not overnight, but over time, and really get to a point that I call it economic independence. We can talk about that a little more, I hope.

Theo Hicks: Sure. So you would say that right now, your main focus would be the Ideal Wealth Grower education portion and then you use your money that you have saved up to buy turnkey properties, that are completely hands-off and passive?

Axel Meierhoefer: Yeah, we’re doing the Ideal Wealth Grower as a mentoring program, an educational program to help people, but we’re also getting paid for it, so there’s income from that, and some other sources. I’m still doing some consulting work from which there’s income… So I’m constantly growing the portfolio.

And what I’m priding myself is that I want to help mentor and support people based on what I have done myself. It’s one thing to say, “Okay, you can read a book, you can go on TV, you can do all kinds of things”, but I hope there is a different level of trust, a different level of expertise that I can bring to the table with my team by basically showing people what has worked, and helping them. And this is my definition of mentoring – to avoid to have to do the same mistakes, right? I did plenty of mistakes that I know now, and I know how to avoid them, and that’s what I basically see as a main value, is to say, “Okay, how can you actually become a residential real estate investor without having to do the same mistakes everyday?”

Theo Hicks: Can you maybe walk us through the first real estate deal that you’ve done so we can get an idea of what your strategy is?

Axel Meierhoefer: Well, there’s a little bit of a difference. The first deal that we did was basically for ourselves. We had occupied a home and we were told by the military that we’re going to move to a different location, and then the question was, “Okay, should we sell it? What should we do?” At the time, I started dabbling into real estate and what could be done with it, and decided it wasn’t really a good time, the economy wasn’t really in a good place… So we decided to rent it and basically, in that process became landlords.

From all of that, and over the years, what we’re doing now – to answer your question about the strategy – I call it “the out of state turnkey strategy.” And the reason is, as you said, we live right now in San Diego, we lived in the Santa Barbara area before that, and both of those areas, as well as other areas in the country, are pretty expensive. A lot of people around where we live, say, “Well, I can’t really become an investor, because any of the properties are way too expensive and I don’t have enough money for a down payment”, and so forth.

So “the out of state turnkey strategy” is really combining, number one, to look for well-performing properties in locations where the balance between the price and the rental income is still good. So most of those, admittedly, are somewhere in the Midwest. I have looked into the South, but I haven’t really found anything that worked there.

And then the turnkey component is basically a shifting of the risk… Because as you know, Theo, a lot of people talk about, “I want to do passive stuff.” I’ve seen you have recently done a couple of shows about what does it really mean to have financial independence, or what I call economic independence, and I’m really looking at how can we be still working still in the ramp-up phase of our careers oftentimes, and get into some form of a passive investment scheme.

I believe turnkey providers are great if you get the right ones, because you’re shifting a lot of the risks in their direction; they find the property, they put the money in for the renovation, they make sure that it actually goes to the inspection, they have to make sure that appraises before we even ever come in.

So the out of state turnkey strategy is basically looking at places where you have a good balance between price and rental income, and have it managed and started in a very, I call it a virtuous triangle, turnkey relationship. So there’s plenty of turnkey providers, as you probably know, but not all of them are made of the same, and we in our strategy focus on a very small subset, that meets very specific criteria, that I’m happy to describe it to you.

Theo Hicks: Yeah, so my next question – let’s say I live in this expensive area, I’ve identified a market in the Midwest somewhere, and the next step would be to obviously find this provider… What are my next steps? How am I finding them, and then what am I doing to qualify them? What is the specific criteria?

Axel Meierhoefer: Well, the easiest way is you just work with me and my team and we help you, because I’ll personally introduce you to the ones I’m working with it. So that’s what I meant earlier, to have this benefit of not only not having to make the mistakes, but also I’m opening up my existing relationship with personal introductions to the organizations that I work with.

But even in the scenario where you say you want to do it yourself, what I basically say is number one, you want to look at a good balance – and you will hear me say balance over and over and over again. It’s the balance, for example, between the economic environment of a location… Let’s say you’re looking in the state of Ohio, because you deem that to be an interesting place. So you look at the state and you say, “Where are the locations with economic stability, with good schools, with good environments, with good jobs that people have? They don’t have to be super high-paying, but good jobs”, so they can qualify if you say I want their incomes to be three times as much as the rent.

And then you look at the properties, and my guiding rule is that the properties need to be performing at least at the 1% level, meaning you buy a $100,000 property, it needs to pay you $1,000 in rent. Now, sometimes you can get a little more, sometimes you can get a little less, but that is kind of the ratio we’re looking for. So that’s the one side of the balance.

And then the other side of the game and what I call the virtuous triangle for turnkey providers is it needs to be in a way that there are dependencies that prevent us as investors to be harmed from the relationship. And what I mean by that – if the turnkey provider is the one who finds the property and has a team that does the renovation, they take all the risk to get the property up to a modern standard.

Then the second thing is when you actually purchase the properties, assuming it meets all the criteria and has the 1% rule, it’s very well renovated, it made the inspection, it got the appraisal value, all of those things, then the turnkey provider also needs to be the organization that does the property management… For one, because we want as investors to be as passive as we can be. But for number two, this virtuous triangle comes together because if you are managing the property that you previously renovated, number one, as the owner, I’m not even getting the runaround between who is responsible when something breaks. And in our case, we make sure that we have a guarantee or warranty for the first year after we purchase, that anything that has been touched, anything that has been renovated, if it breaks, it will have to be fixed by the turnkey provider/property management.

But if you think about it, if they renovate it and they don’t renovate it well, but they signed that contract, they would shoot themselves in the foot if they then have to come up with the cost, they have to go out there and fix a faucet, fix the door or fix whatever breaks. So this virtuous triangle it comes together by them doing a good job on the renovation, knowing that the better the job is there, the less they have to do later.

Now, the other part is also where this comes in from an investor perspective, is really who pays for what. And I think this is really probably something that is not talked about enough, in my view, when I listen to a podcast – and I’m so glad that you’re making the opportunity for me to talk about it – and that is think about where the money comes from. So in our low-interest-rate environment, right now, when you buy one of those properties in the Midwest, you put 20% down and get 80% from the bank. Then later on, when you own the property and it’s running and you’re collecting rent and so forth and something breaks, let’s say after you’ve had it for a year, now you pay 100% of your money out of your maintenance reserves or cap-ex Reserves to pay for anything that needs to get fixed.

So you really have a choice to say — if you find a good provider, like the ones we’re working with, you put a little bit extra in the renovation. You decide exactly how your floor should look like, you look at other appliances really, on a long term warranty, and so forth and so forth, that might cost you maybe $1,000 more total than you would get in another year, but 80% of that comes from the bank. So those $1,000 extra or $2,000 extra cost you anywhere between $200—$400 of your own money, the rest comes from the bank. Later, when you’re in the maintenance phase, not only if you have a separate maintenance company do you have to fight between who renovated it and whose fault is it if it breaks, but also you have to come up with 100% of the money.

So this out of state turnkey provider strategy really says, “Let’s really have a relationship with the turnkey providers,” they do the upfront work, their property appraises, and they have every interest to get a good tenant and have done a good job on the renovation, so it’s really a smooth relationship where everybody benefits. The tenant benefits because they get a better renovated, higher quality home at a good price. The turnkey guys benefit because the less they have to do besides collecting the rent and sending my portion to me, the more of the 8% to 10% property management fee they keep to themselves, and I’m a happy camper because all I have to do on 9 or 10 properties a month is spend an hour or two to make sure that everything is running smoothly.

Theo Hicks: So for that last part about higher-quality renovations, because those costs will be included in the loan – so are you saying that we need to find a turnkey provider that allows us to decide what the renovations are, or we need to find a turnkey provider who is already doing these high-quality renovations?

Axel Meierhoefer: You could do both, but it’s rare to find one that is already doing it, because there’s a fine line between over-renovating and then not being able to actually meet the appraisal, because your lender doesn’t want to give you any more money than the property appraises to… So if you over-renovate, if you have golden faucets and super high-end marble or whatever countertops, then you’re never going to appraise.  So the deal is more to say, what is the relationship that we’re aiming for?

So for me – and that’s why I’m introducing our clients directly to the providers we’re working with – it’s on the one hand to find that balance, but when you have good relationships, the turnkey provider doesn’t suddenly out of the blue sky find a property and say, “Oh, Theo, there is a property now that you can buy.” They find the property probably 6-9 months earlier, when they actually look for properties that they’re going to renovate to sell them 6-9 months later.

So if you have a good relationship like we do, you find out that there are properties coming up the pipeline that fit the criteria that we gave to the turnkey provider, when the scope of work is not completed yet. When the question is still “I’ll be putting hardwood floors or I’ll be putting carpet?” And if I have a choice, I want to optimize the property for the tenant, and for myself. So the tenant has nice hardwood floors or luxury vinyl plank, and I don’t have to replace the carpets every two or three years.

But when the turnkey provider is the one who is actually conducting the renovation and the scope of work has been established, we can go over it together. And that doesn’t mean that I’m giving them money upfront, but we have a relationship. That’s really the important part. They know that if they do a good renovation, have a reasonable price that it appraises to, I’m willing to buy it from them. But that relationship allows me to have influence on the scope; not throwing everything over, but those little things.

For example, one thing that I learned and I recommend to everybody who is interested in this market, and to the listeners of the Best Ever Show, is really think about getting extended warranties on literally everything; on the refrigerator, on the range, on the ceiling fan, on the air conditioning… Literally, the example that you have when you go to Best Buy; every time you get to the register, they say, “Would you like to have the extended warranty?” I found if you add all the extended warranties that you can get on all the moving parts, anything that gets electricity, water or gas, kind of somehow fitting it, and you get those extended warranties, the price ultimately may go up 500 or 600 bucks; $5 here, $20 here…  But now, when something actually happens, even in the best renovation or the best equipment you get, something can go wrong. But for the next three years, or sometimes in some cases, five years, you have warranty, which is also much nicer for the turnkey provider property management side to say, “We just call him and have him come out.” We don’t need to charge you 80 or 100 bucks for somebody to come out and figure out why is this thing not doing what it’s supposed to do. And you can tell your tenants, “Everything in this place is under warranty.”

Theo Hicks: So you’d have to tell that provider that when they’re buying this stuff, include a warranty. What are your thoughts about the general home warranties?

Axel Meierhoefer: Well, most of the general home warranties that I’ve seen are a year, and most of this stuff that you buy, any kind of appliances or any kind of ceiling fans or air conditioning, unless it’s like a roof or a big A/C system or so forth, they also have about a year, sometimes maybe two years… But almost everything comes with an extended warranty.

Now, you can buy the builder’s warranty or the home warranty, but this, in my experience – and I’ve dabbled in this a little bit – is more applicable when you do new construction turnkey, where you would say, “Okay, everything is new anyway, so from that, I want the builder to warranty their work and the equipment in the house for 3-5 five years,” and you can get a policy for that anywhere between 600 and 1000 bucks.

What I’m talking about is a property more typical for turnkeys, that is maybe built in the 60s, 70s or 80s, something like that, and you’re bringing it back up to standard, but you’re still doing a lot of stuff and a lot of new equipment goes in, and those $600-$1,000 extra extended warranty is basically preserving your reserves, because I’m still saving about 5% for vacancy, 5% for cap-ex, and 5% for reserve into your little accumulation fund, but you want to use it as little as possible. The more you have on warranty, the less money has to come off your own pocket.

Theo Hicks: Alright, Axel, what is your best real estate investing advice ever?

Axel Meierhoefer: The best advice I would give people is look for the best-balanced deal. The best balance between people saying 1%, and what the property is really worth.The best balance for how much money you want to get in… But fundamentally, the best balance means you want to start now; don’t wait or let people tell you that you have to wait for a long time. Take the best balance that fits for you and start now.

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

Axel Meierhoefer: Yeah, absolutely.

Theo Hicks: Perfect. First, a quick word from our sponsors.

Break: [00:19:47] to [00:20:38]

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

Axel Meierhoefer: I really have to say I really like the Wealthy Gardener from John Soforic. I’ve spoken to John and got some permission to use some of the quotes that he has in there, but I would call this almost like a seminal book. And for anybody who hasn’t heard about it, I highly recommend it.

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

Axel Meierhoefer: If it were to collapse today, I would probably move into one of those areas that our turnkey providers are in, and then basically start doing a BRRRR deal myself. Find the property, maybe a duplex or so, renovate it, refi it and then keep doing that to build equity, and as soon as equity is there, then find a nice place, like at the coast somewhere, to live again and keep doing what we’re doing now.

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

Axel Meierhoefer: The best ever deal is probably a house in New Mexico that we first occupied and then turned it into an investment property. And within a year of moving out, the city decided to build a road – this was in Santa Fe, New Mexico – that connected our neighborhood with the main highway, and improved the value of the house by 30% in nine months. Normally, I’m always a big, big fan of buy and hold, but on that one, I just couldn’t resist to collect 100 grand overnight, basically.

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

Axel Meierhoefer: I believe that the best way I give back is by merely educating and letting people participate in what we learned, and really making those relationships available… Because I know there’s a lot of fear of getting into investing, not knowing what to do, who to talk to and always being afraid that somebody is giving you a raw deal. So I think by helping people get my relationships accessible to them, so I’m making these introductions and helping them to actually really reach what your show showed about financial independence, I think that’s the greatest service I can do.

Theo Hicks: And then, what is the best ever place to reach you? Where can we go to get this education you’re talking about?

Axel Meierhoefer: People can email me at axel@idealwealthgrower.com. And one thing that I did for the show and for the audience is we created a mindset menu that helps people to get into what is this idea of Wealth Grower thing about. You can find that by going to https://idealwealthgrower.com/free, and you basically click on the little form there and then you can download it. And it’s going to help you understand how we work and wire your mindset in how to become a good investor and residential real estate investor using our out of state turnkey strategy. That is the first thing – you need to be willing and confident that you can do it, and then we help you to do it

Theo Hicks: Perfect. Axel, thank you for joining us and kind of giving us a taste of this out of state turnkey strategy, which could obviously work for anyone, but it’s ideal for people who live in a really expensive area and there’s not that good price-to-rent balance, whereas you will be able to find that in places like the Midwest.
The major benefit is the shifting of the risk over to — not it all being on you. But your big thing is balance, so the balance of risk between you and the actual provider. You talked about the virtuous triangle, and you gave us some ideas on how to make sure that this risk is balanced properly.

You want to have a turnkey provider who’s buying the property, who’s renovating the property, and if they sell it, they are the ones that are doing the management as well. That way, if they did poor work upfront, they’re the ones that are going to suffer the consequences, at least in part, especially if you add into that the one year warranty that you put in all of your contracts with the turnkey provider for any of the work they’ve done, in addition to getting extended warranties on everything, so that once this one-year period is over, you don’t have to worry about paying money for anything that gets damaged. The turnkey providers/management company can just call whoever is responsible for that warranty to get things fixed.

And then you also talked about the importance of relationships. Obviously, to find a good turnkey provider, you need networking relationships; you guys do that over Ideal Wealth Grower. But you also mentioned that having solid relationships will allow you to reduce your risk even more by making sure you’re able to get higher quality renovations. Again, not going overboard, but making sure that you’re not doing poor quality renovations that are going to end up resulting in maintenance issues. And so if you have this good relationship with the turnkey provider, then you will be able to get your foot in the door earlier in the pipeline, before the scope of work is completed, so you can direct what you want. Obviously, you need to have an established relationship with them first and probably do a few deals, but eventually, you want to get to that point.

And then your best ever advice, which [unintelligible [00:25:26].28] through everything we talked about, is making sure you’re looking for the best-balanced deal, the best-balanced market, the best-balanced provider, and starting now.

So Axel, thank you again for joining us; I really enjoyed the conversation. Make sure you check out that free mindset manual at https://idealwealthgrower.com/free/. Best Ever listeners, thank you for listening. As always, have a best ever day and we’ll talk to you tomorrow.

Axel Meierhoefer: Thank you so much, Theo. I’ve really enjoyed it.

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JF2275: Fast Growth With Dan Perez

Dan is fairly new to real estate investing and yet has already accomplished owning 27 rentals, 5 flips, and also a limited partner in a 32-unit complex. He shares how he initially started from developing proof of concept to building a team and process that have enabled them to scale in a short time period. 

Dan Perez Real Estate Background:

  • Full-time corporate tax accountant for Qualcomm
  • Started investing in 2018
  • Portfolio consists of 27 rentals, 5 flips, and a partnership in a 32-unit complex
  • Based in San Diego, CA
  • Say hi to him at: danieljperez562@gmail.com 
  • Best Ever Book: Tax-Free wealth

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Stay consistent, keep underwriting deals, keep learning because when the right opportunity comes, you will be ready” – Dan Perez


Theo Hicks: Hello Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and today we’re speaking with Dan Perez. Dan, how are doing today?

Dan Perez: Doing great, Theo. Thanks for having me on.

Theo Hicks: Awesome, well thanks for joining us. A little bit about Dan. He is a full-time corporate tax accountant for Qualcomm and started investing in real estate in 2018. His portfolio consists of 27 rentals, 5 flips, and a partnership in a 32 unit apartment complex. He is based in San Diego, California and you can say hi to him at his email, which is danieljperez562@gmail.com. So Dan, do you mind telling us a little bit more about your background and what you’re focused on today?

Dan Perez: Definitely. Yes, my wife and I live in San Diego, California, and we primarily invest out of state in Indianapolis, Indiana. We started at the end of 2018 and we’ve really grown since then. We went into real estate investing primarily for rental properties, but based on the market we’ve also taken down a couple of flips over that amount of time.

Based on the amount of capital that we have available to us, we actually used the BRRR method to start out using other people’s money to invest in rental properties, buy them, fix them up, add some value and appreciation to the property, so that we can refinance the money out and continue to scale. Our goal going into this was to allow us a bit of financial flexibility moving forward. We plan to have kids in the next couple of years, and our whole goal in real estate was let’s generate some passive income to help us out down the line, if one or both of us would like to stay home and raise our kids, or just provide another opportunity for us; we figured this would be the fastest way to get us there. And as you mentioned, we’re not only in Indianapolis with single-family rental properties, but we are also limited partners in a 32 unit apartment complex in Kansas City, Missouri, which is going well, and our goal moving forward is just to keep generating passive income.

Theo Hicks: Thanks for sharing that. So your first deal, did you use other people’s money?

Dan Perez: For our first deal we actually used a Home Equity Line of Credit on our primary residence. We actually did that on our first three properties; what we did is we want to have a proof of concept where we can work out the kinks and also just be ready for anything that maybe we didn’t think of going into this investment journey. And for us, after going through 3, potentially even 4 deals with our own money, what we did is then we were able to take our concept and pitch that to other investors to give them some comfort around, “Hey, here’s what Dan and Kelly are doing, it’s working. They’ve worked out some of the kinks.” You know you can’t figure out everything on your first couple of deals… But at least we were able to give them a level of comfort that says “They know what they’re doing, their process works, they’re going to get better and better with each deal. We’re ready to invest with them and they’re also making a good return on their investment.”

Theo Hicks: So you said you started in 2018 and you owned 25 rentals and then 5 flips. That’s like 32 and it has been 2 years, so what is that? 16 per year? So one per month. So I’m just curious, are you doing multiple deals at once now? Have you always been doing multiple deals, or did you do one at a time upfront first, and then did multiple deals?

Dan Perez: So at the end of 2018 where we actually spent most of our time was building out our teams. We’re both very meticulous in how we put together what we’re doing, our process and procedures, and then also we’re extremely picky about who we surround ourselves with, because we know that could really make or break what you’re doing in the investment market.

So for us, what we did is we spend about 3 or 4 months just building out our team, meeting people, calling other investors, asking them who they worked well with, who they didn’t work well with, and why. Because everyone works differently with their vendors. So for us, at the end of 2018 we actually didn’t even take down our first deal, it actually happened at the beginning of 2019. But just the amount of time and effort we put into building our team allowed us to scale at a fairly quick pace.

We actually picked up — I believe it was 20 or 21 deals in 2019, and we were doing multiple deals at once. So the first few we took a little while; we had to get comfortable with our teams and we had to figure out, “Okay, how quickly do we want to go?” Because we do have W2 jobs as well. So we didn’t want to take on too much at once. But once we had our team built out and were familiar with their processes, I think our busiest month we took down 9 properties at once and all 9 had rehabs going on. So that was probably our busiest month, it was august of 2019. But by that time we were comfortable with our team, they knew how to work with us, and it was difficult at times but we got through it.

Theo Hicks: How much money did you make have when you first started, that you used for those first 3 deals?

Dan Perez: So we had a home equity line of credit, I believe it was $180,000 to $200,000. But the house is in Indianapolis; you can pick up some solid three-bed, one-bath properties that need some work in the range of $40,000 to $55,000 in 2019; the prices have grown up a little bit since then. So that gave us the ability to take on those homes and the rehabs with our own money. So that is the beauty of the Indianapolis market – it’s very affordable to get into the market, and the rental rates are strong as well. So it is very conducive to having rentals.

Theo Hicks: Yeah. So if that for the first 3 to 4 months you focused on building your team… Who did you bring on? And then since you weren’t actively doing deals that time, and you hadn’t done a deal in the past, what type of things did you say to them to bring them? Or did they just say, “Yeah, I’ll work for you.” Or did you need to sell to them, in a sense, on your ability to actually do the deals, since obviously, they get paid whenever you actually do deals?

Dan Perez: That’s a great point you bring up. It was difficult with some of the vendors I was reaching out to without having done a deal. It is difficult sometimes to get people’s attention, because there are so many investors reaching out to agents, wholesalers, property managers on a day to day basis. A lot of times if you haven’t done a deal, some people  quite frankly do tend to not take you seriously, as compared to if you have done a deal or two. So keeping that in mind, I tried to respect that; I know everyone is extremely busy, and so if they didn’t have the time to work with me at that given time, so be it. I would have to move on. But at least I would try to pick their brain a little bit and say, “Here are a couple of questions. Can you at least help me to answer them or point me in the right direction?” So if I at least got them on a call, I wanted to make the most of that time with them.

But when we started out, I tried to keep my calls as short and succinct as possible, because I did not want to waste their time upfront. I knew as a new investor I could come off with doing so. So what I did is I had a list of vendors that we wanted to bring on to our team, starting with the property manager, deal finders, agents, and wholesalers. We needed to find someone that could provide insurance for us; contractors are in an extremely big one when you are using the BRRR method.

So we wanted to start with our core solid team, and what I did is I just had a generic set of questions that I would ask each, to figure out who worked well with us, who didn’t. But I think what I actually gained the most value was speaking with other investors, who are my competitors as well, in the Indianapolis market… Just saying, “Who’s working well for you?” Because I think that’s where you’re actually going to get the most honest feedback. What I’ve found is anytime you call a vendor, they tend to have pretty good answers for you. And everyone sounds good over the phone, but you get the most honest feedback from the investors that are actually working with these vendors.

Theo Hicks: And then it sounds like the other person on your team is your wife you said?

Dan Perez: Correct. Yup.

Theo Hicks: What advice do you have on making sure that that goes smoothly?

Dan Perez: That’s a good question, Theo. For us, what we did is we said we’re going to segregate the duties, so that we’re not stepping on each other’s toes, but also so we’re not duplicating work. The point of us going into this together is one, we both really enjoyed real estate. But the other thing is we want to make it as easy and seamless for us as possible, so it’s not necessarily a burden. It’s supposed to be as passive as possible, which takes time and effort, but with the two of us, I think it has honestly allowed us to scale a little quicker than maybe if you’re going in on your own.

So what we did when we started out is we said, “I am going to be more on the acquisition site, and managing the property managers, managing the day-to-day rehabs.” Whereas Kelly was going to be more on the back end; she’s a corporate controller, so she’s managing more of the finances, the re-finances on our properties, which is a huge undertaking. She’s managing the books, she’s working with our CPA’s, she’s doing a lot of the business side on the back end. We always joked that I get all the glory up front, and I get the Facetime with all the fun people, and then she’s on the back end doing the difficult task. But it takes a lot of pressure off me and allows me to scale with the deals that we’re taking on.

Theo Hicks: And do both of you have full-time jobs that are structured 9 to 5? Or do you have some flexibility that allows you to work on the business during the day? Or is it just all at night and weekends?

Dan Perez: I would say that our jobs are pretty structured; with both of us being in accounting, I would say our typical hours are about [8:30] to [6:00], or [6:30] at night. So we’re working about 50 hours a week. But what we do is with us being in San Diego, our team being on East Coast time, we’re able to wake up early in the morning, get the necessary emails. We prioritize any emails that we need to get out immediately, we get those out the door before we start our day jobs. And then we tend to sync up with our teams during our lunch break. And then after work, even though our team is probably home and eating dinner with their family, we’re catching up on other emails that maybe weren’t as urgent. So we do fit it in around our day jobs, but in the morning is typically when we get the most done.

Theo Hicks: And how are you finding your deals? You mentioned the agents and the wholesalers – are they the ones who are solely sending you your deals? So MLS and then wholesalers?

Dan Perez: Correct. When I started out, I was looking at Redfin I would say 30 to 45 minutes a day. One, just to see what deals are out there. But two, I was practicing my underwriting, trying to get comfortable with the rent rates in certain neighborhoods. Figuring out what the ARV’s might be, because that’s extremely important for using the BRRR method. So for us, looking at Redfin, looking at Zillow, figuring out rent rates and what homes are going for, I felt like it gave me a competitive advantage, because now I can look at a map of Indianapolis or any market that I’m looking at, I can more or less tell you if it’s a good deal or not upfront.

Now of course things can come up in due diligence, but at a high level I can usually run a real within 2 to 5 minutes and say, “Yes, this is one that we at least want to look into.” But after doing this for 6 to 8 months, and I became comfortable with it, my team started pretty much sending me every deal. I no longer have to look at Redfin or really go on any sites. My real estate agent will send me deals that he knows meets our criteria, and then we’ve made good relationships with wholesalers in the Indianapolis market, and now they send us deals that they know we will take down. And I think that that all goes back to we built the relationships upfront, and we say what we’re going to do, we act on it; we don’t drag our feet. If we liked a deal, we say “Yes, this works for us.” And we deliver on it. I think that the Indianapolis wholesalers now respect us for that, and they know that we will take down deals if we say that we want it.

Theo Hicks: But for your first deals, did you have those yourself on Redfin and Zillow?

Dan Perez: Correct. I would say the first 5 or 6  deals I found on Redfin. I sent it to the agent we were working with at that time, saying we’re interested. He helped us draft up the purchase agreement and then we worked with our contractors and our inspectors to get in there, do due diligence. You might need to go back and forth with the seller a little bit, based on new information that became available during the inspection, to get it to a price that now works for you. And then from there we would close on the deal and start the process. But yes, the first couple were deals that I was just looking all over Redfin, Zillow, Trulia, and I reached out to my agent and said, “Can we please draft up an offer?”

Theo Hicks: Alright, Dan, what is your best real estate investing advice ever?

Dan Perez: I would say my best real estate investing advice would be to stay consistent and take action. I think a lot of people think that taking action only means putting in offers and buying properties, but there are other ways that you can take action. You can really build your team, build your network, you can learn. I know with COVID going on right now sometimes the deals might slow down. So I would say stay consistent, keep underwriting deals, keep learning, and when the right deal pops up, you’ll know that it’s a great deal to take down, and you’ll be ready for it.

Theo Hicks: Alright, Dan. Are you ready for the Best Ever lightning round?

Dan Perez: Let’s do it.

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

Break: [15:27] -[16:08]

Theo Hicks: Okay Dan. What is the  Best Ever book you’ve recently read?

Dan Perez: Tax-Free Wealth by Tom Wheelwright.

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

Dan Perez: I would figure out what I or my team did wrong, figure out how we can fix it, and I would go right back to doing the same thing I am now, picking up rental properties.

Theo Hicks: What is the Best Ever deal you’ve done? Either in terms of money or something else?

Dan Perez: I would say it was actually one of our first couple of deals. The agent we were working with identified a deal, more or less right up the purchase agreement for us. By the time I got into the office at 9 in the morning, it was in my inbox. I signed it, we had it under contract about an hour later. We were all into the property for $59,000 and it’s renting for $1,025.

Theo Hicks: Something I forgot to ask you earlier… Have you visited the market?

Dan Perez: I have. I’ve been three times and I’m actually flying out in a week.

Theo Hicks: Okay. And then on the other end, tell us about a time that you lost money on a deal. How much you lost and what lessons you learned.

Dan Perez: Fortunately we have not lost money on a deal. But I would say our most unsuccessful deal was a deal that we went into – it was a larger property that we were looking to flip. It was with an agent we were working with in the beginning, that we’re no longer working with. We went into this property as a flip, so we did very nice finishes on this property; it ended up not selling or even getting offers anywhere close to what would work for us. So we actually had to pivot and turn it into a rental property, which we’re not making the rental numbers that we would hope to, but we’re still cash flowing a small amount each month. We will look to either flip it in the future, or figure out another strategy with it. But I would say that that was the deal that went the most in the wrong direction of the deals we’ve done so far.

Theo Hicks: What is the Best Ever way you like to give back?

Dan Perez: Speaking to new investors, hands down. I love talking with new investors, helping them underwrite deals, helping them learn the market, helping them build their team… Whatever I can do to help give back. I had a lot of experienced investors that really took me under their wing when I was first starting out, and Kelly and I like to give back by having quick calls or Zoom sessions with newer investors and try to provide as much guidance and knowledge we can to them.

Theo Hicks: And then lastly, what is the Best Ever place to reach you?

Dan Perez: The Best Ever place to reach me would probably be on Instagram. It’s @paperrouteinvestments. I tend to check that pretty frequently. And if people have questions I’m happy to give back to them and help however I can.

Theo Hicks: What types of things do you post on the Instagram page?

Dan Perez: We’re still building it out, but for now, we’ll post our properties that we’ve purchased, the areas that they’re in… Sometimes I’ll post the other interviews that I’ve done with different companies. So we try to post things here and there. I’m still getting better at that; I would say it’s probably one of the weaker parts of our investment journey right now, but in the future we’re going to work to build it out. Maybe post some case studies on BRRR deals that we’ve done, and anything that can provide value to people.

Theo Hicks: Awesome, Dan. Well, thanks for joining us and walking us through your journey of how you were able to build up this rental portfolio while working a full-time job, with your wife of course. So you went over how you’re funding your deals, especially with the HELOC on your home. And then you did that to create a proof of concept with your own money, and then you were able to pitch that to other investors for the rest of your deals.

You mentioned that you didn’t just jump in right away and do deals. Instead, you focused on building the team first, building that foundation, which is what allowed you to scale so quickly. And you mentioned that the best way to find these team members and to pre-qualify them is to reach out to your competitors, other investors, and see who they’ve worked with in the past and if they worked that well, and then ask them why, to make sure that you [unintelligible [00:19:42].29] with them.

