BiggerPockets Real Estate Podcast

BiggerPockets Podcast 349: Multifamily Flipping and Due Diligence Tips to Save Thousands with Nathan Tabor

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Apartment flipping from one of the best in the biz!

On today’s show, Brandon and David sit down with Nathan Tabor, a well-known multifamily investor who has done 26 multifamily flips in less than 10 years! You will love this informational and oftentimes hilarious episode, where Nathan shares some fantastic advice on how to flip apartments for big returns, what to look for in a deal, and which five incredible pieces of due diligence every investor needs to know.

You’ll also love his straightforward direction regarding questions to ask the county zoning department, great advice for raising money, and some mind-blowing insight into who actually owns fire hydrants!

This show is a very fun listen with tons of talk about dealing with rejection, finding the niche that’s perfect for you, and applying information you already know. Nathan’s story is sure to change your mindset and confidence when it comes to taking action in your life. Make sure you listen today!

Click here to listen on iTunes.

Listen to the Podcast Here

Read the Transcript Here

Brandon: This is the BiggerPockets podcast, show 349. What’s going on everyone, this is Brandon Turner, host of the BiggerPockets podcast, here with another incredible episode of the BiggerPockets podcast with my cohost David Green. What’s up David Green, how you doing?

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David: What’s up, BT? I am doing fantastic, these shows are getting better and better. I’m actually excited to go back and listen to this one even though I just heard it.

Brandon: Yeah, I know. Yeah, I know. There’s so much good stuff in today’s show. Any of you know a guy named Nathan Tabor? Nathan is a guy I met at a conference, he’s a rockstar, talks all about how he started investing as an accident, like he wasn’t even thinking about real estate and bought an 18 unit apartment, his first deal. And then the tragic story of what happened on his second deal. Listen for that. He talks about how having one five minute conversation have saved him from losing like 150 grand. He talks about being a compulsive apartment flipper, which is kind of a cool niche, something you guys will probably like a lot. Why the riches truly are in the niches and in niching down. If you’re brand new to real estate, this might be the most incredible advice you’ve ever heard he gives today. Talks a lot about due diligence and how all the money he’s made or lost really comes down to how well he’s done due diligence. And then finally like he gave me this piece of advice later in the show that literally was like just genius. And I’m actually going to go try to resurrect a deal that had died on me using this piece of advice he gave me in the show. So this would help anybody as well. So make sure you listen for all of that and more today on this episode of the podcast.

Brandon: Before we get to the interview with Nathan, we’ve got a couple quick housekeeping things to do. First of all, let’s get today’s quick tip.

David: Quick tip.

Brandon: Alright, very simple quick tip today. Look, a lot of you guys out there listening to this show are awesome. You know, here’s a couple people who probably aren’t, but most of you are, because if you think about it, if there’s like a million people who listen, what percentage of them are murderers? There’s probably a percentage of you weirdos out there. Anyway, going back to most of you are great people you should be on BiggerPockets, but I know that many of you do not have a BiggerPockets account yet. Guess what. We are having a discount on a free BiggerPockets account. It’s not just free, it’s still free. It’s still a free account, so go make your free account. So you should go to biggerpockets.com/signup. That way we’ll know that you came from to podcast. Go to biggerpockets.com/signup if you have not yet done so and join the community of over 1.4 or 1.5 million real estate investors. I got nothing else to say, David Green you got anything else to say before we get into this thing?

David: Yeah, make sure that this is one you listen to twice and think of who you can send this to so that you can have a conversation about it. I think Nathan breaks down apartment complex investing to such a simplified point that if you have any interest in doing it, you can do it, and you need to get some accountability in your life so that there’s other people asking you, “Hey, have you made any progress on this?”

Brandon: Yeah. Yeah. Yeah, Nathan’s a rockstar. So with that, let’s get to the show.

Brandon: Nathan, welcome to the BiggerPockets Podcast man, good to have you here.

Nathan: Great to be here, thanks for having me on.

Brandon: Yeah, so last time we talked it was at, I believe we were at Joe Fairless’ Best Ever Conference out in Denver and that’s the conference, right? I went to a lot of them.

Nathan: That is.

Brandon: Good. Alright so we were there, you were speaking, I was speaking there, and I just remember being blown away with everything you had to say. At the time I was like, “Man, we got to get this guy on the show,” and it’s now taken this long to get you, because apparently you’re a big deal. And we’re honored to have you. So yeah, I’m excited. Let’s go through your story on how did you get into real estate? Like why real estate investing, what were you doing before and how did you get into it?

Nathan: Yeah, so honestly I got into real estate through a mistake.

Brandon: Okay.

Nathan: Serial entrepreneur, I’ve been involved in used car lots and sending a billion emails, building websites, nutraceutical companies, and I was sitting in my office and a gentleman walked in and said, “Hey, I have an 18 unit apartment complex. I’m literally driving up and down the street trying to find someone to buy it because the bank’s getting ready to take it.”

Brandon: Wow.

Nathan: So I ran the numbers, had never outside of buying my personal home, had not done any real estate. Ran the numbers and I was like, “Well, you know from a numbers side, this looks pretty good.” But I went to five banks that I had banked with before and all of them said no. Because the place was, you know, it had massive deferred maintenance, it had occupancy issues, but I ended up getting into a community bank who did 100% financing and 100% renovation in 2006.

Brandon: Oh wow. So 2006, so this was right before everything went to the toilet.

Nathan: Yes. And so I ended up buying that 18 unit, bought a 12 unit behind it, renovated it, started leasing it out and sold it through LoopNet. In eight and a half months I walked away with $223,000.

Brandon: Wow. That’s not bad for your first deal.

Nathan: And not knowing what I was doing.

Brandon: Was that luck? Was that luck that the market just helped you out there, or do you think you like learned very quickly?

Nathan: Well a little bit of knowing numbers.

Brandon: Yeah.

Nathan: From the business side. Being at the right time, the right place, give me 100% financing and 100% renovation, which doesn’t exist anymore. And then at 2006 the market was still really hot. Basically about where it is now where people were just buying whatever they can get a hold of.

Brandon: Yeah, definitely. It was kind of nuts. So what did you do with that 223 then?

Nathan: So I took the 223 and put it into the second deal that I lost $150,000.

Brandon: Okay.

Nathan: I took my pride riches and my greed goggles and went into the second deal and missed that the zoning was not right. So I was told by three different professionals, “Oh, this is zoned exactly the way it should be.” Went to close on it, went to pull my building permit and it was like, “Oh, you’ve lost your grandfather.” Like how, why? And they said, “Oh well the property divided five years ago and the setback is 40 feet instead of 25 feet.” Because there was another building beside of it. So it took 18, like at the time I didn’t know it took 18 months to unwind all of that.

Brandon: Wow.

Nathan: And 150,000 extra dollars. And I could have avoided all that if I’d have made one five minute phone call to the zoning department instead of trusting the surveyor and the appraiser and the attorney and just said, “Hey, can you send me a letterhead letter saying this property is zoned right?” So I don’t ever buy any other property now without first verifying the zoning.

David: Can you define what setback means in this case?

Nathan: So setback is how far when you build a building or a home, commercial apartments, how far the buildings have to be apart from each other in case one catches fire.

David: So they were too close, and so what did that prohibit from be able to do?

Nathan: So that prohibited it from being grandfathered in, which means I had to bring it up to current code. Which meant that building had to be torn down or I had to remove my building back 15 more feet. I didn’t own the other building.

David: And how did it come to the attention of the zoning department that it was not up to code?

Nathan: When I went to pull it I guess it had been marked in their database that that property was separated. Therefore, since it didn’t meet the 40 foot setback, that it was only 25, it was flagged in their system that no building could be given on the property.

David: Okay. So when I tried to do the right thing by getting permits and then you got burned from it, can’t say you’re the first person that’s had that experience before with dealing with-

Brandon: Which is why I never get a, I’m totally kidding. Yeah. That’s the lesson of today’s episode brought to you by Nathan. Never get permits.

Nathan: Forget all the legal, forget all the, you know, just do it until you get caught.

Brandon: Exactly, that’s, yeah.

David: If there’s one thing Nathan has to say, it’s break the law at all costs. Thank you Nathan, it’s been great having you on here.

Nathan: Great. Appreciate you-

David: I’m going to make a call to my cop buddies who are going to be knocking on your door.

