In this episode, we meet Joe Lieber. Joe and I met in a mastermind group in 2012 or 2013. Either way, he has been an amazingly successful real estate investor in the Cleveland area for years. Cleveland is such a cool town.
Joe’s business model is small turnkey homes, via private pay or Section 8. At one point, he had accumulated a massive portfolio of 217 single-family homes. Joe purchased most of these old school row homes in great neighborhoods at their lowest price point: $5-20K! Once he realized he needed to either go big—more staff, larger operation, etc.—or reduce his inventory, he decided to pare down. He is now comfortably right under 120 properties.
Creative Financing at Its Best
Joe knows all too well that managing rentals isn’t a passive investment in the sense that you can sit back and collect a profit, rather it is an “active-passive investment.” He is intentional at keeping his finger on the trigger of all decisions made in an effort to keep costs down. For example, he chose to not hire an outside property manager out of a desire to be involved in all the details. A new furnace, windows, or roof can quickly put your investment in the “break-even” category for the year!
Private notes on acquisitions with really fast amortization is Joe’s “secret ninja trick” of financing. From 2008-2013, homes were so cheap that he was able to finance them with private mortgages through private lenders on 5-year fully amortized loans. As of January 2017, Joe can happily say he has a paid-in-full portfolio. (That is incredible!) Recently, he has enjoyed a few joint ventures to help up-and-coming RE investors.
Joe’s acquisition strategies during 2010-2011—those prime years when homes were incredibly cheap—were REOs (aka foreclosures) with cash, but he was also able to come up with creative strategies like owner financing with terms and subject-to-mortgage properties.
This Investor’s Best Deal Ever
With no money in his pocket, Joe discovered a $100,000 listing through MLS which was over 150 days old: a double-unit with only one occupant that was way overpriced. The Realtor wasn’t interested in discussing the property because the list price was over equity, so Joe decided to visit the homeowner himself. He was able to propose an option to help her get out of the home without going into foreclosure.
Knowing the property would increase in value, Joe took over the mortgage. She was able to relocate to South Carolina, and Joe rented out the double-unit for a profit.
Due to Joe’s ability to speak genuinely from his heart, the homeowner was comfortable moving the title into Joe’s name. Depending on the market, when he was able to refinance the home into his name, he told the homeowner he would do so. Joe created a solution to her problem that she didn’t even know existed. Pretty remarkable.
Advice for Other Real Estate Investors
With an ever-changing real estate market, you have to keep your eyes on what’s ahead. Being in Cleveland, Joe is always looking across the nation at real estate trends, because inevitably, they end up there, as well.
From this deal, Joe discovered the key to investing in a subject-to property is to find people who are in situations where they need help—it can be beneficial for both parties! While this could be a tricky situation for some, Joe’s ability to be up front and honest with people helps him build trust and rapport.
What was your best deal ever?
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