JF1867: Passive Investing & How To Use It To Become Financially Independent #SkillSetSunday with XRAYVSN

Today’s guest is an anonymous online blogger and a radiologist. He’s here today to tell us about how he was able to bounce back from a nasty divorce that cost him a lot of money and a lot of mental pain, to being financially stable once again. This was done in large part thanks to passive investing, which we will dive into today. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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“The money that you put into these investment is a long term play and it will not be liquid” – XRVSN


XRAYVSN Background:

  • Radiologist, passive real estate investor, and anonymous real estate blogger
  • Lost 7 figures in a divorce, used passive real estate investing to get to financial independence in his 40’s
  • Based in Southeast, U.S.
  • Say hi to him at https://xrayvsn.com/


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Theo Hicks: Best Ever listeners, welcome to the best real estate investing advice ever show. I am your host today, Theo Hicks, and today we are speaking with Xray. Xray, how are you doing today?

Xray: I’m doing fine, Theo. Thank you for having me on.

Theo Hicks: Absolutely. I’m looking forward to our conversation. Best Ever listeners, it’s Sunday, so you know what time it is – it is Skillset Sunday, where we talk about a specific skillset that our guest has acquired, that hopefully you can use to expand and grow your real estate investing business. The skill we’re gonna talk about today is passive investing, and how you can use that to become financially independent.

Before we get into that skill, a little bit more about Xray’s background – he is a radiologist, hence the Xray moniker, passive investor and anonymous real estate blogger. He lost seven figures in a divorce, and was able to use passive real estate investing to get to financial independence in his forties. So he’s a great source of information on how to actually use passive income to not only become financially independent, but to pull yourself out of any financial hole you’ve gotten yourself in.

He’s based in the South-East, and you can say hi to him at his blog, which is XRAYVSN.com.

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

Xray: Sure. As you mentioned, I am a radiologist, so I’ve been a physician for about 15 years now; I’ve been practicing in the South-East U.S. And as you also mentioned, I had a financial low in my life; I went through probably one of the worst divorce stories that most people have heard of when I tell it. It was very contentious; it was just not a fun time in my life. That was starting in 2010, and it lasted for 13 months. During that time I just saw money draining out of my account. It was like I was hemorrhaging money. The only people that benefitted from it apparently were the lawyers.

Just to give you an idea, just my legal counsel fee during this time was about $300,000, I sort of tallied it up… And it was just a shocking amount of drain going through my life. I really hit financial rock bottom and emotional rock bottom right around the time that the divorce was finally finalized. I was looking at a negative net worth probably close to $800,000 negative, and I was just about to turn 40. I was really was reeling. Like I said, financially and emotionally I was devastated; it was a grueling time. There was just a lot of times I just wanted to throw it all in and give it all up… And it was at this lowest point that I started saying “I can still build myself up. I am a physician, which fortunately does carry with it a high income.”

I didn’t really know how to deploy that money in the past. Basically, money coming in – I would spend it, and never really built any financial traction in my life. But when I was starting at rock bottom, I said to myself “I need to do something, otherwise I’ll never be able to retire. I just got my legs cut out from under me at age 40, and if I ever want to retire early, much less retire at all, I’d better get my financial ducks in a row.”

So I started doing research online, and one of the biggest topics that really struck a chord with me was passive income generation. Basically, I thought that this would be an ideal way that I could actually turbo-charge my net worth, bringing money as a physician while I was creating some side-streams that brought additional money into my household. Those two incomes combined could really set me back up to where I needed to be.

That’s how I sort of first got into passive income real estate investing and other passive income sources  – it was just a desperate need to find out “How can I call myself back from this huge hole that I was in right after a really bad divorce?”

Theo Hicks: Thank you for sharing that. I know you mentioned you did some research online… Do you have more specifics on how you’ve found passively investing in real estate specifically? Was it just you were reading some blog posts, did you come across a forum, did you talk to someone online? How specifically did you find this investment strategy?

Xray: I was almost going through Google searches at one point, just to see — how to recover from a divorce was one of the topics I would search… And I started seeing some forums that I took part in. One of the first that was really helpful was the Bogleheads forum. They were basically a group of like-minded individuals that kind of followed this principle of the late Jack Bogle, who founded Vanguard. For those familiar with index investing, Bogle was the first person to really push that out… But this was a group of individuals that really were helpful. Basically, my first post was “Help.” And I gave my spiel of what happened to me, how essentially I lost pretty most close to a million dollars throughout the whole divorce. I said “This is my age, this is what I have. Can I be helped?” And it was just an outpouring of support there. I had a lot of responses saying “It’s not the end of the world. Don’t give up.” And again, they cited that I was a physician, and they said “You can dig your way out of this. You’re having a high enough income that you should start looking into these topics that you might not have been aware of.” Through that, I started looking at other blogs.

One of the biggest blogs that inspired me in the physician finance realm was from The White Coat Investor. He had been giving advice to physicians… First of all, physicians are very well-known for not being very financially savvy. We are usually easy prey for a lot of financial advisors… And mainly, we go through all these years of education – I think I’ve been through  the educational system for 25 years, and not one single hour was dedicated to finance. So you’re basically a perfect sheep for all these wolves of Wall Street. You basically come out of med school with no financial knowledge. You go through residency – no financial knowledge… And now you’re pulling in these good-sized checks, and these financial advisors know “Wow, this is easy prey for us.”

Dr. Dahle, who runs The White Coat Investor, he basically got taken advantage of by a financial advisor, and it basically inspired him to start a blog. Tons of posts on that site, and then from that on, it sort of blossomed into looking at other blogs. One of the ones that really got me into passive income investing was another physician and anesthesiologist who blogs at Passive Income MD. He was solely writing on that topic, and that really spoke to me. Once I got into that, it just took off from there.

Theo Hicks: That’s amazing. You went from googling “how to recover from a divorce” to finding that Passive MD website that’s allowed you to obviously reach financial independence within a year. So let’s actually talk about the strategy. Before we go into specifics, can you explain the overall strategy that you would recommend to someone who may be in a similar situation and wants to achieve financial independence strictly through passively investing in real estate?

Xray: Sure. I guess first define what I think is financial independence… It’s basically at a  point where you could stop working, not receive another W-2 dollar for the rest of your life, and you’d still be able to take care of your basic needs. There’s certain levels of financial independence. The community that I’m part of is called the FIRE community (Financial Independence Retire Early). You don’t necessarily have to retire early when you receive financial independence or when you get to it, but some people like to say they are fired, which means that they’ve reached financial independence and then they can retire early, or they could just basically design a work life that they want. There’s also different levels of financial independence.

There’s the basic needs, where you can’t do anything luxurious; they call that Lean FIRE, where you’re just basically covering your expenses for having a roof over your head, utilities and food. And then you could go all the way up to Fat FIRE, which means that you’re so beyond financial independence you could splurge on anything off the menu, take luxurious trips, and stuff like that.

Where I’m at right now is probably in between the two in terms of my financial independence. I could certainly stop working and support myself with the life I have now, and take a nice vacation every now and then. But I am still continuing to work, because I do wanna pad my net worth a little bit before I pull the plug.

When I wanted to get into these income streams, I had to decide whether I wanted to be an active participant or a passive one. Being a physician, that really took a lot of my time. I didn’t wanna have a second job… And that’s why real estate passively was ideally suited for me.

I’ve owned a couple of condos which I actually lost during the divorce, and I was not unhappy about that, because they were a pain to manage, and the money received from that was not really worth my time… So I didn’t wanna be a landlord, so I kind of wanted to have something where I could invest in real estate, take advantage of all the tax benefits. The IRS and the tax law right now favors a lot of people who are into real estate. There are so many more benefits than you can get from just normal working… So I really wanted to get into real estate, but I didn’t wanna be a landlord.

I started looking into passive things. One of the easiest ones to do is actually what’s called a REIT. That’s a real estate investment trust. It’s almost like a stock – you basically can buy it off the market; there’s indexes for it as well… And you could be part of this real estate investment plan with them, and every quarter they send you distributions, so it’s almost like you own the real estate, but it’s treated like a stock. That’s probably the easiest way to get into it.

Unfortunately, REITs can behave like stocks. So if the market crashes, you could certainly lose a lot of value in your REIT shares. But if you’re not gonna sell it – I don’t plan on selling my shares – the volatility doesn’t bother me as much.

The next level when I got to it was the crowdfunding platforms. The JOBS Act basically allowed normal individuals to start investing in these real estate properties that were at one point only available to the ultra-wealthy. There were platforms that came up, like RealtyShares and a whole bunch of others.

I actually went into RealtyShares and did three deals with them, had no problems, and later on RealtyShares actually closed its doors, but others have taken its place. But that was an easier step for me to go into real estate, was through these crowdfunding platforms.

The minimums were a lot lower than what I’m currently in. They usually could be anywhere from 3k, to 5k, to 10k to invest in. You basically pool your sources with other investors and you could buy these commercial properties like apartments. Then, if you’re fortunate enough – which I achieved fairly quickly in my early stages of this project – you become an accredited investor, if you have a net worth of over a million dollars, not including your primary home, or if your salary is (if you’re single) $250,000 a year. Or actually I think it’s $200,000 if you’re single and $300,000 if you’re a couple, a year. So if you can achieve that and you become an accredited investor, that opens up a whole bunch of more opportunities for you to invest in, and that’s where I was at fairly soon, and that’s where I concentrated my efforts on.

Theo Hicks: Can you walk us through an example deal that you do right now? Let’s talk about it at the highest level, so not the REIT, not the crowdfunding platform, but what you’re doing now as an accredited investor.

Xray: Yeah. As an accredited investor – it basically gives you opportunities to invest in these private syndicators. These private syndicators – there’s a lot of them, and that’s probably the most daunting thing out of all this; there’s so many choices, you have no idea where you wanna go to… So you actually have to do a lot of research. But when you become an accredited investor, basically these private syndicators will offer you opportunities. Basically, you will contact them through their website, or if you have an email contact, and then do an interview, make sure that you’re a good fit with them; they’ll check your financials, you have to fill out some forms that basically agrees that you are indeed an accredited investor.

What happens when you join these companies is whenever they have a potential offering, about a month or two before they close on a property — say they have a 20 million dollar apartment complex that they wanna purchase… They’ve done their due diligence, they think this is in a good area, there’s a good projection for growth – they will send out a mass email, or some will do a demonstration, a webinar over the internet, and they will present it to their group of investors. So I’ll usually get a phone call, because I’m pretty active in a few of them, and I will get a heads up by one of the investor relations people. They say “Hey, we have an interesting opportunity coming up; I just wanna give you a heads up. If you need some funds to start mobilizing, we want you to be ready for this.”

These private syndications are a little bit more of a bigger step to get into. Like I said, crowdfunding – you get in as low as $1,000. Typically, these private syndicators that I’ve been dealing with – the minimums are usually around $50,000, and I’ve seen some that the minimum investment is in the quarter of a million plus range. So it does take a little bit more dry powder to get into it… And obviously, you have to have other assets that allow you to put your money in here… And the money that you put into these investments — it’s typically a long-term play. Once you’re in it, it’s not very liquid; it’s an illiquid investment, so it’s hard to get it out.

In case you’re relying on this money for short-term things, this is not the avenue you wanna go into. But they’ll basically give you a notice after you see the webinar or the emails that they send you and you feel like you’re comfortable with it; you make a pledge, you fill out a form, and you put your investment amount. Typically, they’ll withdraw your funds from your bank, and then you’re automatically invested in it.

The ones that I’m a part of – they usually have each property in an LLC… So all the other investors are all in this one LLC, and then whatever the positive cashflow that that one property does, they do quarterly distributions.

Theo Hicks: Okay, perfect. For all that are listening, if you want more details [unintelligible [00:15:54].04] make sure you check out Syndication School, where we do an hour a week of just strictly talking about how these syndications work.

So you mentioned that with these private syndicators – there’s a lot of them. And I get this question all the time, which is “How do you know who to invest with? How do you pick?” There’s literally hundreds, probably thousands of private syndicators out there, so… I know you’ve probably got your go-to syndicators, but for someone who’s wanting to enter this field – they’re an accredited investor and they wanna know how to get started, what would you tell them are some important characteristics of a good syndicator, but also talk about some red flags as well.

Xray: Sure. That really is the biggest question, and it is one of the hardest ones to answer fully, because you basically wanna do your own due diligence and feel comfortable with it, because you are writing a substantial amount of money (a check) to some people that you might not have ever even met in person… And it feels like a leap of faith. The first time I did it, it was just like “What am I doing…? Am I ever gonna see this money again?” And it felt like I’m just handing this stranger 50k, 100k of my hard-earned money. “What am I thinking…?” And you definitely get a comfort level with it. I guarantee you, the first syndication that you become involved with, you’re gonna have a little bit of self-doubt.

The things that made me feel a lot more comfortable were to actually do research on that particular company. As I said, I did a lot of research on other blogs, and if I saw another blogger who I trusted mention “Hey, I am an investor in this particular company. This is my experience with them. This is great” and they recommended it, that obviously raised the bar for me in terms of “Yeah, this is a good quality company that I should trust.”

