BiggerPockets Real Estate Podcast

BiggerPockets Podcast 334: Using Other People’s Money to Fund Flips, Multifamily, & Self-Storage Deals With Ben Lapidus

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Self-storage with OPM!

Today’s guest Ben Lapidus sits down and spills the beans on his strategies for buying self-storage units and running an investment fund with other people’s money.

Ben has some really great advice for those who want to get into self-storage, including how he began by getting 25 percent of other people’s deals, why he jumped from single family into commercial opportunities, and how he mitigates risk in the self-storage space. You also won’t want to miss his strategies regarding choosing a market, his criteria for buying a deal, and his recommendation for brand new self-storage investors (hint: it’s all about size).

You CAN’T miss his mind-blowing technique for negotiating seller financing, where he improves his terms by saving the sellers money on their taxes. Brilliant!

This episode is packed with content, bursting with energy, and full of practical advice for getting into commercial opportunities with other people’s money. We guarantee you will learn a TON.

Download today and buckle your seat belt!

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

Brandon: Ben, thank you for coming today. This is going to be a lot of fun. We’re going to basically just go through your story, how you got started, kind of your first deals, everything like that. We’re going to ask you anything from mistakes to successes, all that good stuff. If you ever get completely stuck, I mean we edit these things, so if you ever get completely turned around we could always pause, but we try not to. We try to do a flawless show all the way through.

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Ben: Cool.

Brandon: It actually makes it kind of fun anyway. If you have to take a second to think of an answer, not a big deal.

Ben: All right. What’s usually like, what makes it the most fun for you guys to like put on? What kind of personality type?

Brandon: Swearing.

Ben: Swearing? Yeah, should I?

Brandon: No. Don’t.

Ben: Okay.

Brandon: No, I don’t know.

Ben: Should I be wacky, goofy? Should I be very educational?

Brandon: I like fun shows. My theory in all podcasting is that just in general education space right, is like education is more about entertainment than it is education. This isn’t high school or college. People need to be entertained or they will not watch or listen to a show if they’re not entertained.

Ben: Don’t just give blanket answers. Say some wacky things.

Brandon: Yeah, feel free. Tell stories. Stories are fantastic. Oh man, this one time we did this. The human nature cannot help but when they hear the words, oh man this one time, or, let me tell you a story about that. Everyone goes woom, and they have to listen. I love doing that when I’m doing interviews with people. I go, oh, let me tell you a really cool story, because then I know that I have everybody right there just by saying that phrase.

David: Wait, you’re not going to tell me the story. Dammit. See how it works?

Brandon: Yup. For the rest of your life you’re miserable now.

David: A itch I’ll never be able to scratch.

Brandon: Never. That’s pretty much it. Yeah, I don’t know, you guys see land, RV parks, self-storage, carwash. I want to talk about all that stuff. I’m assuming multi-family as well, is that right?

Ben: Spartan doesn’t do multi-family, but I have done multifamily.

Brandon: Oh okay, cool. Well we can definitely talk about, I mean there’s always a fine line between, especially when you work for a larger company, between yourself and the company that you’re part of.

Ben: We’re five people.

Brandon: Oh yeah, so it’s a small enough … When we start we’ll start with like your, where you came from. Feel free, tell the story of how you got involved with Spartan if you want to go there. You don’t have to, but if you want to. What you guys do. Try to refrain from like the we’s, more is like what I do. I mean, don’t like take all the credit for your company obviously. Sometimes people are like, “Why does he keep saying we? Who’s we?” We can talk about that. Just something to keep in mind.

Ben: Okay.

Brandon: I don’t know. Have a good time. Make fun of David Greene here a lot. There’s a lot to choose from really. I mean, just pick something and just harp on it. It’s good.

David: I think the best shows are when we have like a good rapport with the guest, like there’s some joking going on with them. You know a little bit about Brandon and I, and we can tie in what you said into something else you say later. The ones that are tougher are when the guest just goes for like a 20 minute explanation of everything they do and there’s no break in there for us to pull out any chunks or have like a back and forth.

Ben: Cool. Make fun of how Brandon got me on Instagram and now my entire feed is just seeing Brandon five times a day.

David: Wow, that’s great. That’s perfect.

Brandon: That’d be perfect, yes.

David: Yes, and if you could point out like a funny thing he put up, or a stupid thing he put up, or whatever, that’s really good. It makes our guests feel like they-

Brandon: Yeah, I’m not funny.

David: He wrote a song called Somewhere Over the Rainburr, on a ukulele.

Ben: I saw that.

David: It was fire. I loved that. That’s what I listen to before I go lift weights right now actually. It’s how I get pumped up. I’m going to write a rap to put over the top of it.

Brandon: That’s funny. All right, with that, I’m starting this recording, because we’re going to have a good time today. We’ll probably for 45 minutes or so. It usually goes a little over that, but we try to do around 45 minutes, try to get out by the top of the hour. We’ll see. I’m recording here, I’m recording there. One second, let me … All right, let’s do one quick, do me a favor and just clap everybody, kind of at the same time, just so Dave can see what we’re all clapping at the same-ish time. One, two, three.

David: Dammit.

Brandon: Now he’ll see a spike. Yeah, close enough. All right. It’s not his very first syncing, it’s more like he can see that spike right then and now that everyone’s starting right there. All right, here we go. Five, four, three, sorry, two, let me get down to where we’re at on notes.

David: What’s the next number?

Brandon: Yeah, what comes after three?

David: One and three-quarters.

Brandon: Yeah, there we go. Five, four, three, two. All right Ben, welcome to The Bigger Pockets Podcast man, good to have you here.

Ben: Thank you so much for having me Brandon. Good to be here.

Brandon: Yeah, this should be a good time today. Tell me about yourself. I mean, you and I hung out a bit there in Denver, and I got to know you a little bit, but I never heard your early story. How did you get into real estate? What came before, and what was kind of the impetus into the business?

Ben: Yeah man. The quick and dirty is in college, about a decade ago, I was headed towards Wall Street, doing the investment baking thing in 2009, which was an awful time to try and figure that out. Quit my internship, headed to Costa Rica on a whim. Found a business model that worked with study abroad. Tourism was dead. The green fad was just picking up, so we started a study abroad company for renewable energy, sustainability, water conservation, bringing environmental engineers to Costa Rica, which then expanded to Iceland and Japan.

Ben: Three years later we were doing about $2 million a year in business. Sold out, used that money to buy my first couple of rentals, because at the same time my parents were trying to find a retirement home and they didn’t want to move yet, even though they had it, and they were renting it out. They were like, “Hey, you’ve got a finance degree. Help us figure this out.” They bought one, and then they bought another one, and I helped them with that. They bought a third one and I helped a little bit more. By the time I had sold my shares in the business, they had bought five or six and I had experience with that, so I just turnkey system, bought my first two rental properties all on my own.

Ben: Got to New York after I sold my business, signed up for an ad tech company. The first one IPO’d, the second company I worked with had a major acquisition, and I was surrounded by a lot of people that had just made a lot of money, and they heard that I was buying these cheapo houses in 2012 that were cash full in at like 20%, and so they’re like, “Hey, I don’t want to figure that out, I’ve got way too much to do, making a million dollars a year or whatever, here’s $50,000 or $100,000 or something, just go buy me a house.”

Ben: I did, but I’m not a broker. I was an investor myself, so we had an agreement, which I did this seven, eight times, where I would just own 25% of whatever they bought, and I would get 25% of the cash flow, 25% of the equity. They would hold the mortgage and put in 100% of the capital.

Brandon: That’s awesome.

Ben: Yeah, that was my little hack to try and build up my balance sheet. Before I sold my business, I had like $800 to my name. All of a sudden I had this fat six figure check, bought a couple of houses, and then my balance sheet just started snowballing with other people’s money. I turned that into syndicating my first multifamily portfolio. I didn’t know I was syndicating so I definitely did it wrong. A 24 year old doesn’t know what he’s doing. There wasn’t good conferences at the time to meet people.

Brandon: That’s true. Okay, so let’s dive into this a little bit, because you’ve said some really good stuff here. First of all, I love that you just like jumped in at that young age, bought a couple rentals. Why did you not go, like what made it different for you to not just go blow that money on a $80,000 car. Most people at that age, when they get a big chunk of money, they just go and spend it. You worked hard, reward yourself. Why did you decide to put it into rentals?

Ben: Yeah, I had a pretty disciplined upbringing financially, and it just always resonated in the back of my mind, do what people aren’t willing to do today, so that I can do what people can’t do tomorrow. That’s always just resonating with me. I’m always thinking about that. Like, how can I work, how can I invest in myself today so that I don’t have to do things I don’t want to do 5, 10, 20, 50 years down the line. That was a mindset.

Brandon: Yeah. I was talking to a friend yesterday who said, he was telling me how a buddy of his works in like oil and gas. It’s like on this boom, bust cycle. They guy will go from making $100,000, $150,000, $200,000 a year, and then a couple years later he’ll be making nothing. He said every like three years he loses his house and goes into foreclosure, and loses all his vehicles. Then he’ll go and buy a new house and a big trailer and a bunch of RVs and four wheelers and then lose it all again. It’s like this cycle that people get into.

Ben: Oh my god. Yeah, that gives me anxiety.

Brandon: I know, right?

Ben: Hearing that story like, oh, what is that? Yeah, no thanks.

Brandon: Like wow, what if he just like lived on half that income and put the other half away? Like he’d probably be out of a job. Man, but people, and I don’t know how you train people that way. I don’t know how you get people to think that way. I don’t know.

