BiggerPockets Podcast 397: Live Calls! A Travel Nurse, a College Student, a High-End Flipper + More BP Members Put Brandon, David, and J Scott on the Hot Seat

BiggerPockets Podcast 397: Live Calls! A Travel Nurse, a College Student, a High-End Flipper + More BP Members Put Brandon, David, and J Scott on the Hot Seat

70 min read
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In today’s episode we open up the phone lines again to field your real estate investing questions… and for an added twist, we bring in the familiar voice of author, BiggerPockets Business Podcast host, and house flipper/investor extraordinaire J Scott.

You’ll hear callers chime in with questions like: 1) “Help me get started” 2) “should I partner with family members?” 3) “How do I transition from single family to multifamily” – and much more! From refinancing and the finer points of BRRRR… to mentorship and long-distance investing… It’s all here!

Tell Brandon and David what you think of this new format in the show notes at biggerpockets.com/show397. We want to hear from you, too!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets Podcast, show 397.

J:
Figure out what your goals are, figuring out what your longterm strategy is, figuring out what your niche is, and whether it’s flipping, whether it’s wholesaling, whether it’s rentals, whether multifamily, whatever it is, figure that out and then go after those deals. Really try and claim that market and build an expertise and hit your long-term goals, whatever they are. But at the same exact time, don’t pass up great deals.

Recording:
You’re listening to BiggerPockets Radio, simplifying real estate for investors, large and small. If you’re here looking to learn about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online.

Brandon:
What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast, the BiggerPockets Real Estate Podcast, that is here with my co-host, Mr. David Greene, and a special co-host today as well, Mr. J Scott. I’ll start. Welcome to the show gentlemen. David, good to have you back. J, good to have you here.

David:
Thank you very much. We are back by popular demand. Another very popular show format that Brandon and I did. I guess, it would probably be a couple of weeks ago where we brought people in to ask questions live, shooting from the hip, testing out if we really have real estate knowledge. Now you guys know the show is not scripted and we brought J in for a little bit of backup.

J:
Yeah, this is my favorite thing in the world, answering live questions. So, I’m really excited for the show and I appreciate you guys having me on. Thank you.

Brandon:
Yeah, it should be a lot of fun. Now, those who don’t know J, J was the author of lots of books including the book on flipping houses, the book on estimating rehab costs and a lot more, and J is a rockstar in a lot of different avenues of business and life. He’s also the host of the BiggerPockets Business Podcast, a phenomenal show. Because at the end of the day, real estate is business and the better you are at business, the better you’re going to be at real estate. So you should be listening to his show. New episodes come out every [crosstalk 00:01:57]

J:
Every Tuesday.

Brandon:
Oh, Tuesday. All right, well, I get them on Monday because I’m special. With that, let’s get to today’s quick tip.

David:
Quick tip.

Brandon:
Today’s quick tip is, many of you are aware of this, but if you’re not BiggerPockets has a new rent estimator tool. If you go to biggerpockets.com/rentestimator, you can actually go check it out. It’s part of the BiggerPockets Insights program which is a new feature, we have our pro members. You can go try it out and check it out if you want. But if you are a pro member, you get to analyze unlimited rental comps and it uses data and it’s really fancy.
Our data scientist built it and is continuing to refine it all the time to make it the best rent estimator tool you’ll ever see. It’s just super nice and easy for analyzing deals. I love the thing. Check it out again, biggerpockets.com/rentestimator. Now, I think it’s time to get into the show. Anything you guys want to add before we jump into the questions? Like David said, it’s the Q&A format show. People called in, we did a live recording on my Instagram, on Instagram Live, and that’s where the callers came from, but anything you guys want to add?

J:
Yeah, make sure everybody you hop on iTunes, you rate the show and leave a comment and tell us how you like this format because I enjoy doing it, but we want to make sure you guys love it as well.

David:
Yeah, and make sure that you are following @beardybrandon and @biggerpockets on Instagram so that you can be notified when we’re going to do these in the future.

Brandon:
Yeah, and for good measure, follow David, you are @davidgreene24 on Instagram and J you have a TikTok. What’s your TikTok? You guys should see J’s dances. It’s pretty amazing.

J:
Noted.

Brandon:
What’s your Instagram?

J:
@jscott_123flip.

Brandon:
All right.

David:
There you go. I think if you bought real estate in TikTok, you might want to sell from what I hear from the news. Is that might be a bad area to be owning right now.

Brandon:
Yeah, it very well might be. That said, guys, let’s get over with our chitchat and get on with the interview show. With that, let’s get to the first caller. All right, our first guest we’re bringing is Dusty. What’s up, man? Welcome to the podcast.

Dusty:
Yeah. Thank you to all you guys for everything that you do. I’ve consumed a bunch of content over the last six years, and finally started making some moves in the last 18 months. Finally, a landlord, homeowner and working on a cool deal that I want to bounce off you guys.
I live up in Lake Tahoe, Incline Village, Nevada, and I’m working on a property. It’s a mixed use. It has residential upstairs and commercial downstairs. Downstairs is ideal for an office space or storage potentially. I know that the commercial space would probably bring in more revenue, but I’m worried about our world now with where we’re going, if having a commercial space and office space is actually going to be something that’s a long-term good move, or if I should just make it into residential storage for the community itself and just have it be more passive in that way? Love to hear about if business, going into an actual renting out an office is a good move or not?

Brandon:
That’s a great question. J, you want to start us off?

J:
Yeah. I guess the first thing I would suggest is run your numbers with the worst case scenario. That worst case scenario being, you buy it, you get the residential portions rented out and the commercial portion sit completely empty. Is that going to destroy you financially? Is that going to turn this deal into something that you wouldn’t even touch? At least that way you know what your worst case scenario is, you know what your biggest downside is.
If you’re willing to accept that risk, and again, that’s your worst case risk, it’s probably not going to be that bad, but if you’re willing to accept that absolute worst case risk, well then you say, “Okay, this deal is worth doing, how do I mitigate that risk? Can I turn it into a different type of commercial?” Then you run the numbers with a different type of commercial other than office, maybe it’s retail, maybe it’s storage, maybe it is light industrial, whatever, and what do the numbers look like there?
Then run the numbers with turning that into another residential unit or multiple residential units. What do the numbers like there? That’ll give you an idea of what the more likely scenario is. Then you look at all those scenarios and you say, “Okay, I’m going to try and let the commercial scenario play out. If it happens to work, great. But if it doesn’t work, I go with one of the backup scenarios.” But you start with saying, “What is the absolute worst case scenario and if this happens, am I willing to live with it? Can I live with it? Can I afford to live with it?” If the answer is yes, then absolutely assume that it’s not going to be that worst case and then you move forward with whatever’s going to generate the best income based on what’s going on in the world.

Dusty:
Awesome.

Brandon:
David, you want to add anything there?

David:
I would say in addition to J’s advice, which was very sound, and what I hope you guys noticed about what J said is we looked at this the same way we would look at a different deal with multiple exit strategies. Well, you’re going to go into flip it, but if it doesn’t work, can you BRRR. If you can’t do that, can you regular buy and hold? Can you Airbnb? You’re looking at my plan and my backup plan and my backup plan and my backup plan. That is literally how our brains process information and that’s why real estate is a form of business and this is a business decision.
I would add to it, in addition to what gets you the most income, ask yourself what is going to be the most work? There’s ways that you can earn income that are very involved, that at the beginning, if you don’t have a lot going on, don’t seem bad. It might even seem fun. But as you grow in your success, that work becomes less desirable. Some forms like self-storage may make less money, but they may be less work on your behalf so you can make more money somewhere else.

Brandon:
Is there a return on effort? I know J, you’re working on a book on metrics. Is that ROE? Is there a thing return on effort? There should be. Because you’re getting a 12% return, let’s say, but it took you 100 hours of work, that’s a really low ROE, right? Did I just make that up or is that a thing?

J:
Well, ROE is return on equity. So, let’s be careful with that one.

Brandon:
ROEF. So, ROEF.

Dusty:
ROEF.

Brandon:
ROEF.

J:
I think a good investor is going to look at it as, “I’m not putting in any of my own effort, I’m going to pay for that effort.” then that increases the upfront cost, and then you look at your return metrics based on that increased cost of paying somebody to put that effort in for you.

David:
It’s really good, but I’ll tell you if there isn’t a metric for return on effort, it’s just a technicality because every one of us thinks about it. I think about that with everything there is, even getting up off the couch, is it worth getting up off the couch to go answer that door? Or is it no one important and I’m not going to go? That’s why ring doorbells are popular because they saved us the effort of getting up to see who it is. So, yes, you should always be thinking about that.

Brandon:
We’re going to make a t-shirt called, What’s The Return On Effort? What’s the ROEF? That’s going to be our t-shirt we’re going to sell, biggerpockets.com/shirt. You can get it there.

David:
But I would also say if you’re considering a regular commercial usage versus storage for the residents, I would look at which direction is easier to go in. If you start with storage and it doesn’t work and you want to actually turn it into something that a company could rent, that could be very expensive. It’d probably be easier to start the other way. Try to rent it out to someone who’s going to run a business out of it, and if that fails, then you could go back to storage.
The last thing, I think this is a question a lot of people have to ask in the commercial space in general, that the pandemic has changed about real estate investing is companies like Amazon are definitely changing the way a lot of stuff is bought. If you were going to be renting it out to a Foot Locker or some kind of store where people can easily buy stuff online, I might skew away from those types of companies, and I would skew more towards something where you have to go there to get that service such as a massage place or a restaurant. Something where you have to go there to get that you can’t order a hot meal off of Amazon.

Brandon:
Yeah. Really good.

Dusty:
Copy that.

David:
What do you think, Brandon?

Brandon:
I got nothing to add to what you guys said. That was great. All right, dude. Well, thank you very much, Dusty for coming on.

David:
That was a perfect example of Brandon Turner showing return on effort. He had J and I both talk and he just said, “Yeah, what he said.”

J:
Then everyone’s going to talk about what a great episode with Brandon Turner this was.