Some of the other things is most of these companies will require a phone interview. They’re interviewing you, but at the same time you need to be interviewing them. You need to have the same philosophy. Some companies specialize in a certain sector of real estate. Some do self-storage, and concentrate on that. Some people do apartments, some people just do retail, some do all of them. So if you feel like you’re comfortable with a certain sector of real estate, obviously the best match for you would be a sponsor that is in that particular field. For me, I thought that my comfort zone was multifamily commercial apartments, and I wanted to go into that sector primarily, just because of my own personal beliefs. I wasn’t as high on retail as some people might be… So I’ve found companies that were concentrated solely on apartments.

Then after that I did more research on the particular company itself – again, reading about it on blogs, doing online searches… They also should provide you – and you should ask for it if they don’t – a list of other investors that are currently in their base, that you could call and talk freely with them. That’s another great source of information. Talk to another individual who’s already been through a few cycles with them; ask them “Are the returns on par with what they projected?” And even if they’re not exactly on there, these are all projections; some people get all spun up, “Oh, it came in 0.1% less than they said they would…” That’s rational, to have a little bit of a wiggle room.

They’re not gonna be exactly spot on in these projections; so when you’re reading the paperwork, don’t get hooked up so much on the details, but you just wanna make sure that they’re not being overly optimistic. They’re not telling you “This is gonna be a home run.” And anytime you see one property that has expected returns that are way, way beyond what normally would be for that property, that’s a red flag for me.

As somebody who’s a syndicator, who wants to get investors, they sometimes can inflate the numbers, and they try to make it look enticing, so you have to be cautious as well. I’ve seen five properties that have a return of this, property number six is double that; why is that? And they’d better have a good reason why, otherwise you might not want to put your hard-earned money into something that’s more speculative.

Theo Hicks: You mentioned the FIRE – Lean FIRE, Fat FIRE… How do someone who wants to achieve financial independence through passive investing, how do they go about setting their goals? Are they saying that “I need to invest this amount of money”, or “I need to invest in this many deals, if I wanna become financially free”? What’s the process I should go through to determine exactly what I need to do?

Xray: The best thing to do is to figure out what your current (what I call) “burn rate” is. If you could find out what your basic living expenses are, if you have a mortgage… And it also depends on if you wanna retire early or retire a certain age, if you plan on having that mortgage at that time, or will it be paid on… But for me, what I did was I figured out “Every year, this is sort of where I was trending in terms of expenses”, and you wanna make it where there’s a basic level, where “This is the absolute minimum I need to make sure I don’t have to sell my house, or get kicked out, or get foreclosed on, that I could actually eat the way I want to eat, that I have utilities the way I want it.” That should be your basic line. And once you figure out that that’s your annual burn rate or your spend rate, you could sort of work your way backwards and try to get a passive income stream to at least match that.

Obviously, it’s a long-term play. Don’t be discouraged that “Man, I’m not gonna be able to do that year one.” This is not something that you can do in one year. It takes several years. And obviously, the higher the income you have, the quicker that path could be. But the first goal is to get to that “Yeah, I am financially independent where I don’t need to rely on any working dollar to come in to maintain what I currently have, the way I wanna live my life.”

Once I did that and I once I achieved that, then I started envisioning what I wanted to do when I am retired. Do I wanna travel the world? Well, that’s gonna add a lot more expenses, so I need to plan accordingly. And how much do I wanna spend? All this is obviously guesstimates. You’re not gonna be completely accurate there, but you could give yourself a little bit of wiggle room and say “Yeah, I like to spend $10,000/year on vacations”, or 20k, or whatever, and then add that into your budget.

One of the studies that a lot of these FIRE blogs use is the Trinity study. Basically, it tells  you that whatever your goal spending is per year in retirement, you divide it by 25, and that’s what you need to have each year to draw off of.

Say you have a million dollars in your nest egg. Basically, 4% of that is $40,000/year. So that one million dollars — and don’t include your primary home in this number, unless you plan on selling it and using it as money that would work for you. But whatever your money that is actually going out there and acting as capital and bringing in passive income – whatever that amount is, divide it by 25, and that is a relatively comfortable estimate of how much you can take each year.

If you have a $100,000/year lifestyle, multiply it by 25 – so you need to have a 2.5 million dollar nest egg to support that life. That’s sort of how you wanna do it. You’ve gotta figure out where you wanna be, and then how much you think that costs a year to support that, multiply that by 25 and that’s your nest egg gold.

Theo Hicks: Is that factor saying that you can make a 4% return on that money, or is that saying that after retirement you’re gonna be alive for 25 more years?

Xray: The Trinity study took it out for 30 years, so there’s a little bit of caveat to there… And there’s some people now that are a little bit more conservative; they think that 4% is a little bit too high, given where they think the market is going… But the Trinity study was done, I believe, 10-15 years ago. They basically did it on a mix of bond and stock — I believe it was like a 60 and a 40. So that’s how the 25 rule came, it was off this Trinity study.

I personally am really conservative. When I leave medicine, it’s gonna be really hard for me to ever go back into it, so I wanna make damn sure that when I leave it, I don’t have to ever go back… So I am ultra, ultra-conservative compared to that. My goal was actually to be 3% to 3.5% instead of the 4%. So the smaller the number is, the more of a buffer you have.

A lot of people are saying that the Trinity study is an okay guideline, and depending on how conservative you are, you could vary that number. But  most of the time, if you did follow that Trinity study when it first came out, at the end of 30 years, when they worked it out, most people actually had more in their portfolio than they started out with. So it’s sort of like a doomsday scenario, that it kind of survived so many drops and all that, and that’s why they came up with 4%. There’s probably a 90% or 95% chance that you’ll survive okay, but if you don’t wanna have that 5% to 10% chance that you have a bad retirement, you could be more conservative with that number. But at least that’s a good starting point for me.

Theo Hicks: Is there anything else that we haven’t talked about as it relates to achieving financial independence through passive investing that we haven’t talked about, that you wanna talk about before we wrap it up?

Xray: Yeah, sure. I actually wrote a post about this… This is my favorite type of money; I think passive income is by far my favorite type of income. Even though I make a lot more money through my active work, I get much bigger smiles when I see what I’m getting through my passive income, even though it’s like a fraction of my physician job.

So with my passive income dollars – they get taxed a lot differently than my active dollars. As a physician, I’m in the highest tax margin, so essentially every dollar I make, the government automatically takes 37% off of that, so I lose 37 cents for every dollar I make, for my last dollar (that’s at my marginal rate).

Whereas with passive income, the top tax rate comes in at 20%, and then you add in a 3.8% Affordable Care Act on top of that for some higher individuals; the most you’ll be paying on passive income tax is 23.8%. So there is a big tax arbitrage between those two.

My passive dollar that comes in gets taxed far better than my active dollar that comes in, and  that’s one of the reasons why passive income is such a beautiful concept. First of all, your money is working for you. It works 24 hours a day, seven days a week, and basically your capital is bringing you more money that you could put back into the pot, and it just compounds itself that way. It’s just a beautiful concept.

I’ve written about this one relationship that I think is always important to let people know… There is a financial relationship – there’s a borrower and a lender in every financial equation. You wanna be on the lender side, because that’s where the money is made. If you’re on the borrower side of debt, you’re basically paying somebody else interest. You’re making money for them. Once you become a capitalist, once you have money working for you, you actually flip the script and you become the lender. And in our society, it pays to be the lender.

Theo Hicks: Yeah, it pays to be the lender. That’s a good bit to end on. Xray, I really appreciate you coming on the show. Just to summarize – lots of amazing advice; I’m looking forward to relistening to this episode. You started out by walking us through how you got to the point where you needed help; that was your forum post, “Help me increase my net worth.” You talked about how you essentially through online research came across passive investing in real estate, we talked about financial independence, we talked about the different tiers, so your Basic/Lean FIRE needs, all the way up to Fat FIRE, which is splurging on whatever you want.

We talked about the different levels of passive investing. You could start with the easiest, which are REITs; the next level would be crowdfunding, and the top level would be you being an accredited investor and investing with private syndicators. You walked us through how that process works from a passive investor’s perspective. Then we talked about how you actually qualify a syndicator, because there’s a lot of them out there, and it really comes down to being comfortable with them, their business plan, the types of properties they’re buying, making sure they don’t have unrealistically high or inflated terms, make sure you’re able to actually talk to some of their investors to make sure that they are doing what they say they’re doing, as well as doing some online research and trying to find some people you respect and see who they are actually recommending. But at the end of the day, it’s gonna feel a little weird at first, because it is a  leap of faith… And you mentioned how you had your doubts in the first deal, but once you’ve had success, that will at least be reduced.

We talked about how to go about determining what you’ve gotta do to become financially free; it starts off with that burn rate, and determining how much money you need to bring in in order to cover your basic needs. Then either setting that as your passive income goal, or envisioning what you want to do when you retire, and then adding that to your burn rate. And we also talked about that Trinity study, which is whatever your nest egg is, divide that by 25, and assume that’s how much money you’ll be able to spend per year. Or if you say “I wanna make X amount of dollars per year”, then multiply that by 25 and that’s how big your nest egg has to be.

Then we’ve talked about the differences between taxes on a W-2 income and a passive income; you talked about how people should focus on figuring out how to become the lender, rather than the borrower.

As I mentioned, lots of powerful information in this episode. I’m glad I got to interview you today, Xray. Best Ever listeners, thanks for stopping by, and we will talk to you tomorrow.

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JF1764: Real Estate Agents Need To Know This To Perform At The Highest Levels with Monica Neubauer

Monica is a real estate agent, investor, and podcast host. Currently, she is focusing on helping other real estate agents perform at high levels, and helping their clients in the best ways they can. In order to do this, agents need to constantly be learning their market, and understand the real estate investing atmosphere around them, so that they can help their own clients with their portfolios. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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“Being a real estate agent is selling yourself, you have to go and ask for the business to get the business” – Monica Neubauer