Ben: I don’t know either. I love my sibling, but they decided to go live life differently. Same exact upbringing, but just responded to it differently. I’m not sure.

Brandon: Yeah. I get you.

Ben: I like what you do though. You bought like what was it, a two unit for your daughter, so that she could like-

Brandon: Yeah, four unit.

Ben: Four unit for your daughter. I’m sure people have, I don’t know if you’ve talked about it on the show before, but that’s pretty badass. That’s a good way to start.

Brandon: I think, for those of you who don’t know what he’s talking about, I bought a fourplex for my daughter the week she was born, on an 18 year mortgage. Well it’s really a 30 year, but I have it set up on a 18 year payoff numbers so it’ll be paid off when she goes to college. Now it’ll be worth $300,000 or $400,000. She can use that money to get into real estate, or to go to college, or whatever she wants, it’s her deal. Basically she gets to see real estate for the next whatever. Anyway, kind of cool. Look at you, you remember my story, that’s awesome.

Brandon: All right, so you go to New York, you get this 25% of these deals, which by the way I think is a phenomenal strategy. If you’re listening to the show right now and you’re like, “I’m trying to get started, I just don’t have anything. I’m not sure what to do.” What a great thing. Hey, I’m going to go find deals for people. I’m going to put all this stuff together, and I’m going to get a small piece of the puzzle. It’s the same thing we say all the time. 50% of a great deal, in this case 25% of a great deal is still better than 100% of nothing. You were gaining knowledge, gaining experience, all that. Where were those properties at, by the way? Was this Midwest somewhere?

Ben: All in Richmond, Virginia. I picked up 12 to 14, I think it was 14 houses over three years.

Brandon: Wow. Very, very cool.

Ben: Then sold two at some point.

Brandon: All right, so why then, David wrote this question here but I’m going to ask it, why did you move? You said you syndicated your first deal. I want to know that transition. Why did you go from finding a single family? Then walk us through that very first syndicated deal.

Ben: Yeah. Okay, so I actually became friends with Joe Fairless before he was the Joe Fairless that we all know and love today. Before he had the podcast, before he had the books and everything, he put on a Skillshare class in New York. He was also in advertising. He lived a few blocks from me. He put on a Skillshare class, like how to buy a $7 million apartment building for 15 grand. We had a mutual friend, that mutual friend brought me out. I think there was like five people at this class. This is like, you know that picture that you see that he uses everywhere? He like took it at that class.

Brandon: Oh really?

Ben: Yeah. He showed me this, I was like, oh my god, I can actually go and buy an apartment building? I can put in the exact same amount of work to buy an apartment building as I would for a single family. I started looking, I was proactive about it, it didn’t just fall in my lap. I bought an awful property.

Brandon: Oh really?

Ben: I did not buy a good one, yeah. I was like, oh, this is the exact same as buying a single family house, or a portfolio of them, it’s the exact same. It’s really not. I ended up getting out of the deal okay. I purchased this thing for more per door than it was worth. I could not increase rents the way I was able to for the single family. I couldn’t put all the money into the renovation, and I was way too optimistic about my capital stack. Just did not have the working capital that I needed to survive the ups and downs. That’s the high level.

Brandon: Okay.

Ben: How did I syndicate it? There’s a good story with this one, because I had a list of 70 people I was like, I can call these 70 people. A lot of them were people I had done houses with. Everybody said no. It was an apartment building. They didn’t like the idea of being one of five people to work with. One person said no, and I was like, okay. I’ve got like, I don’t know 100 grand and I need 400 grand.

Ben: One person said no, and the next day I’m in the middle of like a meeting at work and I see that this person’s calling me. I’m like, ugh, I’m going to get in trouble if I pick this up, but I did it anyway. I just like walked out of the meeting, didn’t say anything to anyone. Went to the stairwell, picked it up and said, “Hi, what’s going on? I thought you said it was no.” He was like, “Actually, you know, I’ve been thinking about it. I just want a relationship with you. So I’m here, sitting with somebody that I just met. I’ve never met them before. I’m talking about you, I don’t know why, but you came up, and this person’s interested. If you can convince them to co-invest right now, like we’ll complete the deal for you.”

Ben: I was like, oh, okay. 20 minutes later he said, “All right, show up to my apartment. It’s 15 Central Park West.” Wherever it was, for lunch on Friday. We did not talk about the deal at all, and an hour later he wrote me the check.

Brandon: Oh, funny. That’s really like what a lot of syndication is honestly, is just that relationship. If people like you, and you can get them to like you and trust you, they’ll probably invest with you.

Ben: I think that’s the first thing. It’s the same thing on the venture capital side. It’s people first, and then traction second, and then the product. It’s like, who are you? Can I trust you when I look you in the eyes? What experience and track record do you have? Then I’m going to look at the asset. That’s what I’ve found.

Brandon: So true, and so good. By the way everybody, Joe Fairless, you mentioned Joe Fairless. He’s a good buddy of yours I know. He’s a good buddy of mine. He was on episode 227 of The Bigger Pockets Podcast, it was called From Single Family Houses to 130 Million in Multifamily, which now I know he has way more than 130 million in multifamily.

Ben: Yeah.

Brandon: He’s like a rocket ship. Anyway, I definitely recommend listening to that one everybody. Go over to biggerpockets.com/show227 for more on Joe’s story. I think, if I recall, I think he even mentions that first meeting he had there in New York, which is funny that this is coming full picture now of you being at that thing. Where was the property at?

Ben: That one was also in Richmond.

Brandon: Okay, so you started in Richmond. That’s where your family’s from, and you were from originally, right?

Ben: No, they wanted to retire down there like a year before I bought my first house. They just moved there like three or four years ago, but we started buying stuff down there a decade ago.

Brandon: Okay. Very cool. All right, so I guess walk us through what came next after that syndication. It didn’t go so well. You said you got out okay. Kind of what was the picture there?

Ben: Yeah. It didn’t go so well. It wasn’t going negative, but it wasn’t going positive. I wasn’t producing the distributions. What I learned was, is that I’m a finance guy, I love finding deals, I love having conversations, I love underwriting, I love negotiating, getting it under contract, taking it all the way to close. Then I want to look at the next deal. I’m like a dog chasing squirrels. The minutia of managing vendors, projects, asset management, it’s just not complimentary to my skillset.

Ben: Around that time I met my wife in New York, we decided to move out to Denver, Colorado. I said, “I need to connect with some people. I know nobody in Colorado.” Started The Best Ever Conference. Met a lot of really cool people, yourself included. Two of those partnered up with, and they were converting their strategy, they were doing a bunch of condo conversions in DC. I had this cashflow experience, they had this wealth flipping experience, so we married it together. Decided to focus on commercial, and now we’re buying self-storage full time. I am doing acquisitions for that business full time.

David: Okay, let me try to unpack some of this and then ask you a couple questions to clarify it.

Ben: Let’s do it David.

David: You’re involved in several different kinds of real estate investing, and can you sum up all the different stuff that you’re buying?

Ben: Yeah. Over the last two years we bought an RV park, we bought several parcels of land, we bought a carwash, and mostly self-storage.

David: Car wash, self-storage, land, and did you say multifamily there?

Ben: RV park.

David: RV park, okay. Now why those things? Do they all have something in common?

Ben: Really the emphasis is self-storage, that’s what we spend all of our time looking for proactively. The car wash was, it conveyed, was just an 80,000 square foot facility that we bought. We looked at it, we said, “You know what? We don’t know car washes.” We spent a month reading every single book in the universe on Amazon about car washes. If you can believe it, there’s three of them, so it took us all of an hour to read through all those books. We had more inspections than we probably needed, spent a lot of time networking and said, “You know what? We can figure this out. This is not going to make us a ton of money, but it’s not going to kill the deal for us.”

Ben: The RV park we just stumbled upon. That was a reactive acquisition versus proactive. Then the land is to support the construction of self-storage. Really self-storage is the focus.

David: That was what I was really hoping to pull out of this, is you had a goal, self-storage, but then in pursuit of that goal you stumbled across other opportunities that if you had said, “Ah, I don’t know, what do I want to do? Do I want to do a car wash, a laundromat, a self-storage?” You probably never would have taken any action. Because you picked something and you went for it, other stuff kind of fell into place because you were out there making things happen. Is that correct?

Ben: Yeah, that’s exactly right. We actually spent 90 days after … We said, “Okay, these are our qualifications. We want to pick something with low operational maintenance. We want very few surprises under the dirt. And we want something that is becoming more institutionalized.” We had those qualifications, we went through all the asset classes through a strategic planning process, and we came across storage. We said, “Okay, storage is what we’re going to focus our time and attention on.” A few years ago.

Ben: Then we spent 90 days not doing anything. Not looking for assets. Not trying to raise money. Just reading everything we could, networking, connecting with as many brokers as possible. That was our education time period. It was not sufficient to be a master in self-storage, but it was enough to make sure that we weren’t going to make living under the bridge type mistakes when we bought our first portfolio.

David: Yeah. I noticed a lot of people, they want to know every step before they take the first one. Brandon and I see this constantly, but the more people we talk to, the less we see that they actually had a blueprint that they followed completely. It’s more like, you started off growing just a little twig coming out of the ground like a tree, and then things start branching off of it. You don’t know exactly where it’s going to go, but you know, hey I understand how to value this asset class, so I can value a similar thing, a car wash, a laundromat, it’s similar to how your self-storage was going to work, an RV park. There’s a lot of similarities.