Brandon:
Great ROEF. All right. Well thank you Dusty. Now, we’re going to bring in…

Dusty:
Thank you guys.

Brandon:
Thank you. [Anaise 00:09:57] Welcome to the show.

Anaise:
Hi, thank you guys so much. It’s great to see you.

Brandon:
Yeah, thank you.

Anaise:
Thank you. I’m going to try to make this as quick as possible. My husband and I are chefs. 16 hour days, we realize it’s not going to be what we need, and so we do not own anything yet, and we decided that since we’ve been out of work since March, the best way to go about this is to get a financial partner. We’re going to bring in the great team. It’s been highly researched, and things like that, but we want it to know what’s a good deal and how to address our partner. If they’re putting the finances, is there a name on the house? Do they take the money? I know Brandon, you’ve done the 50-50, but if they don’t want that, how do we know it’s a good deal, and how do we know that it’s not when discussing a partner?

Brandon:
Yeah, that’s a great question. I’ll address that from a couple of sides and I’ll let them go since I let them take the last one. My first thought is there’s two types of partnerships… Really, there’s probably lots, but there’s debt partnerships and there’s equity. Most people, when they think partnership, they think equity partnership, which would be like, we each have 50-50 or 70-30, or whatever. There’s also, you’re just borrowing private money from somebody.
True story, I have borrowed money from J here before on a deal. He was my private lender years ago. Are am I still paying you? I don’t think so anymore.

J:
I wish. You don’t need my money anymore, unfortunately.

Brandon:
J was a debt partner to me at one point because I just paid him monthly. There’s always that option. I like to pursue that before I go in the equity option. Though, most people don’t necessarily want to do that, especially if you’re newer to real estate, they want to be a 50-50 or whatever. I like 50-50 generally because it’s hard to argue against that. You could argue like, “Well, I do a little bit more work, so I’m going to be 60-40 or 70-30, but everyone’s usually pretty good with, oh yeah. I guess that makes sense, we’ll just split it 50-50.
That said, you can also look at a deal in… There’s three things. There’s the money, there’s the hustle and there’s the deal or the knowledge. Putting it all together, there’s a few different categories. If you’re doing most of that, maybe you could take a little more of the equity. If all they’re doing is bringing the money, then maybe you could offer a little less. But I just like doing money 50%, everything else, 50%. If you’re both putting money in, then we can obviously have a discussion. But what do you guys think?

David:
Well, J, what do you think?

J:
Well, before we get into the split and stuff, there’s some other things you want to think about when you’re working with a partner. Here’s a couple of the things I always run through a checklist in my head if I’m ever going to consider working with somebody. One, I like to work with people I’ve had a history with, because partnerships always seem great at the beginning. It’s just like, you’re going out on a first date with somebody. First dates, a lot of times are great. How many of those first dates end up being somebody you marry? Generally, not too many because you start to find things after some period of time that you don’t really like.
Working with somebody that you have a history with is always a better situation than somebody that you’re meeting for a first time. That said, sometimes you have to go with that person you’re just meeting because there’s nobody else. Secondly, I like to ask, do we agree on the vision? Do we want to get to the same place? If you partner with somebody whose goal is to flip 50 houses a year and you want to flip two houses a year, you’re going to have a falling out at some point. If you’re partnering with somebody who wants to ultimately buy rentals, but you never want to buy rentals, that’s not going to be good. If you’re partnering with somebody who’s thinking about doing quick flips in and out in a couple of weeks, you’re not going to get along well with somebody that wants to do ground up construction. Always make sure when you’re working with somebody, you’re thinking about where your vision is, where you want to be at some point in the future.
Next, think about who’s going to be in charge. A lot of times, I have trouble working with people that want to micromanage me because I like to micromanage other people. Make sure you figure out early on who’s in charge. Another question I like to ask is for every partnership, they’re going to be situations where you’re going to be that person’s employee. They’re going to be telling you what to do and you’re going to have to listen. You have to ask yourself, am I willing to work for that person? If the answer is no, then it’s probably not going to make a good partnership. Vice versa, there are going to be plenty of times in that relationship where that person’s basically working for you and doing what you say. So, would you want that person to work for you? You have to ask both those questions.
Then finally, you have to ask about skillset. When I have a partner, I don’t want a partner that can bring the exact same things to the table as I can, because then we’re going to have the same weaknesses, we’re going to fall down in the same places. Obviously, you’re looking for somebody with money, but what other things can they bring to the table that you don’t have? Between the two of you, do you have a good compliment of skills that make a strong team?
Those are some of the questions I like to ask in terms of how you split up 50-50, 60-40. I’m very much with Brandon, money is worth about 50%. Everything else is worth about 50%. If that person’s bringing all the money and you’re doing everything else, 50-50 is great. If you’re both bringing some of the money and you’re doing everything else, well, you probably deserve a little bit more than 50-50. I think Brandon hit everything there.

David:
Yeah, I would add, you mentioned that you were a chef and here’s something I would mention for everybody who’s considering going in with a partner. Like Brandon said, I think that’s the most wise counsel we can give you is go in as a debt partner, not an equity partner. Tell him, “Hey, I’ll give you a return on this deal, regardless of how it performs, rather than I’ll give you a percentage of the upside.” Oftentimes, I’ll hear people say, “Well, we’re going to be partners and we’re going to split up the work.” That sounds as a theory, like it’s a good idea. But imagine if someone said, “Hey, let’s open a restaurant. We’ll go 50-50 on it, and we’ll work in the kitchen together. We’ll split up the work.”
Now, you being a chef, can you imagine someone who doesn’t know anything about how to cook and they’re not good in the kitchen, would that save you 50% of the time, or would that cost you twice as much work because you have to go now fix all the mistakes that they just made? You’re smiling, so you know where I’m going with this. Be careful that you don’t fall into the theoretical trap of thinking, oh, we’re going to split it up. That person doesn’t know what they’re doing. They’re not experienced. Like J said, you haven’t dated them very long, you don’t know what they’re really like. Now, you’re in as an equity partner with a person that’s screwing up your kitchen and you would pay money to get out of that deal with that person. That’s what we want to see you avoid getting into that position.

Anaise:
Awesome. Thank you, guys, so much.

David:
Thank you.

Brandon:
Hey, as you take off, I’m going to throw in one more thing. I was talking to my brother the other day about the partnership idea. I think one of the biggest mistakes people make with partnerships is partnering too soon. Now, what I mean by that is I think what people do is they go into a partnership like, “Hey, let’s go build an empire together.” What I think people should do is, let’s go do a deal together, because you never know how you’re going to be until you’re working with them.
Start with, let’s do a deal, start with another deal. Start small. After two, three, four, five deals, maybe then you can say, “Okay, let’s create a business, an LLC, let’s go in this together.” But way too many people, myself included have been like, “Let’s do this.” Then within a day, you’re like, “Oh no, what have I done?” Then it’s really hard to back out, it’s really awkward and uncomfortable. I would start small and go from there.
All right, next, bringing in Corey. Corey, welcome to the show, man. How you doing?

Corey:
Hi guys. How are you?

Brandon:
We’re good, good. What can I help you with?

Corey:
Real quick. I flipped my first house at 19, had been flipping since then. I just turned 24 actually last week and I have an opportunity to move across country and pretty much mentor with a much older developer. He’s starting like a wholesale division of his business. Number one, is that something that you would suggest or you think it’s like, is the grass greener kind of thing, but it’s also, how do I transition from the flip side to the wholesale side?

Brandon:
When you say wholesale, just so everyone’s on the same page, you’re talking about finding deals and then just assigning the contract or something over to another person who’s actually going to flip them, right?

Corey:
Correct.

Brandon:
All right. Jay, why don’t you take this one? I think that’s a good one for you. Should he do that, and what’s your opinion on the best way to do that?

J:
Yeah. Again, like we were saying with the last question is always start at the end. What is your goal? It sounds like you want to go from flipping to wholesaling. One, is that something you’ve decided for some reason? Well, let me ask you, why do you want to move from flipping to wholesaling?

Corey:
Quicker money, less risk, and then using that money to purchase cashflow.

J:
Okay. Next question is, what about wholesaling do you think you can’t do right now, given your flipping experience? What additional help do you need? Because a lot of people look at wholesaling as wholesaling is not necessarily an easier form of flipping, but a lot of the same things you do in flipping you do in wholesaling, except you’re removing the renovation piece. What exactly do you need to learn or what experience do you think you need to make strides to transition from flipping to wholesaling?

Corey:
I think definitely the plus side of working with this older developer and mentor would be his connections and definitely just be able to learn from somebody who’s where I want to be.

J:
Okay. I look at this like a job offer. For a lot of us, if we want to get to the next phase of where we want to be, we can’t always do that just purely as an entrepreneur. We can’t necessarily, in the most efficient manner, teach ourselves and learn on our own. Sometimes it’s important to find other people that can mentor us, or to take a job with somebody that can teach us.
I see nothing wrong with it. If you’ve vetted this person well, if this person is a good match for you both personally, professionally, if he’s offering you something that you think is going to provide you what you need. If the big question is, should you be moving across the country for it? I see nothing wrong with that. A lot of times we need to take chances. We need to do big things. I would just make sure you ask the right questions upfront. Is he the right person to do it? Are you going to get out of it exactly what you’re looking to get out of it? Just make sure you’re not jumping into it because you don’t know what else to do. Think through it, but if it checks all the boxes, yeah, absolutely, it sounds like it could be a great opportunity.

Brandon:
Yeah. I’ll just add to that. I like the idea of going to either mentor, or work underneath or just learn from somebody else with more experience. I’ve always thought that was a solid way to get going. David, you want to finalize any thoughts there?

David:
Yeah. The only thing my brain always goes to, how do I do both? Can I work by flipping business and then go work for this person and maybe make less money flipping, but give away a chunk of the profits to somebody else? I don’t know if that’s possible for you, but I would definitely look at, is there a partner or someone else that can manage your flipping stuff while you learn the new skill? If wholesaling becomes more profitable than the flipping, then you jump in with both feet.