Monica Neubauer 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. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Monica Neubauer. How are you doing, Monica?
Monica Neubauer: Hey, I’m great! Nice to be with you, Joe.
Joe Fairless: Yeah, nice to have you on the show. A little bit about Monica – she has been a real estate agent since 2002. She’s the host of Center for Realtor Development Podcast with NAR. She owns two rental properties and has helped more than a dozen investors buy or sell investment properties. Based in Franklin, Tennessee.
With that being said, Monica, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Monica Neubauer: Well, my current focus is actually helping agents improve their businesses by helping their clients better. I do do a lot of speaking and training about that topic, and one of the things that I love telling agents and giving them the opportunity to learn about is actually investing in real estate… Because agents – they’re around that all the time, and I think it’s a great investment.
You mentioned I have two properties, and just a little bit about why do I just have two, or why don’t have more in this industry, when I have the opportunity… And for myself, my husband and I have been more financially conservative, and so we have bought as we’ve had the money. So like we buy our first home that we live in – it’s almost paid off – we save money, we buy rental properties, and we buy them with a short mortgage. Because our goal is retirement-focused for our investment properties. And I just think all real estate agents, because they’re in the industry, should be looking at buying or selling real estate themselves for their own purposes. So that’s just one of the things I’m passionate about now, among others.
Joe Fairless: Alright. And when you say you buy properties with a short mortgage, how short are you talking?
Monica Neubauer: Well, I have one on a 15, and one on a 20.
Joe Fairless: Okay, cool.
Monica Neubauer: In that case, young enough to look ahead and say “Hm, how many years do I have here?”, being attentive to it. And I put all my money towards getting it paid off.
Joe Fairless: Okay, so you do extra payments, or pay off more per month than what the mortgage is.
Monica Neubauer: Right.
Joe Fairless: Okay. So your primary focus is — I believe you said “helping agents help their clients”, right? So you help agents. Alright. What are some things that you tell agents, to help them perform better?
Monica Neubauer: Well, agents need to be running their real estate business like a business… And in that, while it’s perfectly fine to sell real estate generally, to anybody who wants to buy or sell, in any location within an hour of your house, that doesn’t help agents hone into what they’re really good at. So when I’m teaching and speaking with agents, I like to encourage them to look at their business as a business, what can they be really expert in – is it their town, is it a niche in equestrian properties, residential properties, neighborhoods, or investment properties? What are they really good at and what do they wanna keep doing?
Joe Fairless: Okay. And when you say “run their business like a business”, other than identifying what they’re an expert in, what are some other examples or ways that would play out to run your business like a business, and not a hobby?
Monica Neubauer: Well, it’s spending time in it every day, for one. When we focus on it as a business, that means coming to work, focusing on it, learning what’s so important on it; it’s about keeping up with your finances, recognizing profit, and where’s profit, and what’s the long-term gain. I want them to be in the market all the time. If it’s your full-time job, be in the market; be out there, learning about the new construction that’s happening in the area, be reading up on what are the current new listings on the market, go into classes, go into your office meetings and learning new things… Because the market is shifting and the industry is shifting. There’s so much change going on in real estate, and investing as well; we’re seeing international buyers… There’s just so much to learn, that I wanna see people taking that with purpose – what’s my purpose, where do I wanna go, how do I wanna get there, and what’s the way to get me there?
Joe Fairless: And when you mentioned “What can you be an expert in?”, you gave some good examples of different areas of expertise, like a certain neighborhood, or a certain niche, like equestrian homes… I should know this, but — I know equestrian are horses, right? But what are equestrian homes…? I should know this, but sorry for the ignorance.
Monica Neubauer: Well, equestrian homes, especially those in areas like Tennessee, Kentucky, even Colorado – they usually have property and we wanna know about if it’s fenced, and does it have a barn on it, does it have a stable? You care actually about the quality of the grass. Those are the kinds of things that I’ve learned being involved occasionally; I’m not an equestrian specialist. But in our area, we have agents who are niched in condos; there are some agents who just specialize in condos around the universities in Nashville. There are some who do the high rise condo buildings. There are some who do land, or rural land, or rural land for development. Those are a few of the niches that people easily get into.
But then you could also look at people’s needs niches. Some people love animals, so build your business around your love for dogs and cats, and network with other people who love animals as well, and what’s available in the community. So it could be either a housing niche, or a personality niche.
Joe Fairless: And when it’s the personality one, will you elaborate on how that plays out from a business standpoint?
Monica Neubauer: It plays out in kind of who you spend time with. If you have somebody who has pets, their housing style may not be the same… But when people have pets that are really important to them, they like to be with people who respect their love for their animals, and they’re gonna talk to them about where to find a good vet, and where are the dog parks, and have conversation like that; that becomes that core for community with the realtor and the seller or buyer… Which is so important, because when you’re spending all that time together, you wanna have some camaraderie and some rapport. So you have things like the animals… For a while, my husband and I had a Harley Davidson motorcycle, and we rode motorcycles, and I just enjoyed hanging out with those people so much for that season, and worked with a number of them… And that is a particularly loyal group, and they enjoy working with other people who have the same hobby. So then I could tell them about what are the great roads to ride on, what are the great towns to go visit. So for them, it was not so much my niche specialty in a house, but it was “Tell me how I can live my lifestyle in your area.”
Joe Fairless: Sure. That’s a really helpful example, because that certainly could be applied to any investor, whether they’re a real estate agent or not. If you’re looking for capital for your business, then focus on what you enjoy already, and then go get involved in the community and build a group of people around that thing you all collectively enjoy, and then it’s likely you’ll get some customers or clients as a result of that, right?
Monica Neubauer: Well, totally right. I was listening to one of your podcasts – today, actually – with Theo; you were talking about being intentional about networking with people who could be investors… And when you’re in real estate, honestly the world is your potential client. Anybody could potentially be someone who would buy or sell a property. But that doesn’t mean we necessarily want to or can focus on the whole world, as in every industry we have to focus on where we can meet the people and who are the customers that we wanna serve. So that comes into whether you’re in a Harley group, or you’re in a running group, or you’re in a moms group; whatever your group is where you’re connecting with people, you as a real estate agent can present that for the owner, purchase and sale, or introducing them to investors.
A number of the investors that I’ve worked with were first-time investors, so I would talk to them about buying an investment. Or you’re leaving your first home; why don’t you try and keep your first home, if you can afford to, when you buy your second home? I have loved teaching people how to invest in real estate, just in the normal course of the people that I serve.
Joe Fairless: Have you worked with first-time investors, as well as investors who have purchased multiple properties?
Monica Neubauer: Yes.
Joe Fairless: What are some questions that people who are investing for the first time ask, that people who have invested multiple times do not ask?
Monica Neubauer: Well, I’ve found that the first-time investor buyers – they have, as you mentioned, so many questions. They are concerned about renting it, and how hard is it gonna be to rent it… And it kind of depends on if they’ve had some training. If you have somebody who’s taken some classes, or read some books, they have a little bit more information and tend to ask better questions. But when you first start talking to them about it, they’d like to see how does the money pan out, so it’s good to have a spreadsheet (template) to show them… But it’s also about “Should I manage it myself? Should I get a property manager? What’s involved in getting a tenant in my place? Do I need to run a credit report? How do I do that?” Then they also wanna know about the lease. If I’m working with them, will I help them with the lease, or do they need to do that somewhere else? Those kinds of questions.
Joe Fairless: Do you enjoy working with first-time investors?
Monica Neubauer: I do, because I’m a teacher, so I love to see people grow in something new… So I do. [laughs]
Joe Fairless: Fair enough. And it’s probably rewarding as they come back for number two, number three and number four, that you’ve helped them along through the process, right?
Monica Neubauer: Right. And giving them some vision for something new, and help them believe that they could do something that maybe they didn’t think they could do, or they were afraid of it… And occasionally, they don’t love it; then they come back and they need to sell the property, or they’re done, or they had a bad tenant, or whatever… But I’ve never had them regret it. They still learned something, it was still interesting, or they were glad they tried it.
Joe Fairless: And from a teaching or development standpoint when you work with agents, you talked about running your business like a business and what can you be an expert in… What’s something else that you talk to agents about?
Monica Neubauer: Well, a lot of people come into real estate and they think about it as “I’m gonna start a second career.” Either they might be older in their lives, or they might want to have a little extra money, so they do like a side hustle, which that’s a little concerning to me, because there’s so much involved… So people don’t always think about where to get the business; they kind of think they’re gonna talk about it amongst their friends, and they’re just gonna start helping people and it’s just gonna fall into place. But being a real estate agent is selling yourself. You have to go and get the business and ask for the business, just like as if you were selling clothing or insurance, or whatever else. You still have to go out and sell yourself.
So a lot of agents struggle with the habit of building up that communication with potential buyers and sellers, and providing value in the marketplace, so that when they have somebody who wants to buy or sell, that they will contact them. Just being in touch and providing value. We talk a lot about that, and encouraging people to write blogs, or take good photographs, and connect on social media… Just to be always providing relevant and interesting information to people, so that when they have a real estate need they’ll call you, because they know you know what you’re doing.
Joe Fairless: Sure. And any tactical things you recommend to act on that advice?
Monica Neubauer: Well, I do have a few tactical things… [laughs] There are so many ways, and I would say once you decide “Okay, I need to make a plan to get business…” That’s where people really need to start; me just hoping it’s gonna fall out of the sky is not a plan. I think there’s a book “Hope is not a strategy.” Well, that fits in this situation. They need to make a plan; are they going to be calling people and having conversations on the phone? Do they want to send out information via an e-mail list, or provide market data, maybe on social media? They need to decide some way to communicate out into the community. And what is that gonna be? What’s a social media network that they love being involved with, or are they on a neighborhood HOA board? Where are they already involved with that they can provide value? Is that an email newsletter list to that group, or can they sponsor something where they can provide information? Can they start writing a blog and share the blog and relevant market information on their Facebook page? Do they love taking photos? Maybe they can build an Instagram account and have photos of their neighborhood, or favorite house styles that they like…
I know some agents will do regular happy hour events, and invite past clients or friends to come and network and connect with other people, and it’s sponsored by the real estate agent, so it just keeps her there, front of mind, and always meeting with people, but she’s providing value by encouraging this networking with people who wanna meet other people, which is especially relevant when you have new buyers who move into town.
Joe Fairless: Oh yeah. Very helpful. Based on your experience as a real estate agent and also an investor, what is your best advice ever for real estate investors?
Monica Neubauer: My best advice ever… Uuh. Okay… [laughs] I think my best advice ever is to make sure you as an investor know what you’re getting into. I would love it if every investor had a great network, a real estate investor’s network and a great agent that they trusted, who really were helping you and looking out for your best interests. But the fact of the matter is that an investor – it’s still their own money; they’re gonna be the owner of the house, they’re gonna be doing the repairs, or they’re gonna be hiring the property manager… So an investor needs to keep educating themselves about the process. “Where is the money going? What are the legal things? What are the landlord laws in my state?”
We have so many people ask us – and this is more from a buyer perspective, even though it’s an investor niche – about “What about those pre-foreclosures?” Well, pre-foreclosures are complicated things for people who don’t know what they’re doing, but investors who really dig in and learn it and know what they’re buying, it can be a really great thing. But if they’re relying on a real estate agent who hasn’t been trained in that, that could end up costing them money.
Joe Fairless: Sure.
Monica Neubauer: My best advice to investors would be to keep reading books, keep learning, go and talk to people at the county government office… If you’re gonna take this seriously, either keep it really simple, like I’ve done, maybe like a buy and hold, and just kind of let it appreciate over time, and keeping that money in your savings account as they pay down your mortgage, and if you’re even more conservative than me, you can get a property manager; if it’s out of town, get a property manager… That’s kind of the simplest way to do it.
If you wanna get more involved – and I know that you teach a lot of your investors about how to get more involved and have their own businesses, digging in with it – then they need to learn. They need to learn construction things. If your contractor is over there, learn some things from him/her, because you might need to step up and help them sometime when you get in a hurry. So just keep learning. If this is your business, this is your industry, it’s your money on the line, learn it.
Joe Fairless: Yup. And treating it like a business, and just becoming not a human being, right? Always becoming something else…
Monica Neubauer: Well, maybe it’s one of those times to not so be a human being. This is be a human doing in your business. [laughs]
Joe Fairless: Right, yeah.
Monica Neubauer: Just like being a realtor, being an investor, if you’re building it as a business, think about the income, the expenses, how can you improve yourself. They go together.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Monica Neubauer: Oh, okay. A lighting round. I’m ready.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:18:44].24] to [00:19:25].25]
Joe Fairless: Okay, best ever book you’ve recently read?
Monica Neubauer: I’m reading “High performance habits” by Brendon Burchard right now to tweak some of my habits.
Joe Fairless: Good stuff.
Monica Neubauer: It is good stuff. I’m having to kind of dig in because I know some of it; I’ve got some of it going on, but I’m really getting some great reminders. He’s giving a couple of really good tips that I haven’t heard before. One of my favorites I’m trying to practice is the transition mentality.
Joe Fairless: What’s that?
Monica Neubauer: Well, I work in my house, which is fabulous, but what happens when I’m done working and I just go in for dinner, and go into my family part of my house? Am I taking any mind space to make a shift, or am I bringing my work attitude with me? So it’s that transition mindset, so I can be where I am, in the moment, right where I need to be.
Joe Fairless: That’s something I need to be better at, as well. I might check that out. What’s a mistake you’ve made on a transaction in real estate?
Monica Neubauer: I’m thinking of a situation where the negotiations took a strange bent…
Joe Fairless: Okay…
Monica Neubauer: [laughs] You know, something came up, it was unexpected, and…
Joe Fairless: What?
Monica Neubauer: It was a negotiation and the other agent had something that was not in the contract, that needed to be, and at the last minute her client was like “Well, I want this.” She hadn’t put it in, and so it wasn’t there, and her approach to me was — that’s where the strange part came in; she was saying “Well, this isn’t done and this isn’t done”, which are things that are not contractual. So it was kind of an assault on me, is what it was. And yet, what she needed really wasn’t difficult. My client could do it, it wasn’t a problem… But I got my own back-up. I was upset because —
Joe Fairless: Yeah… The approach she took?
Monica Neubauer: Right. She didn’t approach me with a genuine “Oh, we’ve got this issue. It’s important to my client. What can we do?” So not only did she not bring solutions, she didn’t come with a cooperative attitude of “Is there a way we can fix this? What can we do?”
Joe Fairless: Yup. So what was the mistake?
Monica Neubauer: Well, the mistake was the client had wanted some extra days after closing, and when we had created the second back-up contract, it wasn’t in there… And they wanted their extra days after closing for possession. And it really was easy for my buyer to do it, but the problem was — well, I mean she had her problems in that, but my own problem, that I have to own, was I got upset on behalf of my client, even though my client wasn’t upset.
Joe Fairless: Okay, fair enough.
Monica Neubauer: People need to remember that the real estate agents in the transaction have agendas. They shouldn’t. They should be neutral negotiators. But we have to remember that we’re all people, and there’s a lot of people in the negotiation.
Joe Fairless: What’s the best ever deal you’ve done, whether it’s with a client or one of your own?
Monica Neubauer: The best ever deal I’ve ever done… I’m actually in a transaction right now that I beleive is gonna go good. I’ll tell you what makes a good transaction, the ones that come to mind as far as good. It’s where everybody has a willingness to do something to help the transaction move forward. It’s just like me getting my backup with that really bad thing that I had done, and that many of us tend to do. The opposite is true – when everybody can come into the transaction with a cooperative attitude (“I’m not gonna dig in my heels”), those make the best transactions.
Joe Fairless: Best ever way you like to give back?
Monica Neubauer: Well, one of the things I like to do to give back – because I’m a speaker, I like to speak on behalf of organizations who need a speaker. Even just today, I was working on an upcoming presentation I’m doing for End Slavery Tennessee, which is a human trafficking organization; they work to educate and help reintroduce survivors back into a healthy environment in Middle Tennessee, and I’m doing a speaking session for them to eight-graders. How exciting is that, to be able to talk to young people about such an important message?
Joe Fairless: Yup. And how can the Best Ever listeners learn more about what you’ve got going on?
Monica Neubauer: Well, they can listen to the podcast if they have an interest in real estate outside of investing; it’s for realtors, but it’s about real estate, just living in the industry… It’s at crdpodcast.com. Or you can find me at MonicaNeubauer.com.
Joe Fairless: Monica, thank you for being on the show, talking about some things that real estate agents should know or should hone, one or the other. Also, talking about your approach for how you two are continually learning and developing as you go… Some really good things here.
Thank you so much, Monica, for being on the show. I hope you have a best ever day, and we’ll talk to you soon.
Monica Neubauer: Alright, thanks Joe.