David: It’s like learning a language that you already speak the base language for it. That was the first thing I wanted to point out, is that’s what the listeners should be expecting, is I’m going to pick an asset class, I’m going to chase it, and in that pursuit more stuff’s going to come.

David: Another thing that you mentioned was that you like to chase down these deals, put them under contract and move on. You’re not the guy who’s basically going to be maybe running operations, or managing the process. Can you tell me why you like that part of real estate, and then what you did with your partners so that your weaknesses were on somebody else’s plate?

Ben: Yeah. Why do I like that part of real estate? I just think it goes with how my brain works. I’m a numbers guy. I like to do math quick in my head. I have a gut instinct that is not typically matched by a lot of people that I interact with.

Ben: I’m also self admittedly highly ADD. Everybody’s going something on the mental spectrum. Everybody’s somewhere on the ADD spectrum. Everybody’s somewhere on the narcissistic personality disorder spectrum. I’m just really high up on ADD. Like being organized, making sure I’m following up on things, having things slip through the cracks. If you don’t do a deal, you will not lose other people’s money. That is my cost of making a mistake.

Ben: If I own something and I’m responsible for the management of it and I miss something, I have lost somebody’s money through negligence, and I’m just not okay with that. That does not feel like being an okay fiduciary. It’s a combination of doing what I’m good at, but also making sure that I’m being the best role that I can for our customers, which is our investors and our tenants.

David: I love that you own that. I’ve noticed that we typically look at impatience as a flaw. Most people would say, “You have to learn patience. You’ve got to be patient.” There are times in life where patience is absolutely necessary, but I’m very impatient and I’ve found that a lot of other top producers are impatient people. They are constantly like, “We need to get moving. We’re going to lose that deal. We’re going to lose this opportunity. We’ve got to push through this thing.” Impatience is actually a virtue in certain situations, like the one where you’re in, where speed is of the essence, and the ability to be decisive and make a quick decision matters.

David: That’s something else that listeners should think about, is there are things where you work a certain way, your brain thinks a certain way, you enjoy things a certain way. That doesn’t mean you can’t get into real estate investing because you don’t love spreadsheets, or you don’t love networking. You’ve just got to align yourself with people that do, and focus on the parts that you like.

Ben: Yeah, absolutely.

David: I notice the more and more people we talk to that are doing big deals, that’s what they’ve done, is they’ve just given up the fact that I’m never going to be good at this part. That’s okay. Some other guy or girl has got to be good at that. I need to focus on this part.

Ben: I mean, all of my real estate heroes have done the exact same thing. They’ve all got partners, or they’ve got teams around them, and they wouldn’t be able to do the scale that they’re doing now if they didn’t have people that they could depend on to do other facets of the business that wasn’t their best. Yeah.

David: Yeah. Why self-storage? I really want to know. You’re the second guy that I’ve talked to about this. What was so appealing about that?

Ben: I think self-storage, there’s pros and cons to self-storage. Self-storage is you’ve got a low tenant risk. You’re not messing with somebody’s livelihood if you’re 24 hours late to swap out the HVAC or something. You’ve got very little risk legally on the actual contents of what’s in the unit. Your interaction with clients is not as meaningful. Our mission statement is to improve lives through real estate. If we’re not on top of fixing somebody’s air conditioning, or something like that, we are not improving lives through real estate. We don’t have those concerns in self-storage.

Ben: Secondly, the maintenance on a metal building with doors in the middle, and when you’ve got climate control you’ve got some HVAC running through, is significantly easier than the maintenance and capital expenditures on a multifamily building.

Ben: Thirdly, the risk of what’s going on beneath the ground is much less, because you don’t have plumbing. You’ve got a concrete pad, and then you’ve got metal on top of it. There’s nothing going on beneath the ground, so from a development perspective it’s a little bit simpler. It also makes the capital expenditure part a little bit easier as well.

Ben: Those are the three things that we were looking at, in addition to, is this asset class becoming more institutionalized? Are cap rates compressing? Self-storage met all of those things. There’s other asset classes that meet those things as well. What we’re learning is, what we learned years ago, at this point now we’re just dealing with it, is that self-storage isn’t any less competitive than, say multifamily.

Ben: We were looking to get out of a red ocean market. Self-storage is not really one that you jump out of a multifamily red ocean market, or even a single family red ocean market and say, “Oh, I’m in this brilliant landscape of blue oceans, and I can make all this money doing things easy, like single family back in 2012.” I wish self-storage was single family back in 2012. We’re looking at other asset classes that meet all of those other qualifications to add onto our repertoire now, while not taking our eye off the ball of self-storage.

Brandon: You know what’s funny, is I’ve been thinking the same thing lately. People probably know, if they listen to the show a lot, that I’m getting more and more heavily into mobile home parks. Originally what attracted me to them is like there wasn’t a lot of competition for them, I thought. I was like, oh, these are not very competitive. It’s the same thing, just because it’s not as popular as multifamily, there is 100 times less mobile home parks out there, and so they’re just as competitive because there’s 100 times less people looking for them, but 100 times less property. It’s the exact same competitive nature, competitiveness.

Ben: It really is the exact same thing. I mean, I know multiple guys, Ryan Smith at Elevation Capital, multiple guys who do mobile home parks and self-storage, because they’re complementary assets, but the landscape is basically the same, from a buyer/seller marketplace. I feel your pain Brandon.

Brandon: Yeah. Let’s talk about that. How are you finding deals in today’s market? How do you find self-storage?

Ben: Working my tail off. We’re attacking everything. I’m best friends with every broker out there, which there’s a lot less than multifamily. You go to CBRE and there’s one team nationwide. There’s a couple of guys on the team, but there’s one guy. It’s a lot easier to become friends with every single self-storage broker in the nation than it is for multifamily.

Brandon: That’s cool.

Ben: Secondly, we’re making phone calls. We’ve got somebody on our team, director of business intelligence, she spends all of her time researching what is it exactly that we want, market reducing the entire country down into a list. Getting all of the contact information, and then we’re just, we’re blasting out letters, making phone calls, doing digital assessments with PAs and interns. We’ve got both of those strategies.

Ben: In addition to that, just being open minded to be as creative as possible. We’re looking at ground up construction, build it if you can’t buy it, as well as conversion opportunities. Taking Kmarts and Sears and just gutting them and putting in metal blocks for storage, which is probably the most lucrative strategy within self-storage we think. That’s the one strategy we haven’t executed to complete term yet.

Brandon: Yeah, we had a guest on the podcast, AJ Osborne, let me see, it was episode number … Hold on, I’m pulling it up right now. He told this story about making millions of dollars, I mean it was like $10 million of equity. It was on episode 286 of The Bigger Pockets Podcast. This guy like bought an old Kmart and completely renovated the whole thing to be self-storage. I thought it was just a phenomenal strategy.

Brandon: Then just now out here in Maui where I live, there’s an old Kmart. I saw it, it was sitting there when I moved here, and right now it is a full U-Haul self-storage facility now. Dang it, I should have jumped on that.

Ben: Yeah. As of the start of 2019, so the other interesting thing about storage is there’s all these data platforms, kind of like multifamily. It’s not like, I don’t know, RV parks or restaurants. There’s tons of data, and all these platforms just added flags for like Kmarts and Sears and Shopko. Now that data is ubiquitously available to everyone, so now the value of those buildings, as of the start of this year, is just as difficult to make work financially as anything else. Now we have to look at conversion opportunities that aren’t a Kmart, aren’t a Sears. They’re an 80,000 square foot furniture shop that is just local, it’s the only one they own, and nobody else knows about it. That’s the kind of stuff we have to look for.

David: Ben, here’s something I want to ask. That’s a lot of opportunity that you’re looking to take advantage of. We’re talking about converting. We’re seeing that the market’s a little frothier now than it was before. We all said we wish we could have bought like the market was in 2012. The reason we say that is because it’s been steadily getting better and better.

Ben: Yeah.

David: What are some metrics you look for to safeguard your investment? To make sure that you’re not overextended, you’re not putting in self-storage in a area where there’s not enough people to use it. Stuff like that.

Ben: Yeah. The three things that we do to qualify a deal, which is a little bit of a different answer to the question of, what do you do to make sure that you’re mitigating your risk? I’ll answer both those questions.

Ben: The three things that we look for is, one, where is it? Is it in a market with positive population growth, positive income growth over a certain threshold, benchmarked across the nation? What do the demos look like? Basically. Are there more people coming in? Are they making more money? Are there more houses coming up? We have a map tool that we’ve created internally where I just put in an address, and it’s cross referenced against Esri census data that’s been updated to 2019, and it says, “This is a good market. This is a bad market.” I just follow that like it’s god.

Ben: Number two is, does it have expansion potential? What we’re finding is you’ve got cap rates compressing and interest rates slowly, but rising, and so the spread between cap rates and interest rates aren’t very good, so you have to add value.

Ben: In multifamily, adding value could be adding amenities, doing all these things. You could do the same thing in storage, it just doesn’t have the same push. We have a development core competency. We believe that we are exceptional at, I believe that my team is exceptional at developing, so expanding on an existing facility, if not building one from scratch. All of the existing cash flow in storage that we’re looking for has to have some type of expansion potential. That’s how we’re getting our large enough margins to make it worth our time.