Nathan: Don’t contact me when you get thrown in jail or anything like that.

David: Yeah. Yeah, no. Okay but this is awesome stuff, I mean we’re jumping right into some really good content right away, because as a real estate agent, this comes up all the time. Do I have to get permits? What does it mean that somebody else didn’t get permits? This whole permit thing is very confusing. Someone could write an entire book about it, but they never will because then they’ll be on the hook to get sued when something goes wrong for advice they gave.

Brandon: And nobody would read it.

David: That’s true because it would tell them, yeah, that’s funny. Alright, so if you had called the city zoning department, you would have found out A, this property is not grandfathered in, so we will not release permits for it, and B, if you buy it, we will make you bring it up to code, is that correct?

Nathan: That’s correct, which meant tearing down half of the building or buying the other building and tearing it down, updating the parking spaces, because when the property was built 40 years ago you had to have in North Carolina one parking space per apartment. Now it’s 1.75 or something like that, I mean it’s opened up a whole can of worms of issues that I wasn’t going to have to deal with.

David: Now had that happened and you had found this out, that doesn’t mean you don’t buy it, but it would give you quite a bit of leverage to take to the seller and say, “Hey, you got a problem here.”

Nathan: Right, because than then would have put the pressure on them to you know, solve the problem, either by reducing the price or yes, it would have been their problem and not mine.

David: And that’s why I wanted to bring it up, because I don’t want listeners to hear this and say, “Oh God, I better never buy a house, what if this happens?” If you had just done this step before buying it instead of after, it would have changed the entire negotiation. So for somebody who we’re giving advice to, this is how you should do it. Can you tell us A, how would you have found the number to call, and then B, what questions would you have asked?

Nathan: Well and that’s an excellent point. This is not said to discourage anybody, this is said to encourage people. You just Google your local, it’s normally county, so whatever county you’re in, so I’m in Forsyth County. Forsyth County Zoning Department. Sometimes cities will have their own zoning, but most of the time it’s county related. And then you just call, or you go by, and I don’t ever take anybody’s verbal. I want it in writing. Because they’ll do that for you. They might charge you five bucks, but you want to have it in writing because then if there’s ever an issue, you have something to fall back on. “Hey, you told me on this date that this met this zoning requirement.”

David: So let’s say I’m talking to the receptionist that answers the phone and she tells me, “Oh yeah, yeah, you’re fine,” or whatever the case is, and I say, “Can I have that in writing?” And receptionist [Bob 00:11:30] doesn’t want to do that, or he doesn’t know how to do it. How would you ask for it specifically? Is there a letterhead from the city that you would request the supervisor to send it in, is it just an email?

Nathan: Yeah, if the person answering the phone says, “I’m not sure if we do that,” I always say, “Well may I speak to your supervisor?” Or, “Can I speak to the head of the department?” You’ll finally get to someone who knows how to issue that. But I actually never ran into that problem, I’ve never called a county and someone said, “Oh no, we don’t do that,” or, “I don’t know how to,” it’s normally like, “Oh yes, give me an hour and I’ll get that over to you.”

Brandon: That’s cool. =

David: Come to California, my friend. You will find new levels of apathy [crosstalk 00:12:14]

Nathan: I thought we were not going to talk politics.

Brandon: I was going to say the same thing about Hawaii. Hawaii is like you go to the, I literally went to the county once and they were just like, “Yeah, it’s going to be six months.” Just like, does it really take that long? No, it just takes six months to get you a permit. Like to issue you a permit. I’m like, what do people do? They don’t get permits. Like that’s like the lady at the county’s answers. Yeah. It was basically like nod nod, wink wink, don’t get a permit. Don’t worry. Like how do you work in this kind of world? Like yeah, anyway. Crazy. Hawaii, California.

Nathan: You know this is one of those issues, this is one of those topics that’s really boring, that’s really like oh, do I really need to do that? But I mean in my career of 52 million dollars worth of buying and flipping apartments, this is where you make your money or lose your money.

Brandon: Yeah. That’s a good point.

Nathan: This is where the mistakes are made. These are the things that trip you up that once you buy the property, it’s on you. You know, I went to my attorney and you have title insurance. So I go to my attorney and say, “Oh, I have title insurance.” She’s like, “Great. I need a check for $25,000 to start the lawsuit.” Because title insurance companies, they don’t just pay you once you have a problem. You have to prove that that problem existed and that someone else made a mistake. A surveyor, appraiser, another attorney. You have to prove they made a mistake before they’ll pay.

Brandon: Wow. Yeah.

Nathan: So just because you have title insurance does not mean they’re going to pay you if there’s an issue.

David: So if you don’t mind, let’s break that down a little bit. Explain what is title insurance, who provides it, and what is the procedure for if you feel like it’s been violated?

Nathan: So title insurance is provided by an insurance company, and it’s that you’re buying this property, and it’s free and clear of other deeds, encumbrances, leans, any type of you know, issue that you would come in, the boundaries. So if you’re buying two acres in this is the survey that lays out the two acres, but then you close and it’s only an acre and a half because a surveyor, somebody made a mistake. It’s basically this covers if there’s an issue that you’ve been told everything is okay with this property. But then you close and there’s this encumbrance or there’s this lean out there and they missed it, it’s their responsibility to cover it.

David: Beautiful.

Nathan: After you prove to them that they have to cover it. And that’s the little caveat in this, is it’s not just oh I have this insurance, it’s like if you have a claim at your house or on your car, you have to prove to them that this is covered.

David: So you want to buy a property, and I guess what you’re describing would be, because we come up with this all the time. When I’m representing people as a real estate agent, they have no idea what happens during the title process. But if I’m going to buy your house, Nathan, and you never pay the plumber who did some work on it, he could go get a judgment against you in small claims court for where there’s a lean on your house for $10,000 for the money that you never paid him. So when that house sells, he has to get $10,000 out of that sale. And the company who is like the title company who’s managing that would see this and make sure he gets paid $10,000 so it doesn’t go right into your account.

David: And when you get title insurance you’re having a company scan the public records and other records of who may have put a lean against this property, does the person selling it actually have the right to sell it, are there other owners involved in this that didn’t sign off, that could come back and sue the buyer and say, “Hey, I never agreed to sell you that house. I had a part ownership in it.” And if they make a mistake, you then open a case because they provided you insurance to say, “A mistake was made, I deserve to get paid,” but what you’re saying is that the burden is on you to prove somebody made a mistake. It doesn’t just automatically, your money comes.

Nathan: Well I’ll give you a good example. I had a $100,000 loan that I invested in, and I secured it with a piece of property. The attorney put the information together, filed it, and I didn’t catch that he had like instead of 7001, he put 5001. Well that person that I’d loaned the money went and sold the house. I didn’t get my $100,000, and when I found out the house had sold, I went and filed a claim against the title insurance. Because the attorney had made the mistake. Well I had to get an attorney to go after the title insurance saying, “This was not our mistake. This was the attorney.” So the title insurance company, it cost about 22 grand for my attorney, the title insurance paid me, I paid my attorney, and then the title insurance company went after the attorney who made the clerical error. But when I contacted them, they just didn’t say, “Oh yes, we see the mistake,” which was blatant.

Brandon: Yeah.

Nathan: I had to prove to them that their policy had to cover this issue.

Brandon: Yeah, fascinating. I never even thought that, I always just kind of assumed I guess that like yeah you call the title insurance company and you’re like, “Hey, I got a claim,” and they’re like you know Farmers, they’re like, “Oh no problem buddy,” and they give you hug and they write you a check for your car that you just damaged. Like it’s definitely not that easy, it sounds like.

Nathan: Yeah, I mean I don’t know if it was $2,000, they might just you know, ink it out. But if it’s probably getting into the five or six figures, they’re probably going to want some information on it.

David: So would you have to hire an attorney to represent you in that case, if you weren’t as knowledgeable?

Nathan: Yes because the way people are today in industries like that, it’s even with an insurance company. If you have a fire, I’ve had multiple fires, they come out, and the price they give to you, it’s like you can’t even buy the materials for what they want to pay you. And ends up having to get an attorney who writes that threatening letter, “If you don’t do this, this, and this, we’re going to have to take you to court.”

David: This is really good information, and we dove into some really good stuff right away, but I don’t think we actually asked you what you’re doing today, what you own, can you kind of give us a big picture story of you know, we know how you bought your first property, but what do you own now, what does your portfolio look like?