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JF1688: A Great Team Culture Can Take Your REI Business To New Levels with Danny Coleman

Today’s show features a guest whose main focus with his career is helping teams and businesses grow. Danny shares his best advice on the topic with us today, you may be surprised to learn that team culture is often the biggest area of concern for Danny as he starts working with teams. How do you build an excellent team? Tune in to find out. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“As a leader, you have to make the people feel like they are your priority” – Danny Coleman


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

Danny Coleman: Hey, what’s up, man? I’m doing good.

Joe Fairless: I’m glad to hear it. A little bit about Danny – he’s been working for small teams and businesses since he was 14 years old. He’s got a passion for small businesses and helps business owners grow their businesses. In fact, he was a COO of a real estate development company for four years, and his focus is on management so we’re gonna talk about the lessons he learned from this experiences, and how it can be applied to real estate investors and what we’re doing. Based in Columbia, TN. With that being said, Danny, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Danny Coleman: Sure, yeah. Thanks so much. I was home-schooled, and anyone out there who was ever home-schooled knows that we get to work early in life… So I’ve been working my whole life; it’s always been for small business. I had a few corporate stints; honestly, it just wasn’t for me. I think that when you’ve got the entrepreneurial bug in you, you’re not gonna last in a corporate environment… So ultimately, one thing led to another and I ended up falling into real estate kind of haphazardly, just because of the position I took with a real estate team. Then a couple years later, fast-forward, I’m working for a real estate development company.

I started off as office manager/project manager, then went into business development for the team, and the ultimately COO. That was the last time that I was a W-2 employee. When that business split up – there were two CEOs, and they both had a different vision for the business, so they went their separate ways, and I was like, maybe I can take whatever in being COO for a small team and try to bring that to other teams in real estate businesses… Because if it can work in one place, it can work in any place really, so long as you can teach the fundamentals.

Joe Fairless: And before we talk about what you learned, what did you all do at that real estate development company?

Danny Coleman: We started out wholesaling. We were wholesalers, we were doing pretty high volume, at least for us, within Nashville, TN. Nashville has been pretty hot… So we wholesaled for a while, and then we kind of dipped our toes into the flipping side of things as well. We’d basically get it under contract, and then we’d just determine what’s the best way to monetize this contract. Of course, it used to always be the answer “We just wholesale”, and then we started realizing all the money that we were leaving on the bone, essentially, so we started doing some flips as well. Then the owners also kind of used it as their machine to also build up their rental portfolio… And they gave us the opportunity to do the same, which I’ll probably touch on later.

Joe Fairless: So based on that experience, what did you learn that you’re now applying to small businesses, as well as real estate entrepreneurs who have their own businesses?

Danny Coleman: The biggest thing is helping managers; if you’re a small business owner, you’re managing somebody… Helping managers realize that the fundamentals in management, especially when you’re dealing with small teams and you have limited resources – you’ve got your people aspect and your process aspect. Getting those things right. Focusing on the people aspect really comes down to — the word is thrown around a lot, culture. If you can figure out how to have a good culture on your team, create and cultivate a good culture and realize that that’s an ongoing, never-ending process, you can create a team that becomes leaders, that give you 110%, and can honestly run your business for you, so that way you can do really what you want with your time.

Joe Fairless: How do you cultivate a good culture?

Danny Coleman: Everything for me starts with the hiring process. Whenever I go in to work with a business, I start with their hiring process, because everything stems from the people that you bring in to help you fulfill your vision, to create the thing that you wanna create. So there’s three phases to that. There’s recruiting, then there’s onboarding, then there’s retaining.

Culture really becomes the biggest player in the retaining phase, but honestly it permeates the whole way through them. I don’t know if that answers your question or not. I’ll get into it if you like, but basically culture in a sense is just the soul of your business, and that’s why people have such a difficult time with it. I don’t know if you’re spiritual or not, but the non-physical part of yourself – the soul, if you will – or your business, it’s the same thing; it’s this intangible aspect where all of the things you have, all the processes and systems you have going on around you create the culture. It’s gotta be intentional, but you also have to realize that you can’t control it like you can [unintelligible [00:05:52].08] process.

Joe Fairless: So there’s certainly a priority on having a phenomenal culture. Can you get into some specifics of how to create it? Because you mentioned it starts with the hiring process, so you’ve gotta recruit, you’ve gotta onboard people, you’ve gotta retain them… But can you get into some more specifics there?

Danny Coleman: Yeah. The first thing is what kind of people are you bringing into your team? A lot of small businesses, the owners have a propensity to put warm bodies in seats. “Hey, your sister needs a job?” “My brother needs a job” just whoever. You go online, if you’re working with virtual assistants — we work with lots of virtual assistants, I’ve worked with them over the years… And you tend to think “Okay, I just need a monkey in here doing this. Anyone can do this.” You can’t have that way of thinking. You have to realize you’ve gotta bring in quality people. Because if you want quality people, it’s gonna take intention. And quality people only stick around in the business if you continue to bring in quality people. If you have this mix of “Oh, well this is one of those positions where we need a quality person, but this is somebody where anyone can do that.” You have to throw out that way of thinking. So first of all, the people who you’re bringing into your business.

Secondly, structure. Rock stars love structure. They want honest feedback, they want opportunities in your business to grow, both personally and income-wise, and they wanna be in a place that supports them, and where they feel like they can be vulnerable. There’s a lot of stigma around the whole idea of safe space right now, but the point is your business should be a place where people can be vulnerable, in the sense of that’s how you’re gonna connect with the real person. If we’re all wearing masks, then you’re not interacting with the real person; you’re gonna have communication issues. But when people can be vulnerable, they can be themselves. When they’re themselves, you have the best communication that you can have as humans. If you have to boil all business problems down – it’s not even business, it’s really all problems in the world – it has to do with communication, how we communicate with each other as humans.

Joe Fairless: That’s something that I’ve not thought of… If there’s a position that you need to fill, you must continue to have a high standard, even if it’s a position that perhaps isn’t as much of a priority for you, because bringing in quality people keeps the other quality people around. Thanks for sharing that.

Danny Coleman: And it happens a lot, especially in real estate, because we tend to use virtual assistants for a lot of the parts of the work that basically could be automated, but you ultimately need a human to do it. So you’ll tend to really devalue that position, because you feel like it’s so robotic to do, you could just have the lowest-paying person in there and that’s gonna be the best thing for you… But ultimately, that’s the biggest mistake; if you bring in people who are sub-standard, then your people who are median or exceeding standards will begin to — honestly, they won’t feel great about your decisions; they won’t trust you like they should.

Joe Fairless: Where do you find the quality people?

Danny Coleman: You can get them, you can certainly find quality virtual assistants. UpWork is a huge place to go; it used to be oDesk. And you can find them on Craigslist. I got into the position I’m talking about, the COO position, via a Craigslist ad. So it really comes down to your process. Let’s just think about this for a second – if you’ve got 100 people who apply, how do you figure out who are the 1-3 people in that 100 that are good? So it’s not a matter of where do you go to find them, it’s just you’ve gotta make sure you’re casting your net wide enough.

Then the problem is “Oh, I’ve been casting my net so wide…”, so it’s a 40-hour/week job to screen these people, and interview and hire these people. So you’ve gotta have a good process, and that’s when it comes back to the hiring process we can talk about. A good process will work through all the masses of people that exist out there and who are trying to apply for your job. That’s essentially how you do it – you have to cast a wide net, but you’ve gotta have a process that keeps it from taking up all your time.

Joe Fairless: And what is that process?

Danny Coleman: Every business that I work with, we kind of tweak it a little bit. It starts with your job ad – how are you even putting your job ad together? It sounds so basic and technical, but it’s really important. When you’re writing a job ad, what you’re doing is you’re asking someone else to come contribute to your vision; you’re saying “Hey, I want you to come in and be a part of this thing that I’m building.”

The way that I have people write job ads (or I’ll write them for them) is you wanna tell a story. Why your business. Describe what your business is, four values of your business, what are the people in your business like, and then you wanna lead them on – “Does this sound like a good place? Is it interesting to you? Well, keep reading. Here’s what we need help with.” Get really clear on your position.

I always have people write up a position agreement, or I’m gonna help them write a position agreement. A position agreement is a mutual contract between you and the person who’s filling the position. More basically, it’s a job description. But then once you bring them on board, it’s kind of when it becomes this living, breathing document between you and them.

But to stay on point with the process – you start out with just your job description. You say “Here’s the reason that this position exists. Here’s the things that you’re gonna be responsible of doing on a daily/weekly/monthly basis. Sound like you? Sound like something you’re interested in? Cool, keep reading”, and then you describe them as a person. I think this is what’s missing from a lot of job descriptions – you kind of just say “Hey, here’s our company, here’s what we need. If you wanna do this, apply here.” But you wanna describe them as a person, because the people who get really excited – and people who are hiring managers know what I’m talking about; or if you’ve done interviews – about working for you and the people you want on your team, they’re reading that description of themselves essentially on your job ad, and they’re like giddy. They can’t wait to apply for it. “Wow, this is what I’ve been looking for!”

And just to give you a real-life example, this is how I got into that position, for the real estate business in Nashville. [unintelligible [00:11:30].11] that changed my life… And it was because of how well-written the job ad was; it wasn’t perfect, but it got me excited. In fact, one of the things that they had in the job ad was “Must enjoy organizing chaos”, which is [unintelligible [00:11:43].08] I have podcast named “Organizing Chaos.” So I read the recruiter’s job description describing me, and I was like “Oh my gosh, I can’t wait to do this.” So really that’s the big part. I’m kind of going into details on the hiring process, but it really is where it all starts. Putting that job ad together is the first step towards finding the right people… And again, you’ve gotta cast a wide net, but that process needs to sift through all of the people that are gonna apply; you’re gonna have the resume shotgunners, you don’t want them… You want the people who get excited.

Then I have really specific instructions on how to apply. “Your subject line must look like this, and you must include a cover letter”, and these other things… But yeah, I can get into as much detail as you’d like on that.

Joe Fairless: Yeah, that would be good. I imagine — one of the things you’ve mentioned is “Have something specific in the subject, as well as have a cover letter”. Those are the ways you filter people out, right?

Danny Coleman: Yeah. And it started honestly out as something I did for technical reasons… Because I was casting a wide net, but I didn’t wanna deal with all these e-mails in my inbox, so I set up a filter… And it needed to work with that filter. I’m sure you’re probably familiar with Podio. I would use Podio to manage the applications. So e-mails would come in from Craigslist, Indeed, or wherever else I placed a job ad – they would come in, and then they would use that filter to send that e-mail on to Podio, where I would then manage the applications in there.

But then I also had a qualifier – can you follow simple directions, such as your name, colon, position. A lot of people don’t do that. There’s also lots of apps out there that work with Craigslist, that help people shotgun their resume, and it doesn’t take those types of things into consideration… Just like go to apply with the job title, or something like that. So that’s the next part of the process.

Then the next thing I do is I shortlist those candidates. So I already have two pre-screens that essentially run through a really specific job ad, and then a specific way of applying. Then I do a video for it. I’ll send out a video of myself where I pretty much just say a few things about the position we’re looking for. I’ll pretty much just read the job ad, but I obviously give it some flavor and context, and I let them see me. Then I send that video out to everybody who I’ve shortlisted, and I request a video back from them.

We used to have a problem… For a while we would kind of hit and miss on whether or not people would be responding with their video, because a lot of people don’t wanna do that. But I’ve found out that it balanced the relationship a little bit by me sending the video first to all those people I shortlisted, and basically it gets them excited again. If they like the position, they’re gonna be excited to respond. So that’s another screen right there, because you’re gonna have maybe a 25% response rate with people doing videos back… And it also tests their ability to do something simple like upload a video to YouTube, make it unlisted and send it to you.

Joe Fairless: What do you ask them to do in the video?

Danny Coleman: I have them tell me what about the job ad stuck out to them and what interested them, and then why do they think their natural talents and/or their experience would be relevant to this position. And I really just use the idea of who they are as people. Before we have to sit down and schedule interviews, it gives me an idea of what their character is like, how are they coming across; what is it that excited them about the job ad. I wanna hear them say it, rather than formulate an e-mail response where they can write and rewrite it a million times. Of course, they can upload the video many times too, but they’re less likely to do that than they would with an e-mail.