You gave us some tips on working with a significant other, which can be really be applied to just business partners in general… Which was making sure you’re segregating the duties, you’re not stepping on each other’s toes, but you’re also not replicating the exact same things; as you mentioned, the breakdown of duties between you and your wife.

You mentioned how you were able to spend time on the business while working a full-time job… So waking up early, working during your lunch hours, and then working at night. And then finding deals upfront, you were finding your deals online, Zillow, Redfin, but you were also looking at those deals to practice underwriting as well. Those were your first 5 deals. And after that your team members, the agents, and the wholesalers you’ve built a relationship with would send you deals, because you were known to not drag your feet and would do what you say you’re going to do.

And then lastly your best ever advice, which was to stay consistent and take action, and realize that action isn’t just putting in offers. Action is learning, action is networking, action is building a team. Those small steps that are ultimately leading you to doing a deal. So Dan, thanks for joining us. Best Ever listeners, as always, thank you for listening, have a Best Ever day and we’ll talk to you tomorrow.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2138: Building A Legacy With Terry Moore

Terry Moore is the Co-owner of ACI Apartment Consultants Inc. and is the author of “Building Legacy Wealth” from San Diego California. Terry shares his beliefs and thoughts on how to build your legacy. He works with many investors in helping them change the way they think to ensure they build a legacy worth leaving.


Terry Moore Real Estate Background:

  • Co-owner of ACI Apartment Consultants Inc.
  • ACI has closed more than 4,000 escrows
  • Author of “Building Legacy Wealth – How to Build Wealth and Live a Life Worth Living”
  • From San Diego, California
  • Say hi to him at: www.sandiegoapartmentbroker.com 
  • Best Ever Book: Love and Money by Roy O Wilson 

Click here for more info on groundbreaker.co


Best Ever Tweet:

“I help people become abundance thinkers” – Terry Moore


Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. My name is Theo Hicks, and today we’ll be speaking with Terry Moore. Terry, how are you doing today?

Terry Moore: It’s a great day in the neighborhood, and I’m glad to be here with you.

Theo Hicks: Yep, and I’m thankful for you joining us today. A little bit about Terry – he’s the co-owner of ACI, which is Apartment Consultants Inc, which has closed more than 4000 escrows. He is the author of Building Legacy Wealth – How to Build Wealth and Live a Life Worth Living. He’s from San Diego, California, and you can say hi to him at his website, sandiegoapartmentsbroker@sandiegoapartmentbroker.com. So Terry, before we begin, do you mind telling us a little bit more about your background and what you’re focused on today?

Terry Moore: Yes. I’m one of those rare people who love what I do; it’s a calling. It started out as a job, became a career and became a calling. When I was about 40 years old, I finally figured out some of the themes in my life, and part of what I love about this is that I get to help real estate investors make the most important financial choice of their next decade. I help people buy or sell, primarily, San Diego County apartments, and to some extent, single tenant triple net. So for more than 50 years, I’ve been helping adults make smart choices about money, and in the last 20 years or so, I’ve been paying a lot more attention not just to wealth building, not just wealth management, but more important issues like legacy. So I’m an income property broker in San Diego County and my focus is legacy. It’s great, Theo, that you and I and thousands of our listeners are wealthy, but more important is, to what end, and we’ll try to talk more about legacy with passing time.

Theo Hicks: Sure, thanks for sharing that. Well, let’s just jump right into that. So first maybe just differentiate the difference between ways of building a wealth as opposed to building a legacy. Is there a difference between those two? Are those two different things or are they connected?

Terry Moore: Sure. So the guy with the widget factory who gets wealthy, he’s built wealth. You leave a legacy whether you’re the richest person on the planet or the poorest pauper. The legacy is what people do and or say and or think because of your influence. So when a dad yells at his kids, that leaves a legacy. When a mom helps a neighbor, that leaves a legacy. Legacy of the lessons that people learn is they watch you live out your values. So regardless of your wealth, you’re creating a legacy. The focus of my life in this part is not just to help people become wealthy. For 40 years, I’ve helped people become wealthy. We’ve had a couple of hundred people who become millionaires and probably more than 50 who become multimillionaires, but now that I’m [unintelligible [00:06:19].23] and I have some silver hair, I recognize that there’s a lot of things more important than wealth, and the virus and the recession have gotten us all thinking about things more important than just money. I hope that you haven’t had a live event in the last year where somebody you care about has been threatened by an accident or cancer or the mafia have stolen the favorite grandchild. But lots of us eventually recognize that an inheritance is just the stuff. The inheritance is the dimes, the dollars, the deeds. The legacy is what people say and do and think because you were here. So everybody has a legacy, not everybody gets wealthy. In my day job, I help people become wealthy, and I want my clients not just to leave a big stack of net worth. More important, I want them to have a life that’s worth imitating.

Theo Hicks: So do you mind walking us through how that plays out in your day to day? So obviously, you’re working with clients to buy real estate and you focus on helping them find the proper deal, but what’s the part of your process that you implement that helps them and teaches them how to build a legacy as well?

Terry Moore: Well, in one sense, if they were paying attention, their parents or their grandparents or their rabbi, their pastor, lots of folks — there have been a variety of mentors and heroes that have lived lives or talked about lives worth imitating, and my job as their guide… I don’t pick what they’re going to do, I don’t pick what property, but as their guide, I help people live out their values and their integrity in ways that benefit others.

So maybe more tangible –  the way you deal with a tenant makes a difference. What you will and what you won’t say in negotiating is part of the legacy. I think of rental ownership as face-to-face capitalism. Not everybody gets to play, but the rental owners, by definition, are leaders; by definition, they are impactful people. If you get to decide when somebody gets new appliances or when their rent goes up or whether or not they get a concession when they get laid off, that makes you a very influential person.

A lot of people that I serve are financially independent. They don’t have to go to work next week if they don’t want to, but they have a big influence on the people around them. They may not have a way of working on their staff, but they influence where people live. So the people that I serve are in the richest 3% of the world’s population. They’re impactful people whether they recognize it or not, and I invite people to think about not just how do we help you get the best price when you’re buying or how do we help you get the most money when you’re selling, but instead, how do we make it something where you do great things and the people around you also gain at the same time? A different way to say it is I invite people to become abundance thinkers. Folks who have a zero-sum game mentality, I’m not much value to them. I can help them transact business, but I don’t have a lasting influence in their lives. But instead, I try to empower wealthy people to create values for those around them. That sounds good esoteric, but essentially, I help people buy and sell apartment buildings, and we do it in a way that’s not grinding the other side, but forgive me for saying this, blessing the other side.

Theo Hicks: So is it like when you first meet someone, is there a requirement that you have for working with someone, like they have to be thinking in this way, or is it something where you’re having a conversation with them to say, “Hey, here’s a list of things that you should be doing if you want to leave this positive legacy”? I’m not sure if that’s a good idea [unintelligible [00:10:23].16].

Terry Moore: Here’s the brutal reality. I serve folks of political party A and political party B. I serve folks who are of every religion, and if you take the outrageous claims of Jesus, seriously, yay, hooray, I’m glad to work with you. Alternately, if you think Buddha has the monopoly on spiritual insight, that’s fine. I’m glad to serve you. So I don’t work with only people whose worldview matches mine. I don’t have to agree with my clients and need to understand them, but essentially, if people think that I’m a crazy religious zealot, they don’t hire me, that’s fine. God bless you, have a nice life. Who’s next? The folks who think that my history will enable them to do better are inclined to hire me, and some people do and some people don’t. Whether they agree with me on my worldview is immaterial. My job is to serve them with excellence, and maybe they’ll buy some of my crackpot notions and maybe they won’t. My job is to be the servant. The clients that I most love dealing with don’t necessarily share my worldview, but they do the right thing. Plus one more, they do have some version of people benefiting from dealing with them.

Theo Hicks: You mentioned in your background introduction that you’ve been doing this for 50 years and in the last 20 years, it’s been the focus on what we’ve been talking about for the majority this conversation, which is the legacy aspect. Did something happen to you? Was there an event in your life that made you start to think this way 20 years ago?

Terry Moore: That’s a great question; it is an hour-long answer. The short version was 40 years ago, I made a life choice; I became a person of faith, and a couple of years ago, I was on a bike on a triathlon. I’m the oldest and probably the slowest triathlete that you know, but I was minding my own business in San Diego thinking, “Boy, this is a triathlon, so I have to kind of go slow start”, and the short version is I spent two days and night in hospital. I fell off the bike and I could have easily woken up dead. And that was a startling event, and since then, there is a phrase that stuck with me, and it’s Psalm [95:12] – Teach us to number our days, that we might gain a heart of wisdom. Theo, you and I have no guarantee of mortal life tomorrow.

There’s a fellow named William Carey, and he had a prayer at one time and he said, “I’m not afraid of failure. I’m afraid of succeeding. It’s something that doesn’t matter.” The book of essentialism talks about picking the very few things that really matter and going for gusto for those few things and skipping lots of confetti. So with passing time, I’ve gotten a greater focus trying to put what little time, what little chips I’ve got left on the things which will matter after I’m gone.

So it’s been a gradual process for a long time to then focus on trying to help my clients succeed, and with passing time, it’s not just how do we make you wealthier, Theo; instead, it’s how do we make you wealthier and invite you to consider being a blessing, creating abundance, adding value to the people around you? I understand you’re going to engage with me because you think you’re going to get wealthier. I get that. People read my book because they want to know how to build wealth. I wrote the book because I want them to think about something more important than just material wealth. Money is a great slave; it’s a lousy master.

Theo Hicks: Alright, Terry. What is your best real estate investing advice ever?

Terry Moore: See more deals. The best folks that I serve do not have to be sold on a deal. The best folks that I serve see lots of options, and they look for ways to limit the risk, but it starts with you don’t get two deals a year. I had a conversation ten minutes before we started with a guy who’s got a quarter of a billion dollars worth of real estate, and he looks at a couple of hundred opportunities every year. So he knows how to recognize a good deal and that’s the starting point. The second piece is, how do you minimize the risk on the good deals?

Theo Hicks: Perfect. Alright, Terry. Are you ready for the Best Ever lightning round?

Terry Moore: I hope so.


Break [00:15:12]:04] to [00:16:12]:09]


Theo Hicks: Okay, so what’s the best ever book you’ve recently read that’s been, in some form, related to this idea of building a legacy?

Terry Moore: There’s a book called Love and Money by Roy O. Wilson. He did a study of young presidents’ organization families, a couple of thousands of them. When the money transferred from the first to the second generation, most of the families blew up. They sued each other or they lost them in income-producing property, and by time of the transfer from the second to third generation, 97% of them lost the main asset for the family; they had sued each other. So Love and Money talked a little bit more about legacy and what it takes to be able to transfer to your kids – the values, not just the money, but the values that created the wealth.

Another book that I’ve recently read was called Righteous Mind, and that was insightful because it talked about how people with different worldviews, different political views, understand the world differently, and how hard it is for people, figuratively speaking, from Mars to communicate, figuratively speaking, with people from Venus, and how to be effective. We need to stretch with what our listeners hear, what’s inside their skin and how they perceive it. They could be ethical people of the other political party who understand the world differently, and our job is to find a way to help them understand and trust to understand them.

The third thing that I’ll mention is a classic – The Seven Habits of Highly Effective People and one of those ideas early on is you need to understand before you can be understood. Another idea in that book was, begin with any end in mind. What is it you want to accomplish? If you know [unintelligible [00:18:15].25].

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

Terry Moore: I would cry, I would hug my wife, I would buy the RV and start reading the rest of the next hundred Pulitzer Prize winners that I have in mind to do.

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

Terry Moore: I’m a person of faith. So we give time, money and prayer to make it easier for people to understand our worldview and at least consider it. But on memorial days, I go to Mexico and build a house, and on most memorial days, I pay for somebody to go with me, and the group that I’m part of has now built more than 50 houses in Mexico for folks. Some of them share our faith and some of whom don’t. But if you and I were to go to Mexico and you went with me, you would hand over the keys to Mrs. Garcia or Mrs. Lopez or Mrs. Rodriguez and she would cry and you would cry, and you wouldn’t remember Mrs. Rodriguez, but she would always remember you, and that’s one of my favorite ways to get back.

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

Terry Moore: The phone number is 6198891031.

Theo Hicks: Perfect, and that’s your office number or your cell phone number?

Terry Moore: That’s my cell.

Theo Hicks: Well, thank you very much for sharing that. Best Ever listeners, definitely take advantage of that because this was a very, very thought-provoking interview. I really enjoyed it. I really like your mindset, your worldview towards building wealth, and really the biggest takeaway in what we talked about was that it’s not about the money, it’s more about, as you mentioned, having a life worth living, but also leaving a legacy. And when most people think of legacy, they think of leaving dimes, dollars and deeds, but it’s more than just that. It’s about your interactions with people, what you’ve said, what you think, and how that influences other people, and you gave lots of examples of that – the way that you help others leave that type of legacy, why you transitioned into thinking this way. So I really appreciate you coming on and sharing this with us. It’s been a very insightful interview. I know Best Ever listeners are going to get a lot from this; I sure did. Appreciate you coming on here again. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Terry Moore: Thanks, Theo. You’re a gentleman, a scholar and drinker of fine wine; be a blessing.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2102: From Military to Millionaire With David Pere

David Pere is a full-time active duty Marine and the founder of “From Military to Millionaire”. He has bought and sold 54 units, holds 13 rentals, and is a general partner in a 146-unit apartment. He discusses one of his deals that he had a headache within creative financing and shares what he would have done differently. David also goes into his process of mailing to absentee owners.


David Pere Real Estate Background:

  • Active duty Marine
  • Started investing in real estate in 2015
  • Founder of “From Military to Millionaire”
  • Has bought and sold 54 units (one of them being a 40 unit), holds 13 rentals, and is a general partner in a 146-unit apartment
  • Based in San Diego, California
  • Say hi to him at: www.frommilitarytomillionaire.com 
  • Best Ever Book: Like Switch 




Click here for more info on groundbreaker.co

Best Ever Tweet:

“Stuff isn’t always going to go your way, don’t invest money you can’t afford to lose.” – David Pere


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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Dave Pere. How are you doing, Dave?

David Pere: I’m doing well, brother. I appreciate you having me on. I love your show.

Joe Fairless: Well, I thank you for that, and I’m glad to hear it. First off, you’re active duty marine, so thank you, sir, for everything you do, and you and your colleagues letting us have this time to be free and have these conversations… So first and foremost, I have a lot of respect for you and all of your colleagues.

Dave started investing in 2015. He’s the founder of From Military to Millionaire. He has bought and sold 54 units, 40 of those 54 being a 40-unit property. He holds 14 rentals and is a general partner in a 146-unit apartment community. Based in San Diego, California. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

David Pere: Absolutely, brother. As you mentioned, I mentioned the Marine Corps in 2008. Sometimes, I would say a lot of the world, like it’s a great thing, sometimes I’d say too much of the world… But I had a lot of experience just with people in different cultures. In 2015 I was a recruiter in the Midwest. Someone handed me the book Rich Dad, Poor Dad, I told them I don’t read, kind of joking… Like, “I am a marine… What do you think? I’m hard-headed.” And the guy literally pulled a CD disk out of his pocket and was like “Well, you spend a lot of time driving in your car, so here you go.” And I was like “Ahh, he got me. I’ve gotta listen to this.”

Within three months I had closed on a duplex, house-hack – living in one side, renting the other, doing that good thing… And then about six months later I got orders to Hawaii. I was like “Man, it’s a lot more expensive over here.” I got a bunch of offers declined, I couldn’t find anything that worked to buy… So I just kept buying in Missouri. I started a long-distance thing. I had the duplex, then I bought a single-family that we did the BRRRR strategy before I knew what that was. We renovated it, then we rented it out, and then a few years later — we didn’t refinance, we pulled a HELOC on it, and we used that HELOC to buy a ten-unit.

I then bought a 40-unit, did some  stuff on it, I got rid of the 40-unit, turned around, flipped a house… So during this, I’m partnered on a couple of flips in San Diego, small partnerships here and there made some money, and then flipped a home in Missouri… And then I’m currently under contract on a duplex; so that’ll be 14 and 15 that I just plan to hold indefinitely in that little market.

Then a general partner came in the last few months. So the big trend for me is just trying to balance being a full-time marine, traveling all over the place, with investing in various markets, with a lot of just sight unseen stuff, building teams, and networking, and relationships. So that’s a little bit about me… I’m just continuing to grow all of that.

Joe Fairless: Let’s talk about that 40-unit, since you’ve taken that full-cycle… Tell us about how you’ve found it, what the business plan was, what you bought it for, what did you put into it, what did you sell it for… All that good stuff.

David Pere: We bought this thing for about 150k down. We bought it at a 2.795, with some great financing options. So that one’s just kind of a strange ordeal. Realistically, that one wasn’t a huge profit. That one ended up being something that we got out from under, because it was a deal that didn’t quite work out to what it was supposed to be… So that’s probably the one deal in all of this that — I haven’t actually lost anything on it yet, but I got out from under, because it just did not work out.

So the guy didn’t uphold his end of the contract, things went super-sideways… And in essence, a year and a half later in a fun legal battle I was trying to pull all of our original capital back out of it.

So I may say full-cycle on that one, but that was the one big mistake — it’s funny, because one of your Lightning Round questions is “A big mistake you’ve made on a transaction”, and that was gonna be my answer to that…

Joe Fairless: [laughs] I sniffed it out right out of the gate.

David Pere: Yeah, so that’s good.

Joe Fairless: That was just dumb luck on my part.

David Pere: No, it’s totally good. I thought about bringing all that up before we got on the call, but… In essence, the gentleman that I was under contract with – there were things that were very clear in the contract, like “This needs to be done by this date” or “Seller owes buyer this”, and it just didn’t happen.

Joe Fairless: Like what? What’s an example?

David Pere: The roof needed to be replaced by the 90 days after closing, or seller owed buyer $100,000.

Joe Fairless: Okay.

David Pere: 120 days into the deal, it’s December and I’ve got commercial tenants — it was a mixed-used; it was 25 residential, 15 commercial on a four-story building in the South-West… And in essence, the two commercial tenants on the fourth floor broke their lease, because come December they have a leaky roof and no HVAC, and the two things in the contract were “Replace the roof and put HVAC on the fourth floor.” And it’s December in the Midwest, so it’s snowing outside, and I have a wedding venue and it’s 45 degrees inside this building; we’re done. Some crazy stuff.

There were four units that were in the contract; they were supposed to be finished with renovations by 45 days after closing, and when we brought the city inspector in, he’s like “We’ve put a cease-work order on this four months ago” and they finished it without a permit. So all of those walls needs to be removed, that plumbing needs to be removed,  and the guy was basically like “Well, the contractor said I had to finish them.” “Um, they’re not finished.” “No, they’re done.” “No, no. They have to be finished up to code…” So it’s things like that.

What we did was we just basically offloaded it and we said “Hey, we want our down payment back, plus–” Because it had been cash-flowing up until we lost the commercial tenants. At that point, the guy had had 30 days to pay us for the work he hadn’t completed, and we were just getting the same “Oh yeah, I’ll get to it.” “No, that’s not quite how this works.” So we broke the contract, asked for the down  payment back, got told it was non-refundable, and we have a court date set for July, finally, to finish all that out…

But I guess the biggest thing I would say for that, if we’re talking as far as lessons for your listeners, because I have no problem being the guy to talk mistakes, is document everything… Even if it’s a phone call, follow-up with an email “Hey, this is what we agreed to you while negotiating on the phone call. Please reply to confirm.” Because there’s one or two emails that I should have sent, that I didn’t…So we have “He said/She said” addendums to the contract, that were made afterwards, that there’s just no record of… Which isn’t gonna screw me, but it’s gonna make things very difficult.

Joe Fairless: Yeah.

David Pere: So I would just say document everything like that, and… Hey, stuff’s not always gonna go your way. Don’t invest money you can’t afford to lose… Because this didn’t stop me. I’ve bought three more rental units since then, flipped a house, and partnered up on a GP for a big apartment complex… Because it was money I could afford to lose.

So don’t go in over your head, and just have a plan. Stuff’s gonna go wrong, don’ let it stop you from investing.

Joe Fairless: This is interesting, because it’s creative financing, and that is talked about in a positive light the majority of the time when you’re talking about real estate transactions. In this scenario, because it was creative financing, it did not work out, because there was another party involved due to the creative financing… Whereas if it had been traditional financing, then you wouldn’t have that person involved. But on the flipside, you would have had to get the work done yourself, and get it budgeted and get it financed, or some sort of financing or cash out of pocket and do the work.

So my question is if presented another deal, that’s a very close cousin to this, other than it’s just a different seller, how would you structure it to make the deal work? If it would be creative financing, then what are some things that you’d make sure you had in place?

David Pere: That’s a great question, I love that. I’ve done a lot of thinking about this, because the reality is looking back, you can kick yourself about all the things that went wrong, but if I knew everything I knew going forward, I would probably still close on that property. I don’t know any other way that I would have gotten 4%. This is in 2018, where interest rates were not as low as they are now, but 4% interest for the duration of the loan, and interest-only for the first year – those are some pretty competitive terms for commercial financing in 2018.

Joe Fairless: How long was the loan?

David Pere: I had eight years to the balloon payment, but it was amortized for 25…

Joe Fairless: Got it.

David Pere: But those are some fairly competitive terms for commercial property, and the deal – at the time I bought it, it was only 80% occupied, and it had a lot of room to grow… And it was below market. There was a huge value-add.  It was a really cool property, it had a lot of history in the town, a lot of people knew the building… I don’t know that I would change the fact that I bought it, and honestly, given the same options going forward, I would probably still do it. For sure, the first thing I would do is all of the “Do this by this date, or owe this much money”, I would escrow all of that cash upfront. I would say “That’s great, but I want all of this into the escrow fund, so that if you don’t do what you’re supposed to do, I still get my cash.” And you can do the work out of the escrow fund, that’s totally fine, but it’s getting escrowed, so we don’t have a “Oh yeah, I’ll get to it” payment. That would be the first thing I would do.

The second thing I would do – and this is a little bit on the smaller scale – is I would bring my personal management team in immediately. And this might just be a personal thing because of the experience, but the manager seemed incredible when we took over the place. I just didn’t realize that the manager was getting an under-the-table commission portion of the sale. So while the manager wasn’t terrible, they weren’t nearly as good as they made themselves out to be… So going forward, I’d probably just say “Hey look, I trust you. You look awesome,  you seem great, that’s wonderful, but my team is gonna take over this going forward, because I know them, I trust them, and no matter how good you seem, I’m taking a risk on what you might be like after the fact, while they’ve already been tried and tested.

So those would probably be the two biggest things I would change. And as far as the creative financing, I’ve bought other properties and they’ve all gone really well. I think it’s less of the financing model and more of just the people involved, that can sometimes be the make or break… Which is unfortunate, but I guess maybe I would just do a better job of background checks… But even then, the few references I had and the little bit of a track record I had in town, the gentlemen checked out, so… I don’t know if maybe I just got unlucky, but it is what it is.

Joe Fairless: On the flip side, what deal have you made the most money on?

David Pere: The most money I’ve made probably so far is my 10-unit, which I still own. The 146 will ultimately end up being the most money, but it’s just a little bit newer in the cycle… So the 10-unit – this is Missouri prices, so it’s fairly affordable, but it was valued at 240, I bought it at 212, and it was under market rent, and I got the bank to bring in 86% financing, seller to carry ten, and I came out somewhere in the 4% to 5% range for down payment. So I was able to get in super-creative, super-low… This was my third purchase, so I still was fairly strapped for capital. I was still in the “Please help me so I can save for money.” So I bought it and it cash-flowed about  $1,200/month on average from day one. So about 100% cash-on-cash return. And we’re up to about $1,600/month that it cash-flows.

At the 18-month mark I refinanced, paid off the seller financing… And I didn’t pull cash out really for myself, I pulled just enough out to cover my down payment… So at this point, 2,5 years later I’ve got nothing in it, I have no seller financing, I’m at about 69% loan-to-value, and I’ve got $92,000 in equity, and it cash-flows about $1,500 to $1,600/month.

Joe Fairless: Wow… That’s a grand slam.

David Pere: Yeah, it was awesome.

Joe Fairless: How did you find it?

David Pere: Ironically, I was mailing out to absentee homeowners about duplexes. And basically, I got this phone call, and he was like “I got your letter.” I’m like “Oh, awesome.” He’s like “I don’t wanna sell my duplex.” And my first thought was like “Why are you calling me? Thanks… You just didn’t have to–” Anyway.

Joe Fairless: [laughs]

David Pere: He’s like “But… I have this other property.”

Joe Fairless: He could have been lonely.

David Pere: Yeah, it may be. If it was during quarantine, I’d be much less skeptical.

Joe Fairless: [laughs]

David Pere: But he says “But I’ve got other properties.” And I’m like “Okay, great. What do you have?” And he shot me a couple different things, and they just didn’t really work. I was like “Okay, that’s cool… If you ever come across any other multifamily, or–” At this time I was still looking for duplex, single-family properties…

Joe Fairless: Yeah.

David Pere: He’s like “What about 10-units?” “Well, I’m interested. Talk to me.” And he gave me a price of 235k, and we went back and forth on it… And then we went under contract at 225k, which still would have been a great deal for me… But throughout inspections and stuff we were able to negotiate a little bit more of that down. So it all worked out. He was great for seller-financing, and the cool thing is – I don’t know that he understood paper, or that he really just didn’t need the cash, but when I refinanced, he let me go no prepayment penalty, no nothing. So ultimately, over that year-and-a-half I think I paid like .75% interest on my seller financing to him, because I had only paid down 1.5% of the seller financing by the time we refinanced, and he didn’t ask for interest on any of the remainder. So it was basically free money for me to buy a property, so it was pretty cool.

Joe Fairless: Yeah. You were mailing out to absentee owners about duplexes… Will you describe the process that you used?

David Pere: Yeah, I’m a pretty simple guy… So I just go into ListSource and I just really dive down into a specific zip code, or you can even draw out on a map a square block or whatever that you want… And you can just narrow down in there to absentee homeowners. As you know, people who don’t live in the home, but they own it… And you can pick out equity percentages, you can pick out age of the property… And basically we were just mailing out to people who had owned the property since right around the crash or longer; so the people who had owned it for at least ten years, who theoretically would have at least 40% equity hopefully, and be able to negotiate a little bit… Because I knew that I was gonna try to at least get some angle on the seller financing, whether that was 100% seller finance, or part of the down payment… Because I was in the bootstrapping phase of the business.

So I had narrowed it down to length of ownership, equity percentage being over 40%, absentee homeowner, and really at the time I just put 2-4 units because I didn’t know anything about the commercial stuff and it was kind of intimidating to me… So the 10-unit was a stretch for me going as a first property, but the numbers made sense, so I just let myself jump off the cliff. I guess that would be the short answer to that.

Joe Fairless: What did the note say? And was it a postcard, was it an envelope with a letter inside of it?

David Pere: At this time I was not doing mass, so I literally had a yellow piece of paper, and I remember I had  a 24-hour duty shift which we do in the military here and there, and I sat at this desk during that 24-hours and handwrote 110 letters of “Hi, my name is David Pere. I’m a real estate investor in your market, and I’m interested in your home at Such-and-Such address. I can close fast, please contact me for more information.” And I got a great return. I probably got 19% or 20% callbacks on all those handwritten letters. They were in blue inks… I would throw one or two pennies in the envelope, I would throw a picture of my family in the envelope, and I would hand-sign every letter… So I’m sure every single one of those got opened. But I’ve learned very quickly that that is miserable; so I never did that again.

At this point, if I’m driving around and I might see a property that looks like it has a ton of potential, or if I’m targeting a specific home or two, I’ll handwrite everything. Otherwise, what I did was I basically found a font that looked somewhat like my handwriting, and I’ll print that out on paper and then I’ll sign it in blue ink… And I still to this day will hand-address the envelopes, because I think that definitely speaks volumes for how much your envelope gets opened. And I still stuff in  an envelope and go; I’m not sending thousands and thousands of mailers out, but that’s kind of my go-to. My open rate has definitely dropped. It’s probably 5%, maybe on a good day 10%…

Joe Fairless: You mean your response rate?

David Pere: My response rate, yes. Sorry.

Joe Fairless: Okay.

David Pere: But I would rather send 500 and get 10% responded or 5% responded than handwrite 100 of them (that takes me two days) and get still less responses in the grand scheme of things, even if it’s a higher percentage.

Joe Fairless: The picture of your family – are you wearing a military outfit?

David Pere: It depends on where I’m mailing to. When I lived in Hawaii, for instance, that didn’t really hold any weight, because everybody around the base was military. So I would just go with a normal picture, like a fun in the sand, beach, Christmas photo that I have of us, all in pajamas, on the beach, and Christmas stuff…

Joe Fairless: Okay.

David Pere: If I’m mailing somewhere like the Midwest though, where they’re very military-friendly, then yes, it’s generally gonna be something with — either in a Marine Corps shirt, or hoodie… I generally don’t enjoy the uniform; there’s just something about that that seems kind of cringy to me as a service member… But I will at least have a picture where I’m in a big, very obvious Marine Corps hoodie, with the family. So it’s more focused on the family than the military service, but maybe some subtle hints in there.

Joe Fairless: What about the pennies? Is there a reference there in the note to why pennies are included?

David Pere: No, I totally should do that though. That’s a great idea. I should put a line in there that just says —

Joe Fairless: No, don’t do it — what you’ve got is right; don’t let me mess it up. I’m just asking questions.

David Pere: [laughs] So the pennies, for those of you who aren’t listening – it’s really just because if you’ve got an envelope in the mail and something was rattling around in it, would you open it?

Joe Fairless: Or I’d call the FBI… [laughs]

David Pere: Yeah, one or the other. But hey, the FBI will open it and tell you what it says, so either way you’re gonna read what I wrote.

Joe Fairless: [laughs] Okay, that’s cool. I’m glad that you talked about this in detail. It’s a way that can help others get their letters opened and noticed. Did you ever consider having an assistant who’s time is $10/hour or much less to write those?

David Pere: I actually have several virtual assistants for various things. I have yet to make my administrative one write my letters for me… But I will tell you  a funny story from a good friend of mine, who basically ran a letter sweatshop out of his office. If you ever get him on the show, I apologize [unintelligible [00:21:33].21] Basically, he had 2-3 marines come over, and he would provide alcohol and pizza, and they would spend eight hours handwriting letters in his house. It was only scalable for a month or two before he couldn’t convince anyone else to come do it anymore… But that’s probably my favorite.

This guy probably put out 2,000 letters one weekend, and he had six guys over, and basically was just like “I’m providing alcohol, I’m providing food… This is gonna be fun.” But no one ever returned, so he said it wasn’t worth the relationships he might be ruining.