Ben: If we expand, so to answer your question directly, if we expand but it doesn’t pan out exactly like we wanted to, well we packaged in a 30% margin. Now if we’re off by 20%, which would be a massive swing, we still have 10% upside. Is it a home run for the investors? Absolutely not, but they’re getting their principle back, and they’re definitely beating a low risk mutual fund on that. It’s really hard I think these days, if you’re looking to do a flip in Seattle, Washington or Atlanta, Georgia, and you want a 30% margin, it’s a pretty tough time to do that. We’re maintaining that standard. We’re just taking on a little bit more development risk to get there.

Brandon: Interesting. I think that’s fascinating, the idea that you … Are you buying them, let’s say you buy a storage facility and it’s got 100 spaces, but got room for development, are you buying them so that way it only makes sense, I guess if you were to expand that into 150, 200 spaces, or units? Does it cash flow at the 100, or are you going negative until those are built? Would you take that risk?

Ben: Let’s take this last deal that we just did as an example. We just bought an 81,000 square foot facility, 735 units. It was a $6 million deal. It’s the one that came with the five bay car wash. We just closed on it in April. We kind of won on this deal because the appraiser’s said, “You’re basically getting the car wash for free. We think that your purchase price is equal to the value of the storage.” It’s like, okay, great.

Ben: Outside of that, so it cash flows right from the get go. If we don’t take debt out for the construction capital to expand it, it cash flows from the get go. How we’ve structured the deal is we’ve said we’re going to take a little bit less. We’re going to take on a little bit more equity as a percentage of our capital stack so that that equity can finance the expansion without stressing the existing P&L, so that it continues to cash flow.

Ben: The preferred return is less for our investors, and we can do this a little bit more slowly if you want me to break this down a second go around. Our preferred return is less, but our risk is also less, so that we continue to cash flow during the expansion. That when we get that C of O on that expansion, we start leasing up units, now we’re starting to hit our preferred return and eventually expand beyond it, but we’ve also created this 30% value spread. When we go to either recapitalize it, refinance it or sell it, we’ve got this large liquidity event for our investor base. Do you want me to cycle back on that one?

Brandon: Yeah. Let’s go a little deeper in that, because I think that’s really, really good stuff. Yeah, let’s go back through that again and kind of define some of these things. Like if people don’t know what a preferred return is, stuff like that. Feel free, because I love this stuff.

Ben: Okay, awesome. Let’s start with, what is a preferred return? Preferred return says, this is the return that I’m going to offer my investors as a percentage of their contribution before money goes to anybody else, namely the sponsor, which would be myself. If I’m offering an 8% preferred return, that means that on a $100,000 investment, you better be making eight grand before I pay myself a dime in operating cash flow distributions of any kind.

Ben: If I don’t hit eight grand in year one, if it’s a rolling preferred return, which is what we always do, that means in year two I need to have a combined 16 grand in your pocket on your $100,000 investment before I pay myself a dime.

Ben: Usually a lot of investors want to see something at 8%. They want to get to that like kind of healthy 6%, 7%, 8%, 9%, 10% number. We’re not hitting that in the first year because we took on more capital. We said, okay, we might only need, let’s say $2 million, but we’re going to raise $2.5 or $3 million. There’s more contribution, more equity in the deal, but the same exact amount of cash flow, so the return on that investment, for all of our investors combined, is a little bit lower, but we also have less risk so that we have a certainty of cash flow in those first two years.

Ben: In addition to that, our debt capital, we made sure that we had an interest only period of two years. We’re not amortized during our construction and our lease up. The combination of those two things on our capital stack ensures that we’ve got a lot of wiggle room on our operations before something catastrophic might happen on our cash flow.

Brandon: Okay. That makes sense. The rolling preferred return is something I had not really ever heard of before. I think that’s kind of a cool way to pull that off. Because yeah, I’ve wondered too when I’m looking at mobile home park deals, or even multifamily deals, and I’m like, well the first year I’m only going to give a 5% return to investors, but later on it gets so much better. It’s a value add. That’s the whole point. You’re buying a property that’s underperforming.

Ben: Exactly.

Brandon: I think that’s a really neat way to handle that. Very cool. What about, like where do you see, I’m wondering like self-storage in the future. Is this a industry that’s just going to be growing more and more because Americans are just buying more and more junk? Is this a boom and bust cycle that you’re just kind of like trying to ride and fit in?

Ben: I don’t think it’s a boom and bust cycle. The last few recessions, if you look at the history, self-storage hasn’t really been impacted by it. That being said, the last decade of self-storage has seen a institutionalization of the asset class like no other asset class has experienced in that kind of a period of time.

Ben: Whereas 15 years ago you might have had Public and Extra Space and Life Storage, which are the big brand name publicly traded companies that own these assets. They definitely had assets, but it wasn’t like they owned such a lion’s share of the class A facilities, and there was a lot of mom and pop ownership. The buyers were expecting seven, eight, nine, sometimes 10% cap rates, whereas now those same facilities would be expecting four, five six.

Ben: I mean, there was a portfolio I saw six months ago in Kansas that sold for 375 stabilized cap rate. Just for the listeners, cap rate is your unleveraged return on investment. If there’s no debt on it, and you buy a million dollar facility, a 5% cap rate would be a $50,000 return on investment, unleveraged, no debt in the mix. To have a 375, I mean that’s less than what you get on a CD. It’s a little bit ridiculous.

Ben: The expectation is, well rents are just skyrocketing, which has been true. Rents have just been going crazy because there’s been a massive increase in demand without a massive increase of supply. That changed over the last two or three years. Over the last four years more self-storage square footage has been built than the previous 30 years combined. Just the amount of new supply that’s in the market has overwhelmed quite a few. Denver as an example. Rents have dropped 10% I think because there’s just so much more supply than there was three years ago.

Ben: Holistically, long term, I do not believe that self-storage is going to decrease in value. I think that the cap rates are here to stay. They’ll move a little bit with interest rates. It’s not going to become un-institutionalized, and populations will fit into the supply at some point. Short term there’s a lot of risk. Long term we’re not assessing nearly as much risk as there might be in other asset classes. That’s why folks are buying these things at ridiculously low cap rates, especially if they’re coming from private equity groups, because there’s just a lot of money on the table.

Ben: Now that’s getting really sophisticated probably for a lot of your investors, comparing self-storage and private equity. If I’m a listener I’m thinking, oh wow, self-storage is really cool, really low maintenance, low turnover, really easy to manage, all of which is true. How do I go out and buy these things? Well nobody’s out there buying less than 35,000 square foot facilities. That’s really the game that can be won by a local kind of I want to use my own money, I don’t want to syndicate, I don’t want to raise any cap.

Ben: If you want to go out and buy or build a 10,000, 20,000, 30,000 square foot facility, you can absolutely do that with very limited competition because the efficiencies on the operations are much more difficult for a professional organization to make work from afar. If you’re going to be the one picking up the phone, because you’re the one picking up the phone on your single families, on a 20,000 square foot facility, you’re going to be able to buy that for a really good deal. You can buy that perhaps for an eight, nine, ten cap and add a ton of value to it. There’s definitely a lot of opportunity there.

Ben: The one thing to keep in mind though is at the end of your, if you’re going to hold it for 30 years, great. If you’re going to try and add value and sell it five years later, who’s your buyer at that point? That’s the thing to keep in mind. That’s why we’re looking for the 20,000 square foot facility that has expansion potential to add another 30,000 square feet to it.

Brandon: Okay, so you can buy it at the level that the institutions are not actually in there playing in that level yet, but you can push it up to institution level so they’re going to be your buyer. That’s so smart dude.

Ben: Yeah, so not only are we getting the extra square footage, so we’re getting the spread on that construction, but we’re also decreasing the cap rate on the entire portfolio. If we’re buying it at let’s say a seven, but we expand it so that it’s now in the five ballpark, we’ve taken the existing cash flow and made it more valuable without doing anything to it.

Brandon: Yeah. That’s smart.

David: Can I break that down real fast?

Ben: Yeah.

David: I think compressing cap rates is something that we’ve mentioned before. A lot of our listeners, especially if they’re single family people, won’t quite understand that.

Ben: Sure.

David: There’s two ways that you can improve the value of multifamily property. One is you can increase the NOI, which is basically like the money that you make, it brings in, minus your expenses that you have. The other is for the cap rate to go lower, because those are the two levers that are pulled. You basically take your NOI, you’re dividing it by the cap rate. Very similar to the BRRRR method, where you can improve your ROI by either getting more rent or by leaving less money in the deal. There’s two levers you can pull to improve your ROI. Well it’s very similar with the value of a multifamily property.

David: What Ben here is saying is that most of the time your cap rate is completely dependent on market factors that you don’t have any say in. It’s just like a whole bunch of money moves there, cap rates go down because there’s more competition, your place becomes worth more money. It’s harder for a buyer to make money with it.

David: You’re actually putting a strategy together that you can affect the cap rate so that you’re making it worth more. Lowering your cap rate is like, I don’t know what the right number, like 10 times more powerful than improving the NOI when it comes to your portfolio. That’s why Brandon was over there drooling when you were talking, like oh my god, that is genius. I was looking at the twinkle in his eye as you were speaking. Good job.

Ben: Yeah, that’s a great summary David. Well done. Yeah. Not to say that there’s not other folks doing it. It’s still competitive there, but now we’ve eliminated the highly professional groups from trying to buy. We’ve also eliminated the folks who aren’t confident in their development expertise. The buyer pool is smaller, so it’s a little bit easier to get it done.

David: Yeah, and you also said something that I really like about, if you’re trying to be less than 35,000 square feet, maybe you’re in the 25,000 square foot range, there’s opportunity there. If you want to kind of, you said pick up the phone and make calls, what you’re basically describing is if you want to be an owner/operator.