Corey:
Awesome.

Brandon:
Thank you. All right, man. Thanks so much, Corey.

Corey:
Cool. Thank you guys.

Brandon:
All right, next we’re going to bring in Roberta. Roberta, welcome to the show. Am I saying your name correctly?

Roberta:
Yes. I’m a complete newbie. Stay home mom, homeschooling and my husband and I have just found out about the rental properties. He has a really good job, but we have some credit issues, but just found out there’s some things that we wanted to dispute. Just being new to this, we’re like, do we hire somebody to help us fix our credit or to dispute these things?
Also, we inherited his dad’s home and it’s still going through probate, but it has a lot of equity in it. We’re looking to probably six to seven months to be able to take out a refi. We live in California, so the homes are really expensive here. Our plan is probably in six to seven months start turning that equity into rental properties, and probably investing out of state because not in California.

Brandon:
Sure. That makes sense. I’ll just start on a couple of quick thoughts. First of all, the first one about the credit stuff, I’m not a credit expert, I’ll say that. I know there’s a lot of scams out there. My personal belief is that most people could pick up a book at a library on credit repair and probably will do everything that a credit repair specialist is going to do. I’d be curious if actually J and David, if you agree with that, because I’m pretty new to that stuff. But my assumption is there’s not that much out… It’s not like a super, super complicated thing, but picking up a book or two from a library would probably get you 90% of the way there. What do you think, J? What do you know about credit repair?

J:
I’m not even sure if you need to pick up a book at the library, there is so much… We got the internet now, and there’s so many good resources out there. I agree with Brandon that most, if not everything that needs to be done or can be done to improve your credit, you can do yourself as opposed to paying somebody. Sure, it involves maybe you writing some letters on your own, you making some phone calls on your own, but at least that way you’re controlling the process. You’re not trusting somebody else. You’re not paying somebody else a lot of money.
Yeah, I would hop on Google and just do a search for how do I fix my credit? If you get stuck, if you get to a point where there’s something you can’t do, I’d be surprised if that happens. But if you do, then consider go hiring somebody, but I’d be willing to bet you can do it all yourself.

Brandon:
Yeah. Then as for the second question is, you got a lot of equity in this property in California, I’m going to let David tackle that one. What’s the best way to go about that. What should be the next steps, David?

David:
Well, you got a couple of options. The obvious one would be an equity line of credit, but you’re probably going to have a hard time getting one of those right now because with the shelter in place and the pandemic, we’re seeing a lot of banks that took those products off the table. Something that I would recommend that a lot of people might not think about would be actually selling the house you’re in now, moving the equity into something that you can house hack to reduce your monthly payment and keeping a lot of the money set aside on the next house.
Interest rates are really, really low. A lot of people I’m seeing are refinancing, we’re doing them in like 2.75%, 2.875%. Let’s say that you sell your house, you have a couple of hundred thousand, you buy the next one, but you don’t put it all down. You buy the next house hack and you keep a lot of the money set aside. You only go put 5% down on the next house. Now, you kept all that money, but your payment didn’t go up that much because your interest rates are really low. Then when you consider that, now, you’re getting income from the additional property that offsets that slightly higher mortgage, you’re actually coming out net positive.
You’ve got yourself a house hack that could eventually become a rental in California. You got your equity out of your house. Now, you can take that and start investing with a little bit more aggressiveness out of state because your own expenses are lower after the house hack, so you could roll the dice a little bit more with that income.

Roberta:
Thank you so much for all your input. I’ve been watching you guys, just being up all night, watching BiggerPockets Podcast, and I’ve learned so much in two weeks and I’m really grateful you took my Zoom call. Thank you.

Brandon:
Well, thanks, Roberta. Appreciate you. Thank you. All right, so next we’re going to bring in Jordan Morehead, Jordan, what’s up, man? We’ve been Facebook friends and Instagram friends forever, but I’ve never actually spoken to you online like this. What’s up? Welcome to the show.

Jordan Morehead:
Thanks. How’s it going, guys?

Brandon:
We are well.

David:
Jordan, I just talked about you in the last webinar I did for BiggerPockets. We had one of your testimonials in there as a committee member [inaudible 00:25:02]

Jordan Morehead:
That’s funny. I’m right with them. You and I have been corresponding for years now, and yet we’ve never actually chatted.

David:
You little creeper. You’ve crept you way right into the podcast. Good job.

Jordan Morehead:
Absolutely, that’s what I do.

Brandon:
What can we help you with?

Jordan Morehead:
I’ve got a pretty, pretty simple question. I don’t know, I have a house in Austin, Texas that I bought in 2018, remodeled it, it’s got about 200,000 in equity in it. It’s having some issues because when I bought it, I didn’t realize that the ADU doesn’t quite have a real foundation, but it’s working. It’s a great cash flowing rental right now. I’m struggling with, do I sell it and pull that equity out? As an agent, I have to disclose everything, or do I hold onto it and just keep fixing the sub floor every couple of years?

J:
That’s a good question.

Brandon:
Any idea what a new foundation is going to cost to put onto that thing?

Jordan Morehead:
You can’t put a new foundation without turning down the house. I figured that out the hard way.

Brandon:
All right.

David:
I should probably start with this one.

Brandon:
Okay, go ahead.

David:
How much is the new sub floor every couple of years?

Jordan Morehead:
Only like two grand, it’s not bad.

David:
That’s every two years or so?

Jordan Morehead:
Well, I’ve only owned it for two, but that’s what I’ve had to do.

David:
You got to assume $1000 a year to put new subflooring as a CapEx. Do your numbers still work with that?

Jordan Morehead:
Oh yeah. It works pretty well. It’s not making great cash on cash if you factor in the equity, but-

David:
The return on equity is low, but your return on initial investment was good, right?

Jordan Morehead:
Yeah, it’s great. Return on initial-

David:
I would be leaning towards selling, and here’s why, if you can put your equity to work for you somewhere else, I would be looking to do that. That foundation problem is a problem. It is less of a problem in a hot market where someone just wants a house and they’re willing to take that problem on because they can’t get anything, and Austin is very hot. If you don’t sell now and you roll the dice, and it turns out that five years later, Austin’s not selling like hotcakes. Now, it’s almost impossible to unload that thing because they’re going to want a huge discount.
Just with the state of how the market is, this is the good time to sell, for lack of a better phrase, problem properties, because there’s so much demand, people are going to buy them. I would get out of that one. I’d put my money into something that’s not a problem property that can hold for a long time and not have to worry about getting a low return on equity.

Jordan Morehead:
Yeah. No, I think that’s a great idea.

J:
I agree with David. I’ve been saying for a few months now that I think at some point when the government stimulus runs out and things catch up with us, we’re going to see a softening in the market. One of the strategies I’ve been telling people for the last few months is now’s a great time to sell off anything you don’t want to hold for the next five or 10 years. If you have the opportunity to sell this and capture that equity and still make a profit, I definitely agree with David.

Jordan Morehead:
Okay. Thanks guys. I appreciate it.

J:
Absolutely.

Brandon:
All right. Very cool. All right. Next, we’re going to bring in, it looks like Justin. Justin, welcome to the show. What can we help you with?

Justin:
Okay. I have 18 years, 19, one’s on the market, and I’m looking to get into the apartment. Do you think at a time like this it’s a good time to look for something like that, four or five homes on the market and shoot for an apartment complex?

Brandon:
Yeah. Good question. Basically, you’ve got 18 units now, or 19, you got one you’re selling. Should you fell a few of them, take the cash and go dump it into some larger apartments. That’s the gist of that?

Justin:
Correct? Or more. I don’t have to hold onto all of them, but just something I would like to get into is the apartment complex.

Brandon:
Sure. J, what do you think? You want to start that one?

J:
I would start with, you want to get into apartment complexes just because you think it’s fun because you think it’s more profitable than those 18 or 19 units and single family? You’re looking to make things simpler by having everything under one roof? What’s your thoughts there?

Justin:
The biggest thing is one roof, one area. I have them spread out between two towns basically. It’s not a bad drive. It’s about 30 minute drive from Georgetown to Belton-Temple area, but yeah, just under one roof preferably. I just refinanced all of them. Payments went from 6,000 down to about 4,500, but just, I guess your opinion.

J:
Yeah. Well, you’re playing real life monopoly and you’ve got all these houses and you’re trying to trade up to, well, not quite a hotel, but a multifamily. Obviously, I think that’s a great strategy. My biggest concern is you’re selling off everything. You’re going to pay a lot of taxes and then you’re going to take that money and you’re going to roll it back into more real estate. Basically, you’re going to end up with the same thing you had in a different format, but you’ve already paid some taxes.
I would look into being able to do what about to do-

Justin:
What about the 1031 exchange?

J:
Yep, that’s exactly what I was going to say. If I were you, I would definitely… I see nothing wrong with trading up single family homes into multifamily. I think it’s great, you get the economies of scale and you may get better cashflow depending on the area and the class of property. But for me again, just, I wouldn’t want to pay those taxes. Yeah, if you can do a 1031 exchange and move your money from the single family to the multifamily, I think that’s a great strategy.

Brandon:
Yeah. I’d keep in mind, the 1031 is awesome, but it also gives you that really tight timetable and multi-families are incredibly competitive right now.

J:
Find the deal first.

Brandon:
Find the deal first. Yeah, exactly. I would see if you can do that. Then… because you’ll sell your houses and your small stuff really easily. I would go and focus on that apartment and then don’t sell the properties until you have the apartment because otherwise you might be stuck trying to buy… I did that, I sold a property that was cashflowing really well, and I bought another one because I had a hurry and actually my cashflow dropped significantly by doing that. I should’ve just never sold… I’m glad I did because I got some other benefits out of it, but that timetable forced me to buy a worst property than the one I was selling.

Justin:
That’s another thing I’ve thought about too is hold on to the properties, cash out, refinance in six months to a year. That’s something also another option as well. But then the cash flow is a lot less. When you can get 100% out of the money that’s in the house and go and put it into something else, I think that’s a little bit more valuable for me as far as cash flow.