Joe Fairless: [laughs] Well, he’s given them food and alcohol…

David Pere: I would do it, but I might be crazy. Taking a step back, based on your experience, what’s your best real estate investing advice ever?

Joe Fairless: Man, just get out there and do it. I tell people from the military — I have a safety net, so I’m allowed to take really big risks, in my opinion, because if all else fails, I’ve got housing and food and clothing etc. taken care of, and a fairly stable job. Basically, when I tell people my favorite advice, this is always like “Learn, network and take action”, but my best advice is get out there and take risks, but just make sure that whatever risk you take  won’t break you. It doesn’t matter how many times you fail as long as you’re able to recover from that risk. And as long as you’re  not gonna get broken by whatever risks you’re taking, the pay-off will always end up being bigger in the long run.

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

David Pere: I am ready for the Lightning Round.

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

Break: [00:22:58].23] to [00:23:34].17]

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

David Pere: The best ever book I’ve recently read – I would have to go with either Like Switch, which is a book dedicated completely to how to build relationships through body language… It’s another FBI agent writing a book about body language, but it’s a super fun read, and really intuitive, and just little things you can do to make yourself a little bit more likable.

And I’m just gonna plug Big Debt Crisis by Ray Dalio, because I’m reading it right now, and it’s fairly applicable to where we’re at in the economic cycle. It’s a heavy read, but it’s good.

Joe Fairless: Yeah, I will buy Like Switch. I have not heard of that, and I am looking forward to reading that. What is the best ever deal that you’ve done? It doesn’t have to be monetarily, because we’ve already talked about that, the 10-unit… But just best ever deal. If it’s the 10-unit, then that’s fine, we can move on.

David Pere: That’s a good one, but I think the best ever deal I’ve done – this is gonna be super-cliché, because we already  mentioned the actual deal-deal… It’s gonna be the word “networking”. I have gained more out of whether virtual or in-person relationship building, so I would venture to say that the relationships I’ve built are probably the best deals I’ve ever made.

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

David Pere: Free content and helping others. I’m out here just trying to help others avoid some of the mistakes I’ve made along the way. So if I can help someone avoid a  mistake or answer a question for them, that’s the easiest way for me to add value.

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

David Pere: My social media handle is @frommilitarytomillionaire, but if you google “military millionaire”, I’ll pop up all over the place… And the hope is just to help other service members, vets and normal people learn how to build wealth through real estate and entrepreneurship.

Joe Fairless: Well, Dave, thank you for being on the show, talking about your 40-unit and the creative financing and a couple things that you do differently if presented a similar opportunity like the escrow fund, as well as bringing your own management team to the property immediately, regardless of how well the pre-existing team checks out.

And talking about 10-unit too, the grand slam 10-unit – that’s phenomenal. Congratulations on that. And then also talking about direct mail, too. Lots of really interesting and actionable items from this conversation for everyone, myself included. Thanks for being on the show. I hope you have a best ever day, talk to you again soon.

David Pere: Thanks, brother. I appreciate it.

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JF1962: Finance Major Builds Real Estate Investing Business with Peter Knobloch

Peter joined an investment firm after college, helping them acquire 343 doors and raising $3-4 million to obtain the properties. Now he works on building his own portfolio, with experience in many different assets. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“You’ve got to know the numbers, if you’re not good at it, get someone who is” – Peter Knobloch


Peter Knobloch Real Estate Background:

  • Third generation real estate investor
  • Experience in many areas of commercial real estate investing, including multifamily, office space, hotels, restaurants, and sporting clubs
  • Based in San Diego, CA
  • Say hi to him at www.pknobloch.com 
  • Best Ever Book: Best Ever Apartment Syndication Book


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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.


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

Peter Knobloch: I’m doing great. Thanks for having me on your show. I appreciate it.

Joe Fairless: My pleasure, and looking forward to our conversation. A little bit about Peter – he’s a third-generation real estate investor. He’s got an experience in a lot of different areas of commercial real estate including multifamily, office space, hotels, restaurants, and sporting clubs. Based in San Diego, California. With that being said, do you want to get the Best Ever listeners a little bit more about your background and your current focus?

Peter Knobloch: Yeah, I’m a New Englander by birth. My parents are both from New York. My dad brought us out here because of the Navy, he was a Navy pilot. I’ve been here in San Diego since I was about four years old, so I could say I was raised here. I really love living here in San Diego, it’s wonderful.

I was very fortunate to marry my high school sweetheart. We have six children, and they’re all absolutely wonderful, and six grandkids. I have an MBA in finance and international business. I started out my career at an investment firm, and the principal asked me to take charge of buying multifamily apartments for syndication. We cater to a high net worth individual; we had a [unintelligible [00:02:28].15] pool of investors. Within about a little over a year, we acquired seven properties at a gross value of about $14 million, 343 doors; we raised somewhere between $3 and $4 million in equity, and I thoroughly enjoyed it.

I did everything, from basically the cradle to the grave – finding the property, all the way to working with our attorneys to do the private placement memorandum and the subscription agreements, and it was a lot of fun.

Then I went into commercial real estate, where I was assistant to the CFO. I worked there for three years, and worked on multimillion-dollar projects. I did cash flow forecasts, investment valuations, business plans… We worked with a lot of international investors, particularly Japanese, at the time, and I thoroughly enjoyed it.

After that period of three years, I went into the serial entrepreneur [phase]. I wrote a lot of business plans, helped raise capital. I did international manufacturing with an Israeli partner. I helped startup companies, I helped start up a high-tech company where we built nuclear portable analyzers, and I was there for six years as a CFO. I’ve helped some companies turn around, and I’ve help companies get ready for sale. And for the last ten years, we had a family business and we’re in the process of selling that. About a year ago or so I decided I was going to get back into real estate, because I really thoroughly enjoy it. It’s a lot of fun. It really suits my personality. [laughs]

Joe Fairless: So what do you focus on now?

Peter Knobloch: In terms of real estate?

Joe Fairless: Yeah.

Peter Knobloch: I’m looking for the value-add, because that’s what I do best. Those are the properties we purchased when I was at the investment firm. We were kind of looking for the cvasi-ugly duckling on the block, the B-, C, C+, if you will, types of properties. I’m not buying anything in California because economically, it just doesn’t make sense. So I’m looking outside of California – Midwest, Arizona, Texas, Tennessee, those areas. And I’ve found some great deals. I made at least three offers in the last 30 days, all of which were rejected, and that’s okay. But you just keep trying. So that’s what I’m focusing on – I’m looking for the value-add opportunity, anything above 30 units, and something that we can go in and do that, as you know, the forced appreciation.

Joe Fairless: What’s the last property you purchased?

Peter Knobloch: Well, that was back in the day. I currently haven’t purchased any property since I just started this year, looking and ramping things up… So I haven’t done anything. I’ve come close, like I said… I put three offers in and came close on one, but it’s a very competitive market out there. But that’s okay, because I look at the real estate market as a multi-story parking garage, in the sense that sometimes during the year it’s gonna be very busy, a lot of people coming in and out, and some years, it’s gonna be slow. But the point is that there’s always people entering and exiting the market, every day. So the key is to continually, consistently look, and keep looking and not give up.

Joe Fairless: I like that analogy. I hadn’t heard that before. Is that an original Peter-ism?

Peter Knobloch: Yes, it is. Because years ago, they’d say “A good deal and real estate comes around every week.” And what I’ve noticed is that frankly, now they’re every other day. There are so many people that are entering, and a lot of people exiting the market, for whatever reason.

Joe Fairless: Let’s talk about some things I mentioned while I was introducing you. I said, based on your bio, that you have experience in a lot of different types of commercial real estate investing, one of them including sporting clubs. Can you elaborate on that?

Peter Knobloch: The gentleman that I worked for in commercial real estate bought a class A building complex. And within the building complex was a gym, if you will, a very high-end gym. And he got the idea that “Why don’t we build some class A sporting clubs attached to office complexes?” And one thing led to another, and he started the concept of freestanding $25 million sporting [unintelligible [00:06:28].01] high, high-end sporting clubs. And at the peak of the business, we had ten high-end sporting clubs, on the West Coast and on the East Coast. So that’s how that idea got started.

Joe Fairless: What is a sporting club, exactly?

Peter Knobloch: It’s like a fitness gym. You know, some of the more popular ones…

Joe Fairless: Yep.

Peter Knobloch: …but they cater to the professional and they’re looking to attract the individuals who are willing to spend a lot of money for an extremely well kept, maintained, full of amenities type sporting club. The amenities in there were sauna, personal trainers, nutritional experts, and class A fitness equipment. It was really quite the luxury gym.

Joe Fairless: And they’re all next to a class A office? Did I hear that correct?

Peter Knobloch: Yeah, they were targeted for those areas.

Joe Fairless: And what happened to those?

Peter Knobloch: Well, during that time, it was the go-go days of real estate, and we were doing investments with a lot of Japanese investors. And towards the end of the third year that I was there, the real estate market started to decline, and the interest in spending $25 million for a sporting club started to decline as well. So they lost interest in that.

The other thing that contributed to it is that we built a $300 million multi-use real estate project here in San Diego. And I was the financial analyst on that project. It started out at a $175 million budget, but it ballooned to $300 million, because the owner of the commercial real estate started to spend more money than the Japanese investors were comfortable with. So he fell out of grace with that, and things spiraled down from there, and so… It kind of went away.

Joe Fairless: But the $175 to $3 million – did that get completed?

Peter Knobloch: Yes. It did get completed. It’s a beautiful project.

Joe Fairless: I bet it is.

Peter Knobloch:  It’s right next to the freeway in San Diego. It looks like a Tuscany village. It has an office; it’s, I think, a ten-story office, with a high-branded hotel; there’s three restaurants on the pad, and of course, the sporting club and the pool. It’s really quite gorgeous.

Joe Fairless: How do you go from 175 to 300?

Peter Knobloch: Change orders. [laughs] You change orders. Seriously, you would go in and look at things and say, “I want to upgrade this, I want to upgrade that”. As an example, he was on a trip to Greece, and he was going through a museum, and he saw a statue and said, “I think that $100,000 statue would look good in the lobby.” If that gives you an idea of–

Joe Fairless: Wow.

Peter Knobloch: Yeah, it just got out of control, so to speak.

Joe Fairless: So it was built as a $300 million facility, so that $100,000 statue is in the lobby currently?

Peter Knobloch: Oh, yes. It is.

Joe Fairless: And you were the chief financial officer. Did I hear that right?

Peter Knobloch: No. I was the senior financial analyst. I worked with the CFO for three years side by side and I did all the number crunching. I did all the underwriting, investment analysis, cash flow forecasts, evaluation, operational, everything.

Joe Fairless: What are some tips you have for developers who are listening or even fix and flippers who are working on a smaller scale, whenever they’re undertaking a development type of project?

Peter Knobloch: Well, the first thing is addressed in your book – which I read and I really enjoyed tremendously, and you did a great job on it – is to qualify the market, make sure the market will sustain what you’re doing. Whether it’s developing, or flipping, or going in and renovating; make sure that you get your money back, so to speak.

But second to that is you’ve got to know the numbers. You’ve got to know them upside, inside, every which way, and you’ve got to feel very, very comfortable. And if you’re not good at it, then by all means, get someone who is.

For example, when I was at the commercial real estate development firm, I was running these numbers and I made a mistake. And it was a $30 million mistake because we’re dealing with a lot of zeros. Now, it didn’t have any impact on anything, but it was very embarrassing, and it could have turned out to be a problem, but fortunately, it didn’t. But the thing is, you’ve got to know the numbers and you’ve got to get really, really good at knowing what the numbers are, what the costs are, and your budget to renovate, what the return is going to be, how long… Everything. It’s really critical.

Joe Fairless: The $30 million mistake, what was it exactly?

Peter Knobloch: It was another multi-use project that we were looking at. We were doing forecasts and evaluations on it. It was just a simple– didn’t double, triple check the numbers, and it just fell in there. Fortunately, one of the guys saw it and said, “Hey, this doesn’t look right.” So I went back and triple-checked, and sure enough. But that’s the way it is.

Over the years I’ve built up a repertoire of saving my spreadsheet every two minutes for a major change, and really taking the time to carefully check analysis. For my real estate investment, I built a spreadsheet a few months ago, and I really, really like it. It does a phenomenal job. But the point being is you can never be complacent with it. You’ve always got to be diligent and double and triple-checking your numbers.

Joe Fairless: When you are building your spreadsheet, what are some aspects of it that you want to make sure it included?

Peter Knobloch: Well, of course, what drives it is the revenue. You can play around with the operating expenses and other components, but really, one of the key components is the revenue. When I looked at a property, I say “What do the rents look right now? I want to know exactly how it sits today and take a picture of it.” And then what I did is I built another spreadsheet within the spreadsheet, if you will, that takes the current rents, plugs in the lease expiration date. And then I have the spreadsheet go out two, three, four years, and I put the months in, and I built in a formula that tracks when the lease expires, and when I can bump that rent up. So I get a real-world timing and magnitude exposure of when I can realistically bump the rents, and what does that revenue look like. And of course, once you get that nailed down, then it affects everything down to the investment return.

A lot of people I see say, “Well, we can go in, we can raise the rents,” and they’ll bump them x percent over a time period. But they never talk about the fact that the leases have different expiration dates on it.

Joe Fairless: Yep. That’s a very important variable, because if a lot of them are on the back end of the year, then you’re missing out on–

Peter Knobloch: A full year.

Joe Fairless: Yeah, exactly. So you have the months that you can plug in on a rolling basis so you can see how the income will be increased in a realistic way, based on the leases. What are some other things that you included?

Peter Knobloch: I take the proforma and use it in the first year. I say, “Okay, what are the operating expenses currently? Are they reasonable?” So I use those in the first year, just to be more realistic in the sense of conservatism, understate revenues, overstate expenses. And then I take averages in terms of operating expenses – what does that look like in terms of per unit? Is it $400 per unit for advertising and marketing? Is it $800 unit make-ready and turnover? Whatever. And then, I plug in what I think I can do in the second year, third year moving forward in terms of the operating expenses.

Of course, I keep a capital reserve, operating reserve, because cash is king… And I plug in the debt and then look over the cashflow as depending upon how the investment structure is in terms of the general partner and the limited partner. And I have some sensitivity analysis where I can do some stress testing – what if the net operating income goes up or down? What if the interest rates go up or down? How does that affect the overall return on the property?

What’s really critical for me is to look at the property as it sits today, but also in the second or third year, when I start implementing the changes, and what do the returns look like, as a project sits, as an investment.

Joe Fairless: I’m sure as an employee in these organizations that you mentioned earlier, you were part of a deal that lost money. If that is the case, what happened with that deal?

Peter Knobloch: Specifically regards to which one?

Joe Fairless: Any of them.

Peter Knobloch: In the terms of the commercial real estate side?

Joe Fairless: Yeah, commercial real estate side.

Peter Knobloch: Well, I’m not sure how to answer that, because I left because I got an offer from another company after the third year, and I imagine that they just walked away from it. That’s what I heard [unintelligible [00:14:53].12] friends that, unfortunately, because of the problems with being over budget, there was no way to recover.

Joe Fairless: Sorry, I was talking about not necessarily that one, the $175 to $300 million one, but just any other deal that you worked on that lost money. Any lessons learned from those deals?

Peter Knobloch: What’s funny is I haven’t worked on a deal that’s lost money. I know that sounds really odd. But as an example, the properties that I bought in the investment firm, because we bought them right the first time – and this is one of the key things about buying any kind of investment, is making money going into the deal. We would buy them below market in many aspects, and we just simply bought them right. We bought them in a very smart way. So I just don’t have any experience in that, in the sense of any bad deals.

Joe Fairless: Well, that’s great. We love to hear that, right?

Peter Knobloch: Yes, yes.

Joe Fairless: When you take a look at your experience working with high net worth individuals at the very first company you worked for, what are some lessons you learned by working with them?

Peter Knobloch: Speak plainly and simply. Sometimes we want to be sophisticated, and we feel that these investors are very smart, because they got where they got because they worked hard and they were very smart. But what’s really critical is just to be very transparent, very open and completely honest, and work hard. And building that trust is the number one important aspect of the entire relationship. You want to do business with people you trust. And when they see that you’re disclosing everything that you possibly can, and you’re answering all of their questions as best as you can, and know that you’re committed to preserving your capital and growing their investment and getting their return on investment, then it gives them a tremendous comfort level, and they’ll want to work with you and continually work with you. So that’s what I observed. They’re great people and they appreciate the honesty.

Joe Fairless: How did you end up working with so many international investors at the commercial real estate firm that you work at on your second job?

Peter Knobloch: The reason why is because we hired a Japanese consultant, because at the time the Japanese banks were very interested in the United States commercial real estate market. We worked with a number of banks like [unintelligible [00:17:18].08], Long-term Credit Bank of Japan, a few of those. And at that time, they were simply investing in it, and they’re offering incredibly low, very favorable interest rates and loan-to-value/loan-to-construction costs, so it was very advantageous.

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

Peter Knobloch: Create a vision of what you want to do, put together a plan, write it out, and work on it every day. And don’t give up, don’t give up. Just be consistent and learn from others, find a mentor, but just keep working at it. Your skill level will grow, your experience will grow, your wisdom will grow, and you’ll meet people and opportunities will open up to you… And it will happen, but you’ve gotta stick with it and keep at it.

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

Peter Knobloch: I am.

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

Break: [00:18:15].02] to [00:19:00].00]

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

Peter Knobloch: Oh, heavens… I know this is a shameless plug, but I really enjoyed your book. I really did.

Joe Fairless: I’m glad you did.

Peter Knobloch: It was quite good.

Joe Fairless: You’re talking about the syndication book?

Peter Knobloch: Yes. The Best Ever Syndication Book. Excellent book.

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

Peter Knobloch: I have a very unique skillset, and if I can help, in that sense… I’ve been involved as a serial entrepreneur for quite a long time. Just yesterday, I was having a conversation with a gentleman who’s part of a pharmaceutical company and they’re starting up the company and started asking a lot of questions. I was very happy to help answer some of those questions. So if I can help somebody in some way and be a blessing in their life, that’s what I love to do.

Joe Fairless: Best ever deal you’ve participated in.

Peter Knobloch: My wife and I bought a three-bedroom condo about 15 years ago out of foreclosure. We paid $50,000 for it, and it was a mess. You cannot believe how trashed it was. But we saw beyond it, we went in and we purchased it. We put in about $20,000. I went and did 90% of the work myself, because every home that we moved in with my father, we always did construction and remodeling. And then we had a friend come in and do the kitchen, and then a year, a year and a half later, we sold it for $150,000.

Joe Fairless: Best way the Best Ever listeners can learn more about you.

Peter Knobloch: I’m building a website. I formed a holding LLC which we’re gonna use to acquire the properties, but the website I have right now is at pknobloch.com. It gives you some background on what I’ve done, and what I do.

Joe Fairless: Peter, thank you so much for being on the show, talking about your experience in real estate, what you’re focused on now, the $175 to $300 million development that didn’t go according to plan, and we talked about the reasons why.

And also the spreadsheet that you created, putting months in there that reflect when the leases expire, so you can actually see what timeframe exactly that you’re gonna be able to get the rent premiums in. Thanks for being on the show.

Oh, by the way, does that take into account the time it takes you to renovate those units? So it might expire on the 21st of September, but you might not actually get the premium until October the 15th…?

Peter Knobloch: Yes, it does. It does take into consideration that. Thanks for bringing that up.

Joe Fairless: Well, very cool, Peter. I hope you have the best ever day. Talk to you again soon.

Peter Knobloch: Thank you again, Joe. I really appreciate having me on. Thank you.


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JF1866: From Non-Profit Work To Real Estate Investing with Ellis Hammond

Ellis has taken a slightly different path to real estate investing than we usually hear of. His background is in the non profit space as a missionary. He started investing in multifamily real estate as a better way to build wealth for his family and the causes he cares about. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“If you’re looking to get into real estate, don’t hesitate and figure out what you are good at” – Ellis Hammond


Ellis Hammond Real Estate Background:

  • Founder of EllisHammond.com
  • Manages a private network of investors that focus on acquiring multifamily commercial real estate assets
  • Based in San Diego, CA
  • Say hi to him at EllisHammond.com
  • Best Ever Book: Mindset: The Psychology of Success


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: Hi, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m your host today, Theo Hicks, and today we will be speaking with Ellis Hammond. Ellis, how are you doing today?

Ellis Hammond: I’m doing wonderful, really excited to be here. I’ve been a Best Ever listener myself, part of the community for really since the beginning of my real estate investing career, so I really feel honored to be here.

Theo Hicks: That’s great to hear, and I’m glad  you’ve been a long-time listener. I’m glad you finally got your opportunity to speak to the Best Ever community as well, and hopefully provide advice to like-minded individuals, or maybe people who were once like you.

Before we get started, a little bit about Ellis – he is the founder of EllisHammond.com. He manages a private network of investors that focus on acquiring multifamily commercial real estate assets. I’m looking forward to diving into that. He is based in San Diego, California, and you can say hi to him at EllisHammond.com.

Before we get into more details, do you mind telling us a little bit more about your background and what you’re focused on now?

Ellis Hammond: Yeah, Theo, I’d love to… Because I think it’s a great story, and I hope it’s encouraging for your listeners, wherever they are in their journey. My background is really in the non-profit space. [unintelligible [00:02:38].18] to multifamily missionary, working here in San Diego, California for a Christian nonprofit… And I got into real estate really to try and find a better way to create cashflow, to find a better way to build wealth for my family, for the things that my wife and I were passionate about serving… So we learned about real estate, and really went all in. I’m not kidding when I say – I learned how to buy my first piece of property listening to podcasts like Joe’s, and several different podcasts; I would just put it in my ear and I would listen.

So I got started that way. We started buying duplexes here in San Diego, started with a house-hack, of course, and I think we learned pretty quickly that even though we did really well, it was going to be really hard to get where we wanted to be in terms of the wealth that we wanted to create… So we needed something that was more scalable, and that’s where we learned about syndication. I think that’s probably why I started listening to The Best Ever Show – the focus on syndications.

Now we’ve been a part of two syndications as passive investors, but also really leveraging our networks to really move those deals forward, partnering with other sponsors to raise capital.

Theo Hicks: That was a very inspiring story. Before we talk about what you’re focused on now, how many duplexes did you buy? Was it like you house-hacked on, lived in it for a year, then house-hacked another one? Or did you just house-hack the first one, and then bought the other ones?

Ellis Hammond: We actually own a couple single-family homes in South Carolina, which is where I grew up, and then we came to San Diego and we purchased one duplex, the one we did a house-hack in. Essentially, we moved into the back-unit, which is what we kind of rehabbed, we had a long-term lease on the front unit, and we did really well. We created through that rehab phase about 100k in equity in 11 months… And a lot of that has to do with the market appreciation in San Diego, which is crazy, but also we found the ugliest house on the best block in town, and really created a ton of value in a short amount of time.

And then we refinanced out of that deal; we had a family investor invest with us, and we were able to pull out most of their capital and give it back to them. Now we actually airbnb one side, and we long-term lease the other.

Theo Hicks: Okay, so after that one house-hack is when you realized that it’d be hard to scale that, and that’s when you transitioned in syndications?

Ellis Hammond: Yeah, it was when I was doing some landscaping in the backyard, and shoveling dirt, and I realized “There’s gotta be a better use of my time than down here shoveling dirt.” Even that principle of how much is your time worth… And listening to podcasts – I listened to people who have gone before me, hearing that question asked, and I’m thinking “I know my time is more valuable than shoveling dirt. I can do something more with this.”

That’s when I realized I don’t wanna be 10 PM scraping floors on my project. That’s what we had to do for that deal, just because there was no margin in the deal to hire anybody else. So that’s where we started learning about syndications, and really putting together a team to [unintelligible [00:05:36].17]

Theo Hicks: Okay, so you say you’ve done two syndication deals so far… Were those ones where you were the sponsor, or are those two deals that you were passively investing in?

Ellis Hammond: Yeah, I’m on the general partner side of both of those deals. I act on the general partnership with those sponsors, but really the value that I bring to sponsors is my network, my experience, really from the nonprofit world and fundraising.

Theo Hicks: Okay, so you’re on the GP side, mostly focused on the equity-raising aspect.

Ellis Hammond: Yeah, investor relations, capital raise. Exactly.

Theo Hicks: Okay. Do you mind walking us through how you were able to join either an existing GP, or how you found the person that you partnered with? The reason why is because I know a lot of people wanna become syndicators, and one of the big things is the lack of real estate experience, but you’re kind of a testament to the fact that yes, you did a few deals before, but you went from doing a few single-family homes, to doing a house-hack duplex, to raising capital for (I’m assuming) a multi-million-dollar deal… So do you mind walking us through how you were able to get involved with the GP that you’re currently on?

Ellis Hammond: Sure. Well, I’ll save my best advice, because I think it’s going to apply really well to this, but I think the first step was that I got educated. I really understand how syndications work. I knew the lingo, I knew how to evaluate deals before I ever approached a sponsor; I was well-versed in the apartment syndication world, and then I just went out and started building relationships with people. And honestly, the first guy I ever met, I heard him on a podcast show. And at that time in my life, I was just reaching out to every single person who was where I wanted to be. And it was through that process where I just developed some really deep relationships, found some really good mentors…

And it was one mentor in specific who I approached; actually, he was looking at a different type of investment in Texas, and we flew down to go look at that project. We weren’t interested in that, but we learned really quickly “Hey, we like this guy, we like this network. He could really serve us and mentor for us”, and we approached him and said “Hey, if you find another apartment deal”, which he wasn’t buying a ton of apartment deals at that time”, we said “Hey, if you buy another one, we’d like to be a part of this project. We really think we have a network that would be interested in something like this.

Lo and behold, that project came up in the next couple months, and we were able to really partner and bring value through our network.

Theo Hicks: [unintelligible [00:07:51].10] but for someone who wants to start reaching out to sponsors, what’s some important information to include in that first point of contact?

Ellis Hammond: That’s really great. I think you wanna make sure you know the ins and outs of apartment syndication, you wanna know exactly what you’re doing. I think it’s hard to say, Theo, because a part of this has really come through relationships and relationship building, showing up at conferences and getting face to face; I think that’s a huge thing. If you’re going to conferences and you’re meeting these people, you wanna make sure that there’s good synergy there…

But if you were to reach out to someone — let’s say it’s Joe, for example; you’ve been to his conference, or you’ve been listening to his podcasts, say “Hey, this is who I am. I’ve been part of your network for a while. I’ve really got a ton of value from what you’re doing. I’ve been talking with my network…”, which means that you have to have already kind of gone to your network and said “Hey, if I could bring a deal like this, would you be interested?”, so  you know, you have enough momentum in your personal network, who said “Yes, if you bring me this, we’d be down to ride”, essentially…

I would just be very direct, and say “Hey, I have a network who’s interested in investing in real estate, and exactly what you’re doing, and I’d love to talk more about if we could add value to one another”, because that’s exactly what you’re doing as a money-raiser – you’re bringing value to a sponsor. Because most of the sponsors that I find who are really good at operations or really good at management, they spend a lot of their time finding deals and operating the projects, that they’re not really good at building a brand, and they’re not really good — I wouldn’t say good, but they just don’t focus enough time on raising the money. That might be an exception for Joe, as he’s done a great job of building a brand, but most of them have not, so that’s the real value that we can bring as money-raisers – we have a network, we have a brand that we can leverage in order to really bring value to our investors and bring value to the sponsor.

Theo Hicks: Alright, Ellis, I know you said that you might have touched on this already, but we’re gonna ask it anyways – if you wanna just repeat it, or have something new to say – what is your best real estate investing advice ever?

Ellis Hammond: I saved it, but it does kind of go back to what I was saying… And I think it’s really simple. First of all, everyone should get started investing in real estate; that goes without saying. But there are so many ways to enter into real estate investing that the best advice ever that I could give is that you need to know what your super-power is. You need to know what you do best.

For me, for example, that wasn’t looking at and crunching numbers. For me, it was the skill that I learned in the non-profit world, which was building relationships and fundraising. And I’ve found a way to really use that super-power to add value to other experts in the real estate world. I can’t say that any more clear – if you’re looking to get into real estate, you shouldn’t hesitate, but first, you should figure out what you are best at, and how you can leverage that skill in order to really partner with others.

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

Ellis Hammond: Yeah, let’s get it! Woo-hoo!

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

Break: [00:10:49].03] to [00:11:29].26]

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

Ellis Hammond: I love mindset books; this is what’s really helped me cross some self-limiting beliefs… So one is “Mindset: The Psychology of Success.” Incredible book. Talks about growth and fixed mindsets. And then the other one is “Switch on Your Brain”. Two really amazing books that have really helped me in the past year.

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

Ellis Hammond: I’m building a brand primarily, that’s what I’m really focused on. So I’d go back to the drawing board and I’d figure out how to best serve my audience, the following that I’m creating. So  if it’s not in investments, I’m still building a strong brand, that really is learning to know, like and trust me. So I’d go back to the drawing board and see what they need.

Theo Hicks: What is the worst deal you’ve ever done?

Ellis Hammond: I haven’t done enough deals for any of them to go really south yet, but I would say that my due diligence process that I go through on every single deal, which I’m actually happy to send that to the Best Ever listeners if they reach out to me – the due diligence process  I go through and vetting the sponsors has probably kept me from doing some shady deals, or some deals that may not have worked out with, or maybe they’d have worked out with, but I just wouldn’t have enjoyed doing those deals… That probably has helped me a ton.

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

Ellis Hammond: EllisHammond.com is a great place to reach me. If you sign up, I will reach out to you there. You can find me on LinkedIn, I do a ton of content. Most of my content comes on LinkedIn. Or call me. My phone number is 619-797-6213. And Theo, if they go to my website, EllisHammond.com, and sign up for either my newsletter or fill out an investor form, I’d be happy to send them my due diligence checklist that I use for every deal, which – like I said, it has really saved me a ton of headaches in really not doing bad deals. So I’d be happy to send that as well.

Theo Hicks: Alright, because that’s what I was gonna ask you next, which is where they could find that checklist. So if you go to EllisHammond.com – will they be able to find it pretty easily?

Ellis Hammond: Yeah. Like I said, either sign up for my newsletter or fill out a form. I’ll get it right away and I’ll be happy to reach out to them that way.

Theo Hicks: Alrighty. Well, Ellis, I appreciate you coming on the show today. Lots of solid advice. Just to quickly summarize – you discussed how your background was in a nonprofit; you were a missionary in San Diego, and decided to transition into real estate, because you wanted to find a better way to create cashflow and build long-term wealth for you and your family… You said that you literally bought your first property by learning from listening to podcasts like ours; that’s always great to hear. You mentioned how you did a few investments in South Carolina that were single-family homes, and ended up house-hacking in San Diego. It took a lot of manual labor, and while you were doing some landscaping in the backyard you realized that this is not the way to go…

Ellis Hammond: I hate gardening. [laughs]

Theo Hicks: Yeah, gardening in the backyard… You were probably sweating in the San Diego sun, and just happened to have an epiphany that this is not the way to go, and that’s when you transitioned into syndications. You mentioned how you are part of the GP on two syndication deals and your focus is on the equity raising investor relations.