Ben: Exactly. Right. Exactly, yes.

David: It’s not a completely passive investment where I’m going to go buy it and let other people take care of it. Because every time you leverage something to somebody else, you pay them money, and it becomes a bigger expense. You have to have a lot of meat on the bones to be able to cut off all those little chunks.

David: It’s perfectly fine if you don’t want to be paying other people, if you want to do some of that work, you’re basically buying yourself an opportunity to work a job that’s really high paying and you’re still owning the business. I thought that’s a great strategy for people that are like, “I really want to do this but I can’t buy something that big.” Well, consider being an owner/operator and getting your foot in the door.

Ben: The tech landscape in storage over the last few years has been completely changed. Whereas two years ago it might have been a lot of effort, a lot of time on the phone, there’s just so many services out there now for storage. I mean, I would never want to buy one unless it was like within 10 miles of me, at the 20,000 level, unless I had like a third party manager. With all of the tech that’s out there, I mean, there’s ways to spend very little time owning it, without even having to hire a third party manager.

Brandon: I was hoping we would get to that, because I’ve been thinking about that actually lately, about just how just things like apps and smart locks and all that are just making it more and more hands off to manage. You don’t necessarily have to go meet a manager to unlock the cage, to go open up the facility. A lot of that stuff can be automated.

Brandon: There’s some guy that just built, in Grays Harbor, Washington, where I lived before moving to Hawaii, there’s this guy who built, there’s a spot of land, right on the highway that it just had been undeveloped forever. I don’t even know who it was, but they built like 50 identical little storage sheds or whatever, all one big row. There’s 50 of them in this row. It’s just like a straight one way, one way back. He got 50 of them. Anyway, he leased them all up, like 100% leased up a week after building them.

Brandon: He’s just like a local owner/operator. He just built this. He probably put down a 20% or 30% down payment. Went to probably a local community bank. Built these 50 units, leased them up immediately, and now I just was back there a couple weeks ago, and he put a second one in right behind it. Clearly it’s working for him.

Ben: Yeah.

Brandon: He probably was able to take some cash and turn it into a really, really good paying essentially part-time job for himself.

Ben: If there is demand to be able to do it, and you’ve got a backyard, and the city lets you do it, and you can throw some sheds up there, or some metal up there for 40 bucks a foot, but you’re getting rents. I mean, Gig Harbor, Washington, the rents there are going to be 16 bucks a foot. Especially if you are managing it yourself, you’re probably netting 12. 12 on 40, it’s a pretty good deal.

Brandon: Yeah, it’s crazy. Interesting strategies. What about the idea, have you ever looked into like buying a multifamily that has room to add storage on there? Buying a mobile home park room to add storage. Have you looked into that at all?

Ben: No, for a couple of reasons. One, I personally do not like multifamily. My partners haven’t ever owned before, but they have zero interest in getting that same experience that I had. It’s just not, we don’t want to be in the residential game. We don’t want to have to be responsible for the interior of a unit. I mean, we’ve got an RV park where people live, but we are only responsible for the dirt pads and the utility hookups. It’s a very different situation. That’s number one.

Ben: Number two, typically multifamily parcels are not going to be zoned to allow for additional storage. We’d have to find something that’s in unincorporated land, where there isn’t regulation for that. That’s a little bit rare to find a quality multifamily that has that good cash flow that would allow for storage.

Ben: Then third is, is it complimentary? Who’s your back end buyer when you’re adding storage to the multifamily? We’re trying to play in the institutional space, so we’re always thinking about, who’s our end buyer, when we’re building things.

Ben: We haven’t done that, but for your listeners, if they’ve got a fourplex and there’s like a half acre in the back, or even an extra 10,000 square feet and you want to add 5000 square foot of storage, I mean there are portable units where you could have them shipped and kind of laid down, kind of like a mobile home. You don’t have to have city approval for that because it’s not a permanent structure. It’s personal property, so it is a way to add cash flow. Perhaps not add value, but it is a way to add cash flow, with a very good ROI on that investment.

Ben: We just said, maybe 40 bucks to invest at $12 net if you’re in the right market, because rents do vary quite a bit market to market. It would be a great way to add cash flow for your single family, multifamily listeners.

Brandon: Cool. Yeah, I’ve thought about that. I’ve never actually done it, but I’ve always though, what if I just add some storage sheds back here and get more cash flow? Never done it.

David: You know, there was an old episode of the podcast, I’m trying to remember who it was. It might have been Sterling, or Al Williamson maybe. He was saying he had the goal of buying a multifamily apartment and having it pay for itself without rent. He wanted to like add self-storage and rent out bicycles to the tenants, and have them pay for wifi. That was like his vision was, I’m going to buy an apartment complex that will sustain itself completely from non rent, and the rent would all just be like bonus cash.

Ben: That sounds like Al.

Brandon: Yes.

David: I remember hearing that, but I think that that principle applies. Like, okay, I’ve got my meat and potatoes here, I’m collecting rent, now how can I add in some potatoes or some rice? How can I make this a little bit better meal by throwing in self-storage or laundry or some of the other things that people do? When you’re analyzing deals, you should be looking for what opportunity is there to add something else here that I can use to increase my NOI?

Brandon: Yeah, for sure. Hey Ben, we don’t have to spend a lot of time on this because I think I know the answer, and we’ve kind of touched on it. How are you guys buying? How’s Spartan paying for these investments? You’re syndicating, right? Can you walk us through what that looks like?

Ben: Yeah. Syndicating is, just for the listeners, I’m sure you guys have had people on here before who have talked about it. Syndicating is pooling a bunch of people’s money together under a legal structure that gives them ownership in exchange for their investment. We are acting as the general partners, and we are syndicating capital from limited members. We are using 100% of the capital from other folks, and we are targeting high teens, sometimes low 20% internal rate of return.

Ben: I can’t talk about what we put out there for investing purposes, but I can talk about what I underwrite. When I underwrite, I try to target for that kind of metric with an 8% preferred return that does not get diluted over time.

Ben: That has, I think the way that we go about doing our business, we have a strategic plan that is printed out, and we can hand it over to people, and they can look at it and say, “Oh, this is this guy’s five year plan. This is like what they’re trying to do. This is their mission statement. This is the value statement. This is their environmental scan of the marketplace and how they came upon this strategy, and what they’ve done with this strategy. Oh, and here’s another document with their portfolio of projects, and here’s their track record.”

Ben: That combined with we’re just a bunch of cool guys to hang out with, we like to ski, we like to scuba dive, we like to hang around and do conferences. I think we’re a good time for people. We’ve always done the right thing with investors. We have had a, Ryan Gibson, my partner who’s responsible for the investing, he’s very, very good at building those relationships and building that equity stack.

Ben: On the other side of the table we’re building debt relationships everywhere. Self-storage and other commercial assets outside of residential don’t qualify for the same kind of agency loans as multifamily would. By agency loans I just mean that there’s not some government entity that’s supplying this debt at a cheaper rate than private investors, or private debt providers. We’re looking at commercial mortgage backed securities. We’re looking at debt funds. We’re looking at local banks, regional banks. We have turned over every single rock to get the best deal, and we’ve done some pretty nonstandard stuff for this size storage that we’ve looked at. The combination of those two things is what’s financing our deals.

Ben: We do look for, on the debt side, flexible debt that allows us to have interest only cash flow during our construction of the expansion on all of our deals until lease up, and then converts over to a permanent amortized loan at a predetermined interest rate so that we’re not exposed to interest rate risk two, three years down the line. We like lock it in today. It’s almost like having two loans pre-negotiated.

Brandon: That’s cool.

Ben: Yeah.

Brandon: That’s very cool. Yeah, my first apartment and my mobile home park that I just bought last year, both those I negotiated-

Ben: Congrats.

Brandon: Oh thank you. Yeah, it’s fun. Both of those we did a year of just interest only the first year, and it worked out. At the time I didn’t really, I don’t know, I didn’t really know like why I was doing that, other than I just thought like, well it’d be nice to have less payments. I mean that’s really what it is. Because in the beginning you don’t have a lot of cash flow because they’re fixer uppers, they’re below rent, they’re whatever. Anyway, it’s a cool strategy.

Brandon: Oftentimes, especially if you’re listening to this and you’re doing a single family or multi, especially if you’re dealing with like seller financing, if you’re like trying to get a seller financed deal, at the very end of negotiation, like when you get to the very end and you’re both like, okay, this is the price we’re going to pay, toss in, “Hey, can you also throw in a year of interest only payments?” Most people are like, “Oh yeah, that’s fine.” Because it doesn’t really make a difference to them, because they’re getting the same amount of money more or less at the end of the day anyway, but it reduces your payment the first year a little bit.

Ben: All right, so here’s a nice little nugget for your listeners. This is the coolest negotiating strategy I’ve had for seller financing, is explaining to sellers the difference between taxes on interest and taxes on principle. This conversation has helped me lower interest rates on seller financing down to virtually zero sometimes, in conversation.

Brandon: Really? Explain this.

Ben: Okay, let’s say you’re seller financing something. You’ve got a million dollars and over 20 years you’re going to seller finance it, which is, help me, 50 grand a year in principle. If you’ve got a 5% interest on that, that’s another 2500 bucks. Your payment annually is 52,500. Well, that’s not right. The math is wrong there. Ignore the math.

Brandon: I know what you’re talking about.

Ben: There’s principle and there’s interest. Well, when you’re paying principle, let’s say they’ve got it entirely paid off, the tax rate on the principle portion of what there’re receiving every year is going to be 25%. That is the constant standard, never changing tax rate on recaptured depreciation. You’re paying 25% on the principle portion of the payments that you are receiving as a seller financer.