Nathan: Yeah. So I’m a compulsive flipper. When I buy real estate, my intent is to sell. Two years ago I had seven complexes, 399 units. Today I only have one 12 unit and it’s in a partnership with a nonprofit that does transitional housing. So I’m also a commercial broker. So when the economy goes the way it’s going right, I sell everything I have. When the economy goes back down, I start buying, renovating, and I’ll sell, but normally I hold until that economy starts to go back up a little bit, and then I sell.

Brandon: Yeah. So you’re flipping apartment complexes the same way people flip houses, but you’re trying to time the market as much as possible to make sure you’re out and in at the right times. Does that sound like a good summary?

Nathan: Exactly. You know here in North Carolina, class C property, 40, 50. 60 units normally would sell around 38 to 40,000 door on a normal economy. They’re selling for 55 and $60,000 a door right now.

Brandon: Yeah.

Nathan: To outside investors, so it’s crazy. But when the economy goes down, people can’t sustain that amount there and they’ll have to sell those complexes. I buy, my average cost per door is 15 grand with six to 10 grand per unit to renovate, so I’m in them 33, 34, and then I’m selling at 43 to 45 a door.

David: Wow.

Brandon: Yeah, so go ahead, David.

David: Do you still own anything now or have you sold everything?

Nathan: I only have one 12 unit complex that I own right now.

David: So since that first deal you bought where you made 220 and then sold it or lost money on the next deal, how many have you flipped?

Nathan: I’ve done 26 complexes since 2006. So 52 million dollars worth of property I’ve bought and sold.

David: Awesome. Now was your plan the whole time to buy them, turn them around, and sell them, or was your plan to buy them and hold them and then just kind of see what the economy did and make your decision from there?

Nathan: Well you know, the way I got into real estate kind of a mistake-wise. I just got into it on the side of flipping. I bought that one and renovated and sold it. And I had other businesses that was able to, I had to absorb the tax side of it. But once I got into the flipping, I realized there’s a big market out there of people who want to have real estate, multi-family, but they don’t know how to do renovations, they don’t know how to do stabilization, but they’re willing to pay someone to do that. So I found my niche.

Brandon: Interesting. How did that work or how did you set that up?

Nathan: You know once you get out there and I’ve seen you’ve been doing a lot of trailer parks, once you start getting into a niche and people know, well brokers only make money one way. They make money when properties close.

Brandon: Yeah.

Nathan: So if you’re having a hard time finding properties, you need to show a broker that you have the ability to close. Show them you have bank finance, have investors with money in the bank. So once I became known as, “Hey, this guy can not only is he looking for deals, but he can close deals,” then the deals start flowing in. People start calling, “Hey I got this pocket listing. This guy wants to close in 30 days or less. What can you offer them?” And that’s the situation you want to be in as an investor is where people are calling you saying, “Hey, I need to get this off my plate, what can you do for me?” And so that’s where I’ve spent a lot of time of relationships, building it with brokers, with inspectors, with surveyors, people who fix HVAC. Hey, if you hear anybody say, “I’m tired of this property, I’m about to pull my hair out, I want out,” give them my card. I’ve had people call me up and say, “I’m interested in selling,” I go meet with them and they’re like, “Well I’ll wait,” and I buy the property three years later.

Brandon: Eventually everyone’s motivation changes.

Nathan: Right, situations change.

David: Well let’s say that we want to put ourselves in the situation to do what you just did. What are some things that somebody needs to line up so that they can show, I can close on this deal?

Nathan: Yeah, so the number one thing on that is defining what your niche is. Because if you’re trying to find something, you have to describe that. And I equate it to walking into Baskin-Robbins and ice cream. If you walk in the door and say, “Hey, can I have a scoop of ice cream?” You just created about 50 different questions. What flavor? How many scoops? Do you want it in a waffle bowl, a cone, a cup, small medium, you’ve created so, but if you walk in and say, “Hey, I want two scoops of cookies and cream in a waffle bowl,” you get what you asked for. So the number one thing is to find what that niche is.

Nathan: Second is then if you don’t have money, so you’re not, and I didn’t grow up with money. We grew up like the average American family, probably even below that. So if you don’t have money, then you got to figure out how are you going to get it? Bank financing, private investors, hard money. Most people today, 80 to 85% statistically of people who are involved in real estate, probably listening to this, they don’t have a business plan, they don’t have investor packet, so their idea, they go up to people, they go up to their dad, their mom, a family friend, an investor, somebody at the gym and say, “Hey, do you want to get involved with me? I’m going to invest in real estate.” You know what that person is thinking that just heard that? Like this person, “Yeah oh yeah I’ll get involved with you,” and then they never do. But if you go up to somebody and you hand them a page or two page and say, “Hey, I want to invest in the South side of town and I’m looking for deals between 400 and $600,000 and I’m looking for things with high deferred maintenance and high deferred occupancy, or deferred occupancy issues, and I need to raise $100,000.” Now you’ve given them something to think about.

Brandon: Yeah.

David: Well I think it takes some faith to be able to operate that way, because most of the time, especially inexperienced people, or what we call newbies, feel like I if I niche down too hard, I’ll miss an opportunity. Like a great deal could have come along and I missed it because it wasn’t exactly what you described, you know? I do want pralines and cream, but man I would have loved a really good scoop of cherry flavor, and if I said this is the only one I want, I’ll miss it. And what you’re saying is what I hear every experienced person say, is you have to change that thinking to understand the more specific you can get, the better your odds of success. Because you’re planting an idea in somebody else’s head to kind of make them an employee of yours. They’re now working on your behalf to find what you want, and if you don’t make it simple for that person, you’re not going to get the result.

Nathan: Well David, you’re a broker. Who do you call when you find a deal?

David: The person that I know is actually going to buy it.

Nathan: And you know that because they’ve told you who they are and what they do, and they’ve shown you the ability to close. I tell people if you’re going to write an offer, especially if you’re going to undercut people, I’ve offered a million dollars for a property that was listed at two million. And people were like, “You’re crazy.” I was like, “Yes,” but I put together the time track, but then I put together a bank statement, I put together a commitment letter from the bank, and I put together a reason why I was cutting their price by a million. And this is when fax machines still were used. So this was about 10 years ago. 15 minutes, I faxed the offer over, about 30 pages of stuff. 15 minutes later, the fax machine rings, and it’s the offer signed. No counter.

Brandon: Wow.

Nathan: They accepted it because I showed them I could close and then I told them why I had reduced the price. And most people, they get in that mindset, and I get there too, “Well if I narrow my specs down to this, I’m going to miss deals.” But if you don’t narrow it down then you don’t ever get anything done. You don’t ever get investors involved with you, don’t get banks involved with you, you don’t get brokers involved with you, and then you just sit there and spin your wheels.

Brandon: Yeah.

David: You know I see this in other parts of life too, and I’m only saying this because I think it will make it easier for someone who doubts to believe it. If your friend came to you and said, “Hey, can you please set me up with someone? I’m tired of being single. I want to find somebody.” And you knew, if I bring this person the wrong girl or the wrong guy, they’re going to blame me for it, right? And it’s going to get messy. So there’s a lot at stake. Very similar to I have a listing and I’m trying to figure out who’s going to buy it. If that buyer backs out, the seller is mad at me. They’re blaming me for why I said that you should go with this person.

David: The first thing that someone will do is they’ll start saying, “What kind of girl or guy do you want? How tall should they be, what do they do for work, what do they like, what are their interests, what are their believe systems? You immediately start niching down as much as you can to make sure you don’t set them up with the wrong person because your reputation is at stake. And it works just like that in real estate. And if we can kind of see the jump between those two pieces, it makes it a lot easier to communicate your needs to the people that you’re meeting.

Nathan: And that’s an excellent point because people do that and if you’re going to go buy a car, normally you go saying I want this color, I got this much money, here’s the other thing that really defines out is money. I can tell you real quick what your niche should be based on one question. How much money do you have or how much money can you raise?

Brandon: Yeah.