We talked about how you were able to become a GP with very minimal experience, and first of all, you mentioned how you got educated before actually speaking with sponsors, because you’ve gotta know what you’re talking about… And then you went out and started building relationships with people. You reached out to everyone you heard on podcasts, you went to conferences and talked face-to-face with people, and eventually you were able to find a mentor that you ended up partnering up with on these two deals.

We talked about what someone in a similar situation needs to do in order to reach out to these sponsors. Obviously, you know the ins and outs of apartment syndications, go to conferences and speak to people face-to-face, but the most important thing – and this kind of goes into your best ever advice as well – is you need to know what value you can bring to these sponsors. You can’t just go out to them and say “Hey, I wanna work for you.” Even if you say “I wanna work for you for free”, that’s still not enough value to add. You need to figure out what your superpower is, and then how you can use that superpower to add value to a sponsor’s business.

You mentioned from your experience that a lot of syndicators are really good at crunching the numbers, finding deals, managing deals, but they don’t focus as much on the brand-building component… So that is where you, based on your background of networking and fundraising, were able to add value to their business.

Best Ever listeners, if you are interested in becoming a syndicator, Ellis kind of gave you an entry point, which is become an expert in building a brand, have some proof that you’re able to build a brand, and then maybe even proactively start a brand for a syndicator and present that to them, so they know that you’re the real deal.

Ellis Hammond: Yes, every 16-year-old should become a syndicator, right? Because they’re good on social media. [laughter]

Theo Hicks: Yeah, seriously… Snapchat experts, and stuff. Alright, Ellis, again, I really appreciate you coming on the show. Best Ever listeners, thanks for tuning in, and I will talk to you soon.

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JF1818: Don’t Save For Retirement #SkillSetSunday with Daniel Ameduri

Daniel is returning today after he has already given his Best Ever Advice. Today, Joe and Daniel will be focusing the conversation to a topic that Daniel recently wrote a book about. We’ll hear how Daniel recommends people save their money, and even work towards retirement, just not the conventional way. Daniel looked at the wealthy class and the middle class to differentiate what they are doing with their money and discovered some insightful observations. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Preserve capital and buy things that produce income” – Daniel Ameduri


Daniel Ameduri Real Estate Background:


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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, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Daniel Ameduri. How are you doing, Daniel?

Daniel Ameduri: I’m doing great, thanks for having me back on the show.

Joe Fairless: Yeah, my pleasure. You mentioned it already, back on the show, so Best Ever listeners, if you wanna check out Daniel’s best ever advice, you can go to episode 1106, titled “How to find owner-financing deals.”

Daniel is the co-founder of Future Money Trends. He also recently wrote the book “Don’t save for retirement.” That’s gonna be our focus for our conversation today. He has over 40 transactions, owns 15 rental units, 7 homes, 2 duplexes and a fourplex. Based in San Diego, California.

Best Ever listeners, first off, I hope you’re having a best ever weekend. Because today is Sunday, we have a special segment called Skillset Sunday. The skillset we’re gonna be talking about is around the focus of the book that Daniel has, “Don’t save for retirement.” Daniel, if we don’t save for retirement, what the hell are we supposed to do?

Daniel Ameduri: Exactly. Well, first of all, “Don’t save for retirement” – really what I mean by that is don’t save for conventional retirement… Because all these different things are great for the retirement industry. They’re making a fortune – the brokers, the mutual funds, the ETFs, the 401Ks… They are making money hand over fist. It’s just not working out for the clients and the baby boomers.

And what does work is something that’s been proven for thousands of years, and that’s preserving your capital and buying things that produce income. It’s as simple as that. Instead of saving for retirement and deferring and using all these different things, like a 401K, where you don’t even know where it’s gonna be in 30 years, or what the tax rate for the withdraws are gonna be, how about focusing on passive income?

What I did was I looked at what are the wealthy doing? What are the middle class doing? There’s a huge divide. The middle class, of course, they’re trying to get rich, and most of  them overnight. The wealthy – they’re preserving; they’re focused on income. But it is the one proven way that works, what they’re doing.

The whole retirement idea – really, the 401K is legislation passed in the ’70s, but it’s been around since the 1980’s. Same thing with IRAs. I think there’s just a better way to go about living your life and having your life becoming financially free.

Joe Fairless: I pride myself on thinking through the opposing opinion on basically anything, and just thinking “Okay, if we think this, then what would the other group say that’s the opposite? What would their points be?” Just because I think it’s good to have that ability to be able to do that, so that the initial perspective that I have – I can make that stronger, or perhaps I retreat from that and I open up my mind to this other stuff.

This I’m gonna have a hard time doing, because I agree with you, and I don’t really do stock market investing. I agree with everything you said, so what I’m gonna have to do is I’m gonna have to ask you – because I’m sure you’ve come across people who are heavily in the stock market, and they have other retirement accounts… And you’ve mentioned this to them, and then they have some counter-points. So help me ask some good questions about it – what are their counter-points to the things you’ve just mentioned?

Daniel Ameduri: Well, it’s interesting you bring it up like that, because yesterday I was emailed by a New York Times reporter who was looking at the book and wanted to ask me some questions. And he says “How many people are making $100,000 a year from passive income, that started as the middle class? How many people have subscribed to your letter and have done this with passive income and have quit their jobs?” He’s asking me questions he knows there’s no data point; there’s no data on that.

So I actually flipped it on him. I said “How about we do this? Let’s go over the data for what you’re advocating.” I said “Vanguard, the biggest mutual fund company on the planet – they are saying according to their data the median 401K-er (65 and older) has $58,000 in their account.”

Then you look at social security, which doesn’t even equate to the cost of survival increases annually anymore. Then you look at savings accounts, which is part of that three-legged stool retirement plan, and they’re offering 0% interest. So I kind of flipped it back to them and said “Look, I don’t have a lot of data points for how many people have come from nothing and gone to passive income, or have done a partial retirement, but I do have a ton of data to show you that the other way that you guys are advocating for is an absolute failure.”

Joe Fairless: What was his response?

Daniel Ameduri: I haven’t gotten a response; that was literally yesterday. So I’ll let you know if he does.

Joe Fairless: Was it via email?

Daniel Ameduri: It was via email.

Joe Fairless: Oh, okay.

Daniel Ameduri: We’ll see what he says. But look, I’m not advocating for people to quit their jobs with passive income tomorrow, or even replace completely the idea of retirement. What I’m saying is passive income has been much more beneficial to people who’ve adopted it. I have used passive income to pay my bills. I have used passive income to go on vacations, and I simply don’t worry about retirement at all, because I love what I do – which we do talk about what you’re going to do in life as far as work, and how healthy it is… But we also talk about in the book that you do have that option, and that is where that real financial security and peace and freedom comes from, wherein “Hey, maybe your dream was to be an engineer, or maybe you’re a prosecutor who puts away certain criminals that you really are passionate about doing that job.” Do that job. But what I’m saying is when you buy passive income and reshift your mind from capital appreciation to income, it opens up all kinds of opportunities and a peace of mind and a feeling of wealth that is worth pursuing.

Joe Fairless: Okay, I’ll do my best to pretend I’m the reporter and continue his line of questions. So you mentioned passive, but investing in real estate really is not passive, because there’s some form of activity we’ve got to do. I have three single-family homes outside of the apartment communities that we have, and those three single-family homes – once a year I’ve got to pay the insurance bill, and once a month I maybe get an email from a property manager about something that happened… And that’s on the management side. But going into purchasing those, there was work involved to educate myself, find the right city, and find the right team… Versus I go on Vanguard and I could pick whatever options they have and just passively – and that truly is a  passive investment – and just let it ride on the stock market.

Daniel Ameduri: Yeah. The stock market to me is not a good diversifier for most people. They’re probably not sophisticated enough to even know what stock to buy. Warren Buffett even hasn’t beaten the S&P 500 in the last ten years. So I’m not big into stock picking; I do dabble into venture capitalism, but I’d say for people who are comparing the two – sure, you do have to do a little legwork, or a lot of legwork if you wanna make a lot of money in real estate, and it is a great way to have passive income, but there really isn’t too many passive incomes where you have nothing to do, at least if you wanna maximize it, like in physical properties.

Now, there are private REITs — there are public REITs too, but there are private REITs, or even the crowdfunding stuff… You’ve heard of PeerStreet and Fundrise – there are a lot of ways to make money, and it can be 100% passive to you, but just know you’re never gonna get that same return as if you had gone out and purchased the apartment, or purchased the single-family home. Those are gonna be your best returns.

Now, if you wanna just give the money to a private equity group that owns fractional shares of J.W. Marriotts, or maybe they build skyscrapers, you’re gonna get your 7% to 11% return, but the best returns and the best tax benefits are always gonna be owning physical real estate. But yeah, sure, they got me that it’s not 100% passive on owning physical real estate, but I think we’ve got them check-mated that the alternative is you don’t even know half the time what you’re buying, and you have no idea what that 401K is gonna be at.

At least when I have a property – not only do I have the tax benefits, but I have the income, the potential appreciation, though it’s not important… But you look at a 401K, for example, and people have no idea what the withdraw rate is. Think about how risky that is. You’re borrowing money from the IRS essentially by taking that deduction and not paying the tax, and you have no idea what your tax rate will be… Even though what you do know for certain is taxes are lower than they’ve been since 1931. And you’re gonna speculate that with 22 trillion dollars in debt and ballooning entitlement – an entire movement out there to tax people more, that taxes are gonna be lower. No, taxes are gonna be higher, so why wouldn’t you focus on passive income, rather than deferring things in a 401K?

Joe Fairless: How do you have the book outlined? Or how does it flow?

Daniel Ameduri: It starts off with my wife and I’s journey. It literally starts actually in a bankruptcy attorney’s office. I have the first chapter and the intro, for your readers, if they wanna go to FutureMoneyTrends.com/save – they can read it free. There’s an Amazon link there, of course, if they wanna continue reading… And it essentially starts with what did my wife and I do; how did we just start pointing — a lot of people say “What’s the first step? What do I do if I wanna become financially free?”

Then it goes into really what is wealth, and what is wealth ultimately going to mean for you? And then we go over the actual investments that I’m involved in, and different things that I have discovered. What I’ve done is — I’m not worth 50 million dollars, but I’ve been to a lot of these family wealth offices where everybody else in the room is worth 50 million, or 100 million, or even a billion. I’ve spoken and interviewed many billionaires over the last few years here, and I’ve always just been looking for what are they doing, and I’ll tell you – and your listeners will love this, because they’re listening to a real estate show – in the end, all roads lead back to real estate when it comes to the super-wealthy.

Joe Fairless: Well, can you drill down into some specific things from a cashflow standpoint that have worked best for you, and then some things that did not work well for you?

Daniel Ameduri: Well, when it comes to cashflow, I’ve tried to diversify it as much as possible. One of the things that works very well for me is I have been participating in private equity, either by multi-units, say 30-50 units, and then doing value-adds… Or even getting into where we purchase farmland and lease out the equipment. Now, the farmer obviously will make more money because they can actually profit from the crops, but they also carry the most risk. So it’s a fair trade. They get more risk, and they get more profit, but we get more safety. And again, my focus is preserving, so I love farmland. Then the income – we’re getting rents from the farmland and we’re leasing  out the equipment to the farmers.

On the income disaster side – I would say one of my worst experiences is trying to vet and do individual mortgage notes or loans on my own. I’m just not a credit analyst. So when it comes to that, if you wanna have some debt income, I would highly recommend, defer to people or organizations that have been very successful.

One thing I’ve done is I always try to find organizations that have been around for a long time, ideally (it’s almost a must) that they’ve been around before the 2008 crisis. If I’m gonna partner my money with a group that’s buying mortgages specifically, I wanna partner with a group that has been through the 2008 crisis, frankly… Because that was one of the worst crises and I don’t see us going into something like that again for a long time, because when those types of things happen, investors tend to be more on the conservative side for some time.

Probably my worst experience is me trying to actively involve myself in things I’m not an expert in, I don’t know about. I would start simple when it comes to cashflow – single-family homes, move into apartments, and then definitely, if you’re getting into bigger things, move into partnerships or places like your website where people can get educated and trained… Because this stuff is all repeatable; you can mimic what other people are doing. What other people are doing, you can do. That’s one of the things I always tell our subscribers, and even my kids – “Look, what one man can do, another can.” So it’s all possible, but I highly recommend people partnering with people who know what they’re doing, prior to just jumping out there and throwing money at something.

Joe Fairless: Out of 1,800 or so interviews, the term “farmland” has come up maybe 5 times, so let’s talk about that… How did you get into investing in farmland?

Daniel Ameduri: You know, it always has been something I wanted to do, and I just could not find the right partners. I would look at foreign farmland, where you buy a parcel, and the internal rate of return was like 20%, and all these things, and I was like “But I don’t know about that…” I’d go to Panama and look at these farms, I’m like “If grandma dies on the farm, it’s over. She’s running the entire operation.” In fact, I know a group who got into coffee farmland, and the guy who was the main farmer died, and all the investors lost their money because just one guy was not part of the operation anymore.

So I’d been wanting to get in it for the last decade, and finally a group out of Southern California – if anybody knows Sprott Asset Management. They’re a very good group; they have commodity, resource-related investment companies, and they had brought the opportunity up to me. It’s a private fund, private equity, and that was the pitch – they were gonna buy farmland all throughout the Midwestern United States, they were gonna buy the equipment, they were gonna lease the equipment to the farmers, and it’s done really well. It’s appreciated probably about 7% or 8% annually, but the income is about a 10% yield on my money… So it’s a great way to expose myself to farmland without owning a physical farm, which I know nothing about.

Joe Fairless: And on that note, investing in something that you don’t know much about, what gives you the comfort level to invest in something that you don’t know a whole lot about?

Daniel Ameduri: Well, I’ll give you an example in some of these mining stocks I’ve had a lot of success in… What I’ve done is I’ve just been religious about making sure whoever I’m investing with is on their second go-around. So I identified a handful of people – about 12 of them – and I wanted to find the guys who had already created a 5-million-dollar or a 10-million-dollar company to a billion-dollar company. And I took those guys and I looked at what they were doing, and the asset and the project met what I wanted.

I think if you’re going to involve yourself in a thing you’re not that familiar with, you wanna make sure you’re with somebody who’s on their second go-around. Not the CPA who’s decided he wants to be a gold-mining expert, or somebody who last year was managing a Subway, and this year they wanna buy a 25-unit apartment building with you. So try to find people on their second go-around.

Now, I will tell you this from first-hand experience, and I’m sure a lot of listeners can relate to this – typically, when I venture too far away from things that I know, I usually don’t make that much money. Whatever you’re doing right now that’s making you the most money… As entrepreneurs and investors, we love to go out and find new things. But for the most part – and this is my own personal experience – you’re far better off just doubling down on what you’re doing right now, whatever is making you money. If you wanna monetize your job and make your employer your first client and expand that industry, or if you’re an investor who’s killing it in apartments, or killing it in single-family homes, just keep killing it in single-family homes, or keep killing it in apartments, and just stay focused.

They asked Bill Gates and Warren Buffett if they could say one word that’s been the most important thing in their lives, and both of them said “focus”. I really believe that, because I made a lot of money in stocks and real estate, and I remember one time I wanted to venture out into the payday loan business, because I saw these returns, and… Let me just tell you, it was not a pretty thing. That business is so gone you can’t even find it on the internet.

So you’re better off sticking with what you do know, but if you don’t, make sure you’re partnering with somebody who’s on their second go-around.

Joe Fairless: Anything else you think we should talk about as it relates to your experience and the topic at hand, that we haven’t discussed already?

Daniel Ameduri: As far as income, no. But I would say one thing that helped me become financially independent was cutting spending in an aggressive way. If you google right now “how to save money” or “I need to save money”, it’ll say switch your credit card, switch your checking account, don’t drink coffee at Starbucks… When my wife and I wanted to become financially free, and our definition was passive income paying for your basic needs in life (not extravagances), and just making sure that that was taken care of, we moved. That cut our expenses 50%. We got rid of our pets, because they had a $150/month bill. We stopped eating meat.

Joe Fairless: You got rid of your pets because of the money?

Daniel Ameduri: We did crazy things. She wanted to quit her job, I hated my job…

Joe Fairless: What did you do with your pets?

Daniel Ameduri: We gave them to a very nice family who actually kept a lot of these different type of dogs [unintelligible [00:18:50].15] This goes back to 2009-2010…

Joe Fairless: Oh, okay. Tough time.

Daniel Ameduri: Much different life, right?

Joe Fairless: Right, right.

Daniel Ameduri: So that was us crushing all expenses… And what that allowed us to do – it freed us up to buy even more passive income. And of course, that snowballed and compounded. My wife was able to quit her job, and then I quit my job, and today we live a very good life. Even though I was financially independent, I still drove a 2003 Nissan Altima in 2012.

Now, I’m not telling people that’s how it’s gonna be permanently. That’s not how it is now. My wife and now – we just got done traveling for 60 days, in Africa and Japan and Israel, and we took an Atlantic cruise with Disney from Miami to Barcelona. So I’m not telling people you’re sucking up and living a poor, minimalist life; I’m saying we need to cut deep. Because most of us aren’t living sustainable lives, because we have adopted what we’ve been conditioned to do… Just like the retirement savings, having a 5 to 8-year auto loan, having an auto loan that’s equal to your annual income… That’s just stupid stuff that we do because we think it’s normal.

The book really goes into how do you deep, deep cut spending. Because you’re doing it not permanently; you’re just doing it because what you wanna do is you need to free up as much money as you can to buy income. You need to put those dollar bills out there and put them to work.

I have the mindset — when I go check my mailbox or log in to my checking account, I’m looking for ACH deposits, I’m looking for checks in the mail. And that’s a very rewarding and healthy lifestyle I think everybody can benefit from.

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

Daniel Ameduri: I would love for you guys to just go to FutureMoneyTrends.com/save. You’ll get to read a part of the book for free. It also subscribes you to my weekly wealth digest. I share stories of what my wife and I have done, and what we’re actively doing right now.

Joe Fairless: Well, thank you so much for sharing your approach to making sure we’re ready for retirement, having cashflow, and having income-producing assets. Then how you go about doing that, what has worked and what hasn’t worked.

Daniel, I really appreciate the conversation. I’m interested to hear how the New York Times reporter reacts to your email… I’m thinking you’re just not gonna get a reply, because they’re probably looking for one perspective only. But if they are good reporters, then they’ll actually get really curious about what you’re saying.

Daniel Ameduri: My publisher was the one who had the email, so I’m sure he’ll get back to them, just because he’s probably regularly in contact with the publisher… But when I emailed them, I said “He’s either going to hate this, or he might actually become curious and wanna dig further.”

Joe Fairless: Yup. Well, I agree, and… Hey, I really appreciate it. I hope you have a best ever weekend, and we’ll talk to you again soon.

Daniel Ameduri: Thank you very much, Joe.

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JF1736: $10k Per Month Passive Income, Requires Just 1 Hour Per Week To Manage with Anton Ivanov

Wouldn’t $10k per month of passive income be nice? Anton currently has that with his portfolio, and he only has to spend one hour each week to manage. He also has another career, so his real estate investments are not his main focus, which makes the passive nature of his investments ideal for him. Joe digs into Anton’s portfolio and story, extracting the lessons for us to learn from. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Get your foot in the door, you’ll learn more from your first deal than any kind of reading or research” – Anton Ivanov


Anton Ivanov Real Estate Background:

  • US Navy veteran, real estate investor and entrepreneur
  • Owns 35 units across 4 states, generating $10k in monthly passive income, requiring only 1 hour a week to manage
  • Based in San Diego, CA
  • Say hi to him at https://dealcheck.io/
  • Best Ever Book: 4 Hour Work Week by Tim Ferriss


If you’re a passive investor wanting to learn more about questions to ask sponsors in order to qualify the opportunities, sponsors, and the markets opportunities are in, visit BestEverPassiveInvestor.com.

We created this site just for passive investors to have a free resource providing the questions to ask and things to think through. BestEverPassiveInvestor.com


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

Anton Ivanov: I’m doing great, Joe. How are you?

Joe Fairless: I am doing really well, and nice to have you on the show. A little bit about Anton – he is a U.S. Navy vet. Thank you for what you did for our country. He is a real estate investor and an entrepreneur. He owns 35 units across four states, generating $10,000 monthly passive income. Here’s the kicker – it requires only one hour a week to manage… And he is based in San Diego, California. With that being said, Anton, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Anton Ivanov: Absolutely, Joe. Thanks, first, for inviting me on the show. I got started with real estate kind of in a set of unfortunate circumstances. I was in the U.S. Navy a few years ago, and both of my parents passed away actually while I was stationed in Japan, overseas. They owned a condo here in San Diego, and I ended up inheriting it after their deaths. Prior to that I never had honestly any intention of getting into real estate, at least in the immediate future. I didn’t know much about it, so here I am, I’m living in Japan obviously, deployed with the U.S. Navy, I’ve got this condo… I wasn’t really sure what to do with it at the beginning. I thought about selling it. I glad I didn’t; I talked to a few folks smarter than me, and they were like “Well, you know what – it’s a good asset. Why don’t you try renting it out? Get a property manager and see where it goes. Don’t make any rash decisions.” Which I did.

I happened to find a local property manager here in San Diego, I rented the property out… It didn’t cashflow very well. San Diego prices are very expensive, rents not so much… But it trickled in, a little bit at a time. But over the years it kind of gave me my first look at what passive real estate investing can do for you in terms of cashflow. That was the kicker for the whole driver of after I got out of the Navy and kind of settled in a more normal life, so to speak… It really opened my eyes about what real estate can do for you in terms of passive income specifically, and replacing your full-time job, and obviously helping you retire early. I like to think of that as kind of the start of what followed.

After I got out of the Navy, I moved back to San Diego. Me and my wife, we purchased a duplex that we house-hacked actually, with a low down payment VA loan. That was our first ever property that we bought ourselves, without inheriting it. And from then on we just kept growing. We started investing out of state, we bought four turnkey properties in Atlanta, Georgia, and then Birmingham, Alabama, and from that we went a more traditional route and built a local team in Kansas City, started buying value-add multifamily properties, doing our own rehab, doing our own management, and right now we’re at 35 total units, over 10k monthly cashflow, and the most important aspect for me is our portfolio is more or less 100% self-sustaining and passive, whereas if I wanted to take a six-month vacation, and just basically not worry about it, I have the confidence that it’s going to keep running. It doesn’t need me there every day. And in fact, I work full-time. I’m not a full-time investor. I have a career, I have a business startup, so that’s my full-time focus, and real estate provides me with that passive income, and eventually retirement.

Joe Fairless: When you say it’s self-sustaining and passive, will you elaborate on how you’re defining that? And perhaps elaborate by giving some examples of “If this were to happen, I’m still okay on a six-month vacation, and I don’t need to be present and spend time focusing on that, because I have it solved for.”

Anton Ivanov: Absolutely. To me obviously, passive means that I don’t have to spend my own personal time managing my portfolio. It’s not my full-time job, and it’s not something that even requires my presence. Most of my properties are out of state, and the first key in having this system set up is obviously finding good property managers. Somebody has to manage the properties for you, so if you’re not gonna be doing it, you need a team, and specifically a really good property management company to do that for you. So my first step, and always advice to all investors who want to invest out of state, or just have a passive portfolio locally, is you need to find an absolutely stellar property management company or team to help you.

I’ve found that the best property managers I’ve always worked with have been through referrals from other investors. There’s a lot of companies that manage properties out there, a lot of them are okay, subpar; instead of googling or finding one randomly, first meet investors that invest in that market, that have a track record with using some company for the same types of projects that you want to use them for. So if it’s single-family, find investors who invest in single-family; multifamily – find investors who invest in multifamily, ask them who their property manager is and if they’re happy with them, and get your first few referrals and contacts that way.

And then obviously, interview the property management firm yourself, see if they’ll work for you in terms of the properties you want to buy, whether you want to do a rehab or not, what kind of maintenance fees do they have, what kind of management fees do they have, and so forth. That’s the key, Joe. Obviously, I’m  sure you and your listeners know, first find a good property manager.

The second for me has always been to kind of — I call it training or grooming your property managers. A lot of investors I meet – they find a company to manage their properties, and they expect “Okay, I’m done at this point. I turned it over to them”, and everything’s gonna go smoothly from then on. That may or may not be the case, but the best thing you can do is basically go through as many scenarios before they happen, with your property manager.

We’re talking about your unit becoming vacant, what type of turn rehab are you doing, what is your budget, what are the specific items that you want done on the property. They’re getting ready to lease it – what is the leasing criteria? Do you want pets, do you want no pets? Section 8, no  section 8? Identify and agree on a list of criteria with them. Evictions. What is your late payment policy? What is your eviction policy?

Go through the entire process with the property manager and make sure you guys are on the same page. By being proactive, especially when you’re working with a new company, and establishing a set of checklists, guidelines, basically processes that you agree on, you’re setting yourself up for success later. So when you say “I go on vacation for six months”, because I walked my property managers through pretty much every possible scenario that could happen, and I’m comfortable with the process that they’re going to follow – we reviewed it, we agreed on it – I’m not really worried that something unexpected is going to come up. Because if it does, I’ve already talked to my property manager about how to handle it, what steps to take, how much this is going to cost, and so forth.

So you’re basically delegating your work to them, and giving them the power to make decisions and actually manage the process, but at the same time you’re maintaining control over the overall structure of the process, the fees, and so forth… So when you come back six months later from your vacation and they call you up and say “Hey, we had an eviction. This is exactly how I handled it, like we agreed. Here’s the costs. Everything was done basically how you wanted to” – that for me is truly having a passive portfolio that you’re not constantly stressing over all the time.

Joe Fairless: You live in San Diego… Where are your properties?

Anton Ivanov: I have three properties here locally. I don’t manage them myself either. I have one in Atlanta, three in Birmingham, and 28 units in Kansas City.

Joe Fairless: Let’s talk about the 28 units in KC… Are they all single-family?

Anton Ivanov: No, they’re actually all 2-4 multifamily.

Joe Fairless: Okay. How did you end up in Kansas City?

Anton Ivanov: I kind of started investing out of state, reasons being that Southern California was not a good rental market, in my opinion. I like a combination of both cashflow and appreciation for a good long-term growth. San Diego sees some pretty good appreciation if you buy at the right time. The cashflow here is terrible. So I started looking out of state, and I basically did  an analysis of various markets.

I focused first on bigger cities; I didn’t wanna invest anywhere that was too small. I focused on markets that had very strong economic, population and job growth, because I believe that those qualities are what drive both price and rent growth over time. As a real estate investor in rental properties, that is what I wanna see. I don’t wanna see prices stagnate or decline, I don’t wanna see rents stagnate or decline. I want both to appreciate, and what I’ve found based on my research and reading is if a market has economic growth, population growth and job growth, then that will cause overall prices on rents to go up.

And furthermore, I wanted a market that had a fairly low entry point. We’re talking about maybe between 60k and 80k purchase price per unit. Obviously, compared to San Diego, we’re looking at hundreds of thousands per unit, and Kansas City basically fit all those criteria – it had good economic, population growth, it was a thriving city, diverse economy… At the same time, it didn’t really get hit by the real estate cycle recovery like some of the other markets, so you could still find deals for fairly cheap there.

Joe Fairless: So once you identified Kansas City, how did you start purchasing property there?

Anton Ivanov: The first thing I actually did is network and build my team. That’s the key, like I mentioned before; starting with a property manager, but also finding contractors, rehab teams, brokers, agents, and so forth, to basically assemble a group of people to help you with acquisition, rehab and management of your properties, because I’m not there myself doing it. And the first thing I did was actually connect with local investors, like I mentioned. I think that’s the key.

So instead of finding a broker and an agent, I actually went on sites like Bigger Pockets, a  few local people I knew here in San Diego that had friends who invested in Kansas City, and basically met 5-10 other investors who were successful in that market, learned from them, learned what types of properties they were buying, learned what areas they preferred, and also used them to grow my own network of real estate professionals.

So I did all of that, and it probably took about 6-8 months frankly, just networking, researching, doing this part-time, because again, I work full-time, so I just had to find time to  do it. I flew out to Kansas City myself, met all these people that I was talking to over the phone or e-mail, actually drove around the city probably for two straight days, got a first-hand experience of what these different areas are and look like, to make sure I’m not just blindly buying a property in some area that I think is good.

So I went through the 6-8 month preliminary work that was absolutely essential, because it laid the foundation for being successful in that market later. And only when I had the team, when I was comfortable, only then did I start looking for properties to buy.

Joe Fairless: What’s something that has not gone right?

Anton Ivanov: Specifically in Kansas City, I would say a few times I over-estimated the performance of certain properties, and that’s obviously the key to being a successful real estate investor – you’re about to buy a property, you’re going to run the cashflow projections and make some assumptions of what you think the rent is, what you think the vacancy is, what you think the maintenance will be. Because I was new to the city, didn’t really live there before and only had indirect knowledge, a few times I did over-estimate how much the property could rent for, what the vacancy rate would be, what the maintenance would be. That resulted in less cashflow than I predicted.

Now, thankfully, what helps when you invest in a city that’s thriving and growing is that it does give you some room for error. Because if you think rents are higher than what they actually are, but they do appreciate over time anyway, then maybe the first few years your cashflow will be diminished, but then it’ll catch up  to your estimate. That’s really what saved me in terms of my estimates. But learning from that, obviously; when it’s a new city, new market, you will make some mistakes. The best you can do is use different sources of information, double-check your numbers with other investors, brokers, agents, run it by them, see what they think. Don’t just go on Rentometer or something like that, find one estimate for the rent and think that that’s what it’s gonna be.

Joe Fairless: I noticed in those examples you said brokers, agents and other investors… Did you intentionally omit other property managers, or was that just “…and property managers”?

Anton Ivanov: No, property managers are great people to run by rental estimates. Again, I wouldn’t base the projections on any one estimate, so definitely ask a few brokers, agents, a few property managers what they think a given property may rent for, and take all that collectively, find a middle ground and use that in your projections.

Joe Fairless: Let’s say you were to find a four-unit property that you typically buy in Kansas City today. What would you estimate for vacancy and maintenance? Feel free to pick whatever area you usually buy in, because I know that plays into it, too.

Anton Ivanov: Right. So now that I have some track record in Kansas City, estimating all these numbers, especially in the same areas, is much easier, because I can look at my previous performance and estimate vacancy based on that. For example, for new fourplexes I buy in the same areas, my vacancy estimate is at least 10%. Historically, it’s been around 8% so far over the few years that I’ve been in that market, in the areas. I just add a few little percentages, round out to 10%, to be a little more conservative… Especially because it’s multifamily and these are B-class areas.