Ben: On the interest side, when you’re receiving interest on the principle, you have to pay income level taxes on that. I’ll say, “Hey, let me increase the price, but decrease the interest rate, and you hold this note for a very long time, so that way you’ve got this really awesome vanity metric on price. I’m benefiting from saving, let’s say a million and a half dollars on interest, compared to a bank, but I’ve paid you $600,000 more on the price. And now you are paying 25% tax on everything instead of 25% tax on the principle side of your payments, and then 30%, 35%, 40% effective tax rate on your interest portion of the payments. Let’s redistribute how you’re getting paid. I’m saving money along the way, but you are getting more cash in your pocket because you’re saving on the taxes.”

Brandon: That’s phenomenal. That’s really, I’ve never thought of that in my life, but it makes complete sense. If people are listening and saying that it doesn’t make sense to them, just go rewind that and listen to that again. Because that’s exactly, I don’t know, that’s a really good point. Because they are taxed differently, yeah.

David: When we tell people you need to have more tools in your tool belt and you can take down more deals, that’s a really good tool.

Brandon: That’s a good tool. That’s a really good tool, yeah.

David: I do the same thing when I’m talking to buyers who are considering buying a house but they’re renting and they tell me, “Well my rent’s cheaper than if I was to buy.” Then the minute you factor in, like well the tax savings you’re going to get on your mortgage interest deduction completely changes that.” They go, “Oh. So it would be cheaper for me to own a house, and the rent’s not going to go up every year.” All of a sudden it makes a good argument.

David: I just think in general we tend to not think about taxes, and they’re such a huge, huge piece of your expenses that you can literally make a deal work that wouldn’t have worked if you didn’t account for a difference in tax rate.

Ben: Yeah.

Brandon: There you go. Hey Ben, I’ve grabbed a couple questions here that aren’t specific how to questions, but more about kind of your journey. If you were to look back in the last few years of your real estate investing, what memory, or what example just makes you smile and be like, “Man, that was great.” Or, “That was an awesome day. Like that was the best day.” Anything you can come up with? I know I’m springing that on you.

Ben: No, no, it’s okay. I feel like that best feeling came when I just drove down to Richmond one day because there was a bunch of just properties that looked really good and I was like, crap, I can’t take all these down by myself. I had just bought my first two, so I called up my boss’ boss, who had become a good friend because he had started a business in college, and he’s like, “You know nothing about this business, but I’m going to hire you. I’m going to have my employee hire you because you started a business in college and that’s all I need to know.” We became really good friends. I was like, “Hey man, I just found these three houses and they’re brilliant, they’re great, they’re going to cash at like 22%, plus 3%, 4% principle reduction.” He’s like, “I’ll buy them all.” I didn’t even think of that strategy.

Ben: The strategy of like people throwing cash at me, and I get to keep 25%, I didn’t come up with it, he did. He heard about it. I called him up and said, “How do I do this?” He’s like, “I’ll just buy them for you. You can keep 25%. You’ve found the deal, you’ll manage it. I don’t have to think about it. Just send me checks.” Then he started telling other VPs about it.

Ben: Just like when I got off the phone I was completely, like I was just driving back from Richmond. That was a cool feeling. That was a catalyst, like kind of a derailing moment to be like, oh, without that call I might not be a full time real estate investor. That call kind of pushed me towards, oh, there’s more I can do with this other than just taking my money that I’m earning on my W-2 and putting it to work. There’s a way to do this full time and really prosper here.

Brandon: That’s cool.

Ben: Can I give a second example?

Brandon: Please.

Ben: All right, when we stumbled across this RV park by accident, and it was being marketed at a 17% cap rate, and you’re like, that’s not real. There’s no way that’s real. There’s a mistake in here. There was a mistake in there, it was actually a 27% cap rate. It went the other way. Now it’s performing at like a 36% cap rate, however many months later after us purchasing it.

Brandon: Wow.

Ben: We bought it a year ago for 1.7 million, and we now have an indication through paperwork that suggests that it’s worth 5.5 million a year later.

Brandon: Wow.

Ben: Yeah, so getting that piece of paper saying like, “Hey, you have more than doubled, almost tripled the value of this business with …” I think our total cash into it is less than 2 million. That’s another game changing moment.

Brandon: Yeah. Those are great examples. I’m going to start asking that question I think more often during these podcasts. That’s awesome.

Ben: If you want to ask me the reverse one, I’ve got plenty of like, this is how I lost hundreds of thousands of dollars.

Brandon: Please, let’s go there. Well let’s go to a related one, and maybe I’ll come there. What’s been your biggest challenge so far in real estate? What’s been something that just like, and how did you overcome it?

Ben: I think bridging the gap. I’ve been really aggressive in my professional life, and I’ve been as aggressive in my personal life. I’m 29 years old. I’m married. I’ve got a kid, and I lived in New York City. Not the cheapest way to go about life, and so I decided I wanted to be a full time real estate investor.

Ben: When I sold my business it was game changing money for me then, and it’s pennies to me now. That would not support my family at all for like a year. Not having the W-2 and bridging the gap to support my entire family, that’s been the most challenging thing, especially conflating that with my first real estate mistake. I had never lost a dime on over 35 transactions, some commercial, some residential. Then all of a sudden, poof, 120 grand just disappeared on a deal, on a house of all places. The combination of trying to bridge the gap at the same time as having that event occur, that’s been the most challenging thing.

Brandon: All right. That was a good answer. What’s something you enjoy doing that you never get tired of, like in your real estate?

Ben: Negotiating. Underwriting deals and negotiating. I know people hate underwriting deals, but I built my own platform. I plug all my numbers in. I do it all myself. I can just sit there for hours and play with it and be like, oh what if I do it this way? What if I structure it that way? Never get tired of that.

Brandon: It’s like a giant puzzle.

Ben: It is.

Brandon: Were you a puzzle guy as a kid? Doing little word games and …

Ben: Number games. Always number puzzles, yeah.

Brandon: Number games.

Ben: Always number puzzles, playing with the abacus.

David: That’s funny because that kind of, I mean that’s what you’re into now, right? When you’re telling us, “Hey, this is the part of the deals that I like.” I’m just becoming a really big advocate of that, of quit trying to do everything, because then you get overwhelmed and you don’t take action. Narrow it down to what you are actually going to do, and then focus on crushing that and you’ll start to see progress get made.

Ben: I really like that, and I think it’s important to distinguish between that and some of the advice that I’ve heard, of like focus on an asset class, which I hear a lot. Like focus on an asset class, don’t go do everything. While that’s true, I think you should have a primary asset class to focus on. Trying to avoid all asset classes because you’re not an expert in everything, I think you can have a generalist mentality on asset classes but have a specialist mentality on the function within real estate investing. I just wanted to point that out. I completely agree with you David. I would not want to do everything ever again.

David: You said that a lot fancier than I did though. I mean, I was like, well not all assets are good assets. Then you came in very eloquently. I’ve got a question for you.

Ben: Sure.

David: In your opinion, and this is actually Brandon’s question, I’m just taking it because he took one of mine. What’s the one thing that should be taught in school that isn’t?

Ben: Oh wow. That’s great. Asset versus liability. Well, okay hold on. Are we talking about in like real estate investing specifically, or just in general?

David: It could be anything. You could say like-

Ben: Oh, if it’s one thing, how to love. That would be-

David: How to love.

Ben: How to love, yeah.

Brandon: What do you mean? Explain.

Ben: I think it should be … I don’t know what I’m talking about. Let’s start with that benchmark. I don’t know what I’m talking about. I think it’d be pretty cool if every 16 year old had an international experience. I think that there is a lot of separation between domestic and international humanity, and that’s not just America, that’s everywhere. I think that there is a lot of disconnects between family life and the rest of the world.

Ben: If you’re 16 years old and you’re raised a certain way, sometimes a crazy way, I’ve had a little bit of that myself, and you kind of go into the world thinking that this is how the world works, and it’s like, no, you’re coming from a weird place. I think having kind of college level psychology or philosophy conversations around how to love, and the meaning of existence, to a small degree.

Ben: I think a little bit of that could go a long way in the adolescent years of one’s life. Combine that with interactions, international interactions, and I think we’d be all better off. I think that’s much more important than being financially literate, but I also think financial literacy is heavily important. I just don’t, I mean if you’ve asked that question to other people, I’m sure that’s what everybody else has said. I want to go with the how to love.

Brandon: I don’t think I’ve ever actually asked that question before. I found that on the internet earlier and I was like, oh that’s a good one.

David: Actually you didn’t ask that question. I asked that question. Ben came back with, “I’m bad at love.” Was like, “I should have learned how to do this in high school.” I thought that was awesome.

Brandon: That’s funny. All right. Good answer though, that’s really good. That was fun. Yeah, earlier today I was looking at this list of like just good questions to go deep on. That was definitely deep, so thank you for indulging me.

Ben: Yeah. I liked that one.

Brandon: Good. Let’s go back to real estate here specifically, and we’re going to dive into one particular deal because it’s time for the Deal Deep Dive.

David: Deep Dive.

Brandon: All right, this is the part of the show where we dive deep into one of your deals, and go kind of specific. You got a deal in mind that we can really pick apart?

Ben: Yeah, let’s do it.

Brandon: First of all, what kind of deal is this that we’re going to be talking about today, what kind of property?

Ben: Single family flip.

Brandon: Ooh, single family flip, all right.