So getting just those two questions answered is really all that I ask for. And again, it helps me with this whole process of being able to cast a wide net, but then use all these various filters to filter it down to make the best use of my time.

Joe Fairless: For people who do the video, the 25%, but you’re not a fan of the video – do you reply to them, or do you just not reply?

Danny Coleman: I do let them know that I’m moving forward to another candidate. Of course, typically at that stage they might have asked me a question, like “Hey…” — I’ll always let people know I got it, because you always wanna be respectful of the fact they’ve sent a stranger a video.

Joe Fairless: Yeah…

Danny Coleman: So I always respond. I have an auto-response that says “Hey, we’ve got your video. Thanks so much. We’ll be in touch within the next timeframe.” And I always try to let people know. But the people who send back a video, I try to let them know what the deadline is for when I’m trying to hire for this position; it’s respectful of their time… Because if they’ve given me this much respect at this point too – replied to the video, followed the instructions, sent me a video back – I wanna let them know 1) that I got it, and 2) what kind of timeframe they can expect. Because they might be looking for a job sooner, or they might need to move on with another application, or something. So I try to be respectful in that by letting them know.

But ultimately, when I’m done interviewing someone, or by the point I get to the point where I’m  scheduling in-person interviews, I let everybody else know we’re moving forward with other candidates right now, so thanks so much for your interest, or whatever.

Joe Fairless: And then what’s the next step in your process?

Danny Coleman: The next step is an in-person interview… And I’ll give this out, honestly, to anyone who’s interested in it – I have an interview template that I use. I’ve built it over time, there’s a lot of research behind it, there’s more experience behind it… I’ve got an interview template that — my interviews run about an hour long. That’s why this process has to shake people down to the point where maybe I’ve got five or six people who sent back videos, who I’m like “I wanna schedule an in-person interview with these people.” Without fail, out of those five or six I’m only gonna get three people who are going  to take the time to schedule an interview with me… But the truth is that probably any one of those people that I’m going to schedule an interview with, because of all the filters I’ve had set up beforehand, by the time we get to that point probably any one of those three people would actually work… And then the interview is just to see who I think it would work with the best; who has got the chemistry if they’re interacting with me where we’re gonna get along the best and we’re gonna be able to communicate and understand one another.

But that interview – as I said, it’s an hour long; a couple of the things that I ask people about is their future plans. I wanna know that a candidate that I’m talking to has been considering their future, at least 6 or 12 months in the future. Are they reading books? You know they read books, period; I don’t care — I like it to be personal development or business books, but if they’re reading fiction, that’s fine too. I think people who read books – it’s a telltale sign of someone who is just a little bit more than basic. That’s another favorite.

I always ask the classic question, “What’s a weakness? What’s something you could stand to improve on?” Because for me if you’re not self-aware enough to know something that you need to work on, then you’re not self-aware enough to be on my team… So I think that’s important, too.

I’m trying to think of some other things… I always like to ask people to say one word to describe what motivates them. Then I also ask “In one word describe what discourages you, or tears you down.” It helps me to get an idea of how this person uses words. Everyone has a different association with different words, different words mean different things to people. That’s why communication is hard. It gets them to stop and think in an interview, and that’s with a lot of my questions – they’re designed to get people to pause and give me thoughtful answers… Because as I’m doing the interview, I’m always engaging in Socratic questions; if you don’t know what that is – it’s basically asking a clarifying question after each question. It’s not every question; sometimes people give you good answers that I don’t need to ask for clarification on, but most of the time I’ll be like “Go further into that” or “Why would you use that word?” or “Give me an example of that”, or something like that… And you get them to get a layer deeper. That’s how you filter out people who might just be blowing smoke, or BS-ing you, or whatever. That’s what my interviews are really designed to do – how do I get down to the real person, how do I get down to the genuine human being that I’m gonna be interacting with on a daily basis.

One thing I forgot to mention is that I open it up by actually mentioning a few things about myself. I like to have a conversation, not an interrogation. If you go in there and you’re just like “Oh, well let me just immediately start asking you questions” – no, I like to say “Hey, my name is Danny Coleman and I live in Columbia, TN. I really like to be a part of my community. I’ve been working for this business for x years. I like to ride motorcycles, and I’m a Star Wars fan.” It lowers defenses, because defenses are there because they think that they have to present this perfect version of themselves.

Joe Fairless: Right.

Danny Coleman: That’s not the version of the person you’re gonna be working with on a daily basis. You’re gonna see people in terrible situations, which reminds me of one other favorite question of mine from the interview… Asking them about what frustrates them the most, and then following up with “How do you cope?” That’s another good one that I’ve really used. Because again, you’re not just asking questions that they pass or fail here; you’re asking questions that inform you if you hire them, you understand more about them and how to interact with them, sooner rather than later.

Joe Fairless: Incredibly insightful. Thank you for that. How can the Best Ever listeners get that template? Do they just e-mail you, or…?

Danny Coleman: Yeah, shoot me an e-mail at danny@dannycoleman.me. I have a bit.ly link, it might work with that. Can I send it to you?

Joe Fairless: Yeah, you can send it to Grant on my team and he’ll make sure it’s in the show notes page. Sorry, what was your e-mail?

Danny Coleman: Danny@dannycoleman.me.

Joe Fairless: Cool. Well, based on your experience as an entrepreneur, what is your best advice ever for real estate investors looking to scale their company?

Danny Coleman: It would be focus on your people. I remember there was a point in time at a business that I used to work for, that I was like “Wow, I feel like we care more about each other than we do about our customers.” And that sounds weird and odd, but I think it’s really important, because if your team doesn’t think that they’re a priority, that the money is more priority, then they’re not gonna follow you.

As a leader, you have to make your people feel like they’re the priority in your business, and in turn they’re gonna give you 100% and they’ll be loyal, and you’ll be able to give them more responsibility without necessarily increasing their pay, which I think is one of the biggest things that we run into as real estate entrepreneurs.

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

Danny Coleman: Yeah, yeah. I’ve never done one.

Joe Fairless: Well, because I’ve never interviewed you on the show. This is the first time, and you’ll enjoy it. It’ll be a lot of fun. First though, a quick word from our Best Ever partners.

Break: [00:21:42].09] to [00:23:04].01]

Joe Fairless: Alright, speaking of being well-read – best ever book you’ve recently read?

Danny Coleman: David Goggins, Can’t Hurt Me. Fantastic book.

Joe Fairless: Best ever business deal you’ve done, whether real estate or otherwise?

Danny Coleman: Well, I would have to say it was a deal that we got $100,000 assignment on. That was pretty cool. We all got a percentage of that, so I didn’t get $100,000, but I did get a really nice paycheck.

Joe Fairless: What’s a mistake you’ve made in business?

Danny Coleman: I would have to say being overly trusting.

Joe Fairless: What happened?

Danny Coleman: Contractors specifically.

Joe Fairless: Oh, yeah…

Danny Coleman: I just got kind of manipulated by a contractor. I don’t think he was so maniacal, I just think it was one of those people that are like “Oh, we’ve got a good relationship, so I can get away with this, I can get away with that, I can get away with this…” There’s foundation issues now, we’ll leave it at that.

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

Danny Coleman: My local community or the real estate–

Joe Fairless: Whoever.

Danny Coleman: Well, I’m a very big proponent of being involved in your local government. I think it’s very important that you’re attending commission meetings and/or your city council meetings, keeping in touch with the local representatives, because that’s where you can have an impact on the government. And if you wanna change the way that the world is, we need to get in touch with leaders, and/or be one yourself.

On that note, I ran for a county commission seat just recently. It was just a vacancy, so it wasn’t a traditional election. I didn’t win, but I am gonna run next year, so call me in 2020 for [unintelligible [00:24:25].29]

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

Danny Coleman: Well, they can visit my website, www.dannycoleman.me. You can find my podcast… Everything about me is on there, but my podcast is Organizing Chaos. You can find that on Stitcher, iTunes, Spotify, or your favorite music listening apps. But yeah, if you go to dannycoleman.me, you’re gonna see all my social media profiles – LinkedIn, Instagram, all that jazz.

Joe Fairless: You laid out the plan for how to attract and screen qualified applicants so that you bring in the best people, which creates the best culture, and you got very detailed talking about things to put in the job description to attract people, as well as ways to filter out a bunch of people who wouldn’t be as qualified… And then questions asked during the interview process.

Any entrepreneur who is scaling their business – this is an interview to listen to, and I’m grateful that you spent some time with us. Thanks again for being on the show. I hope you have a wonderful day, and we’ll talk to you again soon.

Danny Coleman: Awesome. Thank you, Joe.

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JF1254: From Losing Money On The First Deal To Paying Cash For New Investments with JD Martin

JD and his wife thought the best thing to do with their first deal was new construction. They didn’t make money on that deal, actually they lost some. They sat out for a little while before getting back into real estate. Now JD has a full time job and multiple part time jobs, along with having a portfolio of 12 properties he rents out. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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JD Martin Real Estate Background:

Real estate investor and Owner of Biz Brainstormers, a real estate business, and personal consulting

– Executive director of a utility system and adjunct professor for two major universities

US Navy Gulf War I veteran and holds a doctorate degree in public administration

– Based in Johnson City, Tennessee

– Say hi to him at: http://www.bizbrainstormers.net/

– Best Ever Book: Your Money or Your Life


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

JD Martin: I’m doing well, how are you?

Joe Fairless: I am doing well, and thank you for joining us. Here’s the deal about JD – he has got some real estate experience that he’s gonna talk to us about, but first, thank you sir for your service; he is a U.S. Navy Gulf War vet.

JD Martin:  Thank you, I appreciate it.

Joe Fairless: I first and foremost thank you for that, and now let’s talk about real estate. You hold a doctorate degree in Public Administration, and JD is also a real estate investor and owner of Biz Brainstormers, which is  a real estate business and personal consulting company. He is the executive director of a utility system and he’s an adjunct professor for two major universities. With that being said, JD, do  you wanna give us a  little bit more about your background and your current focus?

JD Martin: Sure. All of that was right. What I do mostly in real estate is we have buy and hold properties; we don’t have a lot of them, we’ve got about a dozen of them, but we kind of started this off about 15 years ago was the beginning of our real estate adventure, and we lost a boatload of money and kind of got out of it for a little while. Then when we came back, we decided to focus on the rental properties, and since then we’ve created a pretty good stream of income and about seven figures in equity.

Joe Fairless: You started 15 years ago(ish) and you said you lost a boatload of money; how did you lose it?

JD Martin: Well, when we first started messing around with real estate, we were just middle-class workers and we had had a couple of houses that we had owned ourselves, and we decided to build a house. We had originally started off with new construction; we thought we would actually live in the house, and then as we kind of got into it, we thought “Well, maybe we’ll sell this and make some money and kind of go that route.”

The entire process turned into a disaster. Our timing was wrong on everything, our numbers were wrong on everything, our relationship with the bank was rough, and when it was all said and done, we had lost over $100,000 on that project, and we were people who didn’t have $100,000 to lose. So we lost this big chunk of money… We said, “Okay, I don’t think we’re gonna do real estate anymore. We’re just gonna work our jobs and maybe put a little away for retirement… We’ll come back to this maybe someday, or maybe someday never.”

Then about 5 or 6 years ago we had accumulated a pretty good chunk of equity, and we saw it wasn’t making any money, and we said “Well, what do we do with this?”, so we started looking at real estate again. We had some of the typical things people have – IRAs and a pension fund and things like that, but nothing that was really too exciting; it wasn’t making a lot of money… And we said, “You know, we’ve got this education of hard knocks from losing all this money on this new construction, so maybe we can use of that knowledge and apply it to something that will create a cashflow”, and it just kind of snowballed from there.

Joe Fairless: On the development deal, is that all on one deal that you lost 100k?

JD Martin: Yeah, that was all on one house.

Joe Fairless: And that was the house you were gonna move into and live in?

JD Martin: Yes, originally we had started off — it was going to be a new construction for ourselves. We had a house, we were gonna sell the house we were in while we were building this house; so we were gonna build this house and then sell what we were in. Then once we got into it a little bit, we said “Well, the market seems kind of slow for used houses, so to speak, but new construction is popping, so let’s sell this, make some money, and then we’ll kind of figure it out from there”, and neither strategy worked out.

Joe Fairless: What did you end up doing?

JD Martin: We ended up selling the new construction. So we did end up selling it, but we sold it at a huge discount. We had cost overruns everywhere, we had self-inflicted mistakes, things that we didn’t understand the numbers very well on, we had problems with our draws — we had construction loans from the bank that came through in draws and we had problems with the draws…

Then we had a competition that started when we were about maybe three-quarters of the way through this thing… We had major competition – a developer bought an enormous farm essentially across the street from where we were building; he bought an entire farm and just started dropping houses everywhere, and we could not compete at all with that.