So it’s helpful when you have past performance. Definitely use that if you already own properties in the market. Definitely look at how they’re performing. But at the same time, do keep in mind that if it’s a slightly different area, a slightly different property, the vacancy or rent or maintenance may be slightly different… So don’t just blindly throw estimates out there.

Joe Fairless: And as far as the maintenance, how would you estimate that?

Anton Ivanov: The maintenance – typically, when I first get into a market, like Kansas City, when I’m brand new, I usually use a percentage of the rent as an estimate. For multifamily, I do something like 12%-15%. Again, probably a little high, but if I’m new, I’d rather overestimate. Once I have a little bit of track record, like I do now, I can assign a more specific dollar figure, usually in a certain amount per month, per unit in maintenance costs, basically based on the average of how my portfolio is performing in a given area.

Joe Fairless: And what’s that a percent of?

Anton Ivanov: If I use a percent to estimate maintenance, it’s typically of the gross rent. And then if I use a dollar figure, it would just be, let’s say, $100/unit/month for the entire building.

Joe Fairless: You’ve got 24 in KC? Did I hear you correct?

Anton Ivanov: 28 total.

Joe Fairless: Sorry, 28 total in Kansas City. You’re also in Birmingham, Alabama and in Atlanta. Did you come across Atlanta and Birmingham the same way that you did Kansas City?

Anton Ivanov: Fairly similar. The Birmingham and Alabama properties – I bought them turnkey. This is where basically a company rehabs the property, finds a tenant, sells it to you off-market for a sub-price. Those were my first forays into out-of-state  investing when I wasn’t comfortable building my own team. I still did some research on the markets and made sure I’m investing in the areas that I believed will appreciate over time, but obviously I was also investing in the areas where turnkey properties were being sold.

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

Anton Ivanov: What I always like to tell new investors, those getting started, is don’t be afraid to start small. It’s tempting to say “Hey, I wanna buy a 50-unit apartment complex”, or even a fourplex, but when you buy a bigger property like that you basically compound your potential to make mistakes… And as new investors, you probably will make mistakes, and you’ll learn from them, but the bigger the properties you start with, the more costly your mistakes will be.

I always say, don’t be afraid to start small, whether that’s just one local single-family property. Maybe you house-hack a duplex… Just get your foot in the door. You’ll learn more through the first deal that you buy than any reading and research you do online. That will set you up nicely for growing your portfolio going forward.

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

Anton Ivanov: Let’s do it, Joe.

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

Break: [00:18:17].22] to [00:19:11].03]

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

Anton Ivanov: 4-Hour Workweek by Tim Ferriss.

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

Anton Ivanov: Probably I’ll have to mention the duplex I house-hacked at the beginning, just because this was the very first property I bought. I learned a ton. I still own it, and it’s still performing greatly.

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

Anton Ivanov: I’ve kind of mentioned this before, but over-estimating certain numbers in your cashflow projections, like potential rents, vacancy, maintenance… For example in Kansas City, when I was first getting started, I probably used estimates that were a little over-optimistic, and the learning from that was to be more conservative, to talk to more people about your estimates, and then in the future use past performance as an indicator for more properties that you buy.

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

Anton Ivanov: Sure, Joe. I’m the founder of DealCheck.io. It’s a property analysis platform that you can use to analyze rental properties, flips, multifamily and commercial buildings. It’s available as a mobile app. Just search for DealCheck on the iOS or Google Play store, or use DealCheck.io online. It’s free to try out. If you’d like to upgrade to a more full-featured plan, type in “bestever25” promo code at checkout to get a 25% discount, just for Best Ever listeners. Again, DealCheck.io, “bestever25” promo code to get your discount if you’d like to upgrade.

Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on? Follow what you’ve just said, I imagine?

Anton Ivanov: Absolutely, DealCheck.io. We’re on Twitter and Facebook, and if you’d like to e-mail me personally, it’s Anton@DealCheck.io. I’d love to answer any questions or hear from you.

Joe Fairless: Anton, thank you so much for being on the show, talking about your investment approach that you take to open up a new market and invest in it if it’s not the market that you live in, and how you approach building the team, as well as some underwriting assumptions that you do, and your overall investment philosophy. Thank you so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Anton Ivanov: Thanks, Joe. You do as well. Thanks for inviting me.

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JF1231: Leveraging Technology To Automate The Money-Raising Process with Craig Cecilio

With nearly $1 billion in real estate assets financed, Craig has been quite successful with raising money. One thing that sets him apart from other groups doing the same thing is he leverages technology. His offerings are still 506c but he uses a crowdfunding platform rather than doing one-off syndications for each deal. Using the crowd funding platform allows him to cut out the some of the middle-men and automate much of the process. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Craig Cecilio Real Estate Background:

CEO & Founder of DiversyFund

– The founder and CEO of California Coastal Funding Group, Inc.

– Participated in development of over 1,000 single family residences as joint venture equity partner, lender or sponsor

– Has financed nearly $1 billion of real estate assets, having raised over $100M in debt or equity in last three years

– Has developed and managed over $25 million of residential property (renovations and ground-up).

– Based in San Diego, California

– Say hi to him at: www.Diversyfund.com

– Best Ever Book: Law of Success


Made Possible Because of Our Best Ever Sponsors:

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Patch of Land offers a fix-and-flip loan program that ONLY charges interest on the funds that have been disbursed, which can result in thousands of dollars in savings.

Before securing financing for your next fix-and-flip project, Best Ever Listeners you must download your free white paper at patchofland.com/joefairless to find out how Patch of Land’s fix and flip program can positively impact your investment strategy and save you money.


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 fluff.

With us today, Craig Cecilio. How are you doing, Craig?

Craig Cecilio: Good, Joe. How are you doing today?

Joe Fairless: I’m doing well, and nice to have you on the show. A little bit about Craig – he is the CEO and founder of DiversyFund. He has participated in development of over 1,000 single-family residences as joint venture equity partner, as well as a lender or sponsor. He’s financed nearly one billion (with a B) dollars of real estate assets, having raised over 100 million in debt or equity in the last three years. You’ve been very busy!

Based in sunny San Diego, California… With that being said, Craig, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Craig Cecilio: Thanks for the introduction, I appreciate it. Yeah, it sounds like I’ve been busy, or it sounds like I’m just kind of getting old, not sure which one it is exactly… [laughter] But yeah, I founded a crowdfunding platform in 2014, combining my love of technology and real estate.

I started in real estate in 1998. I started doing real estate syndication in 1999. It was a different market back then, of course. When I saw the opportunity to get involved in taking an older business, such as real estate syndication, and combining technology with it and getting online, I got really excited; I’m all in, and it’s been quite a journey in the last few years of getting the platform up and running.

The last 12 months we’ve been focusing on making it a vertically-integrated platform, and that’s a platform where we are the developer or co-developer on all our projects. We chose that route – one it was for better transparency, better control, better reporting, and we just felt like that was the way to go to minimize the risk for the investor when they were trying out the platform, to give them a better user experience. We thought that would be a win/win for both parties.

Joe Fairless: Certainly a differentiating feature, because I haven’t come across too many – I can’t think of any, perhaps you can – platforms  that are a co-developer on all the projects, versus being a meeting place for the investor and the sponsor to meet, and then they just facilitate the introduction. Why did you choose that approach.

Craig Cecilio: Part of that was my experience of doing a lot of transactions, and by being a third-party sponsor or lending the money to somebody else, there is gonna be a number of deals that may go South; it’s just your plan against the odds there. And we thought that “Hey, if we did this, how do we minimize that from happening? How do we make that actually go away?” Our goal is not to have anything go South on our platform.

We kind of really thought about that hard, and we started doing a lot of research, and I started looking at “Okay, we’re talking about giving investors an alternative investment vehicle, maybe give most investors their first-time investment in real estate.” Also, giving them higher returns than they would find in a stock market, in traditional savings and bonds accounts.

We kind of put that all together and just said “It’s very risky if you’re gonna give your money to a third-party, but if we can create an institutional quality product and give a double-digit return to somebody, how would we do that?” and this is what we came up with. We said the best way to do this, to protect all parties, was to create a vertically-integrated platform.

Joe Fairless: I get from your side definitely why to do it, from a profitability standpoint, because (I’m guessing) you’re making more money as a co-developer than someone who would facilitate the process and take an asset management fee or some sort of fee… So I get that. The challenge that I’d like to ask about is – I don’t know if it is or it isn’t a challenge – having another sponsor come on board and say “Yeah, you know what, Craig? I’m in. And I’m okay with you all co-developing with me to get access to the investors on the platform.” Have you come across that challenge?

Craig Cecilio: Yes and no. I would say it’s not really a challenge. Alan (my partner) and I have been in the real estate industry for about 20 years, so we have a pipeline of up to a billion dollars right now coming at us, but we have also kind of looked at how do we take this to the next level and how do we allow that opportunity to third-parties, and we’re open to that.

We have certain stages and phases to our development, so right now we’re gonna go through our pipeline, and then reassess the market. We do this every year, reassess where the market is, and then decide, “Hey, do we stick with our pipeline? Is that pipeline correct where the market is headed, or do we go out and change direction and open this up to other people?” So it’s very dynamic, very process-driven, but we are opening up to taking other people’s projects aboard as well.

Joe Fairless: Okay, for what percent would you say are just your projects, versus you’re partnering with another developer or sponsor?

Craig Cecilio: Right now it’s 100% us, and our pipeline I would say is pretty good; that’s gonna be 100% us. But I see as soon as we hit around $400m-$500m mark, which we believe will be year 2019, then we’ll start taking in other people.

Joe Fairless: Okay. Why create a crowdfunding platform to do all this, versus just doing one-off syndications, or even creating a fund?

Craig Cecilio: That’s a good question. First, we created the platform to allow anyone, anywhere in the U.S. to invest in our projects. Right now we’re doing [unintelligible [00:08:24].29] Reg D offerings, which means anyone, anywhere who goes in who’s accredited can invest in these in real time through the website. We’re also in the process with the SEC to get the Reg A+ offering accepted, which means the non-accredited investor will be able to participate as well. We’re opening this up to people who haven’t had the opportunity to participate in real estate investing… So a lower barrier to entry.

Our barrier to entry is only $5,000 today. It’s gonna be as low as $500 we’re anticipating in February 2018. So as a customer or investor, you can learn a little bit about the real estate process by investing in our platform, as well as participate in development projects, in projects that are kind of way outside the realm of where you’d ever get contacted to participate in.

Most of our transactions and projects have minimum amounts of five million dollars of equity in them. So these are kind of very large projects that the general public does not have access to.

Joe Fairless: As far as you mentioning any accredited investor in the US can invest, that sounds like it’s 506(c), where you can publicly advertise, but you have to have a third-party verification process to make sure that they’re accredited. So why not just do 506(c) offering, versus creating a platform?

Craig Cecilio: It is a 506(c) platform. You create the platform so you create the technology, so you could have more people fulfill a project, fulfill an offering. It’s leveraging technology. It’s having people do the whole process, from soup to nuts, on the website itself.

Joe Fairless: Okay, so basically it’s automating the process.

Craig Cecilio: Exactly.

Joe Fairless: So you can put an ad in The New York Times, “Invest in this deal”, because it’s 506(c), and instead of having an administrative assistant or someone else on your team [unintelligible [00:10:33].15] that e-mail or phone call and talk about the opportunity, they just go to the website, they see the opportunity, and then they can invest directly and it cuts out the people time involved.

Craig Cecilio: Yeah, it does. And it cuts out a lot of middle-men on the way as well. A lot of these offerings get fulfilled by funds of funds, broker-dealers, brokers… It takes fees representing people to put their money into projects like this. We have a lot of funds of funds coming to us. So that person could directly go in and get that full return.

Joe Fairless: How much does it cost to build a platform?

Craig Cecilio: It cost a lot to build a platform. I think more importantly than cost is perseverance, it’s being able to keep your company going and at the same time investing dollars into the platform itself. It’s well north of seven figures, but there’s a lot of moving parts to it. You have to invest in the technology, you have to invest into the people… Then investments in real estate itself. We have our own money in some of the real estate projects. You have to invest a lot into marketing, and PR… It’s quite a bit of money that you have to put into it.

Joe Fairless: Knowing what you know now, before you got started, would you still do it?

Craig Cecilio: I knew you were gonna ask that question.

Joe Fairless: [laughs] Well, once you said North of seven figures, obviously I have to ask that question.

Craig Cecilio: I’m a pretty driven guy; I just felt like I was kind of born to do this, because I’ve been syndicating for so long, and I kind of had an idea of how do I use technology, so how do I syndicate this project and get it done more quickly, and I needed technology to do that. I had an idea way back in the early 2000’s about trying this out. So I would say, yeah, the cost would never get in the way of me. I would figure it out.

If you do something for a long period of time, you have an idea – “Okay, this can accelerate the process more.” But I think the biggest motivator for me above everything was how exclusive it was. I learned from a lot of wealthy people about this investment and saw how they made a lot of money over the years, and it wasn’t open to everyone. How did I find out about it? I had just a side conversation with someone who taught me about this, and all of a sudden I’m like, “Wow, a whole different world exists out there.”

Today it’s a little different than it was 20 years ago. To make something that’s exclusive, make it inclusive – that was the major motivator. The second motivator that I have which is just as big is “How do I do this and do something different?” We always focus on just real estate developments, returns… How do we do this and fund projects that can make an impact on society? How we could do a project to bring a different type of architecture to an area? How do we fund a project that might change some of the general landscape of blighted areas?

If you look at some of the investment that we have on our site right now, we’re kind of going down that path, choosing more socially-impactable projects. That’s kind of where we wanna focus with this. It’s not only “Give someone a return”, but “Let someone participate in doing something that’s different”, and I think that’s what the crowd allows that to happen, whereas if you went through traditional means to get that, people are more just focused on the returns and numbers, not the creativity component.

Joe Fairless: Yes, I can see that. And you read my mind, that’s actually where I was going next, on the types of projects that you’re doing. Can you give us a specific example of one?

Craig Cecilio: Sure. There’s a housing shortage in San Diego, so they had a high density bonus if you created more affordable housing units in certain parts of town. So we were able to buy a blighted property that’s in a very centralized part of San Diego, and we’re gonna build about 57 apartments and about 5,000 square feet of commercial space. So it takes this area where there’s not a lot of housing, it takes an area where it’s kind of older houses, an older area of town, and we’re gonna bring new architecture there, have some affordable units… We’re trying to make it very friendly for electric cars. It’s in a predominant LGBT community… Just kind of really bringing creativity to the area and everything.

Joe Fairless: And what are the main metrics that you look at whenever you’re assessing an opportunity like that?

Craig Cecilio: I don’t wanna over-simplify that one… Just, I’ve been around that particular market and I have the relationships, I’ve known some people for 20 years and it kind of just fell on my laps, this one, with the passage of these ordinances. So what we’re looking at is more of a value-add, how can we add value to the properties in specific areas.

In every area throughout the US there’s probably codes and opportunities out there if you really dive deep into the zoning and the entitlements in those specific communities. They’re everywhere, you just have to do the research on them. And really your value-add is where you’re going in, you’re changing the zoning or some zoning that passed, where you could take a traditional area that was one way and make it another way. So going in, when you’re buying the property, you’re kind of buying at the right price to make a profit on it, or to give it a good return.

Joe Fairless: What are some of the successful value-add strategies you’ve implemented?

Craig Cecilio: That would be one of them. Another one is bringing a new architectural design to a community. I think that would be the second one, and that’s probably a very big one. A couple other ones… We did a student housing project, modernized a property that was entitled a certain way, where for instance a property had a single-family residence on it and the zoning said you could build up to 16 units of apartments. That was a student housing project that we did, we added some value there.

What we’re trying to do now is doing the added value as well as bringing an architect or a new designer at the same time, so we’re kind of doing both – that would be the best choice if we could do that, just depending on the numbers of the transaction.

Joe Fairless: How do you pencil the numbers for bringing in an architect, to see that you have a return on investment?

Craig Cecilio: I think that comes down to more relationship than anything else… Building the right partnerships with the right people. It has to work out for them as well. They might get some good press, they might become potential partners in their next project. It basically just comes down to building relationships with the right people, creating a project that creates a little buzz, that people wanna participate in, and sharing in the benefits of that.

Joe Fairless: But you have to pay them before you receive any profit on your end, right? Because they’re doing work. Or are you saying because you’ve created buzz and you’ve positioned it a certain way, they’re not being paid cash out of pocket before you receive money?

Craig Cecilio: Oh, we make sure that we pay people. So we are paying them, but we could pay them more at a cost basis than we have to do for an added benefit if it was a complete stranger doing architectural design for us.

Joe Fairless: Okay. When you look at a project, how do you determine if it makes sense to bring in an architect and pay them, versus not bringing an architect and just maybe modernize a student housing property and not use an architect?

Craig Cecilio: Well, for us it’s a fairly simple question and answer, but to answer the question, I think for us, we’re gonna choose the project that it pencils for us… So we have the right relationships to get those projects. But for most people they don’t pencil. That’s one of the reasons where I survived real estate for the last 20 years comes in handy, and having those relationships in place to get those deals. You have your network of people finding you the deals, you have the next partners that are willing to give you the cost that makes sense… It’s just building relationships, and I think a lot of that is at the end of the day [unintelligible [00:18:57].12] looking at some of these things we might be talking about, if you’re getting started in real estate, it’s kind of developing win/win relationships with people, where everyone is benefitting together, and growing that. And to put yourself in a position where we are today, because of that.

It’s a long process, it’s a fun process, and it is a reality. But just to say “Hey, I’m just gonna go do that today”, where it took us 20 years to build out – that might not happen. I’m not saying it’s gonna take 20 years, it could take a lot less time than that, but it’s just building the relationships and the partnerships and just having an eye for it. We found our niche; properties 5 to 25 million dollar range is more of our niche of product right now, and we’re able to do that project size where it doesn’t really affect our bottom line.

Joe Fairless: For someone who’s looking to engage an architect for the first time on a project, say they don’t have the pre-existing relationships that you’ve built, what should they expect from a cost standpoint for how architects charge their fee on projects?

Craig Cecilio: It’s gonna be tough for them. You’re gonna have to save some costs in a certain way. If you’re gonna pay market for something, you’re gonna have to look to buy the property at the right cost. Is there a way you can get your construction done a little cheaper? Are you the contractor on that? Are you the real estate agent [unintelligible [00:20:19].14] are you gonna make it up somewhere? You have to kind of measure it out… It’s like, “If I’m not paying market in one area, I have to have a discount in a different area.”

That’s kind of like being a developer, juggling all those different hats and all those different analytics, and just kind of putting it all on a spreadsheet and say “Hey, if I’m gonna pay market for somebody, how do I pay less for something else to even this up for it to make sense on the spreadsheet?”

Joe Fairless: And roughly what is market, would you say?

Craig Cecilio: It just depends on [unintelligible [00:20:49].18] I don’t have an exact number for you. Each market would be different.

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

Craig Cecilio: That is a great question. It’s a hard, hard choice, and you don’t wanna go there, but put me in the position where I am today on a deal, it’s having the ability to say no. It’s just to turn down a deal. I remember the market crashed, I’m looking at a hundred deals. I might be doing one.

You’ve just gotta kind of use reason when you’re underwriting something. Don’t do a deal just because you have to do a deal. I think that would be my biggest advice, to say no. And I don’t think people say no enough. And it doesn’t make sense for some people, but I look at all those deals I passed on in the downtrend, which if I, I could have gotten in trouble on, and it was because I said no a lot. My best advice is persevere.

Joe Fairless: On the saying no front, what filters do you use? And I know there’s many and this could be a three-day conversation, so feel free to take this whatever direction you want… But what filters do you use that help you quickly identify that it is a gonna be a no?

Craig Cecilio: I would say if we’re talking about a deal that we’re gonna be the developer on, we’re the owner on, I would just say location, if I’m not familiar with that location. I wanna have a really good understanding of the location of the property. It’s like, “Well, it’s a little bit outside the neck of the woods I traditionally sold.” That’s what I would start with – are you familiar with that location? That’s where I would start.

There’s a lot of places where you can do deals, and if you’re not familiar with that, I think that’s where you start.

Joe Fairless: Why would you start there?

Craig Cecilio: A variety of reasons. If you’re in a new market and you don’t know about how to get permits, the city, the county, who’s making the decisions in those areas, you don’t have the relationships or no people have relationships in those areas…

On the resale side, if you’re reselling an asset, are you in an area that’s gonna sustain a correction? Are you in an area where you usually understand street-by-street what happens? Every city has certain cities within the city, or sectors within the city; not knowing those intricacies of those neighborhoods, you might be doing the wrong product in the wrong neighborhood. Even though on paper it’s the same city, you might just not know that specific neighborhood in that.

So there are a lot of things to look out for, but if you’re a real expert in that city itself and you’re familiar with that, you would know those things.

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

Craig Cecilio: Sure.

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

Break: [00:23:26].28] to [00:24:16].07]

Joe Fairless: Best ever book you’ve read?

Craig Cecilio: I would say it’s The Law Of Success by Napoleon Hill.

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

Craig Cecilio: I did a small 90k deal, turned it around for 375k nine years ago. It was a quick turnaround.

Joe Fairless: Turnaround in what period of time?

Craig Cecilio: 120 days.

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

Craig Cecilio: Didn’t ask for enough money, enough fees…

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

Craig Cecilio: I’ve sat on a board of a non-profit for four years. Fantastic experience. We actually won an Academy Award on one of the students that we had. It was a phenomenal experience, and I’m still proud to be a part of that.

Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about your company?

Craig Cecilio: Easy, go to our website, DiversyFund.com. A bunch of ways to check us out, a bunch of ways to communicate with us – through e-mail, through Intercom, through phone call.

Joe Fairless: Well, thank you for being on the show, Craig, and thanks for talking to us about your venture, DiversyFund, and also why you created the platform, the vertical integration component, as well as a specific example of a project that you’ve done, the housing shortage challenge that San Diego has, and your solution with the affordable housing build, with the 57 apartments, the 5,000 square feet commercial space, as well as just from a macro level, what you look for from a value-add standpoint, and then one of the filters that you use to disqualify a deal, and that is if you’re not comfortable with the location.

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

Craig Cecilio: Great. Thanks, Joe. I appreciate it.

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Marvin Washington and Joe Fairless

JF1196: From The NFL To The Cannabis Space – Hard Work And Self Reflection The Keys To Success with Marvin Washington

Marvin had an 11 year NFL career, 7.8 years longer than the average NFL career (3.2 years). Now a successful businessman in the cannabis space, Marvin says that his work ethic and self reflection is what separates himself from the average NFL career and entrepreneur. We’ll not only hear tips on how cannabis can and does help people everyday, but how we can separate ourselves from other entrepreneurs and investors. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Marvin Washington Background:

-Super Bowl Champion in 1998 with the Denver Broncos with an 11 year NFL career

-Former NFL Defensive end with the New York Jets, San Francisco 49ers, and Denver Broncos

-Crusader for the healing power of cannabis and getting the league to consider the benefits

-Leading the movement of former athletes embrace it as solution for brain injuries and painkiller addiction

-Involved in a hemp-derived CBD product company, Isodiol, where he leads the promotion of their IsoSport line.

-IsoSports line is a hemp-based nutrition line supports both mind and body wellness in training and competition, used by high profile athletes in NBA, NFL, etc.  

-Say hi to him at https://isodiol.com/  

-Based in San Diego, California


Made Possible Because of Our Best Ever Sponsors:

Are you looking for a way to increase your overall profits by reducing your loan payments to the bank?

Patch of Land offers a fix-and-flip loan program that ONLY charges interest on the funds that have been disbursed, which can result in thousands of dollars in savings.

Before securing financing for your next fix-and-flip project, Best Ever Listeners you must download your free white paper at patchofland.com/joefairless to find out how Patch of Land’s fix and flip program can positively impact your investment strategy and save you money.



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 fluff.

With us today, Marvin Washington. How are you doing, Marvin?

Marvin Washington: I’m doing well, thanks for having me on.

Joe Fairless: Yeah, my pleasure. Nice to have you on the show. Best Ever listeners, I know all you football fans know who Marvin Washington is. If you’re not a football fan, let me give you a brief background on Marvin. He is a Super Bowl champion. He actually won the Super Bowl in 1998 with the Denver Broncos. He had a long and successful NFL career, and is now involved in five different companies as an entrepreneur and a businessman. One of them is Isodiol, which I will let him talk more about… With that being said, Marvin, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Marvin Washington: Yeah. My football was my football career; I retired in 2000. After that I went to the financial industry, we started out with some big houses like Merrill Lynch, MetLife, then I went over to boutique firms, and about five years ago I got introduced to the cannabis space. I call it a space because it’s not an industry yet, because we’re not federally regulated by any of industries as far as [unintelligible [00:03:21].27] what have you.

So I got introduced to it, I did a deep dive into it, because I didn’t know the difference between THC and TLC, because I don’t consume cannabis, and I still don’t… But learning about the medicinal benefits and learning the full spectrum of what the plant can do, I went into it with both feet, and I’m happy that I’m here.

Joe Fairless: Can you tell us what the company does and what’s your role?

Marvin Washington: The company is Isodiol International, and they’re a supplier of Isolate, of CBD, and they have all types of products that they have, from water to pain cream to beauty products, to tinctures, to vapes… The full spectrum that you can have. I got introduced to Isodiol about two years ago; we talked and we did a joint venture, and came up with something that was in my wheelhouse – IsoSPort, which is a sports nutritional line that is geared towards athletes, and we have some products in there line recovery water, cream and what have you… And everybody that uses the product, they’re really happy with it.

Then about six months ago Isodiol – there’s a [unintelligible [00:04:33].09] up in Canada, and everybody put their companies in there. I’m still part of Isodiol IsoSport, but I’m part of Isodiol international, and there’s Laguna Blends, which was a skincare product company; we’ve got  Pot-o-Coffee, who makes infused coffees and teas, we have Isodiol, and we have — Jesus, there’s one more company that [unintelligible [00:04:57].28] but Isodiol was going to be a [unintelligible [00:05:02].09] not only in North America, but also in South America and Europe and Australia also.

Joe Fairless: You said a couple things… One, just for my education – what’s CBD stand for?

Marvin Washington: I’m sorry, CBD is Cannabidiol. There’s two main compounds in the cannabis plant – one is THC, which everybody knows gets you high and gets you stoned, and CBD is non-psychotropic, so it doesn’t get you high, doesn’t get you stoned, and it helps out the kids that have like the epileptic strokes and seizures, it helps out cancer patients, it helps out soldiers that PTSD, athletes that have CTE or the closed-head issue, diabetes, blood pressure – you name it. And we’re not making medical claims, these are facts; that’s what it helps with.

So that’s the main part that I’m on – the CBD side, because as I said before, I don’t consume cannabis to get high, but I definitely use CBD.

Joe Fairless: Got it. So the products that you were mentioning, like the water for athletes, things like that – an athlete in the NFL or NBA could consume that and their pee would be fine?

Marvin Washington: Yes, because in the sports league they’re testing for the THC, and the NFL and the major sports leagues over here haven’t gotten that far, because CBD is still a grey area. But water, the World Anti-Doping Association that governs all Olympic athletes all over the world, they just came out with a big announcement last month that they’re taking CBD off the banned list and athletes can use it now, and they’re gonna start using it… Because we have CBD cannabinoids in our own body. There’s something called the endocannabinoid system, and that’s the one that regulates our body and gives us homeostasis, so to speak. But this thing, I want it to be researched and developed, and we’ll see what it can really do. But I know that athletes should be taking CBD, and if there’s ever a sport that should be experimenting with cannabis, whether it’s THC or CBD, it’s football.

Joe Fairless: Yeah. And maybe rugby too, right?

Marvin Washington: Well, any contact sport.

Joe Fairless: Right, I know.

Marvin Washington: And the second-highest incidence of concussions are high school soccer players.

Joe Fairless: I would have not got that correct on a trivia question.

Marvin Washington: [laughs] Yeah, a lot of people do not know that. So anybody in a contact sport, especially when they’re putting their head in play – we want them to use CBD because the government has that patent, and the patent is patent 6630507, that says “CBD is an antioxidant and neuroprotective for the brain in relationship to concussions.” So the government knows about it, and we’re just looking for this whole cannabis prohibition then to be lifted, and we can really study this natural plant that we’ve been medicating with for thousands of years.

Joe Fairless: Let’s talk about you as an entrepreneur. Let’s take a step back from this particular company and talk a little bit more macro-level… You as an entrepreneur. So I’ve interview other NFL players or former players, and one thing that they’ve said – and not just NFL, but NBA and WNBA – is that when you’re in the professional sport, that’s your life, and really, you almost have to attach your identity to it, because it’s all-consuming. So when you leave, one of the challenges is reinventing yourself and that identity that you attached to yourself. And I’m asking you this question not because I have a lot of listeners who are former NFL players that need some help, but I have a lot of listeners who do have full-time jobs in an industry, whether it’s finance or advertising or whatever, and they’re looking to reinvent themselves into real estate, and being a full-time real estate investor… So how did you reinvent yourself and your identity from one industry to another?

Marvin Washington: Wow… I think that I might have been a little different; the average NFL career is only 3.2 years, and I played 11 years. In the middle of that career, I started thinking about what am I going to do next. The NFL had set up this internship program and I did an internship with Wall Street Journal, I did an internship with Reebok… Which gave me an introduction to the corporate world. So towards the end of my career I started thinking about what I wanted to do, and one of the best things that happened to me was when I was leaving the 49ers, I met with Bill Walsh, who’s an iconic legendary coach, and he told me “Marvin, whatever you do, get to doing it. Don’t sit around, get to doing it.”

So after a season I took about three months off, and the market corrected itself and I was kind of upset about that… I said “Maybe I can do this myself”, and I reached out to my advisor and he got me on with MetLife; starting with insurance, then I got my securities license… And the whole thing is that the lessons that I took from football, I just took them to the corporate world. So if anybody is in a different field and they wanna transition, still take whatever you’re doing and the things that you’re doing that makes you successful there, take some of those fundamentals to your next venture, your next career move in life, and go at it 100%. You can’t be half way in or half way out. Go at it 100%.

There’s gonna be some ups and downs, just like there is in professional sports, but you persevere and you keep going, and eventually that new venture becomes who you are.

I’m known more for what I’ve done over the last 15 years, versus what I did in my previous like as a professional football player.

Joe Fairless: And what are those sports lessons that you learned that you are now applying as an entrepreneur?

Marvin Washington: The biggest one is you’ve got to give 100%. You HAVE to give 100%, because a) you have to really work hard and apply yourself, because in the financial industry that I was in, if you think you’re gonna work 9 to 5 and have success, you’re misleading yourself. But I worked as much in the financial industry as I did in my football career. It was 12-hour days in my football career, and it was the same in the financial industry, and I knew not to ever give up. I knew that there were some down periods, but you have to just kind of keep your head down and keep going, and the biggest thing that I can say is even when you’re not having success, do things that are gonna make you successful.