Nathan: Because in commercial real estate, it’s 20 to 30% down. So you want to do a $500,000 deal, you better have $100,000 or raise $100,000. And that defines what you can and can’t do. And so we define these things out in our lives of who we want to date, or what kind of car we’re going to drive, or where we’re going to live, you know, Brandon you just moved out into Hawaii, you looked at and said, “This is the area, this is how close I want to be to this or this is what,” and then ultimately it probably came down to, “Hey, this is what my budget can afford.” Because it comes down to the money. But real estate investors are one of the worst people that I see that say, “Hey, what type of real estate do you do?” “Well I’m not really sure yet, I’m just trying to look for a deal.”

Brandon: Yeah, which is crazy to me.

Nathan: Yeah, how long have you been looking for a deal? I met a guy the other day, he’s paid $85,000 in education over the last ten years. I said, “Well how many deals you done?” He said, “None.”

Brandon: Yeah. That’s crazy. But it’s true. And I think the idea of niching down, this applies to anybody, whether you’re commercial, residential, or trying to buy your very first duplex or a house hack or a first rental, you want to flip one house, it doesn’t matter. Like getting specific with your criteria, I talk about this on BiggerPockets webinars all the time, is like getting real specific with exactly what you want. Not only does it help you actually stand out to the brokers because now they’re like, “Oh, this guy clearly knows that he’s talking about because he’s not saying, ‘I’m looking for a deal,’ but ‘I’m looking for a duplex in the South side of town somewhere between 80 and $135,000. And here’s my prequalification.'”

Brandon: Not only does that make you look good, but when you niche down, you become an expert much easier at that thing. I mean try to be good at everything. You’re going to be horrible at it. But if you’re only focused on duplexes in the South side between 80 and 135,000, that’s not hard to become an expert at that. You can find every duplex that sold in the last year or year or two, you can gon walk a bunch of duplexes, you can walk the neighborhoods because you know exactly what the neighborhood is. So again, not only are you looking better to other people, but you are better at your job, so then you can recognize hidden opportunities that nobody else does because everyone else is a generalist.

Brandon: So like I mean if I’m going to into a town, like I’m to go into Kansas City and go try to compete right now, like I don’t know anything about Kansas City, so like, but if I was like, “I’m going to buy in this neighborhood of Kansas City,” and I fly in there and I learn everything I can, I mean that’s how you become an expert at a certain thing is by niching. And later on, expand, fine. But niche down first.

Nathan: Well that’s the brilliant point on this. You don’t have to stay in that niche. You can get out of that niche at some point, but if you’re trying to get started or you’re trying to grow, you’ve got one or two or three deals and you’re trying to grow, then grow that niche until the point that you can get to the point of changing that niche and moving to the next level or sideways or whatever. But until you become the master of that once niche, you’re not going to be the master of anything.

Brandon: Yeah.

David: That’s so good. I mean that’s exactly what people, that’s how you satisfy the fear of missing out with niching down, is just start with a niche and expand from there so you don’t miss out on opportunity. Don’t start general and then as opportunities come your way, try to immediately become the expert in that whatever deal that was. So to speak-

Nathan: But then put it in writing. And this is the number one thing after that. And Brandon and David, y’all probably run into this as well, you meet people who they have their niche, they’re really passionate about it, but they don’t have any plan. They don’t have anything in writing. And there’s something about it, I don’t know what it is in our society or the mindset, that is somebody, even if they have one page, it’s like, “Wow, they took the time to put this together.”

David: Yeah, Brandon actually had something really good to say about that. His life’s changed in the last couple months because of that very concept. Do you mind sharing that, Brandon? Your vivid vision.

Brandon: Oh yeah, my vision thing? Yeah, sure. I mean basically what I did is I read this book called The Vivid Vision by Cameron Herold, and it really talks about, I mentioned this a few weeks ago on the podcast as well back when we talked about the launch of the Intention Journal from BiggerPockets, but I mentioned how like this vision, this idea of vision is not so much like where like, it’s not like I will earn $5,000 per month by this date. Like that’s a goal, that’s fine to have a goal, but a vision is like, or you could look at it as a business plan, whatever you want to call it.

Brandon: Like I basically took a business plan and I made it into a newspaper article, and this is what it looks like, for those who are watching the YouTube video. It’s on my wall. How do I angle this upward? There it is. I cannot angle this. Anyway, I basically made it into a, I took a business plan and I turned it into something that it was fun to read. So it’s like a newspaper article. But it’s essentially what it is, it’s a business plan. This is what we’re buying, this is how we’re going to buy it, this is where we’re going to look for deals, this is what our team looks like, this is what the media things about us, this is what, like all these things because now I have a very clear, I have clarity on where I’m headed to. And so is that kind of, Nathan, what you’re getting at, I mean like having, it doesn’t have to be a newspaper article like I wrote, but just having-

Nathan: Well how has that changed your life and your business.

Brandon: Everything. Yeah, everything. I mean like beforehand, like I literally like, I had to take my own advice. I mean for a year, as I tell newbies on BiggerPockets all the time, “Hey, get focused, get specific, it doesn’t really matter what you choose.” But then for a while I was kind of like, “Well I kind of want to do this, and this would be fun,” and every podcast episode I listen to somebody and like, I mean yeah I was buying some deals, but I wasn’t, I was open to whatever. I was a generalist. When I made that, like it takes so much of the emotion out of like, “Oh, but I really want to do self storage.” Man I love self storage, I love it. I would love to do it. No, it’s not my niche. My niche is mobile home parks. That’s what I’m doing. And I’m going to become the best mobile home park investor in America because that’s all I’m doing.

Brandon: And so like having that clarity, but then here’s the thing I find most fascinating is how when you have that clarity and that business plan, whether it’s a creative on like this or whether it’s just a nice pamphlet, it doesn’t matter. Once you have that clarity, everybody else suddenly around you gets motivated as well. So everybody is like, “Oh man, I’m on board with that because this guy knows what he’s doing.” There’s a certain energy that comes with it. So yeah, it’s been huge for my business.

Nathan: Have you seen the movie Up?

Brandon: I have not seen Up.

Nathan: The little animated movie.

Brandon: It looks good, [Rosie 00:34:17] hasn’t gotten quite to that age yet.

Nathan: That age. What you’re describing there, and the same thing happened in my life, when I wasn’t organized, when I didn’t know what I was doing, it was kind of like that movie Up where the dog’s talking, “Squirrel!”

Brandon: Yeah.

Nathan: And then here comes a deal, oh I can make money here. And oh I can make money here. And you chase so many different things, but you never get anything done. But you work 80, 70, 80, 90 hours a week, you’re tired, everybody around is, your family, your friends are aggravated with you because you’re always on your phone or your computer, but you’re never getting anything done.

Brandon: Yeah.

Nathan: But then when you start niching down, it’s like you find this passion, you find your drive, and then the people who come along, whether you know them or not, they’re like, “Oh hey. I know Brandon. He does trailer parks. I saw this deal. I can send it to Brandon.”

Brandon: Yeah.

Nathan: You become known as that person. You can change it eventually. But it redefines you, who you are, and then it helps define you out to everyone else so they know this is the type of real estate he or she does.

Brandon: Yeah. On that note, I always tell people, using the analogy of a job. If you go to somebody and say, “I’m looking for a job,” most people are like, “Good for you, I’m proud of you,’ and that’s about where they leave it. But if you go to somebody and say, “Hey, I’m looking for a job at a mid-size company between 100 and 300 employees, somewhere in the greater Detroit area that is a CPA related job, I’m a trained CPA,” now all of a sudden everybody, what do they do? They start thinking. “Do I know anybody that would fit that role, do I know anybody that would help them?” Like when you get specific, people want to help you achieve your goals because they’re so specific. And so the same thing, like you said, know I’m the mobile home park guy. I get a mobile home park lead, like multiple leads every single day from people just sending it to me because they know that that’s my thing.

Nathan: So the question is why do people not do it?

Brandon: That’s a good question. I don’t know, why do you think?

Nathan: I mean I don’t know, maybe the fear or-

Brandon: Fear of missing out, yeah.

Nathan: Missing out or the fear or actually doing it. Like oh I want to do the this, I want to go to the gym and work out, but then when it comes time to do it, it’s like, “Oh no, I’ll do that later.”

Brandon: Yeah. Okay, so what’s your advice for somebody right now who’s listening to this and they’re in that spot. They’re saying, “You know what, I’ve been listening to these podcasts now for months, maybe years. I’ve dabbled maybe in a couple things like maybe tried to [inaudible 00:36:38]some deals.” What’s your advice to them, like talking directly to them, like what should they do right now?