Joe Fairless: Oh, man…

JD Martin: They were putting houses down so fast… These guys had houses down faster than we could do simple things like run plumbing. [laughter] And their margins — I mean, I don’t know what their numbers were, but I’m sure their margins were really tight… But they were doing 200 houses, so they could be really tight, and we just didn’t have that luxury. By the time it was all said and done, we were lucky not to go bankrupt.

Joe Fairless: Yeah, that was the perfect storm of disaster, what happened there.

JD Martin: It was a perfect storm of disaster. Yeah, it was a very expensive education. It worked out in the long run I guess, because when we started buying the rental houses, without that education, knowing what goes into — because we were the GC’s, so without knowing what went into electrical and plumbing and framing and roofing and drywall, and even things like grading property, without knowing those things then we probably would have been at a disadvantage when it came to looking at rental properties.

So we were buying things that were value-added, where the properties had become dilapidated and were gonna need work. And without that kind of experience and background and education, when we came in to look at these rental properties, we could look at them and say “Well, I pretty much know what’s involved in doing this, or I know what the cost is gonna be involved in doing this” and I believe it gave us a competitive advantage in the marketplace and we started buying houses.

Joe Fairless: Who’s “we”?

JD Martin: Me and my wife, I’m sorry. I’m married, so me and my wife, yes.

Joe Fairless: When the dust settled on the $100,000 loss, what were the conversations like between you and your wife about the project?

JD Martin: [laughs] Some of them were kind of ugly. We never came close to divorce or anything like that, but that would have broken a lot of relationships; it didn’t break ours. I guess the conversations, once the dust had settled and we had finished, it was like “Okay, how do we repair this damage?” We finally unloaded the house, but we were left with huge tax bills everywhere. So the question was “Okay, well how do we repair this damage?”

The way we repaired it is probably the way most middle-class people would approach it at that time – we just kind of put our noses down and got to work. We just went out and worked our jobs, and did a side hustle here and there, wherever you could make a little money, and applied all that money towards becoming solvent again and cleaning up the mess that we made and the mess that we were left with. That took a while.

On a middle-class salary, that’s a multi-year project, for sure. But after a few years we managed to clean up all that debt and clean up that damage, and from there we were able to start taking money and putting it to the side. We’ve always kind of lived underneath our means; we’ve never really been big spenders or ostentatious people, so we just started setting money aside and kind of accumulating this little nest egg. We didn’t really know what we were gonna do with that nest egg… Eventually we went into the rental properties, but at that time we just kind of set it aside as “Hey, let’s have something to fall back on and some cash reserves, instead of where we were before.”

Joe Fairless: For a Best Ever listener who might be going through something similar to what you two went through, and they have a significant other – husband or wife – any advice or thoughts that you have for them for how to approach those conversations? You just went through the situation for how to resolve it from a tactical standpoint, but from a more conversations standpoint before you get in that – any tips for those conversations?

JD Martin: I think the thing that helped us is 1) we never were accusatory towards each other; I’m sure I made the bulk of the mistakes, because I kind of spearheaded the project, so I would say a lot of the fault lay with me… But even things that my wife might have been kind of the lead on, or maybe didn’t put enough input on – we never got accusatory. When everything was done, we kind of looked and said “Okay, this is our mess. This is not Hey, look what you did to us, and now what are we gonna do?” We always kind of approached it as a team, and approached it as “Okay, so we went into this together, it didn’t work, we’ll get out of it together.”

Even during the process, there was a point where we knew we were gonna lose a lot of money… It wasn’t like we were all done and said “Oh, we’re gonna lose money!” There was a point about three-quarters of the way in that we knew it was gonna be a beating at that point; it was just “Finish it up and let’s get out of this.”

When we were at that realization, it was just a matter of being honest with each other, not holding back information, or even kind of holding back your feelings. There were times when I was scared, “Hey, we’re gonna lose the house that we live in. Forget about the new construction, we’re gonna lose our own house.” Just being honest with those feelings and not running from them, so to speak.

Joe Fairless: Now, you started putting away some money, and then how many years until you bought your next property?

JD Martin: It was about ten years. So it was a pretty good distance, but when you come out of something that traumatic for people… At that point, I had never even made $100,000; neither one of us had. Combined we hadn’t made $100,000. So when you come out of something that traumatic, it took a little bit of time before we had the — I don’t wanna say guts, but the wherewithal to get back into even looking at real estate. And even when we did, I remember the first couple conversations we had about it was like “Do we really wanna do this?” We’d been down that road before and it was ugly; it was not good at all.

So it was about ten years, but you have to realize that five years of that (maybe even six) was just cleaning up the damage, really, that was left over from that. So yeah, it was about ten years.

Joe Fairless: At that ten-year mark, right before you two pulled the trigger on the next deal, what was the conversation like, and were one of you going in one direction and the other the other direction? Was one good cop, the other bad cop on doing it?

JD Martin: To some extent I think that’s true. My wife was probably more bad cop than me. I think when we started having that conversation it was like “Okay, we accumulated this chunk of money” and we accumulated a pretty healthy pot of cash at that point… So we said, “We’ve accumulated this chunk of money, we have some IRAs and we have some other stuff, we could put this in an index fund or something else like that”, but neither one of us were comfortable with the stock market… We don’t know a lot about it; we have Vanguard funds and things like that, but… “So we have this money, what should we do with it?”

When we kind of kicked around the conversations of what options were out there, real estate kind of kept coming back, and we kind of looked at the market and saw what we thought maybe was an opportunity locally to get into doing some rental property.

I guess my wife was probably more the bad cop than me in terms of being more “Hey, let’s make sure we really have the numbers straight on this before we even think about doing it”, but we were more or less on the same team. I don’t think there was really that much disagreement either way on doing it or not doing it. We had a lot of conversations about it before we even started looking at houses.

Joe Fairless: Now let’s fast-forward to today – what type of deals are you buying?

JD Martin: What we’re buying today is we’re generally looking for value-added buy and hold properties. We’re usually looking for 2-3 bedroom houses, 1-2 bath; 2 bath if we can get it, 1 seems to be more typical. And we’re usually looking at things that we can get in at 50% or less of the after-rehab value. So if a house is worth $100,000 fixed up, we’re looking at things that we can pick up for 50k or less. Mostly, these houses will need anywhere from 5k to 20k worth of rehab to them, so that when we’re done… And we haven’t really leveraged much; we’ve leveraged a few houses, but most everything we hold outright. But when we’re done, if we want to leverage out of it or sell it, that we have a pretty good chunk of equity already in it that’s really — if we wanted to get our cash back out of it, we would essentially leave nothing behind; all of our own money would be cashed out. So that’s mostly what we look for.

We have a specific niche that we aim for, which is we’re in a college town, so we aim for neighborhoods that appeal to college students – mostly graduate students, but not exclusively… So we kind of look in that niche. We have a pretty narrow scope, probably a lot narrower than most real estate investors, but I still work a day job. I’m a few years from retirement, and we always look that this is just the way to invest this nest egg; we never really set out to be real estate moguls or create an empire, but as we went and kind of picked these houses, it just kind of snowballed from there and created a pretty healthy stream of income.

Joe Fairless: How many different streams of income do you have?

JD Martin: We’ve got a dozen properties. Other than that, of course I’ve got my day job, and I’ve got two part-time gigs. My wife is retired, so we’ve got her retirement income. If you looked at each property as its own income stream and then everything, we’ve got 15-16 streams of income, which I think is probably paramount to existing in this new economy where anybody who’s dependent on just their job, or even just their two jobs if they’re a dual income household (both people working), to me it’s — I don’t wanna say it’s crazy thinking, but if you are depending, you’re putting a lot of dependence on one or two things going right… So creating this multiple stream of income approach has been fantastic for us. It’s created a situation where I could leave my work and we’d just keep chugging along.

Joe Fairless: Do you manage your own properties?

JD Martin: We do. It’s a small portfolio, and everything is local. I can be at any property that we own in 15 minutes. So it’s a pretty small portfolio, and it’s a local portfolio.

Joe Fairless: How many hours  a week do you work in your day job?

JD Martin: My day job works out to roughly 50, maybe a little less than that. But I’m running a utility district and I’m not that far from retirement… So it works out to roughly 50; some weeks are less than that, some weeks are easier than others, but if you averaged it out, it works out to about 9-10 hours a day.

Joe Fairless: What advice do you have for someone who is looking to efficiently manage their portfolio — because you clearly have a system in place with a full-time job… You have to be incredibly efficient with your 12 rentals, plus you said two part-time gigs, which means you have to be even more efficient with your rentals… So what tips do  you have?

JD Martin: Well, the first thing – one thing we do, and we kind of did this in the beginning – when we pick up a house, the house is fully rehabbed before we put it on the market. So we don’t put it on with a roof that’s got one year left of age in it, or appliances that have seen their better days and are just about to break down… When we get a house, we go through it and anything that’s anywhere near the end of its life gets replaced, so that when we put it on the market and somebody gets in it, there’s almost nothing for us to do.

Some of our houses, we have been — other than going back for an inspection once a year, looking at it, we haven’t been back to that house for a year. And by putting that in place, that’s one thing we’ve done to minimize time that way.

Another thing we’ve done is we’ve been very stringent on our tenant screening. Our rental prices are probably a little bit lower than what we could get if we really wanted to push it on the market, but from my point of view, I want a big pool of renters, and I want a strong pool of renters. I wanna have my choice of the cream of the crop, rather than just whatever is left over. By doing that, we get strong renter pools and then we screen them very heavily, because I think if you minimize your tenant turnover and you minimize the aggravating tenants that you can get, it’s gonna really make your life a lot simpler.

So those are two things… Aside from that, I have a small pool of trusted contractors that I can use to handle things I don’t wanna deal with. I have a good plumber, I have a good HVAC guy, I’ve got a good electrician, so if anything major comes up that requires some kind of immediate attention, I can pick up a phone call… Actually, I will do everything by text mostly; I can pick up the text and say “Hey, you’ve got a heating unit that’s not firing.” He says, “Okay, I’ll be out there by 11”, and that’s the end of it; he sends me a bill and we’re done.

Joe Fairless: How much do your homes rent for on average?

JD Martin: I won’t buy anything that I don’t think I can make at least 1% per month of whatever my basis in it is. For me, I consider my basis whatever I paid for the property, plus whatever it costs me to rehab it, plus any ancillary opening costs – if I had to keep it the first six months and pay electric for six months, or whatever the case may be. So if I have a property that I bought for 50k and I put 20k in it, I have 70k in it, that house has to rent for at least $700 or I wouldn’t buy it.

Most of our properties are running for 1.1% to 1.6%, 1.7% above what we have in them, so the annual cash return on them, if you take out expenses, might be for some of them as low as maybe 10% or 11%, and for some of them as high as 17%, something like that.

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

JD Martin: My best real estate advice ever is know your numbers and believe your numbers. On the house we lost all that money in, we had no clue about numbers. We weren’t dumb people, we just didn’t really understand how to truly figure out the cost of holding that house and the cost of construction. We could figure out “Okay, we’ve got an estimate of $10,000 to do framing”, but we forgot about $2,000 in doors, and things like that. So we really had no firm handle on the numbers…

Even today, when we buy the rentals, every once in a while I’ll see a property and be like “Oh, I really want that property”, and then I run the numbers and they just don’t work. Then you get into the temptation of “Maybe I can make these numbers work, maybe I can kind of finagle here, and make this…” and it doesn’t work. If the numbers aren’t there, don’t pretend that you can make them there.

That’s my best advice – you have to know how to do the numbers, and then you have to believe your numbers; once you put it down, if you figured out the most you can pay for this property is 75k and they come back at 76k, you’ve gotta walk. It doesn’t sound like nothing, but if you’ve done your numbers and you trust them, and 75k is your top out point, then 75k and one dollar is over that point, and you’ve gotta go.

Joe Fairless: That’s also a great way to condition yourself if you do walk on that seemingly minor difference in price point, because then that would help you walk during more high stakes situations, because you’re not continually letting things slip for what you want, versus what you’re getting.

JD Martin: I agree. I think what happens is that you rationalize, you say “Oh, well it’s only $1,000 over what my max was.” Yeah, but your max is already the highest thing you could make this work at to begin with.

When I do a max number, I know that hey, if I have to pay more than this, then this property is not gonna make any money, and why would I wanna own any properties that don’t make money?

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

JD Martin: I am.

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

Break: [00:20:43].29] to [00:21:32].19]

Joe Fairless: Best ever book you’ve read?

JD Martin: Best ever book I’ve read in business would be Your Money Or Your Life, by Vicki Robin. Kind of maybe a close second might be The Millionaire Next Door. Both of those are life-changing in terms of changing your mindset. So business-wise, those would be probably my favorite books.

For enjoyment, I like Flight of Passage by Rinker Buck. It was a good book.

Joe Fairless: Best ever song you’ve written?

JD Martin: [laughs] Best ever song I’ve written? I guess I would have to say Gut, Guns and Nascar, because that’s a song that made it to the Super Bowl; although it personally might not be my own favorite, it’s certainly my most famous.