It’s just like, if I went out in my backyard right now and planted a seed, the next day I’m back out there I still have to plant that spot, and then a tree is gonna grow and eventually I’ve got a plant I need to be consistent with every day, and eventually it’s gonna bear fruit. So that’s what you have to do in your career, because I’ve seen too many people give up, and it’s like “Did you really give it an honest shot?” You have to go, you have to keep going day after day.

Joe Fairless: When you are giving it 100% and you’re not getting the results, what do you do?

Marvin Washington: Well, make a half-time adjustment and see what you can do to be successful and be around successful people. One of the things I learned at MetLife and Merrill Lynch – if your client’s making $40,000/year, you’re gonna make $40,000 a year. I had some good mentors; always be open to learn, go into work or go into your new career  like you don’t know anything, but soak it all in there, still have the basic fundamentals, and that will give you a shot at success; I can’t say it’s gonna give you success, but I know it would give you a shot at success. But there’s no way that you’re gonna be successful without the things I learned in sports, which is hard work and consistency.

Joe Fairless: Can you tell us a story of a half-time adjustment, either during half-time or actually in business where you had to make that adjustment, and what the results were?

Marvin Washington: Well, in business, when I first started out in the financial industry – I like to dress up and look like a financial planner and advisor, but I was doing 9 to 5, and it was reflected in my paycheck. So the whole thing with me in sports – I didn’t give myself a backdoor, so my half-time adjustment was to come in early and to leave late, and to work weekends, and always be working. That’s something that I did in football – if something wasn’t working in the first half, we’d go in and make a half-time adjustment and go from there. It has to be on the fly. But you have to be able to adapt, because things would always come up unexpectedly, and as long as you’ve put in the work and you’re focused, you can overcome them.

If something is not working and you like what you’re doing, try something else or go with somebody else that has done it and that is successful, and follow the path… Because no matter what field you’re getting into, you’re not reinventing the wheel; maybe with cannabis, but you’re not really inventing the wheel, because eventually this is gonna become an industry also, so the same skillsets and the same fundamentals that are necessarily in the corporate world are gonna be necessary in the cannabis space.

The thing that I put away and I tell people is to work hard and be consistent… Whether it’s in the financial industry, the financial gods will bless you; the cannabis gods will bless you. You’ve gotta go at it. If you’re giving it a half effort, you’re gonna give that back.

Joe Fairless: As far as working hard and that consistent piece, what do you do consistently?

Marvin Washington: I have my schedule, I’m set to my habits. I get up early, and I always plan my day the day before. Then on the weekends I review what I did the previous week, and see what’s ahead and what I can do better… Because especially in this cannabis space, things change day to day, week to week, month to month, and it’s tricky in this space because rules are different with different cities and municipalities. Cannabis may be legal in Colorado, but Denver’s rules and regulations are different than Colorado Springs, and Colorado Springs are different than Boulder. You always have to be steady on your toes and malleable, but the whole thing is getting back to the fundamentals. Be consistent, have your goals, don’t go with the fads and the trends. You know what you’re trying to accomplish, so go after that every day. That’s what I do.

One of the things I learned in football is I write down a list and I study. If I’m looking at a new company or meet with new people, I’ve already done my research on them, because that’s what I did in sports, and that’s going up against [unintelligible [00:15:59].28] I have to study them. That’s the way I learned, and that’s just the way I brought some of that to the corporate world that I’m in now.

Joe Fairless: Digging in a little bit – or maybe a lot of bit – on the planning the night before and reviewing the previous week… When you plan the night before for the next day, will you tell us exactly what you do in terms of keyboard, notepad, bullet points… What does that look like?

Marvin Washington: The same thing, all of it. On my laptop, and I have an old school planner, and I visualize, because when I was in spots, the Saturday before the game or the week before the game I would visualize myself making [unintelligible [00:16:40].23] in certain situations… So this is the same thing. I visualize myself being successful. I prepared for this interview, I prepare for all my meetings that I go to, and I visualize certain talking points, and I just stay on the talking points and try to get the narrative that I wanna get across. That’s the way I prepare… And it may not be for everybody, but if you’re not prepared, I don’t think you’re giving yourself a chance to be successful… Definitely not against me, because I’m gonna know everything I need to know about your company and about you, and I’m going to use that to control the narrative.

I’ve been lucky enough to work with good people and have good companies, and Isodiol is an excellent company, excellent people… Smart businessmen, so we’re a team and we go out and we get things done

Joe Fairless: As far as now reviewing the previous week, what’s your process for that?

Marvin Washington: It’s on a Sunday. A habit that I picked up when I was with Merrill Lynch is reviewing the week and seeing what I could have done better, because one of the things is that you don’t wanna have regrets in business or in life, and seeing what you could have possibly done better. And if I didn’t close an account, I would do a review and see what could I have done different. It’s the same thing in this industry, with the different companies that I’m with. I’m always reflecting and seeing what I could have done better, because the buck stops with me.

Joe Fairless: Is it challenging to have that self-assessment on a regular basis, to identify things that you could have done better?

Marvin Washington: No, this is the way that I’ve always been taught – you always have to do a deep self-assessment, because sometimes when there’s an issue, it’s not other people; you’re the common denominator in that [unintelligible [00:18:40].13] from girlfriend to girlfriend, wife to wife, job to job, what’s the common denominator in there? So I think people should do that all the time. If you’re really honest with yourself, you can see where you can be at fault. If you do a self-assessment all the time, you shouldn’t be at fault for 100% of the time, but there are some things that you can always improve on, because everybody can always learn and everybody can always improve, no matter what age they’re at, and no matter what industry they’re in.

Once you feel like you can master something and you’ve got it, you probably don’t, and you probably need to adjust or get out of that space entirely, if you think like you know it all.

Joe Fairless: When you identify an area of improvement for yourself, what do you do at that point?

Marvin Washington: I take action on it; I try to improve it and do something better. Sometimes it can come down to something like “I didn’t listen enough.” You’re in a meeting and you wanna get your point across, but having a conversation is a two-way deal, so it’s listening and it’s talking. I like to talk, I can talk a lot, but sometimes I have to listen; sometimes I have to see things from a different point of view, instead of just my point of view. The way that I see things – and I think I’m kind of lucky like this – I see things vertically or horizontally, and then I can see them from above. That’s when I’m doing my reflection, and even thinking ahead. I’m trying to look at it in all ways and get the whole picture, to make sure that I’m getting it… Making sure that the issue is not coming from our side, or coming from me. But I think everybody should do that; I think you should do that in your relationships, I think you should do that in business, I think you should do that in your religion… Do that self-assessment.

Joe Fairless: Yeah, I love that. I completely and whole-heartedly agree with you on that. Based on your experience as an entrepreneur, what is your best advice ever to other entrepreneurs out there? My audience, people listening, the Best Ever listeners, they’re real estate investors, but we’re all entrepreneurs… As a real estate investor, we’re an entrepreneur, so what is your best advice ever?

Marvin Washington: You’re running your own business, and so you have to be true and honest and put in the hard work. You may not have success, but you’re not giving yourself a chance if you don’t put in the hard work, have some fundamentals, have some fundamental things and focus that you’re gonna do every day. Like I said, watering that plant every day, you have to do that. If you’re in real estate, if you have to make contact with 100 people a day, [unintelligible [00:21:12].26] make contact with 100 people a day in order to make 10 sales a month…

The other thing about entrepreneurs – salesmen. Because whether you call me a financial advisor, or investment advisor, or a real estate person or whatever, you’re a salesman because you have to give the check. Don’t be afraid to say no; you have to get your no, but don’t be afraid to get your no… But you have to get it. Don’t be afraid to approach anybody, be consistent in what you do, have a fundamental focus, and go in there and you’re giving yourself a chance to be successful.

Joe Fairless: I love that. We’re gonna do a Lightning Round. Your answers don’t have to be quick, and in fact one of the questions I ask you, I don’t think you’ll be able to have a quick answer (maybe). Are you ready for the Best Ever Lightning Round? First, a quick word from our Best Ever partners.

Break: [00:22:07].13] to [00:22:58].20]

Joe Fairless: Okay, Marvin, here’s the question I was thinking of… You mentioned “Put in the hard work as entrepreneurs.” You may not have success, but at least put in the hard work and be consistent, so you can set yourself up to be as successful as possible. So what’s a venture as an entrepreneur that you’ve done that completely flopped?

Marvin Washington: When I left football, I tried to be concert promoter, and I tried to throw money behind it without throwing work and experience, and relying on other people. I’ve learned since then that if I’m going to cook the meal, I should be able to buy the groceries, too. Saying that, I need to be involved at each level and be in there to make sure that I’m bringing everything I can to make it a success. That one right there, I failed at.

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

Marvin Washington: Oh, all the time. I’m known for it, whether I’m giving to the homeless every day that I see them – and I always give money. I volunteer my time; as a matter of fact, for Thanksgiving and Christmas — I can’t think of the last Thanksgiving that I haven’t given back and helped out at a homeless shelter. That’s my way of helping out humanity, because I think we were put on this earth to help each other, and the way I do that is through my charity of giving to the less fortunate. It says in the book “It’s better to give to receive”, and I take that as “I’m in a position to give, so I do give.”

Joe Fairless: How can the Best Ever listeners either get in touch with you or learn more about your company/companies and get involved with your companies?

Marvin Washington: I’m an open book. Most people find me on social media, or they can go to the Isodiol website… But I’m social media platforms and people can reach out to me; I don’t have a closed page. You can reach out to me, and I’ll answer to your question any way I can. I’m always trying to help people and I always tell people I’ll help you out any way I can, because I think to whom much is given, much is required. I keep saying that like I’m a Christian, and I’m not; I’m more like [unintelligible [00:25:08].01] but there are some fundamentals in each religion that I think you can go by.

Like I said, if anybody reached out to me, I’ll help them out any way I can, especially if they’re trying to ge into the cannabis space.

Joe Fairless: Marvin, thank you for being on the show. This has been a powerful interview for entrepreneurs, and as entrepreneurs and real estate investors, because most of us have been in other industries and we’ve needed to pivot and get into real estate in some form or fashion, and how you were able to do it… I mean, you mentioned you got a couple internships – The Wall Street Journal, Reebok, but fill in the blank, just get an internship, get that experience wherever it is, and start. As Bill Walsh told you, “Whatever you do, get to doing it”, and just be immersed in it, and identify and take away the fundamentals that you see others having success in the industry – whatever they’re doing, take those fundamentals and apply it.

Then also the sports lessons that you learned as an entrepreneur that you’ve applied to business – give 100% and work hard… It’s not a 9-to-5. Just like you had success in your previous life, it’s 12-hour days, it’s putting in the work, giving it 100% and being consistent with it. And I love the visualization aspect of this, I love how you talked about that, as well as how you do a recap for the week and identify areas for improvement.

Thanks for being on the show. I’m grateful that we had a conversation. I hope you have a best ever day, Marvin, and we’ll talk to you soon.

Marvin Washington: Thank you, take care.

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Best Real Estate Investing Advice Ever Show Podcast

JF1134: Below Market Rents Make More Money In The Long Run with Chris Heller

Chris is an agent and investor, and uses all his available resources and knowledge to succeed in the San Diego market. From REO’s to MLS listed houses, he’ll look at anything that makes money. He has a unique strategy for pricing his rental units, and it seems to work really well. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Chris Heller Real Estate Background:
-Owner of The Heller Real Estate Group Inc.
-Former CEO Keller Williams Realty International, Keller Williams Regional OP, Multiple Market Center OP.
-Sold over 3600 homes in his real estate career His team sells over 150 homes every year Based in San Diego, California
-Say hi to him at http://www.hellerthehomeseller.com/
-Best Ever Book: The Psychology of Winning

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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 fluff. With us today, Chris Heller. How are you doing, Chris?

Chris Heller: I’m doing great! I’m happy to be here.

Joe Fairless: Nice to have you on the show! A little bit about Chris – he is the owner of the Heller Real Estate Group. He sold over 3,600 homes in his real estate career; former CEO of Keller Williams Realty International, and a Keller Williams Regional OP, and Multiple Market Center OP. What does OP stand for?

Chris Heller: Operating Partner. It means that I own the majority of a market center, which is what we call an office or a region of the company.

Joe Fairless: Okay, got it. Based in sunny San Diego, California. With that being said, Chris, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Chris Heller: Sure. I got my license when I was 20 years old, in 1983; I was a sophomore in college. Real estate has been my one and only career. I still have a team in San Diego, the home seller team that’s been selling homes for all these years. We’ll sell 160-170 homes again this year.
The last several years I’ve spent my time working with Keller Williams at our headquarters, helping run the company. I’m no longer doing that; now I’m focused on building my businesses, but also looking at new opportunities and new ways of impacting the real estate industry.

Joe Fairless: So what’s the primary way you make money right now?

Chris Heller: The primary way I make money is off my real estate businesses, my brokerages, my team, and my real estate investments.

Joe Fairless: Let’s talk about those investments – what type of properties do you invest in.

Chris Heller: My philosophy has always been about the same, and that is they’re opportunity purchases. I’m just always looking for the opportunity to acquire properties at a good deal, that make sense, that are quality properties and make great rentals. They’re anything from single-family homes to condos to duplexes… It’s not so much the type of property as it is the opportunity and the type of deal.

Joe Fairless: That’s interesting. What would be the type of opportunity? If you could maybe give a specific example, that would help clear up the ambiguity of opportunity purchases.

Chris Heller: Sure. When we’re talking to as many consumers as we talk to every year, there’s always opportunities that come up. There’s people that say “Hey, look, I just want this for my home” or “As long as you can get me this, I’ll sell the home.” Or “Will you just buy my home? I need it quick, I don’t wanna put it on the market (for whatever reason). As long as I can get this, it accomplishes my goals and I’m happy.”

Many of those are good opportunities, and as long as the client understands that they’re foregoing additional potential profits by not marketing the property and exposing it to the whole market, and they’re good with that and willing to sign off on that, then it becomes a win/win situation.

Joe Fairless: Will you give us an example of a property you’ve bought in that scenario?

Chris Heller: Sure. I actually have a couple that I’m looking at right now – two different ones – in North County and San Diego. In both cases, the seller has said “Hey, can you just buy the property for this?” So we worked out the price — sometimes it’s what they want, because what they want is fair; sometimes what they want won’t work, because I have to factor in what I might need to do to the property to remarket it or to turn it into a rental… So I disclose that to him, and if they’re good with that, then I move forward and buy the property.

There was one I bought at the end of last year, which was a property near the beach, and [unintelligible [00:04:43].21] 1.1 million dollar property, and that was a really fair price. I knew I’d need to put in some money to fix it up, which I did… So she got what she wanted, I got the property, I fixed it up, I rented the property very quickly for $6,000/month, and it’s a great quality property for a long-term hold.

I have other opportunities — depending on the market… In a down market they come many times in the form of foreclosures or short sales in down markets; we took advantage of that and bought several shortsales in the last down market… There were some foreclosures, and those are properties that we were able to buy.

I’ll give you a couple of quick examples. One in Carlsbad, a townhome for $225,000 in 2011 that now is selling for $500,000. It had positive cashflow from day one. And I have some foreclosures I bought in the ’90s, some of them are paid off now… I bought them so long ago.

When I say opportunity purchases, those are the types of opportunities.

Joe Fairless: Back to that one example though, the 1.1 million dollar property which was, as you said, a fair price, and it rents for 6k… You said it was a good long-term hold – I think that’s the phrasing you used. Just from a cashflow standpoint, from a high level… I just look at the numbers, and for any property I just take the rent, divide it by the all-in price, and then you try and be somewhere between 1% and 2%. With this one it’s 0,5%, so are you able to cash-flow on that?

Chris Heller: That one’s about a breakeven. When I bought that in December, the loan I got on it was 3,25%, and that was with I think 25% down. So that one breaks even. But I can put that property on the market right now and probably sell it for 1.5. So I factor in the fact that I was also buying something at a really good price. I don’t plan to sell that, because it happens to be in a neighborhood and on a street that I really like and I have some other property in.

I have four kids that are becoming grown-ups, and someday some of these properties might be opportunities for them.

Joe Fairless: How do you manage your portfolio?

Chris Heller: I assume you mean literally manage, as in property management?

Joe Fairless: That’s correct, yes.

Chris Heller: So I have a girl on my team that handles the properties for me, and she’s been managing properties for 20 years for me and for some of my clients… So she does that. If I didn’t have her, I would hire someone to do it. It’s not worth the headache. If someone has one or two properties, that’s one thing, but when you get past that, it makes more sense to pay someone who’s really good at doing it, so you don’t have to deal with the hassle and the headache.

Joe Fairless: What’s been a challenging investment property that you’ve purchased? Can you tell us a story about that?

Chris Heller: Most of them have not been challenging for two reasons. Number one, I make sure they’re quality properties in quality areas. And with that, it’s easier to get quality tenants. The other reason that most of them have not been a challenge is that we really do a great job at not only screening the prospective tenant, but making sure that we price them in a way where we have a lot of demand for the property; it allows us to be really selective, and the people that rent them know that they’re getting a good deal.

Now, the reality of it is they may be paying $100 or $200 a month less than the market, but that’s a big deal for them, and if it allows me to get a much higher quality tenant, I’ll take that every day.

But to answer your question, if there was one — I had a fourplex in the ocean-side that was in a low-income area… These were four little studio bungalows, and three of them were great tenants, one of them turned out to be a guy on drugs that was a challenge constantly, and the eviction was a challenge, and all those things. But with all the properties I’ve owned over all these years, I’d have to think really hard about one that was a challenge. And in retrospect, it wasn’t that big of a challenge.

Joe Fairless: Yeah, that’s pretty good. I haven’t thought of it that way, how you described where you priced it so that you have a lot of demand – not necessarily with the primary objective of getting a quick tenant in there, but the primary objective of actually having a lot of people to select from, because ultimately we lose the most amount of our money (typically) on tenant turnover when we have an investment property. So I suspect, since they know they’re getting a good deal, they are likely to stay longer than what a tenant would if they were paying the market rate or above.

Chris Heller: Yeah, you hit the nail on the head. The losses are in the vacancy between tenant turnovers. I always do everything we can to minimize that. I’d rather have people immediately wanting to move in and take the properties…

As an example, I closed on a new construction in out of state, and put that property up for rent, and within three days had someone who wanted it. This was last week, actually… And they wanted it as of 1st August. Because I knew I had priced it so well, I was able to say “I don’t wanna wait until 1st August. I think I’ll have someone else take it before then”, and they said “Okay, we’ll take it 15th July.” So that’s a good way to minimize the downtime… Because if you have a property that rents for 2k or 3k/month and it sits for one month, you’re better off offering it out for $100 or $200/month less and gain it then quicker [unintelligible [00:10:29].13]

Joe Fairless: What’s been the best-performing deal that you’ve done, from an investment property standpoint?

Chris Heller: There’s different ways to measure performance. There’s just the black and white of it – the return… But another way to measure performance is on the amount of hassles or non-hassles, or turnover… I have one property that I bought in 1993 that has the same tenant in it from 1993. They’ve lived there all of those years, and they’ve done as many or more improvements to the property as I have, and treated it like their own house. In my mind, that’s a really well-performing investment.

I typically take a long-term approach. There’s the occasional ones that we’ll buy specifically for the purpose of turning or flipping, but most of them are with the idea of a long-term hold. In Southern California, if you buy them right, [unintelligible [00:11:26].17] like I mentioned that townhome that I bought in 2011 or 2012 that’s more than doubled in value, or some single-family [unintelligible [00:11:34].29] that I purchased in that same time period and that have doubled in value – by any measure, those would all be considered well-performing.

Joe Fairless: I hadn’t thought of it that way, when you defined performance in different ways, like one of them is the non-hassles. The 1993 property – is that a single-family house?

Chris Heller: Yes.

Joe Fairless: Okay. Did you inherit that tenant, or was that someone that you brought in?

Chris Heller: No, it was a property I bought as a foreclosure and I had to remodel it. It had been owned by a lady that had a lot of cats, maybe hundreds… [laughs] And we had to completely gut it and sterilize it and everything else. Then we put it on the market, we got the tenant and they’ve stayed over since.

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

Chris Heller: The advice that I’ve gotten – that’s how wealth was created in real estate. As real estate professionals, we make a living off our commissions, but we created wealth through our investments. The advice that I’d give myself or if I’m asked for it by others is to make sure you get a great buy. There’s no shortage of great properties, but there are not always great buys. And not being emotional about it – be objective, and make sure that… We’ve all heard the old adage, “You make your money going into the deal, not coming out of the deal. You make your money on the acquisition, not on the sale.” I believe that to be accurate. So the advice is, again, to make sure it’s a good buy and that it makes sense.

The only time that I ever bought properties that weren’t at least a breakeven were when we were in a rapidly appreciating market and I knew that the market was appreciating so fast that that would more than overcome any negative cashflow I had. But as soon as I’d see that the market is starting to change, those would be the properties I would always sell. By 2005 I could see and sense that the market was gonna shift, and I looked at all the properties I owned at that stage and asked myself which ones am I not willing to carry for the next ten years? And there were four or five that I had negative cashflow or would be problematic for ten years, or didn’t have good mortgages, or whatever the case might have been… So in 2005 those properties were sold.

Joe Fairless: What would you look for now to identify a shift in the market, and do you see one?

Chris Heller: I’ve always looked at the same thing, and that is simply supply and demand. In any given market, I’m looking at how many homes are for sale, how many went pending in the previous 30 days… And when you’re looking at that over time, month after month after month, you start to see trends. You start to see demand starting to wane, or supply starting to grow, and those are the indicators of eventually prices changing and the market shifting. So that’s what I look at.

I think your second question was when do I see the market shifting…?

Joe Fairless: Yeah, do you see it shifting now?

Chris Heller: The market always shifts in a finite period of time, say a three, or four, or five year period of time. There might be a general trajectory – there might be an upward trajectory or a downward trajectory, but even during those upward trends or those downward trends, there’s times where it flattens out, or speeds up, or slows down, and that’s [unintelligible [00:14:52].04]. What most people talk about when they talk about a shifting market is the general trend of the market, the complete market trending in a different direction. So we haven’t seen that start to happen yet, but we’re closer to that happening than not. The only time you know you’re at the top of the market is when prices start going down; that’s the only true indicator.

The only true indicator of being at the bottom of the market is when you see prices going up, and you know that was the bottom. So it’s impossible to time it, but you can see when it’s starting to happen and watch the trajectory or the trend start to shift and change. I don’t think for the remainder of 2017 the market is gonna change much from where it is right now. 2018 and 2019 I think it’s going to slow down, or inventory is gonna grow and the rate of sales will start to drop off – that’s when it would happen, but there’s no guarantee that that will happen. It’s a different world we live in now, and there’s different factors that impact the market… And the demographics are changing, and we have to take into account those demographics. If they weren’t changing, we’d probably start to see the market already shifting, but there’s a big group of buyers that over the next 3-5 years will be entering the market that could prolong a strong market.

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

Chris Heller: Sure.

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

Break: [00:16:11].13] to [00:17:06].23]

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

Chris Heller: It’s funny, I just re-read it again and gave it to my daughter to read – possibly The Psychology Of Winning would be one of the best.

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

Chris Heller: Personal deal?

Joe Fairless: Yup.

Chris Heller: I was cold-calling out of area owners, I talked to a guy in Chicago that owned a house in my marketplace; he said, “Yeah, I actually was just thinking I wanted to sell it, I just had an appraisal done. It appraised for this”, and I said “Great, I’ll buy it for that.” It turned out to be a great investment.

Joe Fairless: Simple enough. How many calls did you have to do to get to that point?

Chris Heller: I called for 29 years, so… [laughter]

Joe Fairless: Hundreds…

Chris Heller: Thousands of calls.

Joe Fairless: Thousands, yes. [laughs] What’s a mistake you’ve made on a transaction?

Chris Heller: Hundreds and thousands of them. Everything, from representing that there was a refrigerator included when there wasn’t, to — there’s so many, I probably try to block them out. I know there’s been some bigger ones, and I would definitely focus on minimizing them, but things still happen. I don’t know, fortunately there haven’t been a lot of big ones; it was a lot of little ones.

Joe Fairless: On just the refrigerator example, what’s the solution, when you say there’s a refrigerator included but there’s not?

Chris Heller: I always take responsibilities for our mistakes and own them. If I have to buy a refrigerator because that’s what the expectation was, that’s how the deal was represented, then I’m buying a refrigerator.

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

Chris Heller: In every transaction there’s an opportunity to give back, and that is the quality of the service and the experience that it provided the client. So that’s one way that I always give back… And the other agents that are involved, too – making sure that they have the best experience possible. But I’ve also done lots of things like making donations for every home I’ve sold, at certain times, in certain years, to different causes, whether it’s a Boys & Girls club, or different charities.

Joe Fairless: How can the Best Ever listeners either get in touch with you or learn more about your company?

Chris Heller: Our website is HellerTheHomeSeller.com, or call us toll-free at 800-800-2978. And lastly, they can e-mail me at Chris@HellerTheHomeSeller.com.

Joe Fairless: Chris, thank you for being on the show and talking about your opportunity-focused investing mindset, where the purchases you’ve made have been opportunity purchases – number one. The second thing that stood out is what we talked about earlier, where you price your rentals so that there’s a lot of demand, therefore you can be more selective and the tenant or resident knows that they’re getting a good deal, therefore it’s likely they will stay longer and save you more money in the long run. And the third thing that stood out – among many others – is when I asked you about performance… You mentioned returns, but then you also talked about different ways to analyze deals, and one of them is how much of a non-hassle they are, and you referenced the 1993 tenant who has been there since… Well, since 1993.

Thanks for being on the show, thanks for talking through these things among others. I hope you have a best ever day, and we’ll talk to you soon.

Chris Heller: Joe, thank you. The pleasure is all mine.

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Best Real Estate Investing Advice Ever Show Podcast

JF1103: Using Your Money Wisely and Staying Ahead of the Curve #SituationSaturday with Sarah Davis

Sarah’s first company was when she was in high school, picking lice out of people’s heads, for $10 a head! Who would have thought? Now she sells used designer handbags online and has been making money from the start. Hear about the specific situation that she is here to share with us today. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Sarah Davis Background:
-Owner of ‎FASHIONPHILE, the largest and oldest handbag reseller online Featured on Good Morning America, Good Day LA, and Forbes
-On track to sell over $60 million this year and have always been profitable
-Their app that helps you earn cash for your luxury bags
-Based in San Diego, California
-Say hi to her at www.fashionphile.com

Made Possible Because of Our Best Ever Sponsors:

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

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


Joe Fairless: Best ever listeners, 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 fluff.

I hope you’re having a best ever weekend. Because today is Saturday, we’ve got a special segment for you called Situation Saturday where we’re gonna hear about a sticky situation that our Best Ever guest was in and how she overcame it. With us today to talk through that – Sarah Davis. How are you doing, Sarah?

Sarah Davis: Hi! I’m doing great, thanks.

Joe Fairless: Nice to have you on the show. A little bit about Sarah – she is the owner of Fashionphile, who has built a company from scratch and is now the largest and oldest handbag reseller online. They’re on track to do over 60 million dollars of sales this year, and have been profitable from the start. She’s been featured on Good Morning, America, Good Day, L.A. and Forbes among many others. She’s based in sunny San Diego, California.

The focus of our conversation today will be the sticky situation that she was in when she got started. Her and her husband were in school and they didn’t have any money coming in, they had money going out, and she has built this company. As real estate investors, we’re entrepreneurs, right? And we can learn from fellow entrepreneurs for how they overcame the challenges of starting from nothing and growing a business; that’s gonna be the focus of our conversation today.

Sarah, with that being said, before we get into your story starting from nothing, can you just give the Best Ever listeners a little bit more background on your company, so that we have some context?

Sarah Davis: Yeah, we sell pre-owned (used, basically) luxury handbags: Chanel, Gucci, Louis Vuitton, Hermes… All of the brands. Basically, the favorite luxury brands into the really high-end sector. We don’t sell Coach and [unintelligible [00:03:01].17] and Michael Kors and [unintelligible [00:03:04].10] – those are all great companies, but we don’t even sell those more accessible luxuries (that’s what they call it), but we’re talking about the really higher upper end, average selling price about $1,300-$1,400 purses, but used.

People said we’re kind of like [unintelligible [00:03:17].14] for luxury bags. You bring us your Chanel handbag you used for a couple of years and we write you a check for $1,400, or whatever that is. So that’s what we do, online.

Joe Fairless: Got it. Now let’s rewind to the very beginning… Tell us your story.

Sarah Davis: My husband and I were both in school – I was in law school, he was in medical school, so it’s not like we had a future [unintelligible [00:03:40].18] We thought a direction where we were going, and I’d never really thought of myself as a business person or an entrepreneur, although I was one of those types that had started lots of little businesses; my mom called me “industrious” when I was growing up. She just didn’t have the vocabulary, she wasn’t thinking about [unintelligible [00:04:00].21] When I was in high school I started a company taking lice out of kids’ heads for $10/head. That’s just weird. Or like — I just always had businesses that I started and I was always trying to make a buck on the side.

I’m in law school, my husband’s in med school, just writing checks and bills, and things are adding up, and student loans… We had no money coming in, so I actually had heard about eBay, and started selling some of my own stuff on eBay; really long story short, my husband was on Price Is Right, because he’s in the notary, and there was notary people. He [unintelligible [00:04:36].23] bunch of stuff that we really didn’t use, so we sold that on eBay. That’s the first stuff we sold.
Then we just started selling my own things, and what I realized right after that was that women’s clothing accessories do okay, and especially things with a name brand really keep their value… So when we really just kind of whittled it down I realized that my size for pants may be a size [unintelligible [00:04:56].13], so clothes are kind of a drag, but that handbags really keep their value. You can sell them really close to retail, depending on what the condition is, and things like that. So I whittled it down to just selling purses. Right from the get-go, I realized I was on to something good. Like I said, women just love purses, so it’s not a hard thing to sell, and especially women love a branded purse, a Chanel or a Louis Vuitton authentic bag.

When I started selling, there was nobody else doing what we were doing online. I think women were really clamoring for a source for authentic used luxury handbags, because the brands that we sell – they don’t discount at all. Louis Vuitton – they don’t have a sale ever. There’s no [unintelligible [00:05:42].01] there’s no outlet, there’s no wholesale. The only way to get a Louis Vuitton authentic purse for less than retail is to either work for the company, and there’s a limited number you get, or you buy used. Those are your two options.