David: How did you find this single family flip?

Ben: Found this by way of connecting with a broker, I think I mentioned it earlier. No I didn’t, this was with Kevin. Connecting with a broker who does 1400 investors properties a year in Chicagoland. He lists them for free because he gets 6% when he sells them to you. He only wants to work with investors. He got three contractor teams. It was supposed to be a very turnkey experience. I had never done a flip before.

Brandon: Oh, okay. When was this, by the way? That’s not one of our questions, but-

Ben: This was 2017.

Brandon: Okay. All right, so how much was the property? How much did you pay for it?

Ben: I paid $155,000, from memory. Roughly $155,000.

David: How did you negotiate that price?

Ben: I did not. This turnkey experience was zero negotiation. It’s, I’ve got this under contract because I am the broker for HUD, or the broker for this foreclosure at the bank, so I just tied it up in house for the best price that I could, and you can either take it in the next 60 minutes or it’s going to one of my other investors.

Brandon: Was it kind of like a wholesaler essentially? Like they put it under contract and they’re just like flipping it to you.

Ben: It was a wholesaler with 30 years of investment brokerage experience. Not kind of like your bandit sign wholesaler, but more of like, I do this 1000 times a year wholesaler.

Brandon: He didn’t like get it under contract for 140 and then sell to you for 155, right? He got it from the-

Ben: Nope. He gets 6% commission on the listing.

Brandon: One the sales. Okay.

Ben: I got it for the price that he negotiates it. Very unique setup.

Brandon: Yeah. I never heard of it.

David: That’s actually, I mean if the numbers work for him, that’s really smart. He’s basically finding his own listing without having to put his money into it.

Ben: That’s exactly right, and that’s why he lists it for free on the backend. When you’re done flipping it, he’ll list it for free. You save your 3%, and he knows that he’s got a repeat customer coming back to buy more of his deals to get 6%. He wants the deals to work out so that he can deal with fewer and fewer people to get the same volume done.

Brandon: That’s cool.

David: All right, how did you fund this deal?

Ben: Oh, I thought you were going to say how I was going to find this deal? I was going to say, Bigger Pockets, because I connected with him on Bigger Pockets.

Brandon: Oh, did you really?

Ben: Yeah. I connected with him on Bigger Pockets. Yeah.

Brandon: Oh that’s awesome.

Ben: I funded it, so I put a flip fund together, just a really, really small flip fund, 100 grand from a couple other people that had done some of the single families with me. I did the rest hard money.

Brandon: Okay, cool.

Ben: 7.5% hard money.

Brandon: That’s a good rate for hard money.

Ben: Yeah, 85% LTD on total project cost.

Brandon: You know, that’s amazed me by the way. I noticed that both when I was at the Best Ever Conference that you run, and also when I was at the [Taro Yarburs 01:04:25] Conference out in Seattle. Both of them, like the hard man lenders that are there and talking to people, hard money rates have come down so much over the past-

Ben: So much.

Brandon: Yeah.

Ben: Yeah, like four or five points over the last four or five years.

Brandon: Yeah, it’s crazy. Yup. I mean, it was minimum, years ago it was like minimum 12%, 13%, 14% interest, and four or five points. Now it’s like two points, sometimes one point. It’s crazy.

David: I think we’re going to look back at these days someday and be like, back in my day interest rates were 4%. What were we thinking? Just like we look back at 2010 and like, those houses were $14, why didn’t I buy them?

Brandon: All right, so what did you do with this property? You flipped it, right?

Ben: It was a flip, so we had a $45,000 construction budget on a $155,000 purchase price, with an ARV, after repair value, of 300 grand, 290 to 300 grand. A decent spread.

Brandon: Okay, so what was the outcome then?

Ben: Outcome was I spent close to $85,000 on construction. I held it for twice as long as I needed to, so my carry costs were twice what I wanted to, and I sold it for $230,000.

Brandon: Really?

Ben: Yup.

Brandon: Whoa, I mean I’m doing the math in my head real quick. Doesn’t look like you made much money on that.

Ben: Oh no. That’s the deal that I lost 120 grand on.

Brandon: Okay, I was going to say.

Ben: I picked that deal to do a deep dive on.

Brandon: Okay, so then the big question is, what lessons did you learn?

Ben: Why?

Brandon: Yeah, why? What happened?

Ben: Yeah, so a bunch of things happened, but they all kind of stemmed from this place of hubris. Where I had done I think over 30 deals at this point, close to three dozen deals, single family. Never lost a buck. Even on the deals that didn’t go well, I still made money. Not a lot, but some. I had this experience having only ever having done cash flowing assets, never having done a flip. When you’re buying a cash flow asset, you can flip it. You can do a lease option. You’ve got all these strategies. When you’re buying something specifically to flip and you’re not looking at those other strategies, you’ve got this one outcome that you’re looking for.

Ben: This thought of, I can automate flipping the same way that I have automated this management of my rentals. I was getting 25% ownership to manage it, but I more or less had outsourced it at that point. I started from this place of hubris and trusting. I had done two deals with this group, and I had made 20, 25 grand on each one. It had worked out, but then I just bought the wrong deal with them, I bought the wrong one.

Ben: I don’t know Chicagoland. I mean, each borough there, I guess not borough, but municipality there is completely different from the next. No one has called it the least corrupt place in America. The relationship with the permitting office was awful. I mean, I went through 12, 13 certificate of occupancy inspections. I never ended up getting my certificate of occupancy, never ended up getting it, after doubling my budget.

Ben: There was a little bit of negligence on my contractor’s part, I believe. I think the biggest thing was that if I was one block over, I would have been in that 300 plus price range, but I was not one block over. I was exactly where I was, and there was some socioeconomic history that I was unaware of, that my broker was unaware of, that my contractor was unaware of, that my lender was unaware of, and it made all the difference. I ended up having to sell this in a different neighborhood than I thought, without a certificate of occupancy.

Ben: When I went to go visit the property a year after I had bought it, I realized that the work was just it wasn’t brand new. It was definitely a cheaply done flip, which I suppose the last two had been done the same way, they had worked out, but this one was not.

Ben: The other mistake that I made was that I had a nine month term on my loan, and I ended up holding this thing for 13, 14 months, so I had refinance it. Not only did I have to pay extension points, but I also had to pay more points when I refinanced it. I had heavy carry costs. I had heavy permitting costs. I paid more than double on my budget. Then I ended up losing 70 grand on my ARV. Yeah, it was the opposite of a slam dunk.

Brandon: Yeah. Well I’m really-

Ben: Do your homework.

Brandon: Yeah.

Ben: Don’t automate flipping.

Brandon: Yeah, I’m so glad you said all that stuff. I mean, it seems so fun to hear stories of people making 100, 200 grand on a flip, and it’s like awesome, especially when it’s from a distance. You just brought up so many good points on why it can be dangerous. If you don’t understand the market well enough, and you don’t have that solid core four, as David says, it’s not as easy as it looks. Anyway, thank you for sharing that.

Ben: Yeah, and I look at it as a plus for two reasons. One, I lost that $100,000 flip fund. I didn’t put that money in, somebody else did. I lost all that money that was theirs, but I still paid them 100 grand plus 8%. That was number one, was I had an opportunity to do the right thing all on my own, and I think it made all the difference with those relationships and the story of myself that I got to tell.

Ben: Number two, I was able to, to David’s point, really concretely know about myself, what I’m good at and what I fricking suck at. When I was partnering up with the gentlemen that I work with now, they’re looking at my underwriting file, and they’re like, “Holy shit, that’s impressive.” Excuse me. I’m looking at their 310 point due diligence list for doing condo conversions with DC row homes in a very highly litigated neighborhood, and I’m like, oh wow, that’s incredibly impressive. This would be a good marriage.

Brandon: Yeah. That’s cool man. Yeah, that’s really, and I love the integrity there. You didn’t have to necessarily pay everyone back. That’s the risk that they’ve made when they invest with somebody, but the fact that you did, you’re like, “Hey, I’m going to make this right anyway.” I just think that’s phenomenal. Good on you.

Ben: Yeah. Now I get to brag about losing money, right?

Brandon: Yeah, exactly. Awesome.

David: That’s how you know somebody’s really doing well, because they’re not afraid to tell you about the time they lost, because they know like, well I did so good on all the others. Very, very clever Ben.

Brandon: All right, so let’s move on from the Deal Deep Dive and head over to the next segment of the show, which we call Fire Round. Boom, boom, boom. All right, time for the fire round. These questions come direct out of The Bigger Pockets forums, which of course everyone can go to participate in by going to biggerpockets.com/forums. Let’s see, we’re going to throw a few of them at you here Ben. Number one, from Keith from Camp Hill, Pennsylvania. “It seems like there’s plenty of good deals for single family homes, but I’m having trouble finding multifamilies. The MLS has some deals, but all I’ve found is retail prices. How are good multifamily deals found today?”

Ben: They’re not, they’re created. Multifamily deals and all commercial deals are not found, good ones are not found. I mean, if you can figure out how to make that deal perform in a way that’s different from everybody else, if you have a niche strategy that separates you from the pack, that’s how you’re going to make the deal work.

Ben: Because otherwise you’re competing with New York money that’s using life insurance debt financing at 2%, 3%, 4%, which you can’t compete with that even with an agency loan, or you’re competing with 1031 money who doesn’t really care what the cap rate is. There’s so much 1031 money out there right now. If you’re not able to create the value in multifamily or any commercial asset, either look in another asset class, just get out because you don’t want to lose your shirt, or find a partner who can help you, who can compliment you in creating that value.