J:
That’s something that’s going to be personal to everybody. Some people like to have a lot of equity in their houses and they want higher cash flow. Other people are thrilled to be able to use debt as much as possible, leverage as much as possible. They’re happy with lower cash flow for a few years, but obviously that’s higher risk. It’s a longer term strategy. There are pros and cons of using a lot of leverage and that’s something that’s very much a personal decision and what’s going to help you sleep better at night.

Justin:
Right? Okay. Awesome. I appreciate it.

Brandon:
Thanks, Justin.

Justin:
Yep, thank you all.

Brandon:
All right, next we’re going to bring in, it looks like Ricky. Ricky, welcome to the BiggerPockets Podcast, man. Good to have you here.

Ricky:
Hey, what’s up everyone? I’m sorry for bad audio, but-

Brandon:
No, it’s good.

Ricky:
How you guys been?

Brandon:
I’m in Hawaii, it’s sunny, it’s not too bad. I’ll survive somehow.

Ricky:
All right. I’m calling from San Francisco. My question is, I’m looking to start burning into the Houston market. I think my only option is to use hard money. As you know, hard money is expensive. I guess when you’re using a hard money, should you be all in that 65%? That way that extra 10% could pay out that hard money interest, just the origination fee and all that? My question is what strategies would you use when using hard money? If you wanted to use it for the purchase price plus the rehab as well?

Brandon:
Yeah. Let’s have the guy who wrote the buy book, David Greene here answer that one. What do you think, David?

David:
We’re talking about buy and hold rentals in Houston.

Brandon:
BRRR.

David:
BRRR, okay. So, we are going to be keeping them. If you’re going to use hard money, you’ve got to be fast, that’s what I would say. A lot of lenders are going to make you wait six months before you can do a refi if you want to get into a Fannie Mae or Freddie Mac product. Like we told the last person, you need to find the next apartment before you put your houses on the market, do the hard part. First, I would go look for a portfolio lender first, find someone that will let you refi quicker, if that’s the road you’re going to take before you start the process of finding the deal and then using hard money.
I don’t think hard money is expensive, per se, relatively speaking. This is the cheapest we’ve ever seen it. It’s expensive compared to a regular loan. If there’s no way around this and you’re going to wait six months, you might be better off to just use standard financing. Keep your closing costs low. A lot of the time, if you go to a mortgage broker, you can actually have a higher interest rate, but get a lender credit back to cover your closing costs. That’s what I would recommend doing, max that rate up as high as it goes, which is really not that high when rates are this low. You’re only going to have it for six months. Keep your closing costs low, then refinance into the lower rate with the higher closing costs to get the better deal for you once the BRRR is completed.

Ricky:
It’s just straightforward, cool. Thank you guys for having me on the podcast.

Brandon:
Thank you, Ricky. Appreciate it. All right, next, Luke Nelson, welcome to the show, Mr. Luke Nelson, how are you doing?

Luke Nelson:
Okay. How are you guys doing?

Brandon:
Not too shabby. What can we help you with?

Luke Nelson:
Nice. I’m actually getting out of work right now. I am 19 years old as of tomorrow, and I’m looking to get-

Brandon:
Happy birthday tomorrow.

Luke Nelson:
Thank you. Single family or multifamily with an FHA loan. I just wanted to know, you asked single family or multifamily on that part, and I have a couple of other questions after that.

Brandon:
Yes, you want a house hack it, right? You want to live in one unit and rent out the others?

Luke Nelson:
Yeah, house hack or mix it with a BRRR.

Brandon:
Sure. Okay. First of all, I love the strategy. I love obviously David talks a lot about the house hacking stuff. He’s really into it as well. What market are you in?

Luke Nelson:
I’m in the Denver area, but I’ll be living in Boulder for school. I might be looking at a college town.

Brandon:
Okay. Denver, Boulder, it’s one of those cities like Austin, like San Francisco, it’s just super expensive. There’s not a ton of multi-families there, but there are some. My guess is you’re going to have a whole lot more options in the buy a house, rent out the bedroom type of house hacking than you are on the buy a duplex triplex. Not impossible to find the duplex, triplex.
But what I found in those big expensive markets is those duplex triplexes go really, really high and really expensive. I think you may… What I really like is the ADU, the idea of find the house with the mother-in-law or with the attic or with the basement, where it’s still a single family house, but it’s also it can be a multifamily. I like those ones. You have to be careful the zoning issues there. You don’t want to get in trouble with that, but David what do you think?

David:
100% what Brandon said, you’re looking for multifamily principles, but not necessarily a multifamily property because other people are going to be just descending on those things like locusts during a plague. Man, it’s so hard getting multifamily properties in some of these cities. The other thing I’d say is you don’t have to BRRR if you’re only putting 3.5% down. The whole point of BRRR is to add value to get your capital out. Well, if you’re not putting capital in, you don’t have to worry about that whole component of it.
If you’re going in and putting 3.5% down, 5% down, buy a place that is going to be in high demand, where students are going to want to live, look for as much square footage as you can possibly get, put bunk beds in those rooms and rent them out to the other college students. Have their parents put their name on the lease, not the students themselves so that they are paying you, and you are going to walk out of this thing, like an Elon Musk entrepreneur style person, leaving college with your school paid for and money saved up. You could literally buy one of these things every single year. You’re in college. As long as you can save up another 3.5% to 5%,

Brandon:
Hey we had another episode come out, was it last week, or the week before with Todd Baldwin, I think was his name, right? That’s what his strategy was basically in Seattle, was buy the big house, rent out by the bedrooms, essentially house hack it that way. Make sure you guys… You, Luke as well as everyone else, listen to that episode, it was phenomenal. I think that strategy works in markets like yours really well.

J:
I have nothing to add except, Luke, congratulations on being 19 years old and taking action. That’s awesome.

Luke Nelson:
Thank you. One last question if you guys have a second.

Brandon:
Sure.

Luke Nelson:
I also have a car I might be looking to sell soon. Do you think it’d be a wise idea to… It’s a classic car, not exactly the most daily vehicle. Do you think I should look at maybe selling it to get into these properties and eventually also at the same time, get into a more reliable daily car?

Brandon:
That’s a good question. J, what do you think?

J:
I’m a big fan. Again. I said it a little bit earlier that right now, any assets, just because I think the market is going to see a softening in general, the equities markets. Any asset that you don’t want to hold for the next five or 10 or 15 years, now’s a good time to sell it. If this is a car that you want to pass down to your kids in 20 years, by all means just hold onto it. But if it’s like, I’m going to sell it now, or I’m going to sell it in a few years, I think now is a good time. Especially if you have a good use for that money and you’re going to put that money to work to generate cashflow for you.

Luke Nelson:
Okay.

David:
Then use that cash flow to buy that car back five years down the road.

J:
There you go. Love it.

Luke Nelson:
Thank you guys so much.

Brandon:
Yeah. Thank you, Luke. All right, next, let’s bring in, I think it’s D. Hartley. Am I saying that correctly? D. Hartley?

Dorian Hartley:
Yeah. It’s Dorian, like Dorian Gray.

Brandon:
Dorian. What’s up Dorian? Welcome to the show.

Dorian Hartley:
Thanks. Big fan. Been listening to you guys for a while now, since school.

Brandon:
Thanks, man.

Dorian Hartley:
I guess my big question is I’m fairly new to investing. I’ve got six properties now. I’m now in that middle zone where I’ve started the ball rolling. Still do lot more. But my question is, at this point, I don’t know, I’ve just been finding good deals. My first house I bought was a home. I turned the basement into a rental and then, me and my wife got a second home. We were able to get a couple of vendor take back mortgages. I’ve just been taking deals that have come to me. Like, oh, this is a good deal. This is… Whether it be a BRRR or a cash flow or a buy and hold, I’ve just been taking good deals. Do you guys think I should continue on that path and just keep taking good deals, or do you think I should niche down and really find a strategy and stick to, you know what, I want to do longterm buy and holds, or I want to do just BRRR, or I want to do just flips. I’m caught in that, do I focus down or do I just keep taking good deals?

Brandon:
Yeah, that’s a really good question. J, what do you think? We’ll start with you.

J:
David made a comment earlier about embrace the and. You can do more than one thing at a time. This is one of those situations where I say you need to be doing both things. One, figure out what your goals are, figure out what your longterm strategy is, figuring out what your niche is. Whether it’s flipping, whether it’s wholesaling, whether it’s rentals with multifamily, whatever it is, figure that out, and then go after those deals really try and claim that market and build an expertise and hit your longterm goals, whatever they are. But at the same exact time, don’t pass up great deals.
I know there are so many people out there that are saying, “I can’t find anything now.” You’re sitting here saying, “Yeah, I’m just finding good deals.” Great, keep finding those deals, bring in a partner that you can offload those deals to. Wholesale those deals. Don’t ignore them necessarily, unless you find that to niche down, you really need to focus 100% of your time. Nothing wrong with that either. Nothing wrong with giving 100% to something. But do both things, figure out what the longterm strategy is, start to focus on it so that in five or 10 years, you’re actually achieving what you want to achieve instead of just going along with the tide. But at the same time, don’t pass up good deals if you have the bandwidth.

Dorian Hartley:
Okay, cool.

Brandon:
I would just add, I think you need to be very clear and specific when it comes to what you’re going after and marketing and stuff. But if the good deals come across your plate, you don’t necessarily, at your level, don’t need to say no. But if you’re just like, well I’ll buy anything, then chances are anybody who says that isn’t doing anything from marketing. They’re not finding deals because they haven’t defined what they wanted.
But if I said, for example, “I buy mobile home parks.” Everybody knows that’s what I do. But I’m also a guy brought a flip deal to me here on Maui. Of course, I’m going to do it because they just brought it to me. Now, I don’t do a whole lot of work to go find those deals, but if they come, so I’ll do them. The biggest mistake I see new investors making, newbies making is they just say, “I want everything.” So, they don’t actually do anything.

Dorian Hartley:
Right.

Brandon:
But you’re past that stage now, you’re good enough that you could probably tackle a couple of things.