Like I said, when we started doing this, there was nobody else doing it. You might go to your local consignment shop and you’ve got like eight purses in there; one of them is [unintelligible [00:06:06].04]. So just the idea of building a place where people can really trust that what we’re selling is authentic, and they’ve got a great selection — I consider it like the muffin shop of consignment shops. The best section and only the best pieces of your local consignment shop times like a thousand and online.

Now I think we have like 10,000 items on the site. We’ve built this kind of machine where if you want a used luxury handbag, depending on how much money you’ve got or what kind of condition you want, you can get any type of range of thing. So we kind of started from that… From the early days, I sold my own stuff first, and then I used some of the money that I had there, which was in the hundreds of dollars – we’re not talking about thousands of dollars – to actually buy things from consignment shops. I’d buy a purse for a few hundred dollars, and then I’d sell that purse. Then I’d take the money that I made out of that sale and I’d buy another purse, one at a time.

Joe Fairless: And you were selling them on eBay, or on your own website?

Sarah Davis: I was selling them on eBay. In the beginning, everything was on eBay. It was actually a great platform. It still is a decent platform. Today there’s lots of really great platforms for whatever you do, where I was able to watch tutorials and learn from other people and see what other people were doing, and research pricing and all that… I consider eBay kind of like my MBA. I never went to business school; like I said, I went to law school. But I learned a lot about selling used items [unintelligible [00:07:41].29] I just actually learned on eBay. Anyway, I did that for a couple of years and started hiring people to help me, because in the early days it was just me. I had PTSD sometimes, because I’ll have these memories of the time — I had a family, I started having kids, and I remember going to the post office with a stroller filled with boxes, and a kid strapped to my belly, trying to keep the closing time at the post office…

Now we’ve got like 90-something employees, we’ve got multiple locations, and we have a 30,000 square foot building in Carlsbad. It kind of looks like Willy Wonka for luxury bags. It’s [unintelligible [00:08:19].14] it’s so fun.

Joe Fairless: So now let’s talk about the challenges. Name the top three challenges you’ve come across.

Sarah Davis: Like I said, I started myself, and lots of it — I had no background; I didn’t have training, I didn’t know what a [unintelligible [00:08:38].20] I really didn’t wanna know… So basically, just kind of getting myself, while I was in law school – like I said, I didn’t give that up; I passed the bar, I graduated from law school and really wanted to finish that, but at the same time I had a lot to learn. The thing that’s amazing nowadays is there’s so many great resources; there are books that are not only filled with amazing information, but that are easy to read and enjoyable, that didn’t feel like punishment for me to read. Now there’s video tutorials, and there’s information online with websites, and you can take classes from universities for free online… There’s all those resources. So I never went to MBA school; I always in the back of my head was like “That sounds like a lot of fun, maybe I should do that. Maybe I should think about that.” But really, I learned so much, and really everything I needed to know, from reading, from all these resources and from what was on the internet.

I had in the very beginning kind of like — they talk about impostor syndrome, where I’m like “Okay, I own this business, and I’m acting like I’m this businessperson, but I have no idea…” And nothing has changed as far as my degree or anything like that, but I don’t feel like that anymore because of the training that I got myself. [unintelligible [00:09:57].18]

The second thing was I never really felt like money was a challenge in the beginning, because there was nobody else doing what we were doing, and like I said, I would just invest the money that I’d make back in the business, and we slowly grew it that way; there was never a profitability problem, we were always profitable, but we didn’t have some of the — when you get a bunch of VC money and there’s like money flying out and there’s not a lot of thought put into where it’s all going precisely, and maybe money is wasted in different areas that wouldn’t be if it’s your own money. When it’s your money out of your own pocket – we were so careful about every purchase that we make and every dollar we spent.

So that wasn’t an issue in the beginning, but it actually became more and more of a challenge as people noticed that what we were doing was working, and that we were growing. People could see that there’s money to be had in this niche, so now we’ve got lots and lots of competitors. All of the time someone will send me a link, or I’ll get a Google alert, something will pop up and it’s another company that was started, and “Oh my gosh, this one [unintelligible [00:11:04].09].” Some of our company has up to over 173 million dollars – one of our competitors has raised that much money… So how do you compete, when we’re bootstrapping? I felt like that’s the direction we should go.

So just really trying to use our money wisely and to continue to stay ahead of the curve. Like I said, there was nobody else doing that when we started, but you can very quickly lose your position in the market and that advantage that we had when somebody comes in who’s got a lot of money. We’ve been able to maintain our growth trajectory, and really just by paying real attention to those numbers and making sure that we have people on our teams that are really good with numbers and that we’re smart with the way we spend our money.

I read something – I think Malcolm Gladwell… I think it was actually something he wrote in the New Yorker, where he’s talking about planes, and how small planes crash, and he’s talking about the fact that when these pilots will be flying, and just flying in an area that’s really murky or foggy, and they use the plain of the earth as a way to keep balance. They wanna keep their wings balanced with the plain of the earth. And if they just start to lose that sight, they try to look ahead and they try to [unintelligible [00:12:22].10] themselves and they end up in a tailspin and they go down. And he talks about the fact that if those pilots would just look at the instrument and not look around… If you look around, you get stressed out – it’s dark, it’s foggy – so look at the instruments that you can actually fly that plane without visibility.

We stress out — just in this last week we found out that one of our competition have raised another 50 million dollars… And you can just stress yourself out and say “What is going on here? [unintelligible [00:12:50].06]” And what we realized is like “Okay… Let’s just look at the instruments. We’re doing pretty good here.” Just checking everything to make sure that we’re all — you know what I’m saying? Just to make sure that we’re on track… That we’ve got a plan, we’ve got a direction we’re going and we’ve got a speed that we wanna get there, and rather than get stressed out about the things that you might see around you or hear, you just have to watch the instruments and look at your numbers, and pay attention to those things and pay attention to metrics and goals you’ve set for yourself, and then you can say “Okay, we’re doing okay”, and not allow yourself to get really wrapped up in that. I think that’s been really important.

I think just trying to stay — again, when you’re really super budget-conscious, like we are, where money is an issue and you’re trying to really be careful with your money, just making sure that we’re using it smart in the way that we do our marketing and social media, and really trying to develop a brand.

For us, we’re like — we recognize that people who want a Louis Vuitton purse or a Chanel purse, or [unintelligible [00:13:51].11] or a Gucci purse – those people care about brands. They care a lot about the quality, and they become very brand loyal. They like the history of it, and they like the story, and again, there’s different things  that make them love that brand… So we decided early on that we want to be a brand like that – a brand that they appreciate our story, they appreciate the fact that they can trust us, they appreciate our customer service, that we have a reputation, and just that we become an actual brand… Not just a company selling bags, but they become loyal to our brand, because we are loyal to them and we just kind of do a lot of those things. Part of that means that we should be very involved in social media — and I actually do all the social media myself still.

A couple of times we thought about having somebody else do our Instagram, our Facebook, and we realized that at this point it doesn’t take me long… I’d be walking around the office and I’ll see something, I’ll snap a picture and I’ll write a little thing, and it’s real, it’s authentic, and it’s my voice, and it makes sense to the business.

I think people appreciate feeling like they’re getting a secret, behind-the-scenes view from my voice, so that’s been a helpful way that we can keep the word out and have our buyers and our suppliers — they all feel like they [unintelligible [00:15:10].11]

Those are, I think, three challenges that we’ve had and ways we’ve addressed them that have made us actually stronger in the end.

Joe Fairless: With your marketing and social media – you said earlier that you pay close attention to the numbers… What numbers do you look for from a “This was successful” standpoint?

Sarah Davis: One of the things that is really important to us is that — there’s lots of ways online that you can manipulate all those numbers, where it’s just not real. You can run contests, but there’s lots of other (even little black hat) ways that you can grow your numbers that they’re not gonna end up benefitting your business. We want followers and people engaged that actually care about what we do, that potentially are buyers or suppliers, or aspire to be that.

Our goals are a little bit different than maybe other people’s goals that are just looking for awareness building in the grand scheme of things… Because you can really ramp up numbers really quickly in using black hat methods that we just don’t agree with. So we have tried to very slowly but surely just use tools like engagement, making sure that we’re holding an online conversation, that we’re engaged with the people that are commenting and sharing, and that we’re appreciative and generous in that.

So for us, we keep close tabs on things like Google Analytics. Google allows you to monitor very closely when you’re doing online sales — we can see where all of our sales come from. We can see that “Oh, this percentage of people found us from an organic Google search” or “This percentage of people found us from paid Google ads” or “This percentage of people came to us from a Facebook post and then made a purchase.” We can track all that, and it’s actually awesome to see that.

What we sell isn’t really an impulse buy; if we were selling cute $25 T-shirts, we might put up a Facebook ad and sell 25,000 shirts, because it’s a small price and you can just impulse buy.

For us, part of it is how many things people buy from us every year or two years, and we just try to make sure that we are keeping people engaged so that the next time they’re looking for authentic bags, that we’re the ones they will come to.

It’s not that we’re gonna put up a Facebook post right now or an Instagram, and then all of a sudden we’re just gonna sell 200 purses… What we sell is something that lots of people think about a little bit more. It’s like “Oh, you want a $4,000 purse? Maybe I’m gonna save, or maybe I’m gonna get it for my birthday.” We want you to remember Fashionphile when that comes, because maybe you are ready to  buy at that moment.

Joe Fairless: Sarah, how can the Best Ever listeners get in touch with you or your company?

Sarah Davis: I respond to all of our social media posts, so on Facebook, Instagram, Twitter – Fashionphile. If you have a question in particular, you can find me at Sarah@fashionphile.com

Joe Fairless: And the Fashionphile website link will be in the show notes page, so Best Ever listeners, you can just click that and check it out.

Sarah, thank you for being on the show. Thanks for talking about your journey as a fellow entrepreneur and the three challenges that you have come across from a macro level. One is just learning what it’s all about, all the different aspects of the business – not having a formal training, but having kind of a hard knocks training. Two is that investing money back into the business and knowing that really you’re competing against some companies that are funded with more dollars than yours, so how you can be nimble and compete at that level, and your solution was to pay close attention to the numbers and be smart with how you’re spending the money. You talked a little bit about the types of metrics that you look at.

Then three is being really focused on building a brand that people care about, and that’s why you personally do the social media stuff, to make sure that your voice is being shown on the brand channels and the engagement levels there.

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

Sarah Davis: You too, thanks so much. I appreciate it.

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Terrell Fletcher and Joe Fairless

JF1102: When You Feel Like You’ve Lost it All, or Have Lost it all, You’re Not Alone – with Former NFL Running Back Terrell Fletcher

When he was done playing football, Terrell had to figure out who he was. It took him about 5 years to learn what he was all about. When Terrell lost everything around the 2008 market crash, somehow he found himself and his purpose. It is impossible to not be inspired after hearing him speak! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Terrell Fletcher Background:
– Former American football running back in the National Football League for the San Diego Chargers.
– With the Chargers he rushed for 1,871 yards and gained 1,943 yards receiving
– He currently serves as the Chaplain for the Charger organization.
– As of March 2012, he is the Senior Pastor of the City of Hope International Church in San Diego, California.
– He shares a message of transformation and action, motivating audiences of all ages to live to their full potential and realize their dreams.
– Just released newest book, The Book of You, where he shares his transformation from nearly losing everything to discovering his purpose. https://www.amazon.com/Book-You-Discover-Transform-Future/dp/1531835112
– Based in San Diego, California
– Say hi to him at http://terrellfletcher.com/

Made Possible Because of Our Best Ever Sponsors:

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

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


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 fluff. We’ve spoken to a whole lot of people – Barbara Corcoran from Shark Tank, Robert Kiyosaki (Rich Dad, Poor Dad), Emmitt Smith (former pro football hall of famer), and we’re gonna keep with the football theme/entrepreneurial theme with Terrell Fletcher. How are you doing, Terrell?

Terrell Fletcher: I’m amazing, how are you today?

Joe Fairless: I’m amazing, I love your energy, it’s so much fun. I am very grateful to be speaking to you, and more importantly, I am glad that the Best Ever listeners are gonna share in our conversation.

A little bit about Terrell, in case you have been living under a rock and you don’t follow football… He is a former NFL running back for the San Diego Chargers, and now he has transitioned since — let’s see, in March of 2002 I believe you’ve been the Senior Pastor at the City of Hope International Church in San Diego, California. Is that right?

Terrell Fletcher: 2006, but yes, [unintelligible [00:08:38].17]

Joe Fairless: 2006, okay. And when did you stop playing for the Chargers?

Terrell Fletcher: ’03 was my last year. We had this great talent named LaDainian Tomlinson that came in around 2001-2002ish, and he put that whole running back room out of business.

Joe Fairless: I wanna talk about from ’03 to ’06 what you were doing and how you transitioned, but a little bit more about you, real quick, for the Best Ever listeners. Terrell just released his newest book, The Book Of You, where he talks about his transformation from nearly losing everything (and we’ll talk about that) to discovering his purpose. It is available on Amazon now, you can go to it… Actually, we’re gonna include a link in the show notes pages so you can simply just click that link and go straight to Amazon and get it.

Let’s talk about the 2003 to 2006 period when you had left NFL but you had not started as a Senior Pastor… What were you doing?

Terrell Fletcher: Well, a lot of soul searching, to be honest with you. What I did when I was playing – I tried my best to prepare myself for the day that I wouldn’t play. My last two years — like I said, LaDainian was so amazing, and he was really starting to turn into the guy that would eventually be the hall of famer… And I had time to explore other parts of myself that football takes away from you.

We spent so much time with football that you really don’t get a chance to find yourself. All you do is find the football player in you, but you don’t get to find yourself. I had a little extra time to do that. One of my loves was real estate, one of my loves was public speaking, and my other love was inspiring and motivating people. During that three and a half year period or so, I tried to hone those skills down.

My brother and I, while I was still playing, my business partner and I formed a small company, we started to acquire real estate back in St. Louis where I’m born and raised. We rehabbed strip centers and houses, and we kind of jumped knee-deep into real estate, and that’s what I did during those years. I was trying my best to be a mogul and to be a TV personality with football, while at the same time exploring who Terrell Fletcher was.

The funny thing about football is that football is an identity to itself; to become a football player is an identity to itself. So I really wasn’t looking for a new job, I was really looking for a new identity. “Who in the world is Terrell?” and I just put my hand in a lot of things that I could do, and those were the things that I spent my time doing, hoping one or two of them would shake out.

Joe Fairless: As you were testing different things, identifying what that new identity was, since football had been your identity for so long, what did you start gravitating towards and what lessons did you learn along the way?

Terrell Fletcher: Interesting thing, I started gravitating towards people. Football is a funny, funny world, because that world centers around the team and you, and when you separate from the team, you have your secondary team, which are your handlers – your agent, financial advisors, your friends, your [unintelligible [00:12:20].03] and somewhere in that space, you’re the center of it. So without even realizing, even though you might give back a whole lot, you might not realize it, but when you become the center of your world, you become selfish.

I needed that time to rediscover the kid that handed out sandwiches to the poor, the kid that didn’t mind helping an old lady cut her front lawn back in Missouri. I needed to reattach with that, and that’s what I found again in those two and a half years. I realized that I could do a lot of things, but I wasn’t purposed for everything I could do. Being able to perform it doesn’t necessarily mean that’s what you should be doing.

I performed pretty good as a sports announcer, but my heart wasn’t connected to it. I performed pretty good as a sports coach, but my heart wasn’t there. It wasn’t where my purpose was. And I found myself just connecting with people… Inspiring, challenging, pushing – almost being a coach in a different way, except a coach toward being your best self, having a great life, chasing the dreams that’s inside of you, and not settling for what everybody else thinks you should be operating in.

I learned this the hard way – people will root for you at the level of their expectation for you. And if their expectation for you is lower than your capacity, then you will feel a void and feel insignificant, even though they’re applauding you. People will applaud you at average, man, so you can’t go off of what everybody else thinks; you have to find that thing in your heart and chase it, because that’s where you find real satisfaction… And that’s what I did. That’s what I had to do for about three and a half, four years, five years – chasing and digging and doing self-introspection and finding out “Who am I? What do I have to offer this world and what core tenets of life am I gonna operate in?”

As that started to shape itself out, I came up with this idea that I’m here to motivate, educate, inspire and entertain every person that I come across. I wanted to make sure that no matter what business venture I got into, I was able to motivate, educate, entertain and inspire every person that I ran across, whether it was a Ministry, or rehabilitating a community or what have you, I felt that this was a part of my job, to be able to do that.

So that’s what I had to do, and that’s what I did. It was a journey, it’s still a journey, but that’s what I had to do.

Joe Fairless: You mentioned you gravitated towards those people, and now your personal mission statement sounds like is to motivate, educate, inspire and entertain people you come across… What would someone who played with you on the Chargers say, if they were asked, “Did you see this coming?”

Terrell Fletcher: Funny thing – everybody saw it coming, except for me. Everybody but me. I talked to guys, Rodney Harrison (who would be great for your show, by the way) Fred McCrary – all of these guys, to this day, they’re like “Fletch, we saw this coming a mile away. You were the guy that kind of kept us centered, you were the guy that brought all the laughter and the energy.” Everybody saw it but me. I was following a path that I thought was what I was supposed to follow. It was the predictable path. Underdog athlete, reaches his dreams, and now he goes into the studio and he becomes this announcer, or he goes into the coaching room and he becomes a coach.

Somewhere along the journey I just wanted to not be normal. There’s nothing about normal that excites me. So somewhere along the journey I realized that my core competencies lend to more than to just what people are expecting of me. And I probably could have done it, it probably would have been the easy path, I probably would have some level of success, but one of the things I learned along the journey was that I didn’t just want success, I wanted significance. I wanted meaning, I wanted what I did to count towards somebody’s life, so it had to be more than a money grab for me, and it had to be more than a fame grab, getting my face on TV. I needed to find the underlying purpose for all of those things – “Why did I wanna build wealth? Why did I want to be a household name? Why did I want these things?” and now I have a better sense of my Why. I wanna motivate, educate, entertain and inspire every person that I meet, and as creative as I possibly can be: through real estate, through entertainment, through faith, inspiration… These are opportunities for me to do my mission and to have a sense of significance while I’m giving back to the world, and not just be a big success.

So yeah, the guys in the locker room would have said that they saw this a mile away. They still tell me, like “Nothing about you surprised us.” It surprised me, though. Everybody knew me but me.

Joe Fairless: You mentioned you describe yourself as an underdog athlete reaching his dreams… In what ways would you consider yourself an underdog?

Terrell Fletcher: Now, here’s the irony behind that – I never viewed myself as an underdog. I had no idea — I’m 5’8,5″, 5’9″ on a long hair day… [laughter] I had to eat seven times a day to stay 195 pounds. They used to fine me for being underweight.

Joe Fairless: What was underweight?

Terrell Fletcher: For me, if I got below 195, they would fine me. They wanted me at 201, 202, and there was no way in the world I could hold that.

Joe Fairless: How much would they fine you?

Terrell Fletcher: $368/day, per pound.

Joe Fairless: $368/pound?

Terrell Fletcher: At the time, that was the maximum fine that the Collective Bargaining Agreement allowed them to fine us. So some guys would be overweight and get fined that, and some guys like myself, if you were considered five or so pounds under your weight, you were considered too light. So I would frequently run in there at 190, 191… I just — listen, I was 135 pounds as a freshman in high school. I went to college, I was 170 pounds soaking wet as a freshman in college, so to be… I just, I didn’t have the body for it, and if you looked at my football pictures, you saw this little guy out there with all these big guys; it was just like “Where is he gonna fit in this game of gladiators, and bodies being thrown around?” And I’ll tell you something about the NFL – they’re not just tackling each other, they’re tackling each other with bad intentions. [laughter]

But I never really viewed myself as the underdog, but everywhere you turned around it was “What are you gonna be size-wise? How are you gonna deal with the injuries? How are you gonna keep up?” And the reality was that even though I was fast, there were guys that were more physically gifted that were just as fast as I was, that could jump higher, that could do circus things that my physical ability just didn’t allow me to do. And then playing running back was somewhat of a — that was a difficult thing as well, because when I played, all the running backs were 215 pounds or higher.

[unintelligible [00:20:39].01] who was our star at running back at the time, Nate was 244, 245, and was just as quick as me. [laughter] It was crazy – I’m looking at this guy and I’m like “How in the world are you as quick as me? Not as fast, but as quick as I am.” But the good thing for me is that they had a situation where a guy named Ronnie Harmon really revolutionized the running back position. He was a running back that could also essentially do everything a wide receiver could do. If you catch and run routes, and go in the back field and do the traditional running back work, there was a spot for you. And I was versatile enough to be able to do both of those.

Early in my career, I caught more passes than I actually was [unintelligible [00:21:28].15] because of the mismatches that I was able to create. And here’s the interesting thing – all of those things were considered, you know, “He’s too small, he’s not as physically gifted as everyone else… Where are we going to place them?” – those are looked at as all the reasons why you shouldn’t have a job in the NFL.

I had creative coaches and I felt like there was a pathway that had been paved before me, that if I can get in here and show them that I’m necessary, that I could create mismatches, that I can catch and I can beat a bigger guy who would normally cover me, or that I would make them put in a smaller guy and I could move back into the back field and we’d have a big guy and a little guy – if I could create mismatches, I could find a niche in the game for myself. And for a four-year period of my eight years, I was the highest-paid third down back in the National Football League, because we did that and we used it effectively, and I honed a skill for myself… Which interestingly enough is what I feel like I had to do in business, as well. I had to do it in people’s faith, I had to do it in Ministry and in my personal coaching business.

Finding those spaces where I fit in the market has really been the hallmark of what I’ve been able to do.

Joe Fairless: I love how you segued into what you’re doing now, and applying what you learned to what you’re doing now, so can you give us an example of how you’ve created a niche for yourself  in any one of those areas that you mentioned?

Terrell Fletcher: Absolutely. I think one of the things that I do as a public speaker, that I bring to the table is this sense of being unassumable — I’m talking a lot about football right now, but I really don’t talk that much about football when I go to corporate events or when I speak face-to-face. I like to say that “I’m not a serious guy, I’m not just a fun guy, and I’m not just a guy that’s full of degrees and information, I’m all of it!”, and the interesting dynamic is that there really aren’t a lot of guys that do what I do in that sense – we engage you with information, but engage you with humor and engage you with personality. Usually, when that happens in our industry – you know this – it’s a head-to-head conversation, and I try my best not to have head-to-head conversations with an audience. I think my niche is having a heart-to-heart conversation, and a heart-to-head conversation.

Before you’re over-consumed and over-powered by information, I wanna touch your heart. I don’t want to just give you tips and tools to be successful, I wanna give you a purpose for wanting to be successful, and the only way we do that is not to just touch people’s heads, but to touch people’s hearts. That’s a really interesting space in our industry of speaking and in our industry of motivating.

Joe Fairless: How do you do that? How do you touch people’s heart?

Terrell Fletcher: You know, here’s the irony, man… It’s my gift? It’s really not my gift. You are one of the most successful entrepreneurs of our generation, and I thank God for you as an example, I follow you… I’m gonna really be on your tail now that we made a connection, really following you in that sense now that we’ve made a connection, but here’s the reality behind what you do – you don’t just have an amazing financial portfolio, you house people. You have found ways to help people who have families, and who need families, and you have placed them in a place that they can call home, a place that’s comfortable for them to build morals and to build foundation and fabric for their family lines.

Sometimes we miss that when we’re buying a multi-unit complex, or when we’re going downtown and putting up the latest condominium… We forget that “Hey, we’re impacting lives.” You’re changing people’s dynamic. And when you grew up the way that I grew up, in communities where everyone did not have a steady place to live, that your neighbor this week might not be your neighbor next month, or that guys that you went to school with one year may have had to move out of the community to go to another school the following year – when you get to that transient type of lifestyle, then you start to see that show up in the fabric of community.

What you guys provide is you provide opportunities for stability, opportunities for communities to be stronger, and very rarely does a highly successful entrepreneur see themselves as being a part of the continuum of humanity… But brother, that’s what you do, man, and that’s why you’ve gotta keep doing it at the level that you’re doing it. You are adding to the fabric of humanity, and that’s what everyone does if you’re listening to the Best Ever; all of your podcast followers – that’s what you do.
When you do your next business deal or when you go after your next project, keep that in mind. Connect to heart with the project, and you’ll operate not just in business, but in purpose.

Joe Fairless: That’s beautiful. And just taking a step out of our conversation, kind of putting on my analytical hat, what you just did is you put yourself in my shoes and you acknowledged the good that I’m doing, which clearly — well, sometimes I don’t even realize it… And that immediately connects us. So now from an analytical standpoint, a way to connect with people’s heart, as you just did, is to take that same approach, and that is put yourself into the other person’s shoes, acknowledge the good that they’re already doing, because a lot of times (I suspect) they don’t recognize that themselves, and it brings to light the positive things they are responsible for in their life.

Terrell Fletcher: You’re absolutely right. Remember how a few minutes ago you just asked me “What would your teammates say?” and I told you that they saw what I didn’t see… It’s the same way. A lot of times we’re doing things that we’re successful at, but we don’t really see how far the ripples in the pond go. It’s guys like me that come and just remind guys and gals that “Hey, you matter, and how you conduct business matters, and how you deal with your customers and treat your customers – all of these things matter”, because we’re not really in the marketing business, real estate business, faith business… We’re really in the human being business, and there has to be more of us, who have some level of influence and power in the community, to remember that there is a human being that’s on the other side of our purchase, and we want to treat them with dignity and with respect, and not just have guys and gals as being numbers, but have them being human beings. That’s important, and that’s critical for us.

Joe Fairless: Let’s talk a little bit about your book that just came out… The Book Of You: Discover God’s Plan And Transform Your Future. I introduced it by saying it talks about your transformation from nearly losing everything to discovering your purpose. “Nearly losing everything” – tell us the story about that.

Terrell Fletcher: Well, the book itself is about transitions, and I use my story to help any story who’s going through transitions. For me it was the period between leaving football and finding a sense of purpose and meaning on the other side of football. But what I’ve learned is that life is about seasons, and who you are in this season is not necessarily who you were in the last season, and what validated you in the last season may not be the thing that validates you in this season.

What happens is I learned that there were individuals that it looked different, but it was the same process, of going through a period of transition where they were searching for identity, and by that I’m talking about the stay-at-home mom who’s children just went back to school, or the empty nester, or the new divorcee, or the person who just got downsized from his job and has to figure out what they’re gonna do next. Transitions are a part of life, and part of the challenge of my book was not just to create change in your life, but to create transformation. And change is a much more cosmetic thing, and transformation is much more of an internal thing; it’s about transforming who I am, so that I can meet the demands of what my life should look like now.

So for me, I went through this interesting period for a handful of years where I was trying to figure out who I was, trying to figure out how I could contribute to the world in a meaningful way, and real estate became one of those ways for me. Ministry was one, but real estate was another one.

My business partner and I – we got interested in real estate right around the time that real estate flies out the [unintelligible [00:31:07].24] in the United States. We were really novices, holding on to a skyrocket, right? We were trying to hold on to this thing… And we were novices, so we just acquired properties, acquired properties, acquired properties, because we did not necessarily have all of the information of how trends worked, how markets worked etc. We just had pockets full of money, and opportunity… And we took advantage of it.

Well, when the market tanked, like many investors, we didn’t know what to do. We were such novices and it happened in such a fast three-and-a-half-year span that we didn’t know the conversations we should have had with banks, we didn’t know the conversations we should have had with other investors… We just didn’t know. So we basically went on a firesale and tried to dump as much stuff as we could dump, and you go one day from your portfolio being one way, and your business portfolio showing up within two-and-a-half-years looking totally different, and potentially owing banks money; instead of making money, now you’re owing more than you ever dreamt or imagined. Well, that was our situation.

It was scary, we really weren’t sure how to solve all of these problems… One way is to just dig into your bank account and pay everybody off; another way is to go and talk to an attorney, and then you’ve gotta trade off who you wanna give your money to – the attorney or the bank…? [laughs] And you know how the market was… We chose not to panic. Our futures were secured through other ways that we made money, but we chose not to panic, and we waited it out as long as we could. We made some very foolish mistakes at the beginning of the downturn; I got rid of a bunch of things, or we gave things back to the bank, or we sold out some things… In the panic, we made a lot of poor business decisions that if we had a bit more experience, we would have held tight or we would have talked to the banks in a different way, if we would have known the banks were in the situation they were in. We don’t kick ourselves too hard for it…

Joe Fairless: Yeah, you didn’t know at the time…

Terrell Fletcher: Not many people knew that, but that was the story, man… And we looked ourselves in the face, and here we have families, here we have people that were counting on us because we did start to find a sense of purpose… We had families in these homes that were trying to rebuild their lives… So it was tough on many levels for guys like me. It wasn’t just a business transaction, “Hey guys, you’re gonna have to move, because we’re gonna give this house back to the bank”, it was “How do we put a plan together where we can help families relocate?” In some instances we even helped with first month’s rent, because they just didn’t have it. Things were happening so fast that we just didn’t know what to do.

Fortunately for us, we built a great team around us, that helped navigate us through the back-end of it. There were some things that were not redeemable, there were other parts that were redeemable that we still hold today, that made it through and they’ve become pretty good investment opportunities for us.

Tough time, brother, but those things happen. I’m not much of a gambler, I never have been, so I never leveraged my whole life on any one thing, but from a business perspective we went all in in the real estate market during that time, and we didn’t know… We didn’t know what we didn’t know. Fortunately, we landed on the ground of some people that were experienced, some people that cared about us, and that helped us navigate through some very difficult times.

Now the foundation of our real estate business is not only strong, it is primed and ready to go to a whole other level… And I’m excited about that.

Joe Fairless: As far as the foundation goes, being ready to go to another level, what are you doing differently than you were doing before?

Terrell Fletcher: That’s a good question. A couple of things that I’ve done over the years – I’ve educated myself. Whatever market I’m operating in, whether it’s real estate, or faith, or public speaking, I’ve educated myself so that I could protect myself. As it relates to real estate, we’ve been saving money. As the market has been going up, we chose as a business strategy not to purchase right now, because we’re trying to hold on and follow trends.

We wanna be ready when the market takes a downward spiral – hopefully not as drastic as 15 years ago, but it will still take a dip, and we will be prepared to have some sound investment opportunities when that time comes.

That’s one of the first and most important things – learning how to be patient and allow the ebbs and flows of the market to work for us, instead of feeling that I can be this maverick and I’m going to be the one to go against the trend and it’s gonna work for me.

In this particular season, we’re being smart, we’re being patient. We’re taking our time. We have an end sight in view, and not so short-sighted.

The second thing is I’m starting with a good team; I’m not just starting with a good idea. The idea and the team go hand-in-hand. I’ve got a great headhunter out there doing some great research for me, I’ve got a good analytics team that’s helping out a lot… Just some good people in my ear that don’t need me to be successful; they’re already successful. So they’re not jumping on our back, trying to ride their own selves up to success. We’re partners now. That was different; I didn’t always have partners in the early parts of my business. I had guys that needed to build their name off of whatever I became. Now we’re partners, and that’s so much easier, because it feels like we’re all pulling an equal share of the weight.