Ben: For example, for us … This is not lightning round, so nevermind, we’ll just cut it off there.

Brandon: That was a good answer. That was really good.

David: All right, next question from Jared in Raleigh. “I consider myself a numbers person when I look at a deal, which in turn makes me seem not so warm. I’m trying to approach a park owner about lowering his price and working on my negotiation skills. Do you have any advice for me?”

Ben: Yeah. That’s definitely hard, is to be a numbers guy and an interpersonal guy. We look for that a lot when we’re hiring at Spartan because it’s so unique. One is date, just go on dates. If you’re single, go on dates with somebody that you would want to just have an interaction with. If you’re not, if you’re married, go on friendship dates. Tell your wife, or your kids or whatever, that you’ve got work to do, and go practice by going on dates.

Ben: Grab a cocktail with somebody. Read the book Click, by Ori Brafman. Read Never Split the Difference by Chris Voss, and then just go on dates and practice interaction. Practice connecting with people, clicking with people, and then take that into your business life, or partner with somebody who’s good at it.

Brandon: Yeah.

Ben: Like I do.

Brandon: Yeah, there you go. It’s funny how many people will say things like, “I’m just, I’m an introvert. I’m not good at talking with people.” Then like when you ask them, well what do you do to improve that? They’re like, “What?” Like nobody wants to like … Either you’ve got to find a way to get around your weaknesses by partnering with somebody who doesn’t have them, or work on your weaknesses and fix them. Instead, people are just like, “Well, it is who I am, so I guess I can’t invest.” I don’t know.

Ben: Yeah, and I bet you’re probably the same as I am Brandon, because I saw you at the conference chilling in a corner.

Brandon: Yeah, it’s what I do. I like my corner.

Ben: I’m an introvert too. I do not like networking. One on one interactions is my thing.

Brandon: Yes. Exactly the same thing. I actually, I’m similar, I’ll find people to partner with who are better at that. I’m not good at dealing with contractors so I typically don’t, I hire people, or I work with people, or partner with people who do that. I’m just not good at that.

Ben: Exactly.

Brandon: I’m not going to sit on the couch and watch the Bachelor every night because I can’t do it. I’m just going to find somebody else who is good at it. Yeah, there you go. All right, let’s do this one. We’ll call it the last one. Greg from Southern Maine said, “What are some of your favorite motivational quotes?” Is there any quote that just like gets you going, or you look at?

Ben: Oh god, I’m awful with regurgitating quotes from like TV, movies and stuff like that. I’ll tell you, I don’t know if it’s motivational-

David: you could do what Brandon does, and you could just take the smartest thing you’ve ever said, and then say it, and just like, a wise man once said … You can do that if you can’t think of anything.

Brandon: You’ve got to let that die David Greene. Let it die. It was one time.

Ben: This too shall pass. That’s the one I always go back to. This too shall pass. When I lose 120 grand and I’m like, shoot, I have to like answer to my wife, I have to answer to all these people, these investors. This too shall pass. You’ll get through it.

Ben: When I’m riding on a high and I think I can take it easy, or I think I’m like the man, this too shall pass, and I’ll have my lows again. I don’t know if that lifts me up every day, but that’s probably my favorite quote to keep me level headed.

Brandon: That’s perfect. I actually say that to myself too whenever something goes wrong. I’m like, this too shall pass.

Ben: This too shall pass.

Brandon: Very, very good.

Ben: Not to be confused with, you shall not pass.

Brandon: You shall not …

David: Brandon should totally dress up as Gandalf for Halloween. He’s halfway there. If you started yelling thou shall not pass, I would lose it.

Brandon: You shall not pass. I’ll work on that. All right, that was good. End of the Fire Round. Let’s head to the last large segment of the show, and that is our Famous Four. All right, this is the last segment of the show. It’s the part that we ask you the same four questions we ask every guess every week. We’re going to throw them at you right now. Oh first, before we get to the famous four I want to go over to talk to Jay and Carol. Let me rephrase that. Before we get to the Famous Four, let’s hear what’s going on this week over on The Bigger Pockets Money Podcast. Let’s hear what’s going on this week over on The Bigger Pockets Business Podcast.

Brandon: All right, and now let’s get to these Famous Four questions. Number one, Ben, do you have a favorite real estate related book?

Ben: Here’s what I’m jamming on right now. Am I Being Too Subtle? Read this last year, by Sam Zell. It is not a how to as much as it an awesome story of a self made billionaire that is still alive today in real estate.

Brandon: All right, cool. I had not read that one.

David: What is your favorite business book?

Ben: A business book, all right. Shoot, Chris Voss, Never Split the Difference.

Brandon: All right, that’s a good one. I see you also over your shoulder there you actually have the book, Traction, is that right? Is that what I’m seeing over there?

Ben: Checking out the office library.

Brandon: Yeah. Oh yeah, you’ve got a lot of books over there. Yeah, nice.

Ben: Traction I have not read, but I could pull Scott into this room, he could talk about it.

Brandon: I was going to say, it’s on my list, that’s why I saw it there. I was like, oh yeah, I’ve got to finish that one. I started it once, I just didn’t finish it. I’m working on that.

David: That’s a man who knows his weaknesses. I hire people to read books for me and tell me what they say. I’m a numbers guy, not a letters guy. All right, what are some of your hobbies?

Ben: Skiing, hiking. You can see probably in the reflection in the background, our office is right outside the Rockies. I’m within biking, hiking, skiing distance of like, walking distance of biking, hiking and skiing. Big sports guy.

Brandon: Where is your office? Is it outside Denver?

Ben: Golden, Colorado, yeah, 30 minutes west.

Brandon: Oh Golden, nice.

Ben: Yeah.

Brandon: Yeah, I love Golden. That’s a great area. Very cool. All right, last question from me. What do you believe sets apart successful real estate investors from those who give up, fail or never get started?

Ben: Doing, just doing. Acting, doing, being active. Just taking steps, making action. I don’t know if there’s anything simpler than that.

Brandon: Awesome. I love it.

Ben: You can fail 999 times, and the 1000th time could be what makes the difference. If you’re not continuing to take steps, you’re not going to learn. If you’re not learning, you’re not going to feel comfortable. If you’re not comfortable, you’re never going to go anywhere.

Brandon: Wiser words have never been said.

David: All right. That was awesome, so for people that are-

Ben: That was a quote by Ben Lapidus.

Brandon: There you go. A wise man once said.

David: I see Brandon’s rubbing off on you. You spend time with him, and-

Brandon: I never said a wise man once said. That was Tyrion Lannister from Game of Thrones said that. David get me confused with Tyrion, obviously why, we both look pretty similar.

David: Yeah.

Ben: So impish.

Brandon: Anyway, all right.

David: For people that are fascinated by your story Ben, tell us, where can people find out more about you?

Ben: You could either check me out at The Best Ever Conference, besteverconference.com, or you can hit me up on email, [email protected]

Brandon: Awesome. All right dude, well thank you very, very much. I’m sure I’ll be seeing you around, probably at next year’s Best Ever, if not before that. You put on a good-

Ben: Oh, don’t tickle my fancy like that.

Brandon: You put on a good conference. Yeah.

Ben: Thanks man.

Brandon: Everyone should definitely check it out next year. All right, thank you so much Ben. With that we’ll just take this show out. This has been awesome. I really, really appreciate it. David Greene, I’ll let you actually say the final words and get us out of here.

David: Sounds great. For Ben Lapidus, this is David Greene, for Brandon knows what makes you smile Turner, signing off.

Brandon: Awesome. All right, that was good. That was awesome. That was great.

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In This Episode We Cover:

  • How Ben found real estate after finding success in other business ventures
  • Starting off investing with partners and getting 25% of the deal with none of the risk or capital
  • Why he jumped from SFR to apartments
  • What he learned buying an awful property on his first deal
  • How he put together his first syndication
  • Why he invests in self-storage
  • How he found opportunities while looking for something else
  • How he focuses on his strengths and finds partners to handle his weaknesses
  • How he finds deals in today’s market
  • His criteria for what he needs to see in a market
  • How he mitigates risk when buying self-storage
  • Why he looks for “expansion potential”
  • How he finances his deals
  • The strategy he recommends for newer self-storage buyers 
  • His BRILLIANT tax-saving strategy he uses to save thousands of dollars on seller financing opportunities
  • The one thing he thinks should be taught in school that isn’t
  • How he recommends people improve their people skills and forming connections
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “A lot of top of producers are impatient.” (Tweet This!)
  • “Taxes are such a huge huge piece of your expenses.” (Tweet This!)
  • “You can make a deal work that wouldn’t have worked for a difference in tax rate.” (Tweet This!)

Connect with Ben

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investors and other real estate professionals, who chat about failures, successes, motivations, and lessons learned.

    Andrew Syrios Residential Real Estate Investor from Kansas City, Missouri
    Replied 3 months ago
    Great podcast Ben!
    David Sharp Investor from Tucson, Arizona
    Replied 3 months ago
    Great show, can you elaborate on the mobile storage units that you can put on an empty lot? Would you need to put down pads for the mobile units to be set on? Thanks David
    Taylor White Rental Property Investor from Fort Worth, TX
    Replied 3 months ago
    Ben talked at the beginning about using investor money and having 25% of the deal. For a buy and hold SFR, does that mean that in addition to having 25% equity, you would also be getting 25% of the rent and paying for 25% of the expenses? Or in other words, would this only work if it’s 25% ownership of all costs and revenue?