Nathan: I mean immediately stop all the meetings you’re going to, all the networking, everything for two or three days. And sit down, and then within less than an hour, and if you don’t have a template, Google business plan template, investor packet template. There’s free things out there and there’s courses you can buy. But find something within a day or two or three, write down what that is. Commit to do that. I’m going to be in mobile home, I’m going to do raw land, I’m going to flip single family, I’m going to do multi, I’m going to do this. And until you get your first deal done, you don’t change that. You stay on that course until you get it done.

Brandon: Yeah. That’s really-

David: You sound exactly like Brandon right now. I just feel like, there’s just something about being super tall that just makes you guys think this way.

Nathan: Maybe it’s because we’re really good looking, is that what you’re-

Brandon: [crosstalk 00:37:41]the handsome factor. Clearly the handsome factor.

Nathan: I can’t grow a beard though. I’m not-

David: Yeah, you look like someone took an app and got rid of Brandon’s beard and gave him a normal, respectable haircut, not this [inaudible 00:37:53]spike that he has.

Nathan: I did get my hair, I got my hair cut today just for this show.

David: Just for the show. Well that’s awesome, Brandon can’t say the same.

Brandon: I was going to get a haircut later today, alright, calm down.

David: I was going to get it, yes.

Brandon: I’m going to get it tomorrow maybe.

David: Do what Nathan just said. Don’t do anything until you get your hair cut. Sit down, mediate, whatever it takes.

Brandon: Hold on.

Nathan: And don’t pull permits.

Brandon: And then don’t pull permits. That’s clearly what Nathan said. No, I want to add one more thing here. So this is about, I’m a big believer, and again I’ve said this before but I’ll say it again now. I think one of the reasons people have such indecision on like they haven’t made up their mind to niche down, they haven’t decided this is what they’re going to do. Yeah, I think it’s fear of missing out, but I also think it’s because everyone is looking for this mythical like, this is my destiny, my purpose, I haven’t discovered it yet.

Brandon: It’s there, they’re out at a beach with like their like, you know like we live in Hawaii here, there’s all these people going through with their little metal detectors, right, and they’re going back and forth on the beach trying to find this hidden thing that’s there somewhere. And it’s not there. I mean like it’s just not there for most people. For most people, like ask yourself the question, that’s what I advise anyway, I’d love to know your thoughts, Nathan, but I say stop asking what was already buried on that beach that I’m trying to uncover, and change the question to what would be awesome? What would be cool? What would be exciting? Like and then instead of thinking it as a beach you’re trying to find buried sand, think of it as a canvas that you get to paint. what are you going to paint?

Nathan: I mean here’s my thought. It is a choice. It’s a mental mindset. I’ve got a little plaque in my other office that says “The answer is always no until you ask.” And the reason I married a woman who is way better than I am and better looking and all that is because I asked her out. And had I not asked her out, she would have never said no or yes, because I wouldn’t have asked her. And I think people are afraid of being told no. And if you’re afraid of being told no, real estate is not the place to be.

Brandon: Yeah.

Nathan: Because I’ve been told no by investors, I’ve been told no on offers, I mean I correct go down through a whole list, but I don’t count my no’s. You know what I count? My yes’s. Because you can’t raise money without being told no. And most of the time it’s not even about you. Most of the people I’ve asked to invest with me that said no, do you know what I found out after I asked the right questions? It wasn’t a no to me. It was a no because they didn’t like the risk in class C multi-family. They wanted something secure. They wanted something that was right on class A, deposit my money, and so find people who had the same goals that I did as investors. They liked the higher return, but it came with a higher risk as well. So I think most people are afraid of being told no. They don’t want to be confronted with failure.

Brandon: That’s so true. Two funny stories about that. I made the comment a few months ago on the podcast that I asked my wife out four times before she finally agreed to go out with me. That’s actually slightly misleading. She had to remind me of this. The first time I asked her out-

Nathan: 40 times you said? Okay.

Brandon: I was too much of a wimp to officially ask her out because I didn’t want to face rejection. So as she reminded me, my asking was, “I really like you a lot. I really like hanging out with you. What do you think?” Or “Hey-“

Nathan: Will you be my friend?

Brandon: Yeah, “We should hang out more. You know I really like being with you. And I kind of have a crush on you.” But like I never, and it wasn’t until like the last time I came to her, and she had to be like, “Brandon, just freaking ask me out, like stop being a little girl and ask me out.” And that’s how it, like, oh okay well then I asked her out. So there’s that. Like I think I don’t like being rejected. I always say that real estate is like high school prom. It’s just rejection left and right, and you have to just accept that. It’s a numbers game.

Brandon: And then secondly, I got rejected, about a year and a half ago I asked a couple of people if they would invest in a deal with me. I was trying to buy a mobile home park and they said no. And these were like friends of mine, and I was like, they’re probably listening right now, but I was like fairly crushed. Because I’m a high eye personality, I like people liking me, and I took that as they don’t like me. And it really hurt. And I was like, “I don’t want to ever raise money again.” And so for the next year I didn’t raise money for anything at all. I didn’t go because I was like, deep down I felt like I don’t like to be rejected, I hate that feeling of rejection, and I told myself this lie that I’m not going to raise money. Well as it turns out, neither of these guys had any money at the time. They weren’t saying no to me, they didn’t have money.

Brandon: And now recently I started this fund that’s now, should be closed by the time we launch this, but so this fund, and I raised like, the entire fund was five million dollars, I raised all five million dollars with like no work whatsoever. And so anyway, like you said, they’re not always saying no to you, it might just be another situation.

Nathan: The reason you raised that money is one you asked, and two you had a niche.

Brandon: Yeah.

Nathan: You raised that money for a specific type of investing. So the people who didn’t invest, it wasn’t about you, it was that they didn’t like that type of investing.

Brandon: Yeah.

Nathan: That’s not personal. That’s business.

Brandon: That’s so good.

David: The lesson-

Nathan: Well I think-

David: Oh go ahead Nathan.

Nathan: Well you know people who have made money and have money are normally really smart about their money. They’re not just going to give it to you. They want to know what you’re going to do with it, which is the written plan.

David: Yeah and compare that to Brandon’s story of asking out [Heather 00:43:20]. She was, it wasn’t money we’re talking about, but she was good with herself. She knew she was in demand, she knew she could date anybody that she wanted, right? Like Heather lived her life the right way and had a lot of options could be picky about who she dated. And I think the lesson to pull out of this is when you’re going for a worthy goal, like dating a girl like Heather, or buying a really good deal, or raising money, if you try to hedge your bet against the rejection and you become wishy washy and watered down, I are almost guaranteeing that’s what you will get. That’s why you had to ask her out four times and she kept saying no because you didn’t just say, “I like you, I want to go out with you, what will it take for you to say yes?” Had you done that, Heather probably would have been like, “Okay, I see something in him I like, I like that wholeness, I like that directness. Maybe I wasn’t thinking about him before, but now he’s on my radar.” And even if she had said no and you felt rejection, the second time you probably would have got it.

David: How many of us are doing the same thing, “I want to get in to real estate but I don’t want to lose money, I don’t want to make a mistake, I don’t want to fail. I want to get that promotion at work,” or whatever the case is, but we’re hedging our bet and so we’re getting in our own way. Nathan, go ahead.

Nathan: Well and you don’t have the confidence. Brandon finally had to have the confidence to go up, no I mean you guys, that’s nothing bad, I’m not saying that in a bad, same way with, I met my wife in DC and the second time we met, I called my dad and I was like, “You know, I think I just met my wife.” And he’s like, “Well,” and nine months later we were married.

David: That’s awesome.

Nathan: But I had to have the confidence to go to her and ask. And the same thing on asking for money or submitting an offer, you’ve got to have a certain, whether internally you have it or not, but externally is confidence, and that’s putting things in writing and going and doing it and executing it. Brandon, you could have been like, “Hey, I want to ask my wife out,” but until you did it, she can’t say yes. And I think that’s where most people are stuck is that they want to do it, but they just, they haven’t, and they know, they’ve listened to BiggerPockets and they’ve taken courses, they’ve been to conferences, they know what they should be doing but they’re not.