Joe Fairless: And it made it to the Super Bowl in what way?

JD Martin: It was played at the Super Bowl at the 49ers and Ravens. It was actually — I play in a professional rock band when I’m not doing all this other stuff, and we had played at some clubs and one of the sound people worked sound for the Tennessee Titans NFL team, and he was part of the sound crew for the Super Bowl, and our song was part of his playlist.

Joe Fairless: What’s your band?

JD Martin: My band is the Rhythmbrewers, and it’s rhythmbrewers.com if anybody wants to look us up.

Joe Fairless: Best ever deal you’ve done?

JD Martin: Best ever deal I’ve done was probably one where it was a foreclosure and we had put in an offer in on it and the bank didn’t move on it. Then later there was people coming out of the woodwork, everybody putting in an offer. There were probably 15 offers on this thing, and the bank realized they had something that would go for pretty good money, so they said “We think we’re gonna reject all the offers and just put it on the auction.” It looked like everybody was [unintelligible [00:22:57].25] Well, in between that, before they could get it on the auction site, an investment company came in and bought a huge portfolio from this bank, and bought maybe 1,000 houses. I guess the deal was when they bought this 1,000 houses, the bank made them take some things that were in areas that they thought they might not be as well received, and this house was one of them.

When this investment company had come through and bought this, they realized we had had an offering on it before, and they called our agent and said “Hey, are your investors still interested in this house? We don’t really want it, it doesn’t fit our portfolio, so we’re willing to just give it to them for their offer.” We said, “Oh, yes, we’re ready”, because we ended up with 60k in it, and it was worth about 150k. If we sold it today, we would make (I don’t know) a couple hundred percent.

Joe Fairless: What’s a mistake you’ve made on a transaction that you haven’t mentioned already?

JD Martin: A mistake I’ve made on a transaction that I haven’t mentioned already… I would say probably a house that I bought where when I did the numbers I had inadvertently left something out that the house that was being for sale, they had already priced it with leaving that number out. We got into a deal, and then when I went back and realized, “Oh, I really should have accounted for this…” It still ended up being a good deal even with that, but they weren’t willing to move on that number once we had come to a price. So it still ended up being a good deal, but it cost me a few thousand dollars just on the error of not accounting for that. I think it was the roof, and when we had gone through it we didn’t account for that in terms of our offer.

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

JD Martin: I’ve got this little website called BizBrainstormers.com, and I do kind of real estate and personal finance mentoring. It doesn’t really make any money… I charge a little bit of money; I do that just to make sure they’re serious, because I talk to a lot of people, and I’m on some other real estate websites, and I talk to a lot of people and there’s a lot of dreamers and tire-kickers out there…

So I charge a little bit of money, but it’s minuscule for the amount of time I spend with people. I wish that something like that was around when I was doing my first deal, because I didn’t even have anybody to talk real estate with at that point; we just kind of winged it. If we hadn’t winged it, somebody else that could have been a disinterested viewer could have said “Hey, you guys are getting in way over your heads here”, and maybe saved us a bunch of money. So I try to do that.

Outside of that, I meet a lot of times with investors that live locally and say “Hey, can we go to lunch and talk?” and I do that with them for nothing. I participate in online forums and try to give out whatever knowledge or advice I’ve been able to accumulate… So those are kind of the ways I try to give back.

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

JD Martin: They can go to that website, which is bizbrainstormers.com, they can go to my band’s website, which is rhythmbrewers.com, they can just send me an e-mail, and I’ve got e-mails on both of those websites; they can send me an e-mail for me at a place there and I’d be glad to talk to anybody.

Joe Fairless: JD, thank you for sharing lessons learned and what you’re doing now that has built your portfolio. From the lessons learned standpoint, holy cow – timing and numbers. Know your numbers, know your timelines, and believe in your numbers and hold true to your numbers. Starting out with new construction right out of the gate is incredibly challenging, and it is something that if we do that, then we’ll definitely – as I’m sure you’ll agree – wanna be aligned with some other people who perhaps even have money in the deal with us, who have the experience… That way it mitigates risk.

JD Martin: I certainly wouldn’t recommend that as a starting strategy. I think there’s other ways to get your feet wet.

Joe Fairless: I completely agree. And when something like that happens, because as long as we’re doing real estate over a long period of time, we’re gonna have some projects perform unfortunately the wrong way, not how we had planned… And when we’re in business relationships or relationships in general, one insight that you have is don’t get accusatory, instead focus on solutions and really grow together, not grow apart. That’s something I have recognized…

When I was working in advertising, I worked with some people who when we got into a challenging situation, we knew that they were just gonna attack us, and we were gonna eventually grow further apart, versus it’s actually an opportunity to grow together as a team, and that’s an important part.

Then the additional streams of income – you’ve got lots of streams of income, from two part-time gigs, a day job, and then your rental portfolio, as well as how you lower or make the management as efficient as possible by fully rehabbing the homes before you put it on the market, that way you don’t get as many phone calls.

Thanks for being on the show, I really appreciate it. Thank you, again, for your service. I hope you have a best ever day, and we’ll talk to you soon.

JD Martin: I appreciate it, thanks a lot. That was a lot of fun.

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JF935: RECONSIDER Your Partnership for This One Reason #SituationSaturday

Ready to jump into a partnership? Well, hold your horses! Do you both know real estate? Do you have experience? Do you and your partner bring complimentary skills to the table?

Here are some steps to form a great partnership:

– Know the skills needed. Identify skills you bring.
– Identify skills that are lacking. Identify structure.
– Approach someone with skills and offer yours.
– All partnerships end, and it is the responsibility of partners to know how it will end.

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Chris Clothier Real Estate Background:

– Partner of Memphis Invest, one of the largest passive turnkey real estate companies
– Memphis Invest does over $100 million in annual revenue
– They purchase over 600 single-family properties yearly in Memphis, Dallas, and Houston
– He and his family manage over $400 million in asset value for investors from around the country
– Founder of nine different companies in two industries billing over $10 million in annual revenue
– Based in Memphis, Tennessee
– Say hi to him at http://www.memphisinvest.com/ or chris@memphisinvest.com

Click here for a summary of Chris’s Best Ever advice: http://bit.ly/2nFyzii

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real estate partnership advice


Joe Fairless: Best Ever listeners, 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. We only talk about the best advice ever, we don’t get into any fluff. I hope you’re having a Best Ever weekend.

Because it’s Saturday, we’re doing a special segment called Situation Saturday where our best ever guest talks about a sticky situation they were in and how they overcame it. How are you doing, Chris Clothier?

Chris Clothier: I’m doing phenomenal, man. How are you?

Joe Fairless: I am doing phenomenal as well, and nice to have you on the show again. Best Ever listeners, if you recognize Chris, that’s because he’s been on the show before. Originally, he was on episode 58, titled Turning Smiles Into Profits, where he talked about his customer service program and how they call every single client of their with this turnkey company every month, and get feedback.
From that interview, I implemented a question that you talked about, Chris. You talked about how you always talk to potential partners about the mistakes that they’ve made, and if they say they haven’t made any, then they either are being dishonest or they haven’t been in the game long enough. I actually ask that on my normal format ever since then, for the last 900 episodes, because of you.

Chris Clothier: Wow! Are you kidding me? 900 episodes – that’s cool! I’m glad I could contribute to that.

Joe Fairless: Yeah, and there have been so many good answers as a result of that. There are so many lessons learned just from you mentioning that one thing. I guess it was 900 days ago, I guess that’s how it works. [laughs] Ain’t that crazy? 900 days ago, whenever we talked.

Well, a little bit about Chris. He is the co-owner of Memphis Invest. It’s one of the largest passive turnkey real estate companies. Memphis Invest does over 100 million in annual revenue. They purchase over 600 single-family homes yearly in Memphis, Dallas and Houston. He’s based in Memphis, Tennessee. With that being said, Chris, do you want to give the Best Ever listeners just a little bit more about your background? And then let’s dive into the tough situation you’re in.

Chris Clothier: Yeah, absolutely. As you said so eloquently, I am a partner in Memphis Invest, and I am partners with my father and my younger brother. My older brother Kent, while maybe not being a partner in the company, obviously had a huge influence on us. He’s got his own real estate company out in California, but what’s important is that my family, all of us have been raised in this very entrepreneurial environment. Ever since we were kids — I started working when I was 11, and everything that we’ve ever done has been really customer service centric, no matter what the industry was, no matter what the particular company was that we started. Each of us has started our own companies, and always based on customer service, no matter what the product was.

For that quick little background, we’re managing, as you said, 4,000 properties for passive investors from around the country. We love real estate, probably more than anything, just being in business in general. We love having clients and vendors and team members and building things… I guess it’s in our blood, it’s in our nature, from doing it for so long to this point.

Joe Fairless: From managing 4,000 properties to buying a whole bunch of properties on an annual basis, to building companies, I know you’ve come across many sticky situations, so you’ve got lots of different stories to choose from. Which one do you wanna talk about?

Chris Clothier: Let’s talk about one that may hit closer to home for many of your listeners. It’s just about doing a deal yourself, and I’m gonna talk about bravery… Being brave enough to go out there and try and take on a challenge on your own, rather than feeling like you have to go with a partnership. It really boils down to… Early on, several deals that I had done went really well, and one went South really fast. But the point of it was that all of it I did with a partner, because I wasn’t brave enough to go on my own.

It’s interesting for me, because I look back on it… I had all the tools, I had everything that I needed, I just didn’t have the confidence and the bravery to go on my own, so I chose a partnership instead [unintelligible [00:06:15].15] but that’s a partnership that no longer exists and it’s a friendship that got hurt because of it, so I’d love to share that.

Joe Fairless: Yes, please do. You’ve piqued my curiosity.

Chris Clothier: Well, I was in Denver, Colorado recently at the Best Ever conference event out there in Denver. It gave me a chance to kind of go back to some of my old stomping grounds, where I got started as a real estate investor. It’s also the place I founded my first company, which was a grocery arbitrage company. I was very successful thanks to having some really good mentors and my family around me that helped me to build my first company successfully. And I was taking my earnings from that company and I began to invest in real estate.

The biggest challenge that I had was the fact that I should have been smart enough to look around me and say, “I’m a smart person, I’ve got good people around me, I’ve paid attention, I’ve got good mentors…” I built a business at the time that was very successful, but I still felt like I needed a partner in order to invest in real estate, the fix and flip kind of stuff. And rather than pick the best partner, I picked — let me just be clear… Great guy, phenomenal person. He was a good friend of mine, but the problem was that neither one of us had any experience in real estate, and the funny thing was we both were scared of losing, and rather than lose alone, we chose to lose together.

That’s what happens so often in partnerships… We made the decision to be partners for all the wrong reasons. Not because he had strengths and I had strengths, but because we both had a weakness, which was lack of faith, lack of bravery, lack of courage to go do it on our own. To be fair to him, he was already a long-term buy and hold landlord that was doing okay, but we were going to do some fix and flip homes.

In the end, we picked a couple of deals and we were doing well. We had no idea that we were spending twice as much as we needed to spend and taking twice as long to do it, but we were selling the houses and making money. And we mistook making money for success, if you know what I mean. We were not doing a good job of anything, we were just spending money.

Joe Fairless: Well, selling houses and making money – on the surface that certainly appears to be asuccess from a business standpoint.

Chris Clothier: I’m glad you said that, because you’re right. But that was our problem… Anybody that is successful over the long term knows that you have to track your progress, you have to know how many dollars you spend in relation to how many dollars you make. You have to know how everything correlates, all the cause and effect of what it is you’re doing.

For us, we were moving so fast… We both had other successful companies that we were making money in. Neither one of us were holding each other accountable to anything. One of the tips I always share [unintelligible [00:09:11].26] is “Inspect what you expect”, which neither of us were doing. We basically were just kind of relying on the other to be the smart one. Looking back, it’s really funny – we were making some money; we could’ve done much better, and what did us in eventually was a home that we chose that… This is how fickle real estate is. It was right there in Denver, and it was a matter of 200 yards – that was the difference between us making money and losing a lot of money. We lost over six figures on this deal, and it broke apart our partnership certainly.

We were just not really friends anymore because of it. There was a lot of animosity towards each other, because neither one of us were holding ourselves accountable, much less the other. The problem is that we purchased a home that was literally two blocks away from where it needed – both school district, taxing district… The way that homes were gonna be appraised and what would be used as comparable sales – it literally was the difference between a home being worth 500,000 and a home being worth 300,000. We owned the home in the four hundreds.

We held the house for a very long time. I continue to write checks for it, and write checks for it, and write checks for it. I tell people on the backside when it’s all said and done that I went into a partnership with someone that I was comfortable with, someone who told me all the right things that I needed to hear, like I was a good businessperson and I was smart, and I was obviously successful; I had money together, we would be able to fix and flip homes.