Dorian Hartley:
Yes. It’s more about my time. Focus my time on a specific thing, but I’m not going to say no if a deal comes along.

David:
Bro, get yourself a mentee. Someone really smart that picks things up quick. When those deals come your way, paint a path for how to acquire the deal and exit the deal. But that person put their time into it, and you just work on filling up that funnel.

Brandon:
Hey, Dorian, what market are you in?

Dorian Hartley:
I’m in Kingston, Ontario, Canada. Just two hours from Toronto.

Brandon:
All right. Well, if anybody’s up in that market at all, what’s your Instagram?

Dorian Hartley:
It’s dhartley77. Link up with me, I’d love to meet up, and chat and talk to you guys, and thanks for having me.

Brandon:
Awesome, man.

David:
You’re playing matchmaker, Brandon.

Brandon:
Look at that.

Dorian Hartley:
Always one step ahead, nice.

Brandon:
Well thank you, Dorian. All right, next up we got Shane. Shane, welcome to the podcast, man. Good to have you here.

Shane:
Hey, how’s it going guys? My situation is kind of interesting. I closed on my first house hack to rental property in February and then shortly after, of course everything hit the fan. Now, I’m in a position, it’s kind of an ancillary. J, I know you said that if there’s an asset that you can capitalize on. I’m in a position where I could rent out my property when I leave because I got a job offer in a different state and make about 100 bucks a month on it after CapEx and all those things, or I could sell it for a small amount of profit and take out a good chunk of equity and reinvest.
Now, I’ve done some research and Ken McElroy is predicting a big downturn. J, I know you said there’s going to be a softening in the market. Would you guys recommend pulling out that equity at this point or holding it longterm?

Brandon:
Yeah.

J:
I’ll take this one. One.I’m friends with Ken, and Ken and I see a lot of things the same way on what we think is going to happen in the market. So, yeah. But to get to your question, I invest a lot in military towns, small military towns. The number of properties I buy from one demographic of seller is crazy. That demographic of seller is guys who have gone into the military, they get stationed in one place and they move to another and move to another move to another. Each place they get stationed, they buy a house. The general theory there is fantastic. You build up your portfolio, buying one house here, you move to the next place, you buy another house. But the reality of that is it’s really difficult to manage a one off property in multiple locations because you have to find a good property manager. If there’s an issue you have to fly back for one property, you have to find contractors for one property. It’s really, really difficult.
What I generally tell people is, if you’re going to invest long distance, invest someplace where you can build up a portfolio, don’t go someplace and say, “Oh, there’s an opportunity in Denver. I’m going to buy that house. Oh, there’s an opportunity in some city in Ohio, I’m going to buy that one.” Because one offs are really difficult.
If you’re moving and you’re not planning to build a portfolio in that area, I think now’s a great time to sell that property, and then start investing somewhere that you’re going to be living or somewhere that you’re willing to invest to build a larger portfolio.

Shane:
Yeah, totally. I think for me, I wasn’t planning on leaving and then I got an opportunity that’s pretty hard to pass up. The plan wasn’t to have that one off, but I think that’s a really good know, and I appreciate it.

J:
Absolutely.

Shane:
Thank you guys.

David:
As a general rule, I’ll say this before you go, for people that are asking the question, should I hold or should I sell and wait? That’s really tough. It’s a hard extreme on either end, and you leave a lot on the table because you don’t know what’s going to happen. I prefer to get out of that binary thinking and think, should I reposition or should I hold? If you’re going to sell it, where would you put that money? Like J said, you’re putting it in a smarter place. If there is a recession, you’re good because you’re in a military town, but you also didn’t put all your capital aside and then if prices don’t go down now you’ve got to reenter at a higher price point and you’re worse off.

Shane:
Right. All right. Well, thank you guys. I appreciate your time.

Brandon:
All right, thank you. All right, next we’re bringing in [Leora 00:45:20] Am I saying your name correctly, Leora?

Leora:
Yeah, you’re saying it right. That’s my name.

Brandon:
All right. Good deal. Welcome to the show. How can we help you?

Leora:
Thank you very much. My question is pretty similar to the kid just right before. I’m in Minneapolis.

Brandon:
My hometown, sort of.

Leora:
Yep. Stuff got really real here. My neighborhood burned down, but I just bought a multifamily property and it’s turning out to be a house of horrors. Everywhere I look, there’s a new problem and I know that’s totally going to happen, but it’s becoming to be very unmanageable. Of course, I also bought in February and I lost my job two weeks later and I’ve been permanently laid off. I guess I’m trying to figure out where to go from here. My partner wants to buy… We’re not married, we want to buy in Allentown. Now, I don’t even want a yard, I just want a turn key, ugly house that needs paint. But I’m just trying to get some guidance on where to go from here.
I redid all the plumbing. I’m starting to do the time lapse videos. I’m getting a lot of people to chat with about… I just redid all the plumbing myself. I’m refinishing all the floors myself. I’m redoing everything, but should I sell it? Should I hold it? It’s a big question, I guess.

Brandon:
What do you do in a situation? I think this is a really good question because this happens to people. I wouldn’t say everybody gets in real estate has a bad experience, but a lot of people let’s call it 20%, have a really bad first deal. Something just goes wrong. Whether they didn’t know it right, they didn’t do something correctly. Whether the market burned down, just literally in the area. How do you handle that?
I guess, my one thought is this, my one thing is this, it doesn’t matter, first of all, say that. I don’t mean to make light of the situation. What I mean is 10 years down the road, when you want 100 units and you’re bringing in 30 grand a month in cash flow and you’re living in your dream location, who cares that first deal, whether you kept it or didn’t keep it?
The only goal of the first deal is to get to the next deal. If you go ahead and sell it, great, sell it. Don’t feel like you have to keep it because you did that first deal, and it’s your first deal, and there’s emotion there. Sell it, move on to the next one. That’s fine. If you can get your money out, even if you lose money, if it makes you feel better, sell it. If you want to keep it, you want to just put your head down and say, you know what, even a money pit has a bottom. Every pit has a bottom, you will get to it eventually. You could just keep… I’ve been in money pits before and I just keep digging, and you keep going down until I eventually reach it, and then we come out of it. When I look 10 years later, those money pits are now making me thousands of dollars a month in cashflow. I’m like, wow, I sure I’m glad I kept that thing.

Leora:
As long as I can get it rented, I’m into it. But it’s insane the amount of work. I guess I’m just going to keep trucking along and try to buy it. I’m going to go… Honestly, I’m going to go with single family for now. I rent by the room, like Philippe. I want to do it too a lot of airline folks. I’m just going to try to take that route from here on out because I know I’m going to be doing a lot of work myself.
Thank you guys for everything, I listen to all the episodes. I’ll see you guys. If we ever need to have another conference, I will see you there. I saw you in Nashville.

Brandon:
That’s awesome.

Leora:
Sending love from Minneapolis.

Brandon:
Thank you. Say hi to my family. Say hi to my mom.

Leora:
All right. I will. Party on.

Brandon:
Thank you. All right, next let’s go to May. May, welcome to the podcast.

May:
Hey.

Brandon:
Hey.

May:
This is exciting for me. Okay. Thank you guys so much for doing this. This is a huge resource for a lot of people. I know we’re all super jazzed to be here.

Brandon:
Thank you.

May:
A little bit about me, I live in the Bay area, I invest out of state, obviously, because there’s not a lot of cashflow and that’s my business model for me and my husband or that’s what we go for over equity. Right now, we have one rental property out of state and we you’re looking at another one and we want to invest with family, but my husband wants to, and I don’t think that’s necessarily a good idea. I wanted to see what you guys thought about… I guess why I don’t want to, is we’ve done a lot of research and they haven’t necessarily. I don’t feel like they always see the vision.

Brandon:
Yeah.

May:
Why do that over by more Tesla stock? That’s my question.

Brandon:
I generally say, don’t invest with family and then I invest with family. It’s one of those, I’ve invested with my in-laws and I’ve invested with my parents, and I invested with other family members I’ve been involved. It makes… Just want to say, I do it, but it’s so dangerous because if you like your family, it makes Thanksgiving dinner very awkward when things go wrong. I don’t like it for that reason. That said the reason I have violated my own rule and done it is because we’ve had a lot of conversations with both sides, both ends on both sides on expectations, what to expect, what not to expect. My parents and in-laws trust me implicitly, and I know if something went wrong, they would trust me through that as well. We’ve worked through those. But J, what do you think, family?

J:
I’m right with Brandon. I don’t like doing it. I have done it. It’s one of those… Well, let me ask you a question, are you investing with family because it’s a win-win for both sides or because you’re doing it because you feel obligated because they’ve asked you to, or they feel obligated because you’ve asked them to? What’s the goal? And then what is the relationship going to look like? Is it an equity investment? Is it debt? Is it 50-50? What’s a little bit more information there?

May:
Yeah. I think my husband approached them about investing. I guess it’s from that point of view. We need them, we need their equity. My father-in-law has been trying to, through all these hoops and whatever, invest with his retirement. That makes me feel uncomfortable, because it’s not just like extra stuff. It’s like, either this works or we lose you money. I don’t know.

J:
Here’s something to think about. I apologize for cutting you off, but here’s something to think about. Would you be willing to, or would they be willing to invest with debt? Meaning they make a loan to you and you pay them 6%, 8%, 10% interest. That way, you’re on the hook to pay them back whether your investment makes money or loses money so they won’t necessarily lose money. But at the same time they have some upside. Basically, all the risk is on you. They’re not making as much money, but they’re still making money in their IRA, because I do a lot of that out of my IRA. I’ll lend money. I don’t take the risks, it’s not an equity investment, I’m not a partner. The person, whether they make money or lose money, they’re going to pay me back the interest on my loan either way.
That’s a win-win. You’re taking the risk. They’re making money. They’re just not making as much, but they’re not taking any risks.

May:
Okay. Sorry, I apologize for my children. I’m a stay at home mom.

J:
That’s okay.

