Real Estate Investing Basics

BiggerPockets Interview with Investor Rob Gillespie

Expertise: Real Estate Marketing, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing, Real Estate Investing Basics, Landlording & Rental Properties, Flipping Houses, Personal Finance, Business Management
301 Articles Written

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For the second edition of our real estate investor video interview series, we with an interview with Rob Gillespie aka Rob the House Guy. Rob has been investing for 15 years in Ohio and brings a unique perspective with his philosophy on how to become a success in this business.

Rob can also be found on Twitter @RobtheHouseGuy

Please leave any feedback about the interview or questions for Rob below.

Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of How to Invest in Real Estate. He started BiggerPockets to help democratize the real estate investing landscape for himself and others, aiming to make it accessible for everyone, regardless of income or education. Today, BiggerPockets is the premier real estate investing website online with over one million members and reaching over 70 million people with the message of financial freedom through real estate investing. Joshua, along with his wife and three daughters, make their home in Denver, Colorado, and spend any time they can traveling, exploring, and adventuring. Read more about Joshua’s story in 5280 and Inc.com.

    Joshua Dorkin
    Replied over 8 years ago
    Sorry again about the quality of video, everyone. Rob had a somewhat slow connection, but I thought it important to finish the interview because there was so much great stuff to talk about. Thanks again for talking with us, Rob!
    J Scott
    Replied over 8 years ago
    Great video, guys! Rob – Congrats on the success and thanks for sharing the details… Reply Report comment
    J Scott
    Replied over 8 years ago
    Great video, guys! Rob – Congrats on the success and thanks for sharing the details…
    Arthur Garcia
    Replied over 8 years ago
    Rob, First off I really enjoyed the interview. I was hoping you could explain the whole “there’s no such thing as cash flow”? I currnetly have 5 cash flowing propertys all of them are leveraged. The rent is roughly 1000-1100 per property and the debt is about $500. If I was to base my ROI on the money in the deal (downpayment) I am getting 25-30%. Even if I have to do a certain amount of repairs each year I still think it makes a lot of sense. I am just curious if am missing something or if you can help me see your side of the conversation. thanks man! AG
    Anthony
    Replied over 8 years ago
    Josh and Rob, I enjoyed the interview. However, I do believe in positive cash flow.
    Joshua Dorkin
    Replied over 8 years ago
    Thanks Anthony. I’m also an advocate of positive cash flow. 😉 Reply Report comment
    Joshua Dorkin
    Replied over 8 years ago
    Thanks Anthony. I’m also an advocate of positive cash flow. 😉
    Joshua Dorkin
    Replied over 8 years ago
    Thanks Anthony. I’m also an advocate of positive cash flow. 😉
    Joshua Dorkin
    Replied over 8 years ago
    Thanks Anthony. I’m also an advocate of positive cash flow. 😉
    GregB
    Replied over 8 years ago
    Good interview guys. Thanks for sharing Rob.
    Joshua Dorkin
    Replied over 8 years ago
    Thanks Greg.
    Rob
    Replied over 8 years ago
    LOL! I figured the “no positive cash flow” thing would spark controversy! Obviously if you are at a ridiculously low LTV and an extremely high rent, there will be a nice positive cash flow. I am talkin about the late night Guru that preaches “no money down” rentals. Lets use round numbers since I am not a math major. If you buy a home for 100k and take an 80k mortgage with a 20k carry back. Even if there is not a payment due on the second carry back, the debt service on the first is gonna be over 500 per month. Then you have taxes, insurance, maintenance, vacancy, etc…. Even if the rent is 1k per month, you are only gonna cash flow a couple hundred per month. If you need one major capital improvement, the cash flow is eaten up for the year! I agree completely if you are buyin stuff so cheap that the debt service is ridiculously low, you will have a nice cash flow. Unfortunately, that is not what a lotta of the Gurus teach. They teach the whole key to success is not using any of your own coin, and leveraging everything to get in with no money down. In my opinion, that is the fast track to bankruptcy! I would have gone into more detail, but I knew I was on a timed schedule and had to keep my opinions brief, LOL! @ Arthur, it sounds like you have a great plan that is worin fine! Congrats!!!
    Angelo
    Replied over 8 years ago
    Rob, I already sent you an email that cash flow does exist. Just to put it where everyone can see, my family and I had a 72 suiter and we had about 60k cash flow. (and remember, cash flow on real estate is almost all tax free if you know what you are doing, for a little white anyway) Now, I do have to say that the maintenance and management was done by myself and my family, so that does help a little. LTV was 85%. Now, this was 15 years ago, and we kept the building for 10 years (sold 5 years ago, what timing) and I have to give you credit that the majority of the “profit” came on the sale. But it was still a great property. I keep looking for another.
    Jon Klaus
    Replied over 8 years ago
    Excellent advice on not chasing someone else’s supposed portfolio/strategy, etc. With so many examples and opportunities, staying focused on what you do best is tough. Rob, would you say this deal would cash flow? 100 unit apartment purchased for $2,000,000. Gross rents $720.000. Expenses $360,000. Debt service $102,204. Financing 75% at 5.5% on a 30 year amortization.
    Rob The House Guy
    Replied over 8 years ago
    @Jon and Angelo, you are both absolutely correct! I should have been more clear in my interview, I am speaking on residential houses and not so much commercial space. The difference is both of you had a lotta skin in the deal, and 100 units is large enough to have an on site manager, and it was not a 70/30 carry back. There is absolutely cash flow in a large occupied commercial property with a bunch of equity, especially when you are willing to be a working part of it. I am looking for a residential investor to share their deal with me. The guy that has no skin in the deal, and paid market value. Things come up on properties, all of the time. If you are truly an investor, and not an employee of the property, positive cash flow is tough to come by on smaller properties. I can give you countless examples of deals that run across my desk daily from investors that are sick of workin for free. Like I said in the interview, call some for rent ads and see who wants to sell. I will bet you’ll be surprised at the number of folks that will say how soon can we close! LOL!