I did not partner up with someone who had the ability to run good forecasts of as far as what we’re spending, how to budget that money and how to model that money. I didn’t partner with someone who could pull comparable sales and could analyze that 200-yard difference, that two blocks that really sunk us. I didn’t partner with a person that had the right skill set for me, because my skill set was absolutely at my business, and I had money. I had the ability to stay organized and stay on point, but I didn’t know real estate.

My partner, unfortunately, didn’t have money, but also didn’t have the real estate skills that were needed, so he was managing a project that he didn’t know how to do. It ended up being a disaster, and I go back to the very first thing I said… When we’re choosing a partner and we’re choosing a partnership, I did it out of fear, and that is never a good reason to go into any type of  — whether it’s a real estate transaction or a business transaction, you should never enter one out of fear.
Like I said, we were fearful of losing money, so rather than losing money as individuals, we lost it together as a partnership.

Joe Fairless: Based on what you said, it sounds like you need someone who has the right skill set to complement you, or fill in the blank for whoever is the person who is looking for a partnership… But when do you know that you should have a partnership, versus going on your own and doing your own deal?

Chris Clothier: If your choice to go into a partnership is based on your own fear, whether it’s fear of unknowns, whether it’s fear of failure, whether it’s fear of taking on a really big project and being highly successful, which believe it or not, that’s a fear that a lot of people have. When they haven’t done a really big project – they’re perfectly capable of doing it, but the simple fact that they haven’t done it before is a fear that makes them bring on a partner instead.

So when you’re making a decision on whether to bring a partner in based on fear of what could happen, then you’re probably not ready to bring on a partner. It needs to be a partnership – and you nailed it perfectly, Joe… You need to take on a partner when you can look around the landscape and say, “I’m able to bring these particular skills to this project.” Maybe in my case I didn’t have the time or the experience to know how to do comparable sales, so I wasn’t sure how to comp a property properly at the time. I did not have enough experience negotiating with contractors to negotiate pricing. I had been basically a very passive investor up to that point.

If I was gonna partner, I needed to bring someone in that had the experience of negotiating with contractors, getting them hired, keeping them on track, because I knew all those things had to be done, I just hadn’t done them before. If I had just spent a little bit of time sitting down and thinking about it, I would have realized that even though I’d never done it, I negotiated with contractors daily. It was a different kind of contractor, but I’d been negotiating for years; I knew exactly how to negotiate a contract, I knew exactly how to negotiate work to be done… I could have easily contacted one of the top real estate agents in the area, because I knew the things to do, I just didn’t do them. I strictly chose a partner based on fear, rather than probably looking myself in the mirror and saying, “I know how to do this. I’ve been a successful businessperson, I’ve been in the local real estate investors association, I’m surrounded by smart mentors… I can do this.”

I chose to take the easy route, which was “I’ll get a partner instead and let him do these things. I’ll provide the money and make it on the backside.” And the worst part for us, Joe, was that we were successful for the first three or four deals we did. We made money.

Joe Fairless: Yeah, false sense of security.

Chris Clothier: Oh, yes… Absolutely.

Joe Fairless: One question I have… I’m a huge Tony Robbins student and he talks about how emotions like fear and being scared or being maybe depressed, they’re all action signals if we use them in an empowering way. I don’t remember what he said fear is and what that should lead us to, but I suspect it’s something like, “Get prepared.” If we’re fearful about something, then we need to either get educated or more prepared.

The question I have is along those lines… I have entered into partnerships with a good dose of fear, but then also it’s because I know some of the aspects that they’re good at that I’m not will help with the transaction, and it’s gone well. So I am fearful that “Hey, I really don’t wanna do this because I’m not gonna set up the project for success”, so how do you reconcile that with this approach?

Chris Clothier: You said something perfect right there… You are aware of your weaknesses. I’ve got a better way to put it – the things [unintelligible [00:15:49].26] on that particular deal, and it was that awareness that made you fearful to move forward without correcting that. What I’m talking about for me is I guess I had that same mentality, but I just didn’t recognize what I needed in a partner. Instead for me it strictly was “I like this person, I’m good at what I’ve been doing, he’s been good at what he’s doing… It will be fun to be in a partnership with this person. He and I can make some money together. We have done all this stuff together, so we can — whatever it might be… It might be playing softball on Thursday nights together, and we’re gonna meet for a happy hour…” Whatever.

These things that say “Hey, this is what makes us a good partnership, and he’s got time on his hands, he’s got some experience…” I was never asking the questions that you were asking right there – “Does this person bring to the table exactly what I need?” Forget anything else about it, and “Do they bring to the table the specific things that are gonna make me successful in this project?” Being fearful and not moving forward because you don’t have everything you need yet, that’s smart.

I love the way that you said Tony Robbins puts it, in the case of “Get educated, get yourself surrounded by the right pieces, don’t just stop.” But for me, I didn’t do that. I just chose a partner that I thought would be fun to hang out with and I can make some money with, and I thought if I do lose, we’ll both lose together so it’s no big deal, because we’re buddies.

Joe Fairless: Everyone loves losing over a hundred thousand dollars with a friend. You should experience that with all your best friends. I highly recommend it.

Based on listening to you and taking notes, I’ve condensed it into a five-step thought process, and I wanna run it by you to see if there’s anything else that you’d like to add. One is to know the skills that are needed to do what you wanna do. Two is to identify the skills that you bring, three is to identify the skills that are lacking, four is to know how you wanna structure it, and then the fifth would be when you approach someone saying, “Hey, I know skills are needed…” — and you don’t saying it exactly like this, but say, “I know the skills that are needed for this project X, Y, Z. I bring these skills, I think you can bring these other skills. I’d like to structure it as follows. What are your thoughts?” Is that the approach that you would take?

Chris Clothier: Yes. And I will add one asterisk for everybody to understand, and we’ll see if you agree with this. I was told by a very good mentor of mine that all partnerships end, and it’s the responsibility of those entering into the partnership to decide on the frontend how it will end. That includes — as he pointed out, he’s like “Look, at some point debt is chasing us all.” Man, I will not forget what you said up there on stage, that we’re all dying. I remember that when hearing you speak on stage, Joe, and that is true. So from the very beginning, set up how will this look, because it may look like one of you passes away at some point, and what happens next?

So he said, “If you will sit down and decide on the front end if this go good, if things go bad, should there be debt – whatever happens, this is how we’re gonna handle it”, then that partnership has the pieces it needs to get started up on the right foot. If you partner with people because you like hanging out with them, as I did, you very well may end up as I did, and that is no longer with a partnership, and possibly losing money.

Joe Fairless: Yeah, and I can tell you if you bring in investors in a partnership, they’re gonna ask the same question of “What happens if one or both of you die?” I’ve been asked that many times, and we have to make sure that it is written out in the agreement, because then we go, “Oh, good question. Let me show you point three sub. three, or whatever it is.

Chris Clothier: Yeah, “Let me show you exactly what will happen.” That’s good.

Joe Fairless: I love that. This has been great. It’s a very clear theme and story. Is there anything as it relates to identifying the right partners that you wanna mention that we haven’t talked about already?

Chris Clothier: I don’t know about exactly the things you need to look for, because everything is going to be different… But I love what you said earlier, I think clarity is really, really smart. When you recognize that you don’t need to move forward on something without having the right pieces in place – and that might be a partner – let that be a great starting point for you to start defining “What do I need?” I can’t say this is always gonna be the case, but I do believe that there’s no need to be in a hurry. There’s a need to get things done, and there’s a need to have timeframes, but there’s no need to be in a hurry.

When you know that you need to surround yourself with other pieces, get to defining it. Get to learning exactly what it is you need around you, and then go get it.

Joe Fairless: As far as partnerships go, we don’t necessarily have to have partners, we just need to identify the skills that are needed, and then perhaps we hire someone instead of bring on a partner, so maybe we hire a vendor to do that.

Chris Clothier: Well, like I said earlier, sometimes the skill is already in you, you just don’t know it. Maybe it’s just learning a different way to look at something, taking a different approach. Some of that happens when you surround yourself with mentors and you run your ideas past them and what it is you feel like you need to move forward on a project, and they’re able to educate you that you have these particular skills, you just need to hone in on it, you don’t know it yet. Or you don’t need to have a partnership to bring that skill, you’ve already got it. You need to bring it out of you.

Had I been told some of that back in the day, maybe I wouldn’t have moved forward on that partnership… Who knows? Maybe I still would have, because I would have had a different kind of fear, but hopefully you get the point there, that it’s all those steps: surround yourself with good people, know your strengths, know what you need, be clear, and see what happens.

Joe Fairless: Chris, where can the Best Ever listeners get in touch with you?

Chris Clothier: I am always at MemphisInvest.com. They can send me an e-mail, chris@memphisinvest.com, or they can go right there onto our website and take a look around. There’s tons of videos of me, I guess, and they can certainly register to get more information on our company. I’m more than happy to try and help people get educated.

Joe Fairless: I love this conversation. It is about when to find the right partner, or if to bring on a partner at all, and that is first know the skills that are needed for your venture, second, identify the skills you bring, third, identify the skills you need, and like you just said, make sure that you don’t have those skills and you just haven’t uncovered them yet. Lastly, look to structure it as follows for however you wanna structure it and, as you mentioned, having an idea of what the end looks like, because all partnerships end, we’re all gonna die, or it’s gonna go in opposite directions for whatever reason (who knows? life happens) so know how it will be dissolved when the time does come to be dissolved.

Thanks so much for being on the show, Chris. I hope you have a Best Ever weekend, and we’ll talk to you soon.

Chris Clothier: Talk to you soon, man.

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JF914: How to VISUALIZE Your Success Amidst Failure #SituationSaturday

Imagining your success is a pivotal part of your journey towards it. Our guest visualized what he wanted and manifested his dreams by taking massive action after having clarity and a vivid dream of who he wanted to be. If you are failing or if you feel that your efforts are not earning you what you want, it’s time to change how you see yourself and visualize your own success.

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Bryan Harris Real Estate Background:

– Owner with Homesfor10k and Real Estate Mentor
– Built several multi million dollar businesses from conception to 8 figures
– By age 27 owned and managed an 8 figure real estate portfolio including over 120 properties
– Mentored over 300 individuals on how to start a real estate investing business
– Based in Memphis, Tennessee
– Say hi to him http://www.homesfor10k.com 

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JF905: Flying Planes, Flipping Houses, and Hiring the Right People

Too busy doing what you don’t want to do, or the tedious things that need to be done? Hire someone! Today’s guest did just that and was able to close more transactions and remain an Air Force pilot.

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Bill Allen Real Estate Background:

– Owner of Blackjack Real Estate, LLC
– Active duty Navy pilot who fell into REI due to his constant military moves
– In 2016 he flipped 13 houses and wholesaled 54 in Pensacola, FL with plans to double those numbers in 2017
– While still working full time he has turned to systems and building a business
– He is now expanding to Chattanooga TN
– Based in Nashville, Tennessee
– Say hi to him at http://www.blackjackre.com
– Best Ever Book: Traction

Made Possible Because of Our Best Ever Sponsors:

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

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JF890: STORAGE UNITS Acquisition You NEVER Would Have Guessed and Quitting His Job 5 Days Ago!

Extremely simple approach to acquiring storage units, yet very unconventional at this level. Our guest is a free man as he quit his job just five days ago, and now he’s investing full-time. Hear how he got started and how you can jump into storage units.

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Michael Rogers Real Estate Background:

– Full-time real estate investor and Owner of Chandler Properties
– After 15 years in the corporate accounting world, he retired from corporate job on January 20, 2017 to become full time investor
– Manages residential rental portfolio including 350 storage units and entrepreneur office space
– Also flips and wholesales properties thru http://www.SellMichaelYourHouse.com
– Based in Chattanooga, Tennessee
– Say hi to him at http://www.chandler-property.com
– Best Ever Book: The Essays of Warren Buffett

Made Possible Because of Our Best Ever Sponsors:

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

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

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JF722: 23-Year-Old Builds 26 Homes and How He Funds Million Dollar Deals

Hold on to your hat, he’s 23 and he is putting together million dollar deals constructing 26 brand new homes. He’s young and highly driven, and he’s rocking the Nashville, Tennessee market. Hear how he found funding for this project and all other deals.

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Devan McClish Real Estate Background:

–  Owner of McClish Properties
–  Completed over 60 deals
–  23 year old currently developing several homes currently
–  Based in Nashville, Tennessee
–  Say hi at Facebook Devan McClish
–  Best Ever Book The Intelligent Investor

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JF672: Why This Investor Won’t Touch Single Family Homes Now

Today’s guest is an accomplished real estate investor that purchases multi family properties including large multi family commercial zoned land. He shares his concern for having multiple exit strategies and why single-family resident purchases are not the best investments, hear his Best Ever advice!

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Rod Khleif Real Estate Background:

– Host of “The Lifetime Cash Flow Podcast”
– Participates in Tony Robbins seminars
– Started the Tiny Hands Foundation
– Based in Sarasota, Florida
– Say hi to him at: http://www.lifetimecashflowpodcast.com/

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

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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

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