So those are a handful of real practical things that I’m doing. You’re as good as your team, and you have to understand why your team members are on the team. In that way, everyone can be pulling their weight in the same direction, and you can get your business going the way you want it to go.

Joe Fairless: I was talking to Tony Delk… NBA guy – he played for a bunch of teams in the NBA – and he mentioned something that reminds me of what you’re talking about in terms of you’re partnering with people who aren’t needing you to be successful for them to be successful, because they’re already successful.

He talked about how he looks at his group, his close circle  – as either an asset or a liability, and it’s such a black and white way to look at it, but it really resonated with me… Because it’s like “Are they empowering you along the way and you’re empowering them, or are they someone who you’re constantly having to give, give, give, and it’s just draining you, whether it’s mentally, emotionally, financially etc?”

Terrell Fletcher: One of the best books I’ve read during that period of time was a book called Necessary Endings. I found that loyalty is very important, but if you’re not careful, you can be loyal to the detriment of your own destiny and your own future. Sometimes it’s important — for the time you’re in relationship, you must be very, very loyal to the commitments that you make. But there are times in every person’s business career, personal life etc. that the relationship doesn’t serve where you’re headed and where you’re going, and it’s important to have those tough conversations, to sit down and to know that some endings are necessary. Some endings are important to have, and you won’t go into your next level if you continue to hold on to certain things that served you in your last level.

I always think about life in seasons, and one of the things that prohibit people from moving into their next season of success is their desire to hold on to the things of their last season of success. Sometimes you have to know that business relationships are a handshake and a “Thank you. It was a win/win for the season we were together, and now I have to keep moving on.” Sometimes friendships are that way, because you’re not the same person in every season of your life, so it’s important to re-establish your boundaries.

It’s a funny thing – while we’re talking… I just changed my cell phone number about three months ago, and all I was doing was just re-establishing my boundaries. It’s just gaining control of my life again, gaining control of who had access and who didn’t have access. Exactly what Tony was talking about – knowing that in every season of your life there are going to be people that will put in, and people that will take out, and you cannot have too many people withdrawing from you without putting in deposits, or else you will go into a space where you’re insufficient. And you don’t wanna have insufficient energy, insufficient funds, insufficient joy, insufficient happiness, because people in your life are taking-taking-taking, and never giving back. Your team has to have a reciprocal effect with you.

Joe Fairless: Based on your experience as an entrepreneur, achieving at the highest level in your chosen profession, previous to you doing what you’re doing now, what is your best advice ever for real estate investors and entrepreneurs?

Terrell Fletcher: I think the best advice that I can give for anyone is to stay the course. Often times, as visionaries, we tell people to have the end in mind, and we don’t spend a lot of time talking about what’s gonna show up between now and the end. Barriers, enemies to your success, whether they’re external or internal – they show up along the journey, but don’t give up on the journey. Fight them, do battle with them, get victory over them… Because if you are on the right path, those barriers are not even designed to win, they’re just designed to make you stronger.

So if you know you’re on the right path, and you have a goal in mind, every barrier that shows up is meant to make you stronger, is meant to make you more wise, is meant to make you a more compassionate person, is meant to make you a warrior in your own right.

In that regard, the thing that should be your bad is actually gonna be for your good. So stick in there, go finish the deal, and change the world with your gift. I think that’s the most important thing. I wish someone would have told me that the troubles of my life were actually going to be the things that help make me the man that I am today, and I would not have run from so many things, I would have embraced the journey, understood it was a part of the process, got victory over it and kept on moving.

Joe Fairless: One of the things that Tony Robbins says is “Life happens FOR you, not TO you.”

Terrell Fletcher: That’s right.

Joe Fairless: And when you embrace that, then it really transcends your approach. I have my old banner behind me, so I can’t read it, but there’s a poster on my wall – it’s something along those lines: “Without challenges there’s no growth” or “Growth doesn’t happen when everything’s good, it happens during the challenges.” That’s when you really grow, and you have to embrace that stuff.

Terrell Fletcher: You’re saying something that’s so apropos to nature. The funny thing about seeds is that in order for seeds to grow they have to be placed under the ground, and then the seed itself has to break before something grows. And we wanna grow without breaking. That’s the challenge. You will grow big, you will grow to be enormous if you’re willing to go through the breaking process that life brings. That process is not always victories, and I know that you can attest to this; every deal that you signed up for didn’t work out the way you wanted it to, you didn’t get every deal, you didn’t get every level of compensation that you wanted. Sometimes that happens. Life is full of disappointments, it’s full of heartbreaks, it’s full of frustrations, but it’s the disappointments, heartaches and frustrations that make the joy, the happiness and the pure excitement about life that much sweeter.

If you can embrace the breaking, then you can grow. If you can embrace the breaking, then there’s no limit to how far you can grow, but you don’t get to take one without the other.

Joe Fairless: Powerful stuff. I have taken a lot of notes. Are you ready for the Best Ever Lightning Round?

Terrell Fletcher: Let’s do it!

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

Commercial Break

Joe Fairless: Okay, let’s see… We’ve got a special one for you… What’s more fun – and I said “fun”, not more fulfilling…

Terrell Fletcher: Okay…

Joe Fairless: Life as an NFL football player, or life after being an NFL football player.

Terrell Fletcher: Life as a football player. [laughter] Childhood dream, you’re living it! [laughter]

Joe Fairless: What are some pros and cons, top of mind, for each of those lives?

Terrell Fletcher: Well, the football player — listen, you get to go and knock somebody upside the head and nobody’s gonna arrest you for it, right? [laughter] You roll around in the dirt all day long and people will applaud you for it. We get to do something that we would have done for free, and get paid a lot of money to do it. What can you say – it’s the dream… Children grow up saying “I wanna be a football player” before they can even catch a football or run with a football, you say “I wanna do this thing” and to accomplish it is actually one of the biggest accomplishments of life as well.

Joe Fairless: Okay. And what about a con?

Terrell Fletcher: The con of it is the investment that you have to give to it. You almost have to turn off a part of your life to be great at this part of your life. Football is all-consuming, it demands your energy, your time, it demands your physical strength, your emotional strength, and sometimes you put so much into being great at an all-consuming machine that you don’t really get to build the relationships you wanna build, or develop as the man you wanna develop as, and unfortunately many of us don’t develop until we’re older – 28, 29, out of the game, and we are essentially 30-year-old children, trying to figure out how to be a man. You somewhat lose — you have the potential, rather, to lose on the development as a human being sometimes when you spend 7, 8, 9, 10 years in a fairytale.

Joe Fairless: Pros and cons for what you’re doing now?

Terrell Fletcher: Pros – I get to speak and I get to share my heart with people, I get to watch the a-ha moments happen, I get to motivate and to know that the things that I share transform and change people’s paradigm and their dynamic. I think the cons of what I do now is it can be somewhat limiting. It doesn’t always give me the space to express the full breadth of who I could be; the faith community by itself has its own culture, can be its own culture, and doesn’t always embrace us stepping outside of that culture to impact the world… So entertainment, or even real estate or things like that are not fully embraced by the culture that I work in. So it has its limits, but it’s hopefully rewarding, and I think that both of them have an eternal value; what I do now is soul deep, and not just wallet deep… And I appreciate being able to do that, too.

Joe Fairless: We talked about some of the hard lessons learned with real estate… What’s the best ever deal you’ve done?

Terrell Fletcher: The best ever deal I’ve done — this is not gonna be big in money, but I’ll tell you why it was the best ever deal I’ve done. It was when we sold my parents’ house to put them in the house that they’re currently in. It’s the best ever deal because when I was in college, I’d got into some trouble, and my parents were within two, three years of paying off their house, and they had to borrow every dollar on that house to keep me from having to stop my collegic career, collegic life. In my head, one of the things that I said was that if I ever made it, I was gonna buy my parents a house. And that’s what happened.

When I got to the NFL, the first dollars that I spent was making the transaction with my parents’ home to put them into the home that they eventually called home. To me, that was probably the most rewarding, gratifying deal that I’ve done, even though numbers-wise I’ve done better. But right now, that still is at the — it’s not even close to the best deal and the most rewarding deal.

Joe Fairless: I was reading your bio before we started talking and I saw you were (or are still, I’m not sure) involved with Junior Achievement; I’m on the board for Junior Achievement Cincinnati, and I did some stuff with them in New York, too. So actually I’m involved with that organization, but I’m curious what’s the best ever way you like to give back?

Terrell Fletcher: Here’s the thing with JA – it’s funny you say that, because we’ve just recently started dialog and conversation again about me volunteering time with Junior Achievement. JA was phenomenal when I played. I had opportunities to hold charity events for them, interact with young people… The journey of my second career pulled me away from some of my community service, because for the most part what I do now IS community service. So I had to really focus my attentions on some of those things.

We have built some amazing partnerships with the San Diego Food Bank with our church. We have built some amazing partnerships with Walmart, with Lincoln High School, which is a major high school right here in the city. [unintelligible [00:51:08].02] is literally 300 yards away from where our parish is. I’m really excited about the ways we’ve been able to give back.

We have live classes and Bible classes on the high school campuses of four high schools in San Diego county, in two middle schools… We’re able to be the parent to the Lincoln High School football team, we feed them every [unintelligible [00:51:35].29] we do their chapel services for them… We’re also able to be partnered with the San Diego Food Bank where we give away food on a regular basis to needy men and women in the community. We also have a major Turkey Drive that we do every year; we give away over 1,000 turkeys to families of four or greater, in partnership with Walmart and in partnership with Union Bank.

We’ve been really fortunate to give back, so in those ways — we’ve literally just had a meeting yesterday on a new mentorship program that we wanna pilot, where we want to create an opportunity for mentorship with teenagers that are coming from single-parent homes that need male mentorship in their children’s lives. So this is my life now. It all makes me proud and it all makes me happy.

DeVon Franklin just came and hung out with our peers a couple of weeks ago… In fact, it was Friday. Bringing that type of motivators and inspirational men and women to our community is at the tops. I think that’s what’s unique in the types of communities that I’ve served in.

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

Terrell Fletcher: Sure, you can go to my website, TerrellFletcher.com, or go to my faith website, which is TheCityOnline.org. And of course, I’m a social media head, man, so I’m on Twitter, Facebook and Instagram – find me on those. I love to live my life out in pictures and in 141 characters more than I like to live my life out on Facebook, but I’m on all of them.

It’s a great journey, man. We laugh, we talk, we inspire both traditional motivation, but also spiritual motivation, and I think you’ll enjoy the ride either way. To all your Best Ever guys, I wanna connect with you, I wanna help inspire your life and challenge your life, and your life pursuits as well. You guys do the good work, and I wanna encourage people that do the good work, so follow me, catch up with me.

Joe Fairless: Well, I’m so grateful that we had a chance to talk and learn more about what you’re doing, learn your philosophy, your approach, your story, and some lessons – I was taking notes the whole time – that I learned along the way… And all of these apply to not only real estate investors, but entrepreneurs, and that is prepare yourself for when you can’t play; we’re not talking just football, right? We’re talking about retirements, we’re talking about preparing yourself for the next season of your life, to use the analogy that you think of and you use often… And that is making sure we’re aware of where we’re at, and then where we’re headed.

In that transition, with your NFL background – you said that is your identity at the time, because it has to be, it’s all-encompassing, and when you need to create a new identity, you tested some things out and you gravitated towards people. Now your approach is to motivate, educate, inspire and entertain people you come across, and it’s very clear, and that’s the world that you live in and that’s what you do.

Another thing is – I love this – people will root for you at the level of their expectation for you. That’s something that we could probably talk about for 30 more minutes, I imagine. That’s some pretty impactful stuff, if you think about it.

And from a breaking into an industry – and this could be real estate, this could be whatever venture a Best Ever listener wants – one of the takeaways where you broke into an industry at the highest level (NFL), it was through your versatility, finding a way to be valuable. That can be applied to every business venture there is. If you wanna break into something, don’t square peg a round hole type thing — or square peg… Whatever, you get it. You want to be able to identify different ways in, and be able to maximize your unique abilities in those industries and show a lot of value in different ways, not necessarily just trying to be good at really one thing, but really what’s the best approach to take, and be versatile.

Lastly, I’ll say that when want to connect to people’s heart, you not only told us how to do it, but you showed an example of it, and we’ve talked about this earlier… An example for how to do that is put yourself in the other person’s shoes first; second, acknowledge the good that they are doing (assuming that they are doing good, which most people are), and acknowledge that because most of the times that person has not acknowledged it themselves. That’s really important, and that’s something that we can all use as a practical tip to connect with others.
Thank you so much for being on the show…

Terrell Fletcher: Absolutely!

Joe Fairless: I enjoyed it! I hope you have a best ever day, and we’ll talk to you soon.

Terrell Fletcher: Thank you so much. Thank you, thank you, thank you!

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Best Real Estate Investing Advice Ever Show Podcast

JF1044: What Your Financial Planner Isn’t Telling you About Retirement

Charlie started out as a real estate agent, but wasn’t fulfilled. After becoming a financial advisor, he found a better way to plan for retirement. He’s destroying the sacred cows of “make a large down payment and pay off your mortgage as soon as possible”.  Listen in to hear how he advises to plan for your retirement, which includes making better returns than the stock market while also keeping it safer!

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Charlie Jewett Real Estate Background:
-Owner of Jewett Wealth Management and Member of The Estate Planning Team
-Host of The Renovating Retirement Podcast Financial Advisor specialist and insurance services
-Author of Renovating Retirement
-Based in San Diego, California
-Say hi to him at www.jewettwealth.com
-Best Ever Book: The Power of 0%

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planning for retirement and finances


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 fluff.

With us today, Charlie Jewett. How are you doing, Charlie?

Charlie Jewett: I’m doing great, thanks for having me, Joe.

Joe Fairless: Nice to have you on the show. A little bit about Charlie – he is the owner of Jewett Wealth Management and a member of the estate planning team. He’s also the host of the Renovating Retirement podcast. He’s a financial advisor specialist and he is the author of “Renovating Retirement.” I think I’m sensing a theme here… Based in San Diego, California. With that being said, Charlie, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Charlie Jewett: Absolutely. My background was in real estate sales. I was a realtor here in San Diego, California, I realized I didn’t like working Friday nights and weekends, which is when everybody wants to close on residential properties. I did like the numbers, I liked the finances, so I crossed over into the mortgage industry and I ended up managing 80 loan officers, and through that industry, I read a couple of books that I thought would help me help my team do more mortgages, and I ended up bumping into comprehensive financial planning, which I call MERIT planning – mortgage plan, estate plan, retirement plan, insurance plan, tax plan.

I became a financial advisor, but during that time I also purchased 15 of my own homes in that short period of about nine years. So I dipped my toes in the real estate investing world, had some success – certainly not as much as I wanted. There’s things I do different that I’m learning from your show, but background of a real estate investor, real estate agent, mortgage professional, then crossed over, studied taxes, estate planning, insurance annuities and investments, and now I just do crazy comprehensive all-inclusive plans, which is what people really need.

Joe Fairless: You gave us so much to talk about… Thank you. [laughs]

Charlie Jewett: Three hours show. It’s only gonna be a three hour show…

Joe Fairless: That’s right, that’s right. After over 1,000 episodes, why not break the mold and just start a brand new format, right? I wanna make sure I wrote this down right – 19 houses or 9 houses in 9 years?

Charlie Jewett: 15 houses in 9 years.

Joe Fairless: 15, okay. Option C, 15.

Charlie Jewett: There you go, door number C.

Joe Fairless: Yeah, door number C. 15 houses in 9 years… You said you’d do it different – let’s talk about that. What would you do and how would you do it different?

Charlie Jewett: Probably the thing that I’d do different than anybody else that’s in the traditional real estate world is I don’t finance properties the way that you’re traditionally taught to do so. When I first got into the industry, I studied what I call the three pillars of financial deception, which is you should pay off your mortgage, you should postpone taxes to a later date using [unintelligible [00:04:56].29] and you should diversify, meaning spread your money around only one type of investment, such as securities. I’ve heard your background – you realized how lacking that type of profits were… I went into real estate. I studied all three, and I 100% do not agree that you should make large down payments, pay extra principle, use 15-year fixed or try to pay off mortgages to “cashflow.” It only hurts you.

I turned around, I wrote a book on that. You mentioned Renovating Retirement, but I also wrote a book called The Two Ways To Be Debt-Free. When I work with investment property owners or just basic home owners, I’m showing them why you should have the biggest, fattest, hugest mortgage possible AND keep that money somewhere else where it’s earning 6%-7% while you pay 3%-4% tax deductible (or 4%-5%). Who knows when people are going to listen to this… Let’s call it 4%-6%, or whatever.

You should pay a mortgage while keeping your money liquid, safe, earning an arbitrage – which is earning a little bit more than you’re paying – and giving you the benefit of tax deductions, keep more of your rent (which is true cash flow). So I 100% disagree – I can prove it over and over again – with people that say you should pay off your mortgages. Other than that, I don’t have strong opinions on the subject.

Joe Fairless: [laughs] What an interesting topic, because I love this approach and I completely agree with you. There are tax advantages to having a mortgage, and the flipside is that people think “Well, I also don’t wanna be overleveraged. I’d rather just get rid of the mortgages.” But as you said, if you’re making a rate of return higher than the interest rate that you’re paying on the mortgage, then you make the difference and you have that asset that is making the higher rate of return than your interest rate on the mortgage – you have that continue to make you money.

Charlie Jewett: Right, and the biggest gift you and I could give to anybody – this is the magic of comprehensive financial planning is there is one financial plan, it’s what you do with your mortgage plan, estate plan, retirement plan, insurance plan and tax plan. It’s everything. Just like a house is not plumbing or electricity, it’s the sum of all of those workers’ efforts… It’s architectural.

So if you told a bank or an insurance company that they should be debt-free and they should listen to one of the ridiculous financial pundits who’s popular out there and pay off your mortgages because it saves you interest – if you listen to that advice or you told that to a bank or an insurance company, they would laugh in your face… Because the entire business model of banks and insurance companies is “Acquire debt, get people to put money in CDs, get people to put money in annuities or life insurance” where they pay you 2%-4%. Why do they want that debt? Why do they pay commissions to financial advisors to acquire that debt? Well, Joe, they’re turning around and lending it out at 4%-6%. If you’re paying 2% and making 4%, you’re making 100% rate of return.

Every mortgage that anybody has – you can be the bank, you can be the insurance company, but there’s one piece missing that nobody knows; when we give it to them, it’s a gift that sets them free, which is “Where do you store that money?” If you’re not gonna make a 50% down payment, but you’re gonna make a 10% or 20% down payment, where do you store the money where it makes 5%-7% tax-free, safer than being in a home, so that you’re creating an arbitrage? Where can you put the money so that you have a bigger loan, at 4.5%-5%? You can be making 5%-7%. Most people not only don’t know where to put it, worse – which is why the whole show Renovating Retirement is about what criminals and crooks the financial services industry are for ripping everybody off on a HUGE grand scheme… I’m revealing all the secrets to show you how to hold your advisor accountable, end up firing them, basically… Or hold them accountable and make them do what’s right — but you cannot build this tool without doing something that nobody wants to do, which is dropping your commissions by 75%.

If an agent doesn’t build it the right way, you’re not gonna make enough money to create an arbitrage. If it’s built the right way – and I will go to my grave just preaching this – if you can go make 5%, 6%, 7% after all fees, compounded, tax-free, where you keep it all, and you can be paying 3%, 4%, 5% tax-deductible, that arbitrage is beautiful.

Joe Fairless: So where do you put the money?

Charlie Jewett: I put the money into a certain type of life insurance that’ll shock people, but there’s book — you’re gonna ask me about the best book I’ve ever read, and I can give you a little sneak preview… The author trained me 12 years ago. There’s books on this – I wrote a book on this, and there’s probably five good books on it. E.F. Hutton in the ’70 and ’80 discovered life insurance is where you can grow money tax-free. Joe, this is pre-law of IRA. Back then you had municipal bonds, and you had nothing… Or you had what he discovered, which is life insurance.

The problem is whole life sucks; whole life’s returns are like 2%-3%. E.F. Hutton created something with a checkered past; it’s called “universal life insurance” – have you heard of that?

Joe Fairless: Yeah, yeah.

Charlie Jewett: You read Investing For Dummies, right? Universal life insurance has this checkered past, because it came out in the ’80s and the agents were showing people that they’d make 14% a year for the rest of their life, because in the ’80s some things made 14%, even [unintelligible [00:09:51].02]

That’d be like saying the stock market is gonna go up forever now because of quantitative easing or the Trump run-up, which is silly. So it has a checkered past, but as a tool, today’s indexed universal life insurance policies, minimum death benefit, lowest death benefit possible, right product, right design, drop the commissions…

There’s a video, by the way, that you can point your listeners to on YouTube called “The Six Ways To Improve Your Cash Value Life Insurance”, where I’m teaching how you do what I’m saying to a life insurance policy to make it work for you. You can get the expenses down so low, that this thing with a 30-year average of 8,2%, your expenses might be 1% or 1,5%. 8.2% – 0.5% is 7.7%, so you’re at 6.7% net compounding rate of return, tax-free, that you don’t have to share with anybody, in a product that doesn’t go backwards when the market goes down, because there’s a floor of 0% (you never lose money).

Everybody right now with rates going up should refinance every property in their portfolio to the biggest loan, the loan you’re gonna keep on it forever. They don’t know how, but I can show them 1) how you cover the higher mortgage so it doesn’t come out of your pocket; 2) the most important piece – where should you store home equity, in a home equity savings account, if it shouldn’t be inside the home, where it’s not liquid, subject to depreciation, not earning a rate of return and hurting you on taxes… Where should you put it where it is liquid, is safe, is earning a higher rate of return than the mortgage and helping you on your taxes? When we show them that tool, they go “Oh crap, it’s too good to be true.” They go study it, find out it’s true, and all of a sudden it changes everything.

Joe Fairless: I have a conversation with someone who talks about investing in life insurance policies once every seven months, and every time I have a conversation, I always highlight it but I haven’t acted on it yet. I think you’re finally pushing me over the edge where I need to act on it and do it for my own stuff, because I have some friends who also are doing this and they speak about it in such endearing ways, because it works out so well for them.
I guess the initial reaction I imagine people have when you talk to them about life insurance policies is one of suspicion, and something that sounds too good to be true, and perhaps there’s a negative connotation with life insurance salesmen or whatever, and maybe that’s where it’s coming from… But I’ve heard this a decent amount of times from people who I’ve interviewed, and I’m not doing it, but I think you’ve pushed me over to the side of actually doing it.

Charlie Jewett: Yeah, well let me give you a gift. One is you can’t get a better life insurance policy on the planet than the ones I’m building. I will stop saying that when I find one more person who’s doing the “drop your commissions by 75%.” However, for real estate investors there’s probably nothing more important than this, because every property is 100% financed – most people don’t realize that. Every single property you buy is 100% financing; if you make a down payment of 20%, you are financing 20% with lost revenue. The opportunity cost of the money you put down not being somewhere else. Does that make sense?

Joe Fairless: Yeah.

Charlie Jewett: When that somewhere else is what I’m talking about, 5%, 6%, 7% tax-free, that means for every $100,000 you are losing 5k-7k a year, and you cannot write that off on your taxes. 100% financing, which we used to be able to get before 2008 if you [unintelligible [00:13:21].03] or whatever we do today, or people that try to pay a giant down payment to “save themselves money”, all they’re doing is hurting themselves. They’re taking their money out of commission, but what your listeners don’t know and maybe you don’t know, Bill Manassero didn’t know, and he interviewed me — is if you understand life insurance and how to use it like a bank, you can have – brace yourself – second mortgages on investment property, so 100% loan-to-value at 4.3% tax-deductible, no payments due ever; no monthly payments, not due until you die and then someone else pays it off for you. Does that sound attractive for investors?

Joe Fairless: Maybe. I don’t know about leaving my kids or grandkids with a bunch of stuff they have to pay off after I die.

Charlie Jewett: That’s the key with life insurance – the death benefit is so high that it pays off all of the mortgages and leaves more to the kids, plus the value of the property. You always leave two or three times as much to your loved ones by our way, versus just pay off the home and leave them whatever’s in it. The value of the home is always the value of the home, right?

Joe Fairless: Right. So say that a little bit slower, that way I can take notes. You said with a life insurance policy you can get a second mortgage on all of your investment properties…

Charlie Jewett: Right, so if you have money inside of life insurance and you’re gonna buy an investment property, the banks aren’t gonna do this for you, nowhere else you go will do this for you, but an insurance company will. They will lend you money, you can put it down on a property as a down payment – so basically you have a second mortgage… If you’re borrowing money for a down payment it’s a second mortgage, right?

Joe Fairless: Yup.

Charlie Jewett: You have a second mortgage to 100% loan-to-value. Today’s rates are 4.3% based on Moody’s corporate bond rate (based on a bond rate), there are never any payments due on an insurance loan – unless you take all the rest of the money out and there’s no money in there, but as long as you manage the policy you’re supposed to there’s never any payments due… They will pay themselves back when you die out of a death benefit we didn’t want in the first place, which may not make sense unless you read a couple of these books. But any property handled the way I’m talking about, you never have to put a single dime of your own money in, so you’re fully leveraged, and all of the costs for the 80% traditional loan or 75% traditional loan plus this insurance company’s second mortgage – all of those costs are lower than what we’re earning where we keep the money.

So we keep our money liquid, keep it safe, keep it making an arbitrage where you’re paying 4%-5% and making 5%-6%, and your tax deductions are as high as they possibly can be, which lowers your taxes, so you keep more of your rent. That is true cash flow.

Joe Fairless: In order to have a policy — say my down payment is $20,000. In order to have the second mortgage, so to speak, and have the life insurance policy cover that $20,000, I need to have probably $20,000 in the life insurance policy, that way we’re borrowing against what we already have in? Is that correct?

Charlie Jewett: Yeah… The key to comprehensive planning is to look at the five pieces, which is like, say, plumbing, carpentry, roofing, masonry work and drywalling in the home industry. This industry just does a terrible job. People get tax advice only looking at taxes; they get investment advice only looking at investments. If you look at the whole thing and somebody redoes their mortgage plan, estate plan, retirement plan, insurance plan and tax plan all at one time, one of the things that always happens is money that you have inside of properties already, money that you have in brokerage accounts, whatever – that gets transferred to family banking, that gets transferred to some sort of life insurance vehicle that’s beating the stock market.

The safe investment is beating the stock market, the stock market becomes useless. So when you do your whole plan and you move money into these banking concepts or safe investments, whatever, that cash value then in the future is available as collateral for doing insurance company loans, which can just by more properties.

By the way, why would I do 100% financing on every property, if they still offered it? If you take the money out of the properties before depreciation happens – now, Joe, you sound young, I’m young… Mortgage meltdowns are not the only reason properties go down in value. The number one reason properties go down in value is when interest rates on loans go up, and people can’t afford the payments, so nobody’s buying, and the seller still wanna sell and they go “I’ve gotta incentivize these guys”, right?

Historically, when the rates go up, values can go down, and we haven’t even seen that in 17 years, or whatever… But that’s what happens. When rates are starting to crawl up, if you get all the money you can out before the rates go up, or before another mortgage meltdown (who knows?) and then you’re holding it somewhere safe when property values come down, that’s when you wanna be buying… You wanna be in a position of not leaving the equity in your homes so that you lose it when everything goes down; get it out first, put it somewhere safe where you can never lose it, wait for properties to crash, then you wanna buy them with none of your own money. Use bank financing, use the second mortgage from the insurance companies…

You were spot on – if you’re gonna borrow 20k, you probably want 25k-30k of cash value sitting in the life insurance policy. In my type of planning that’s easy anyway, because it’s beating the stock market; we use it for a giant piece of the money.

Joe Fairless: What would be some resources that the Best Ever listeners can watch…? I mean, you mentioned your video… What about some books?

Charlie Jewett: First we’ll do the Bible… So what’s the best book I’ve ever read in my life on this type of planning? Missed Fortune 101 by Douglas Andrews. Missed Fortune 101 is the 250-page version of this 550-page book called Misfortune, which is all that was around when I studied this in 2005. Missed Fortune 101 has three parts: why you shouldn’t postpone taxes to a later date because you’ll probably be in a higher tax bracket… The whole thing was a scam from the IRS. Second part – why you should never pay off a mortgage, because it only hurts you, because equity is not liquid-saved; you’re not earning a rate of return and it hurts you on your taxes. Third part of the book – if you’re not gonna pay extra principle to mortgages, not gonna make big down payments, if you’re gonna do a cash-out refinance and take money out of a home to borrow at 4%-5% tax-deductible and put it somewhere else, where is this somewhere else? It goes into life insurance, it does a really deep dive, basics on understanding life insurance.

You can also read Patrick Kelly’s “Tax-Free Retirement”, David McKnight’s “The Power of 0%”, my book, “The Two Ways To Be Debt-Free” on why you should never pay out the mortgage… So book-wise, you have those.

My video is at WatchCharlie.com. I made it easy. The YouTube channels – now the names are ridiculous, it sounds like r2d23cpo and then seven alphabets from Arabic languages, right? So my videos can be found at WatchCharlie.com. I just put up three hours of everything I teach: IN-Case, IN-Come, IN-Crease. You need three types of money: IN-Case accounts, IN-Come accounts, IN-Crease accounts, which could be retirement funds, yet to be taxed, or it could be after-tax money like we’re talking about. The after-tax money, the IN-Crease Accounts number two is an hour on just this tool, just how you use life insurance, why do people use life insurance; I hear life insurance is expensive and is a terrible investment, blah-blah-blah… But guess what? A Crown Victoria is kind of a crappy car, but the police departments that use Crows Victorias don’t use the crappy car; they buy it and then they fix it up, they tweak it and make it a cop car, and that’s what we’re talking about.

It’s not what club you buy, it’s how Tiger Woods (or whoever won the Masters) uses the club. I wanna teach people how to use life insurance; even if it starts out crappy, how do you tweak it, lower the death benefit, change the death benefit, assignment of level increasing, and then take out the commissions – how do you use it and tweak it and soup it up and make it beat the stock market or make it a place to hold money and borrow against to buy real estate with 100% second mortgages.

Joe Fairless: As you’ve gone through the education process and now implementation process of this approach, what mistakes or callouts would you have for listeners who plan on doing this? Either mistakes you’ve made, or mistakes you’ve seen people make in how they’re setting this up.

Charlie Jewett: Before I bought my first home, I read this book “Misfortune 101”, so it’s not arrogance – I did everything the guy said, so I didn’t make the mistakes. I did the largest mortgage possible on every property, did 100% financing every time I possibly could… I had 40-50 clients that did 100% financing on every property prior to the mort