May:
But that’s an interesting… I guess I would feel more comfortable, if I take on all the risks, all the responsibility, I’ve also done all the research.

David:
Let me ask you a couple of questions, May, are you paying rent right now?

May:
I own my home. Well, I guess [inaudible 00:52:30] my home and I house hack.

David:
Can I ask what your mortgage is? Wait, you said you’re house hacking already. That’s what I was going to say is what if you borrow the money to buy a primary residence where you were the tenant and you use that money to house hack and turn the house you’re in right now into a rental rather than going and buying one out of state where you’re not the tenant, it’s a new market you don’t know, they have to put all this trust into someone, but a system they’re not familiar with. Whereas if you just do it local and now they’re investing in you as opposed to investing in a deal, they don’t understand. If you’re really want to take on partners, I would probably look at it from that angle.

May:
Okay.

J:
I do need to add one more thing. If you’re… Is it your parents or your in-laws?

May:
It’s my in-laws. It’s not my family.

J:
Okay. Either way, if your husband is part of this investment, there are laws… Not laws, there are rules regarding how IRA investments can be used. One of the things that they can’t do is they can invest that money with a close family member. I believe son or daughter is disqualifying. Make sure you talk to a good what’s called a ERISA. Retirement Fund Accountant or attorney before you go down this path, because it’s very possible that you could be running into some violations of ERISA laws if you have a close family member that invests with you out of their IRA.

May:
Okay. I think we’ve overcome… We have an LLC. I think that overcomes it, but not as good for me to double check.

J:
That protects you, it doesn’t protect your in-laws, who are lending out of their IRA.

May:
Okay. Thank you. I appreciate it.

J:
No problem. I’m not an accountant, I’m not an attorney, but I have done a lot of lending out of my IRA, and I know I wanted to lend to my brother before, I wasn’t able to. I know that they may be able to… You can’t… Do some research, make absolutely certain.

May:
Okay, perfect. Thank you guys so much.

Brandon:
Yeah. Good deal. Thank you, May. All right, now we are going to bring in another… Let’s see, question. Let’s go with Megan. Megan, welcome to the BiggerPockets Podcast. Good to have you here.

Megan:
Hey Brandon. Hi Scott. Hi everyone.

Brandon:
Hello.

Megan:
I’m Megan. Hi.

Brandon:
What can we help you with?

Megan:
I’m a COVID-19 crisis travel nurse. I’m on the opposite end of the spectrum. I know a lot of people are hurting right now financially, but when the COVID-19 started to break out, I became a travel nurse and now have the opportunity to invest $100,000 in liquid cash. My husband and I own our home. We have a mortgage on it still, but over the past four years we’ve been doing the Mindy Johnson model where we do a live and flip and the house is going to be… We bought it for 309, it’s valued anywhere from like 420 to 520. It’s like, do we keep this house? Do we sell it? What do we do with this extra money that’s coming in?

Brandon:
Yeah. You got a chunk of cash that you could invest and you also have equity in your primary residence that you could potentially pull if you needed to.

Megan:
Yeah.

Brandon:
When did you get your mortgage on your house?

Megan:
In 2017?

Brandon:
Do you know your interest rate off top of your head?

Megan:
Oh yeah, it’s 2.88.

Brandon:
Oh, wow. That’s a-

Megan:
It was a VA first time home buyers loan, zero now.

Brandon:
Okay, that’s already a… I was going to say you could refinance and get way lower rate. You’re not going to get a lower rate, but you can refinance and post on the equity maybe.

Megan:
That’s one of the plans was, and also it’s in Richmond, Virginia, and we really want to move to Florida and be J Scott’s neighbor.

Brandon:
There you go. J, Can they just rent… You have an extra bedroom, J, right? They can rent from you?

J:
It’s funny, I have a really good friend down here that rents exclusively to traveling nurses.

Megan:
Nice.

J:
It’s a good business model.

Megan:
Yeah. For right now, I used to live in Raleigh, Durham in the triangle and I house hacked my first home there, which was a townhouse. We really want to just keep investing in areas with three different healthcare systems or more, that way we have a large amount of students and healthcare professionals to rent to. We’re just looking for longterm wealth. I’m a bedside nurse, I’m an ICU nurse, and I would like to eventually be able to have kids and be home with them.

J:
What’s your timeline for moving, for relocation?

Megan:
Well, I’m traveling nursing, COVID’s projected the last two to three years, so I’m going to be away from home for the next two to three years. My husband’s going to stay in our Richmond home. He’s asked for that just because we put so much work into it already and while I’m gone, he just wants a stable place to stay. But anytime in the next three to five years, we’re open to going. Even if you say, “Hey, jump tomorrow.” We will. We’re pretty fluid with plans.

J:
Yeah. I said earlier that I’m not a big fan of owning one off properties in locations where you don’t live. If you said to me you were moving in the next year, year and a half, two years, I’d say, probably hold off, don’t buy anything local. If you said it was going to be 10 years, I’d say, “Well, then that doesn’t matter. Go for it. Start buying.” You’re in the three to five year range, which is the gray area. It’s that too short, can you build a portfolio in that timeframe, or would you end up buy one property or two properties and being in a tough situation?
It’s a little bit harder, but one of the things that I might suggest is if you know that you’re going to be moving, or if you suspect you’re going to be moving, let’s say to Florida, if you have an area in mind, well, maybe now’s a good time to start researching that area and consider start getting familiar with that area, so that over the next three to five years, maybe you could buy a property or two and start building that portfolio in the area where you plan to live. Maybe you can even buy a property that you rent out for a couple of years, and then when you moved down to Florida, you now have a personal residence that you could live in for a few years, then you could basically sell it tax free.

Megan:
That would help too, because my income has quadrupled unexpectedly and Richmond is not a tax Haven state. We do have income tax. Florida would provide that for us.

J:
I think, if you have a pretty good idea of where you’re going to be in five years, I like the idea of starting to invest there. That said, if you’re uncomfortable investing long distance, there’s nothing wrong with taking that money, putting it into your home, paying down your mortgage and using that as a way to save. If you ever need to tap it, you can refinance or get a line of credit to pull it back out. But that’s probably better than just having the cash sitting in a savings account.

Megan:
Absolutely. Okay, thank you so much.

Brandon:
Yeah. Thank you, Megan. All right, next, let’s bring in Zari. I hope I’m not completely butchering the name. How do I say that?

Zari:
You said it better than most of my teachers have my whole life.

Brandon:
Okay, good.

Zari:
I go by Z, I live outside of-

Brandon:
Z.

Zari:
… Washington, D.C. area between Baltimore and D.C. I actually have met J Scott, he knows Western Peter’s pretty well. I work at his brokerage. I’m a real estate agent as well as a consultant in D.C., as well as an investor. I just started three years ago. Pretty much currently I own rental properties. I’ve done a few flips in D.C. My question really is I get really emotional with my flips, and I like to put in high end materials and nice stuff because that drives the market in D.C. I guess what I wanted to understand was, I guess it works with each market, but when to analyze what your budget should be, and when you should go with high end material, maybe mid-level material, especially when you’re using wood floors, or you’re using carpet. When is a good idea and a strategy to analyze that?

Brandon:
J, you got to take this one.

J:
Yeah. I’m a big fan of scenarios, and we’ve talked about that a little bit with earlier callers, running multiple scenarios. Every time I buy a flip property, I run through at least five or six scenarios. I’ll run through the wholesale scenario. I buy it and I resell it before I even close on it, or within a couple of days. I run through the whole tail scenario where… Or the prehab, depending on what you want to call it, scenario, where I do maybe a little bit of fix up, and then I resell it to another investor. I run through the scenario of putting in low end finishes and selling it to a landlord. I run through the scenario of putting in mid end finishes and sell it to a retail home buyer at a relatively low price. I run through the scenario of putting in high end finishes and selling it to a higher end retail buyer. I run through this scenario of tearing it down and rebuilding.
Typically, you can rule out a couple of those scenarios really quickly, but then you get left with a few scenarios that you can say, okay, if I put in mid-level materials and I can resell it for X amount, what’s my profit versus putting in high end materials and selling it for Y amount? You can run multiple scenarios. Run a scenario of hardwood floors versus tile versus carpet. Run a scenario of laminate countertops versus marble countertops. Run a scenario of replacing the roof versus not replacing the roof. These are all scenarios you can run.
If you have a good agent, a good real estate agent that knows the area really well, they can tell you low end materials, you’re going to fetch this ARV, mid-end materials, you’re going to fetch this ARV. Replace the roof, you’re going to fetch this ARV. Add another bedroom, you’re going to fetch this ARV and run five or 10, or maybe even 20 different scenarios and see what’s going to allow you to maximize your return, not just financial return, but your return on time, your return on risk, return on everything. Then just be really flexible with those scenarios.
Don’t just… Too many people go into a flip and say, “I do the same flip every time. I’m going to go in and do it this way, just because I’ve done it this way the last 20 times.” There might be a better way. Run those scenarios and analyze your returns for each one.

Zari:
Yep. Thank you very much, guys. I’ll give you a quick scenario of how that worked out. Well, I had a townhouse in D.C. which had three bedrooms upstairs and I converted the three bedrooms into one master bedroom with a master bath. On that street, I was the only house that sold and I sold 20K over this price, and it was only because I took out that extra bedroom and I put in a master [inaudible 01:02:13] Sometimes strategies like those do-

Brandon:
That’s such a good example of why some of the pat advice we give, like add a bedroom and it increases the value, can actually… It’s very specific. There are examples where that doesn’t work. You took out bedrooms and you increase the value. It’s rare, but it happens. People, it’s such a good way to look at it. Where’s the hidden potential, where are people not thinking? Obviously as an agent and an investor, you get that, and I think people can learn a lot from that.

Zari:
Thank you very much, guys. Thank you for having me.

Brandon:
Awesome, and thank you Z. All right. Let’s next go in… Let’s see, the name came up as iPhone, but I’m assuming that’s not your name.

J:
I love that name.

Brandon:
That’s a good-

J:
I almost named my son iPhone.