Nathan: And this is where I really break it down in my life. There’s knowledge and there’s wisdom. Knowledge is knowing how to do something. Wisdom is applying said knowledge. So if you know you should be eating right and you know yeah should be exercising and you know yeah should be taking care of your health, but you don’t, you’re not applying said knowledge. And the same thing happens in real estate. You know there’s certain things you should be doing and how you should be doing it, but you’re not, therefore you’re not going to get the results that you want.

Brandon: That’s so true. Really, really good stuff, Nathan. So I want to shift gears here a little bit, and we could talk about this stuff forever, but I want to get to a little bit of, you mentioned apartment flipping. And I want to talk about like how does somebody flip an apartment complex? So I want to go through some of the nitty gritty. Imagine I’ve done some real estate, maybe I bought single families and some smalls, but I’m like, “You know, I want to flip an apartment complex. I want to buy something with the plan of making it worth more and then resell it.” What are my steps, what do I got to do?

Nathan: Go to the gym a lot, you’ve got to get those muscles to get-

Brandon: Alright.

Nathan: Oh no, okay. On the flipping side, so the first myth or thought is immediately in people’s minds when you say apartments, they think multimillion dollars. Well there’s apartments out there that are four units and six units, seven, eight, nine. There are apartment deals out there for a couple hundred thousand dollars. I’ve seen apartment deals be at the same price as a single family home. So the first is just to look at it from a realistic side. Just because it’s apartment doesn’t mean that you need million of dollars. That’s the first thing in this.

Nathan: The second is is kind of knowing the system and understanding like looking into. Most people get scared off on commercial real estate because they don’t know what a cap rate is. So they immediately like, “Oh.” Cap rate is very simple. It’s the comps, you know if you’re doing single family, I tell people if you look at single family comps and they’re all $150,000 in the area, the cap rate is the same. If that type of apartment is selling for 8% cap rate, then you just run the numbers. But the cap rate is an arbitrary number. That cap rate is negotiated between the seller and the buyer. It’s not preset, it’s what the seller is asking but what the buyer is willing to pay and somewhere in there they come together. So don’t let the money, the amount of money you need or cap rates scare you off from. And then it’s really just putting that plan together and saying, “Okay, this is what I’m going to do.”

Nathan: I think personally, and professionally, that there’s less risk in doing multi-family than there is single family, based on on thing. If you have a $250,000 home and you’re renting it for $1,500 a month, how many sources of income do you have? One.

Brandon: One, yeah.

Nathan: If you have a four unit complex that you paid $50,000 a door for and you’re renting each of them for $600 a month, you have four sources of income and you’re making 60%, 70% more on this $250,000 investment than you are on this $250,000 investment. I don’t know why people build, I mean in my opinion, I don’t know why people build portfolios of 20, 25, 30 single family homes that are rentals that are 30 miles away from each other. Why not just go buy a 25 or 30 unit apartment complex.

Brandon: Good question. David, what do you think? You buy, you have a lot of single families. What do you think?

David: Well the answer to why somebody would do that is because it’s easier to find a single family that’s a good deal than it is to find a big multi-family, it just takes more time to find a multi-family deal right now-

Brandon: More that 30 single families?

David: Yeah, well more than one single family. But what happens is because they’re easier, I just end up scooping those up as they come along. It doesn’t take a concentrated effort like it does to go, like I’m learning to analyze multi-family and look for those deals right now, it’s much more labor intensive than just, “Hey David, here’s a good deal, I already know how to buy it, I can analyze it in three minutes and I can have an offer.”

David: But what happens, is I think the point Nathan’s making is you end up with the mess I have, which is a herd of 35 cats that I’m trying to keep moving in this direction, and I’ve got to hire all these people to help me put out all the fires that pop up and collect all the money and honestly I’ve mentioned this before, but maybe never on the podcast. What will make me sell this portfolio is nothing logical, it is the fact that trying to keep track of 35 different mortgages, property taxes, HOA fees, utility bills, going through nine different bank accounts and the complex spider web that that creates is just emotionally draining to the point it’s not worth it for the wealth, and I’ll sell them all and I’ll buy the apartment complex.

David: So that’s a great point, Nathan. I do think the multi-family is incredibly more efficient, but it’s a much bigger investment on the front end to learn that asset class, to develop relationships with brokers, you’re going to do a lot of work in the beginning before you get that payoff.

Nathan: Yeah, so I mean like with you, you’re already in that, so it’s kind of like, “Okay, well I keep it,” but if somebody is starting out and they don’t have any rental houses and they don’t have any multi-family, I’d at least look to the duplex. Get the two unit.

Brandon: Yeah. I teach this thing called the stack a lot, where basically saying if you start small, like start with a single family house or duplex, just don’t stay there forever. How do you go outside your comfort zone? Go with the fourplex next, and then maybe an eight unit, then a 20 unit, then a 50 unit, like scale up to where you’re outside your comfort zone but you’re not in like danger zone. You’re not going from one to a million units, but scale up. Get outside your comfort zone a little bit.

Nathan: And then in that, you know, whether you’re doing single family or multi-family is knowing the terminology, knowing the systems, and most people don’t get to know that because they’re like, “Oh, I’ve never done that, therefore I can’t do it because I don’t know.” Well I mean if that’s the case then you’re never going to do single family because you don’t know everything until you start doing it. I still don’t know everything about multi-family. I still have things that come up, but that’s why you ask people, that’s why you listen to BiggerPockets and participate in the forums and buy books and do that because you’re always learning. So don’t let, “Oh I don’t know,” keep you out of either single family or multi-family.

David: Okay Nathan, so you sold me. I now want to be a multi-family investor.

Nathan: Alright.

David: And I am making you my coach, you’re going to teach me what to do. We’re assuming the first thing you told me is, “David, you’ve got to learn it. You’ve got to learn how it’s valued, you have to understand cap rate, you have to understand NOI and the relationship between the two,” what’s the next step you would give me and then the corresponding steps after that to get into flipping apartments?

Nathan: So then the next is your niche. So I got this much money or I can raise this much and this is the area I’m interested in. Then you just start reaching out to commercial brokers, and if you can add a commitment letter from the bank or you can show them that you’re serious about this to get that first deal done is really going to help that, speed that process along.

Nathan: The next is just identifying properties too. Just like you’re doing single family, half the properties I’ve found that I have bought, I’ve just been driving around in neighborhoods that I want to buy in and see an apartment complex and write the person a handwritten note or call and them and say, “Hey, if you’re ever interested in selling, here’s my information.”

Brandon: Yeah.

Nathan: The next is than knowing the due diligence side. And whether you’re in single family or multi-family, due diligence is more than just looking at some paperwork. It’s, especially in the multi-family side, when you’re doing, where you’re renovating four units or eight units or 12 or the most I’ve ever done at one time is 121, you’re dealing with a lot of toilets and a lot of flooring and window, there’s a whole other aspect that comes into play there.

Brandon: I’d like to actually go there. Let’s talk due diligence for a little bit. This is something that when I saw you speak in Denver, that I just was blown away by all the different things you covered in knowing due diligence. So like, first of all for those who don’t know, let’s start at the very beginning. What is due diligence? Like why is this so important and then what are some of the items that people should be aware of?

Nathan: Yeah, so due diligence is the time period you go under contract. You’ve put your earnest money down and you have a time period. Normally 30 days, it could be 15, it could be 60, that you have to inspect the property, look through any paperwork, check the zoning, and if you decide not to move forward with the property, you cancel your contract and you get your earnest money back. So this is your time to kind of peek underneath the hood and see is this something I want to move forward with?

Brandon: And so some of the obviously stuff is let’s say I’m buying a single family house or an apartment, even. I’m going to get an inspection. Okay, I have an inspection, you then see I’m going to get inspected, that’s a good idea. What else is there?

Nathan: Yeah, so you know, and that, you know, the zoning, the tax value, when’s the last time an assessment was done on the property? You’re going to look at any of the insurance costs, your traditional, what’s the roof look like, what does the windows look like, things that, what’s the parking lot look like, what school zone is it located in? What can you rent the property for or what can you sell it for? So then you get into one of these, well if I’m buying this for 100,000, how much renovation does it need and what can I sell it for? Can you make any money? And if you miss any of those numbers, the only thing that is cut is your profit. So if you don’t run your numbers, I always tell people be very conservative on your income. Like go as conservative as you can and go as liberal on your expenses so you’ve got a really tight deal, so if you’re wrong on something, you have plenty of room to adjust that. But a lot of investors, they go in and they’re very liberal on their income and very conservative on their expenses, and then they wonder why they lose money on the deal.