Partik:
Sorry. My computer was acting up, so I had to download the Zoom app on my phone.

Brandon:
That’s all right, what’s your name?

Partik:
My name is [Partik 01:02:59]

Brandon:
Partik, what’s up, Partik. Welcome to the show.

Partik:
Thank you. Thank you for having me. The question I have is I’ve been reading a lot about flipping and BRRR. I start… Basically, I sharpened my axe for so long, and me and my partner that we went to school with, started to execute and starting to look for a flip in the beginning of this year. We got hard money, lender approval. We interviewed a lot of lenders and they interviewed us and we… Basically, all of this, we spent a lot of time and now we can’t find a deal.
Over this time, we have saved up so much money because as we’ve been looking for deals, sending in offers, now we have the cash together to do a full flip without a hard money lender because we’ve been saving up because of this downturn. My question is, number one, should I use my cash, should me and my partner use our cash and not use a hard money lender for our first flip? How do we find deals… I’m in the Houston market. Texas has hit a lot more than any other States right now. What should I do there?

Brandon:
I’ll start this one. My first, I’ll address the what to do when you can’t find a deal thing. This is the procedure I walk everybody through when they say they can’t find a deal. I always ask, and I’ll ask you, how many offers have you made in the past week? Actually written offers?

Partik:
Written offers, I would just say two.

Brandon:
Okay.

Partik:
But, I’ve been sending in offers, I’ve been… Our wholesalers that we’ve been looking at, when we reviewed the deals, our numbers don’t work. Even now the fact that we can do it without a hard money lender, we have more wiggle room to make more profit and make more offers, it still doesn’t make sense right now, even their lists are so short. We’ve been even on Zillow and ACR and sending in random offers before actually not written offers, but like, hey, we’d like to send this offer in the little text box they have on the right, but we haven’t gotten any hits over the past couple of months.

Brandon:
Yeah. Well, where I was going to go with that… Again, you’re already doing a lot of what you should be doing, obviously. But I was going to say, most people, they’re not making offers because they’re not analyzing deals because they’re not getting leads. If you’re having trouble finding offer… This is just basic stuff and you know this, but I’ll say it anyway for those who don’t is if you’re having trouble finding deals, you got to ask yourself, how many offers are you making every week? How many deals are you analyzing and how many leads you’re getting.
You can usually diagnose the problem in one of those three things. Now, it sounds like to me, you’re making some offers. You’re probably analyzing some deals. Your numbers just aren’t there, which I would then go to the first one, which is your lead source is that the lead sources is not there. Now, there’s one more, the lead source in terms of, can you do some different direct mail marketing? Can you do different, like the text message kind of thing. Could you go into ringless voicemail? Could you do that kind of thing and then really ramp that up?
I’m not saying you’re guaranteed, but if you spend 10 grand in direct mail marketing, I bet you’d find something. Maybe it means finding a new market. You might just be overheated there.

Partik:
Yeah. I would like to add that last month or a month and a half ago, I started driving for dollars, but I need to do it as much. I just did the trial version because I got so fed up and I even downloaded Pop Stream trial version and started looking for people that filed so bankruptcy and sent all my own letters. I probably did maybe like 30 letters. I know that’s not enough. That’s not even one hit, but I noticed that’s a lot of work and I would rather just pay a wholesaler to do that for me, and I would focus on the flip myself.

Brandon:
Yeah, but there’s so many bad wholesalers out there. I would encourage you even like, yes, wholesalers could work. I would almost consider find somebody local, who is a 21 year old kid, who’s in college who needs more money. You pay them $9 an hour and make them give you a list of 300 or 400 vacant properties in an area because they drove every day afterschool for two hours. Get that list build up. Mail those people every single month, or every other month for the next year. You do that strategy, if you’re consistent with that, you’re going to get it. Then if you don’t want to do the driving, because you got other stuff, it’s a super low dollar per hour job.

Partik:
Yeah. Okay. I understand. I work 9:00 to 5:00, but I’ve been working from home. That’s why I’d started to do some driving for dollars and all that stuff on the side.

Brandon:
What’s your Instagram, by the way?

Partik:
@KO3R.

Brandon:
All right, so at @KO3R?

Partik:
Yeah, KO3R.

Brandon:
All right. If you’re in the Houston area and you want to go and do this work for Partik, hit him up because there’s probably people out there that could learn from what you’ve already figured out, and to be able to do that for you and maybe take a small piece of the deal or just learn and just get part of your world. You hit him up.

Partik:
Thank you, and the question is, we’ve saved up enough money as we’ve been looking for a deal. Should I use all my money right now?

Brandon:
J, what do you think?

J:
I think it’s always nice to have cash as a backup. So if you use the cash on the first deal and then you find out you need it on the second deal, you’re going to be disappointed because you don’t have it. I’m a big fan of if you can use hard money, use it, if it still makes sense and save that cash for when a great deal comes along and the seller says, “Yeah, I’ll sell it to you, but you need to close in 48 hours.” Because it’s better to save the cash for that situation than use the cash and then find that seller and be like, “I guess I can’t buy this one.”
I’m a big fan of saving enough cash for at least one deal and putting it aside for when that great deal comes along, but it really, really needs the cash.

Partik:
Okay. Yeah. The reason I started to think that is because I realized depending on the ARV and depending on the house, hard lending was taking between $6,000 to $9,000 on every deal that I analyzed-

J:
It’s expensive.

Partik:
Yeah, it’s expensive. If I hold it for three months, it was $6,000 to $9,000. I was like, if I can get rid of this $9,000 fee, I can start offering a little bit more so I can get more deals. That’s why I started thinking that way, but okay. I really like it. Thank you guys.

J:
If you’re going to do one deal at a time, then use your cash. But if you want to do more than one deal at a time, then front load the money and save the cash for when you really need it.

Partik:
Okay. Thank you so much, guys. I really appreciate it. Thank you.

Brandon:
All right. Thank you, Partik. Next step, let’s bring in Mahi. Mahi. Are you there?

Mahi:
Yes, I’m here. Hi everyone.

Brandon:
Hello.

David:
Hello, welcome.

Mahi:
Thanks. I am a Philly investor. I invest in flips and I have some rentals and I’m in the market to purchasing a multiunit. My question is what are some clever strategies besides writing a letter to the seller to have a higher chance of winning a bid as a mortgage buyer against potential cash bidders in a semi hot market, which I’m currently up against?

Brandon:
Oh, yeah. You took away my one that I say all the time, which is write the letter, make it personal. How do you get your offer accepted, especially when you’re dealing up against cash offers? By the way, for those that don’t know what she’s talking about, the letter is something that I do a lot of times. I’ll submit just some kind of personal letter with my offer. Just says, hey, my wife and I love this market. We want to buy properties here, whatever. We do that a lot.
Even if you’re dealing with a bank, honestly, it’s helped us even with banks because there’s still a person somewhere that makes the decision usually, and people like to sell to people they I like. But besides that, David, what do you think?

David:
Well, first off, I’m assuming these are deals on the MLS that you’re finding.

Mahi:
Yes, these are deals on MLS and working with wholesalers as well.

David:
Okay. Well, the benefit of a cash buy, something, I just want to highlight for everybody. Is it just that it’s cash? It’s that it doesn’t have contingencies. It doesn’t have a way for the buyer to back out. You could write an offer with a loan and waive contingencies on it. Now, you’re risking your earnest money deposit a little bit more, but now your offer is pretty much good as cash, if you’re preapproved. The lender calls agent and says, no, she’s already approved for the loan. So maybe you go to your lender and you get a full approval as opposed to a preapproval and they can go and say, “Oh, we’ve already looked at her file. Underwriters have cleared it.” Now, you basically are a cash buyer. You’re just not using your cash, you’re using the bank’s cash. It’s the removal of contingencies that makes you competitive.

Mahi:
Yeah. I actually did that with my first deal. I’ve waved off all contingencies, and it’s still losing gills.

David:
That’s my market too. Go ahead, Brandon.

Brandon:
Well, I’m going to say, that’s here I would encourage you to contingencies to start thinking of different lead source then. How do you get and molest. Perfect the other skills that are more valuable. I feel like the skill to drive for dollars and send letters and negotiate with the off-market is a higher dollar per hour skill than working with an agent to find out our market deals. Maybe it’s time to go that route. J, anything you want to add on that?

J:
No, I agree completely. You need to find deals where you’re not competing with other buyers. The only person you’re competing with is your ability to negotiate with the seller. Write letters, door knock, or do skip tracing to find the owners of these complexes that you want, and reach out to them. Like Brandon said, it’s, it’s a higher dollar per hour skill, which means it’s going to take more effort and more work, but you’re going to get paid for it at the end.

David:
That is such a good point. I tell my clients this all the time, when you chase the same house that 10 other people want, which in your case, it’s a flip house. The flippers want it. But to a traditional buyer, it’s just the prettiest house on the market. Your agent’s ability to negotiate just vanishes. You’re not negotiating with the seller. You’re negotiating against the 12 other people that also want to buy that house and you have to want it more than they do and be willing to pay more than them.
What I tell my clients is let’s stop looking at the same houses that everybody else is looking at. Let’s look on the one that’s been on the market a little bit longer and see if that seller is more motivated. I think you should take that same principle and apply it to how can I work my sphere of influence and tell them I need a house to flip? Do you guys know anybody with a hoarder house or an ugly house? Somebody who owns a rental, they don’t want it anymore and put your efforts there as opposed to just chasing after the same deal that everybody else is chasing after.

Mahi:
Good point on that.

Brandon:
David just brought up something else that’s really good. If you’re finding deals on the MLS, if you’re on the MLS anyway, look for anything that’s expired. Find stuff that’s expired in the last year or two, because that’s stuff where the seller was motivated recently, but now there’s no competition. We just bought a new personal residence, and that’s how we did it. We found an expired house in our neighborhood and we went to the seller and we negotiated a great deal because they didn’t realize it was a hot market, so, they weren’t putting it back on the market. But as soon as we made an offer, they were really excited. They’re like, “Oh wow. Yeah, we’re still ready to get rid of this.”

J:
That’s awesome.

David:
That’s great advice.

Brandon:
Cool. All right, Mahi, thank you.

Mahi:
Thanks for your time.

Brandon:
Thank you for joining us today. I think lastly, today we got one more that we’re going to take on here. I know you’ve been waiting a long time. Joseph, welcome to the BiggerPockets Podcast. Good to have you here.

Joseph:
How’s it going? This is awesome. Thanks for doing this.

Brandon:
Thank you. What can we do for you?

Joseph:
I’m crushing it. I’m hyper-local in one market. I am building up deals. I started off with a condo because it was comfortable and I just wanted to do the deal. I know the market because it’s cyclical based on… It’s in a rural town where there’s an academic medical center. People are there for the college, which I don’t do college rentals, but I do that to grad students and to medical trainees, they don’t tear up the place. They’re working 80 hours a week. So, they’re not in your home.
I know the zoning… My next deal was a single family legacy property was inherited. I knew the zoning, I knew I could turn it into two units. I turned the single family to two units and I bought it off market deal because I noticed that most of the deals that other people, other investors and developers like myself were doing were off market deals. I started pressing the flesh, et cetera, et cetera.
My question is this, and I’ve heard this from a couple of sources and a couple of mentors who have a lot more real estate that they control than I do. That said like, Hey, look…. I think it’s [inaudible 01:14:41] story too. He’s like, “I ended up with like 2000 single family homes.” That’s what I’m worried about. I want to plan my future, I’m moving super fast. I know I have a recipe that works, a contractor that works. I’m going to hit hiccups at some point, but I’m picking up duplexes like crazy.
There isn’t a lot of large, say 10, 15, 40 unit complexes around this area. It’s just small… I’m not doing any more condoms, but it’s all duplexes. Do I just keep doing it because it’s working or I know where I’m headed and I should just avoid that?
I don’t want to flip because I don’t want to have to compete against people and I want to build my portfolio. I’m kind of stuck because I have a recipe that’s really working, but I know where I’m going to be in 10 years. I’m going to have 150, 250 units, but they’re all going to be duplexes. How do I dissolve that unless I hand it off to somebody else and find one buyer, which is not going to be easy to do?

Brandon:
Yeah. Really, what we’re talking here is like quantity versus quality in a way. I don’t mean quality in terms of property, but you can go buy an 100 unit apartment building or you could buy 50 duplexes. I don’t think there’s actually aa… There’s not a right or wrong there, in fact. But the way you run an apartment complex is going to be very different than way you run 50 rental houses. If you want to do the 50 duplex thing, nothing wrong with that. But you need to make sure that you build a business and treat that 50 duplexes like an apartment complex, that you got a manager that manages the whole thing. You have systems and processes.
I think if it’s working in that market and you can capitalize on it and crush it and you can build those systems in so you don’t have to do the work, and you’re not just cashflowing because you’re there managing it and you’re doing all the work, but you actually have all the systems in a business, I would go that route, and I would just stick with what’s working personally until it’s not working anymore.

Joseph:
Don’t worry about the exit, because that’s what people-

Brandon:
Yeah, because you could easily… Not easily, but you could package 50 of these together, 50 duplexes together and sell off 100 units to an investor at a low cap rate later on as the commercial investment. There are wreaths out there, there are investors, there are people that would buy that in a heartbeat, in one big shot. Personally, I wouldn’t worry about it, but I’d love to get your guys’ take on us, J and David.

J:
Yeah. I agree with Brandon. I think you’re looking for a problem that doesn’t exist.

Joseph:
Awesome.

J:
Certainly, it’s going to take longer to disperse of 50 duplexes than 100 unit complex, but you’ll probably get a premium for them. You may be able to sell them in bulk. Even if you have to sell… If you have to sell them off to individual buyers, you’ll probably get a premium, and it also gives you flexibility. For all you know, you may want to cash out 20% of your portfolio at some point to send your kids to college, or you may want to cash out 50% of your portfolio to buy a house in Italy, to go live in and let your property manager run the other 50.
There are advantages to having these sub dividable assets. Like Brandon said, instead of focusing on the problems, focus on the solutions, work on your systems, work on processes, find a great property manager, find a great team of contractors, start using VAs. There’s some really smart people out there that manage a whole lot of properties, and basically do it completely passively because they focus their time on their systems and the processes.

David:
I got a couple of things I’d add. One, I would not assume you have to sell all 50 at one time. If you go find the deal that you want to buy, a 200 unit apartment and you put it under contract and you just tell the seller, “Hey, I can pay you this much, but I could pay you more if you can give me another 12 months to exit everything.” You work out a deal with that person, then you just sell them individually for as much as you can get, put it all in a 1031 escrow and move it all to buy.
You could do like J did, where you sell off 10 here, 20 there. You could refinance and put them on a 15 year note, pay those suckers down really, really fast, and then just start pulling money out to go buy apartment complexes with it. That becomes like a foundation. You can also do what I did in the meantime, where I hired a person to manage all of the property managers of the properties that I have. Now, that’s one phone call a month that I have with that person. He goes over the P&L, he goes over who paid, what’s vacant, what questions we have. All the property managers send their requests to the same email. It’s not that much work to manage a lot of different units, when you could get some help. That’ll probably buy you some peace of mind while you’re building this empire.

Joseph:
Yeah. Did you guys, any of you write a book on that? I’ve read most of your books. The long distance stuff makes me nervous. It’s a market I know, but I need some… I’m starting to realize as I’ve grown my portfolio, I need the anonymity, and I need those, as you’re talking about, David, those levels to just streamline the processes, because I need to do what I’m good at, and I need to start adding whether it’s a virtual assistant and then a couple more handyman and that sort of thing, just to-

Brandon:
I think all three of us have that book mapped out in our heads, we just haven’t written them yet.

David:
Well, there’s not a lot of people that have 200 duplexes that are going to buy that book that are trying to figure out what to do with them. But-

Brandon:
It’s that idea, like systematizing and being a business owner and that whole thing.

David:
That’s exactly right, Brandon. You are transitioning out of being a real estate investor into a business owner. You’ve always been one, but you’re transitioning into thinking like one. You should go check out J’s podcast, the BiggerPockets Business-

Brandon:
Business Podcast. There you go.

Joseph:
Love it. Thanks for everything you guys do. I listen to it religiously and I put everything into play and I’ve crushed it. It’s been fantastic.

Brandon:
That’s awesome, Joseph, congratulations on that-

J:
Congratulations.

Joseph:
Take care, guys.

Brandon:
Take care. All right, everybody, that was the end of this recording. I know we didn’t get to everybody’s question. There’s still people waiting. I think there’s 20 people waiting in the waiting room right now. We did not get to everybody, but we’ve got to get out of here because we’ve been going for almost two hours now. Why don’t we end this thing? J, can I get a quick update on what you’ve been up to in real estate wise lately? Just curious, because I know you’ve had some movement.

J:
Yeah. I just picked up my first multifamily that we’re going to be syndicating. I’m working with some amazing people. Ashley and Kyle Wilson who have been on the BiggerPockets Podcast and our BiggerPockets contributor. We picked up 150 unit in Houston that we are raising money for right now. I’m doing a lot of flips, I’m buying a whole lot of rentals. I tell you, I was burned out on real estate about a year or two years ago. Took some time off and hitting it back full steam right now. I’m excited to get back in.

Brandon:
That’s cool, man. David, what have you been up to?

David:
I’ve been very busy helping put clients in contract on houses. It’s going really good. I’m trying to hire some more buyers agents and showing agents for my real estate team and loan officers for the mortgage company that I just started. I think we have 28 houses in escrow. I set a personal record for the most I’ve ever had in escrow at one time, and it’s going really good. I think we’re in this position with really low interest rates and not very much inventory and people that are recognizing, I don’t want to be cooped up in an apartment or stuck downtown, I want to move out to the suburbs.
There’s a lot going on. A lot of growth, a lot of stress. I was telling someone the other day, my brain will just turn off on me sometimes. Like, okay, you’re done. No more thinking, you need to just go stare into space or take a nap or take a walk. It feels like a muscle when you just work it out really hard, your brain and your mind can get sharper and stronger just like your body can. I recognize this is the same way. It feels after a really hard workout where I’m just like, okay, I don’t want to move. Same thing. So, I love that.

Brandon:
I hear you. That’s awesome, man. Well, thank you guys.

David:
How about you, Brandon, what’s going on with you, Mr. Humble?

Brandon:
I went to Yellowstone National Park and now I’m quarantining in here in Hawaii. We’re still buying mobile home parks. I think we have, 500 or 600 contracts right now. I just had Ryan, I guess the head of all acquisitions and pretty much runs my entire life, he just went on a… What’s it like, 13 state tour? I’m sure you guys watched him on Facebook. He just like went to 13 States or something like that looking at mobile home parks over a two week period. It was crazy. We just closed out our second fund. We’re about to go into our third, potentially. It’s been exciting.

David:
Is that all?

Brandon:
That’s all.

David:
That’s awesome, man. Very proud of you.

Brandon:
Thanks man. Well, with that said, let’s get out of here guys. I appreciate Both of you joining us and sharing your insights today, and doing what you guys do, is make me look better. So, thank you guys.

J:
Thanks for having me, guys.

David:
All right, everybody, this is David Greene for J Scott and Brandon, the Pinnacle Turner signing off.

Recording:
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In This Episode We Cover:

  • Buying a mixed-use commercial/residential property
  • The concept of “Return on Effort”
  • Transitioning from flipping houses to wholesaling
  • Moving across the country to learn from a mentor
  • The Do’s and Don’ts of real estate partnerships
  • How to run your numbers when using hard money
  • House hacking as a college student
  • What to do when you bought a “house of horrors”
  • Using leverage vs. buying with cash
  • Advice when you “can’t find a deal!”
  • And SO much more!

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Books Mentioned in this Show:

Connect with David, Brandon, and J:

In today’s episode we open up the phone lines again to field your real estate investing questions… and for an added twist, we bring in the familiar voice of author, […]