Brandon: Yeah. It’s because like their emotion gets involved and they want to close this deal and so they say, “You know, I know average rent is only 500, but I bet we can get 650. I’m sure we can.”

Nathan: Well then you better go to apartments.com or forrent.com or one of those and see what everything is renting for in that area. Because whatever it’s renting for, you might get 25 dollars or 50 dollars more, but you’re not going to add 30 or 40%. But see that’s the same thing with comps with single family. If houses have sold for $150,000, what is your house going to sell for? Close to $150,000. It doesn’t matter what you do to it, it doesn’t matter if you put marble flooring in and all types of great solid wood cabinets, your house is only going to sell for what it’s worth in that area.

Nathan: So I have five main things I look at in due diligence. There’s a lot more, but do everything in writing. Between brokers, between buyer seller, anything that you’re doing, if you have it in, just it’s in verbal, expect problems.

Brandon: Yeah.

Nathan: Second, be organized. Don’t always have to be looking for, “Oh where’s that report or where’s that file?” Whether you’re cloud based or you’ve got your file cabinet, make sure everything is in a nice, neat order so you don’t have to spend time looking for everything. You know where it is. That’s a really important part of the due diligence. I hate to say this this way kind of on the third one is whether I like them or not, I don’t ever trust a seller.

Brandon: Yeah.

Nathan: It’s nothing personal. It’s business. But I assume they’re lying about most everything, if not everything they’ve given me. I bought an apartment complex before where the rent roll said $28,000 a month, and I bought it and collected $7,500 the next month.

Brandon: Wow.

Nathan: Anybody listening to this, rent rolls are useless. Everybody talks about, “Oh, get certified rent rolls.” A rent roll is only a regurgitation of what’s on the lease. It has no bearing on does that person actually pay that amount. Rent roll simply says that person should be paying that amount.

Brandon: Yeah.

Nathan: And bank statements. You got to get those bank statements to verify that. Run your own numbers. I don’t trust other people’s numbers. I want to put my own expense and income sheet together, I want to do my own evaluations on my numbers, insurance numbers you can get caught on because if somebody’s deductible is $25,000 but your bank requires $5,000, guess what happens to your insurance numbers?

Brandon: Yeah. It’s going to go up crazy different.

Nathan: You’re going to go crazy. It’s going to be different. So you got to run your own numbers in it.

Brandon: Yeah, one of the, and we’ll go back to your list here in a second, but one of the mobile home parks that I’m in contract right now for, yeah. Their number was like $4,300 for insurance. The cheapest we can get anybody is like 11 grand. That’s a massive difference in insurance, but had we just accepted their number, now it makes me wonder, are they really getting 4,300 or is that just not true? I don’t know, but I know I can’t get 4,300 now so it adjusts our numbers because of that.

Nathan: So if you’d missed that $7,000 mistake, at a 10% cap rate, you decrease the value of your property $70,000.

Brandon: Yeah. Yeah, it’s crazy.

Nathan: So when you’re buying, and in that due diligence period, then that’s one of those you’ve got to go to the seller and say, “Okay look, yours is 4,300, mine is 11 thousand, so you’re either going to have to buy it what it is or adjust the number.”

Brandon: Yeah.

Nathan: And ultimately the last is verify, verify, and verify. And this is the question I love. So I ask both of you. Who owns fire hydrants?

David: I would guess the city.

Brandon: So I wouldn’t have thought to ask this, except for I heard you ask this question in Denver, so when I was-

Nathan: You’re cut out of this then.

Brandon: Yeah, I will cut out of it, but I heard you-

David: Only one of us here is honest, thank you Brandon.

Brandon: This saved me a ton of time. So anyway, a ton of money, go ahead.

Nathan: So the assumption is, and due diligence is you got to lay aside the assumptions. I assumed that, and most 99.9% of the people I’ve ever asked assume that fire hydrants are owned by a city, a town, a municipality, somebody other, but in single family or multi-family, fire hydrants can be owned by the property owner. And you have to look at the deed, you have to look at the HOA, you have to look at the paperwork and see. I bought at 66 unit apartment complex, called for the inspection on the fire hydrants because the insurance company needs it, and get a call back from the Fire Marshall saying it’s $75 per fire hydrant to inspect them. And I was like, “Why would I have to pay,” I’ve done that 15 times before, so why would I have to pay for these? He said, “Oh because the city of Salem doesn’t own them. You own them.” And I immediately called a friend who did that, it was going to be $88,000 had I had to replace that system, all the piping and the four fire hydrants. Thankfully the inspection went great and they were in good working order, but that was an $88,000 bullet that I missed.

Brandon: Yeah. Yeah. Same, actually similar thing. Ours inspected out well as well, but yeah, we were touring the park, I asked the question, “Hey, who owns these fire hydrants?” And the guy I was with, “I think the city probably does.” “Well let’s check that out.” “No, we do.” Like we’re going to own them.

Nathan: Where do I send my consulting bill for that one?

Brandon: Yes, you can send that right to, my name is David [Green 01:01:07], you can send it right to my office. My assistant, [Krista 01:01:10], can handle it.

Nathan: Why would you ever think in a realistic world, why would you ask about fire hydrants?

Brandon: Yeah.

Nathan: I mean it’s just something you don’t think about. But in doing this due diligence, if you’re going to be successful at this, and I tell people in my opinion, having done as many deals, the money I’ve lost has been lost in due diligence, and the money I’ve made has been made in due diligence.

Brandon: So good.

Nathan: And I mean I’ve caught where electrical meters are owned by power companies, and the power company had to pay to replace them. I mean there’s all kinds of of things in due diligence that goes beyond just looking at leases or looking at expenses and contracts and that. You start diving into due diligence, and if you can become an expert at due diligence, you can really rock the real estate world because you can negotiate with the seller on why the price should be less, which makes you more money because you’re not having to cover that after the fact of purchasing the property.

Brandon: Yeah. So good. So good. This is awesome. Good, good stuff here. I’m wondering like what do you typically do, you find something I mean like, when do you retrade? Or when do you go back and renegotiate with the seller? Like how much of a discrepancy in your mind is it worth going back to them. And say we find out that there could be a you know whatever, $2,000 thing. Is that big enough to go be concerned about or is it $50,000?

Nathan: It depends on the size of the deal. If you’re at a $100,00 deal and you find two or three thousand, yeah I mean I can go back and negotiate. If you’re in a two million dollar deal and it’s two or three thousand, you’re going to have to decide is it worth rocking the apple cart? I don’t really have a rule of thumb, but I start getting into the three or four percent more than what I thought, so if I’m in a million dollar deal and it’s 20 or 30 thousand more because I found things that, you know, rotten flooring underneath toilets, things that you don’t see on the first go by, our find out that the air conditioning units, and people will do this, they will order new outside cages, take off the old ones and put on new so when you look at them it’s like, “Oh those are new units.” Until you look down in there and they’re all old.

Brandon: Yeah.

Nathan: So when you get into that, and I don’t ever go to an owner and negotiate a reduction without having it in writing. So when I sit down, I want to say, “Okay, look. I found this. This is going to cost me 50,000 more than I thought. This is going to cost me this, this is going to cost me this, and at first glance, these were acceptable until we went into the due diligence.” And sometimes they reduce, sometimes there’s negotiation, sometimes they say no. And then I have to decide after I run my numbers and I’m having to absorb that extra cost, is it worth going forward with the deal or not? And that’s one thing that trips a lot of people up. They feel like if they put this time in and they back out of a deal, they’re somehow losing.

Brandon: Yeah.

Nathan: Well if you go forward with it, you’re definitely going to lose. Just because you put something under contract just because you do the due diligence doesn’t mean you should close on the deal. Sometimes you run away.

Brandon: That’s such a good point. In fact I just had a call this morning with my performance coach, and I told him, so we had eight mobile home parks under contract. We backed out on a portfolio of three of them because there was some concern with the septics and they wouldn’t let us inspect them and it was like, they were like, “Just trust us, they’re fine.” And we’re like, “We’re not going to trust you,” like it got weird, so we backed out. We said it’s not worth the risk for our investors, for us, whatever. And so I told my coach, I said, “Yeah we lost three of the deals.” He goes, “Did you lose them or did you make the right choice and the right business decision and you chose to back away from something that was a bad choice?” And I was like, “Yeah, you’re right. I didn’t lose anything. We made a choice.”

Nathan: Yeah. I mean that’s part of doing this business. That time that you put into it is time that had you gone forward with that, you could have lost a ton more.

Brandon: Yeah. There’s that thing in psychology, I can’t remember what it’s called, like sunk cost or whatever, where people, like the more time you have invested in something the less chance somebody will ever back out of it. It’s not just a real estate, just in human nature we tend to. Even though it’s just a logical fallacy in our heads, like just because you spend more time on something it doesn’t mean that you should do it. That’s stupid.

David: You’re right though. I’ve been dating this person for five years,i I can’t break up now-

Brandon: Exactly, yeah. Might as well get married.

David: There’s so much invested in it.we get the same training as a real estate agent where we’ll get like a buyer that’s just wasting our time. They want to get in our car every weekend and drive around and look at houses, you find the house they want, they never buy it. You get sucked into this thing and I start thinking the same thing. “Well I’ve already committed two months to this person, I’ve got to get something out of it.” But what they train us to do is you don’t have a bad buyer, you have a lead generation problem. Because if you had four other good buyers that were wanting to get in your car, you’d have no problem kicking them out and going with one of the others, right? You didn’t want to fill your funnel up, and that’s why you were able to get rid of that one because you had seven others that you could pursue. I can-

Brandon: Yeah. I’m confident I can turn the marketing machine back on again because I know how to lead gen. Yeah.

David: And if you didn’t, I bet you the pressure to try to make that deal happen, the conversations would have been completely different. Well worst case scenario, let’s say that it is bad, can we still make it work? That’s exactly how that conversation goes, so that’s why Brandon is always talking about his lapse funnel, right? You fix that problem not by looking at the very bottom of the funnel and saying, “Well I’ve already pushed it all the way through, how do I get it all the way?” You just say, “I just need to turn on the spigot at the top and have more coming down.” And that usually means dealing with rejection and being told no and all the things you’re trying to avoid. But you either pay the price to put stuff in the top of the funnel or you pay a much bigger price by paying stuff through the bottom that shouldn’t make it.

Nathan: Yeah. And that’s an excellent point. Those people who ride you around on the weekends like that, David you know what you do with them? You refer them out to your biggest competitor.

David: The one you hate the most.

Nathan: The one you dislike.

David: That’s funny.

Nathan: Hey Brandon, your point about the three group there who said, “Oh trust us.” Here’s a way to find out really quick when somebody says that. If you want to try to stay in it. Say, “Okay, I’ll trust you. But this is a,” let’s say it was a $50,000 fix. “I’ll trust you, but closing we’re going to put $50,000 over into escrow and if this doesn’t break or this whatever is going on for a time period, at the end of that time period if everything is good, you get your money.”

David: That’s a great point.

Nathan: And you’ll find out real quick if they’re being honest with you or not. Because if they’re honest then that holds the deal together so they have to wait 30 days or 90 days to get their money. I tell that people with rent rolls. If you think something is wrong with their a rent roll, “Oh we’re collecting $10,000 a month.” But you can’t prove it and the bank statement says six, we got $4,000 that you’re short on a month, but $48,000 in an escrow account. $4,000 for each month, and the end of each month, if you’ve collected your full $10,000, the seller gets the four.

Brandon: That’s so good. That’s so good.

David: I love that strategy in everything in life. Every time someone tries to pate you into a corner and guilt you into something that you think is wrong, don’t fight back, don’t get angry, just switch it around and say, “Okay, we’ll use your logic and your assumptions, and if they’re wrong, then you pay instead of me. What you don’t trust me?” Right, that’s exactly how you do it. And then you don’t get angry, you don’t get frustrated, and you find, or they have to face their own claims. When they’re just saying, “No, you should trust me and move forward,” they’re not being held accountable or responsible for anything. When you switch it around and say, “Okay, we’ll put money in an escrow and your assumption or your claim to me was that everything is fine. If you really believe that, you’ll have no problem putting this money into escrow and giving it to me if you’re wrong.” And then you find out what was really underneath, right, that squeeze will reveal what was inside.

Nathan: Yeah. And if they get mad about it and the immediately like, “Oh no, I’m not going to do that,” they’re lying.

David: Yeah.

Nathan: I mean because there’s no reason for someone to get that upset about it unless you just called their bluff.

David: Yeah. They’re saying, “I want you to risk your money on my claim, but I won’t risk my own money on my own claim.”

Brandon: Yeah. That’s what that is. Oh, funny. That was really good. Yeah, that definitely probably, and maybe I’ll even go back and see if I can’t try to pull that into the deal and see if that will maybe help us get through it. So this was all worth the time right here that I paid-

Nathan: Where do I send that consulting bill? David, we did this all wrong, because I’m a real estate agent, I could have referred to you and [crosstalk 01:09:58]

Brandon: Yeah. Yeah.

David: See like now it’s not just you and Brandon that have something in common. Nathan, you’re just really good at making people like you.

Brandon: It’s the Southern accent, that’s what it does.

David: I don’t think it hurts.

Nathan: That’s it.

Brandon: That’s it.

Nathan: Yeah.

Brandon: Alright, well let’s go and see how well you respond to these. This is time for the deal-

David: Deal deep dive.

Brandon: Alright Nathan, this is the part of the show where we dive deep into one of the properties that you recently bought, or maybe something you did in your past, maybe it’s a really good one, maybe it’s really bad one. We just want to dive deep in and get the details, the dirty details of the deep dive. So do you have a deal in mind? Something that we can pick apart? We’re going to ask you a bunch of questions about it.

Nathan: Yeah, so a 56 unit deal.

Brandon: Alright.

Nathan: In Winston, Salem.

Brandon: In Winston. Alright, that was my first question is what kind of deal and where was it at? So David?

David: Yeah how did you find this deal?

Nathan: So it had been on and off LoopNet for five years. So I had seen it listed, taken off, listed, taken off, but never a price reduction.

Brandon: Interesting. Well how much were they asking for it?

Nathan: They were asking 2.225 million.

Brandon: 2.225.

David: Wow. That’s a very good memory. A lot of 2s in there. A lot of 2s.

Nathan: But I can’t spell, but I can remember numbers.

David: How did you negotiate that price?

Nathan: So I did a little research. I was like, “This is weird that this property keeps coming on and off.” So I just went through the tax records, pulled up who owned the property, before I ever called anybody. Found out that it was owned by a elderly lady who lived in Florida. Her husband had used to own it. He had passed away. And when he passed away, she moved. And from what I could tell, there was no family members in or around the area and so I stopped by there and just said hello and found out it was being managed by a local management company.

Brandon: Okay. So then what did you actually get the price down to and what did you buy it for and then how did you negotiate that, like that discount?

Nathan: Yeah, so this is the one when I went and looked at housing complaints. So before I even contact a broker, I want to kind of know what the picture is. Where does it stand with the housing complaints, what type of issues are there at the property? I always tell people when you drive by a prop, singly family or multi-family, and you see that landscaping is not done and the roof looks like a grandma’s quilt, it’s got five different colors of shingles, and there’s duct tape on the windows, doors are different colors, cars are broken down, there’s normally a financial issue. They’re not keeping the property up.

Nathan: So I saw that there were issues going on, so then I know numbers wise in my area what’s going to cost to do HVAC, roof, windows, so then I built my budget out. What was it going to cost to renovate the property? Now this is before I’ve even contacted the broker. Because I want to see if my numbers are going to make sense. What’s the property going to rent for upon completion? And I come out with a value that this property is going to be worth somewhere upon two years of stabilization worth about 2.9 million. But it needs a little over a million dollars worth of renovations. And I know as a flipper, when you start leasing up a property, your property, even though it hits 90% in three or four months, it’s not worth a property that’s been stabilized for two years. It’s worth a little less because it doesn’t have the history.

Nathan: So I was like, “Okay,” well I ran my numbers back, I always run my numbers backwards. I start out what could it be worth, conservative. What’s the cost, the property cost? What’s the renovation cost? And then what any, if I sell it sooner than the two years, what kind of discount am I going to have to give for that? So I get this property at 2.6, they’re asking 2.25, it needs a million renovations, numbers don’t work.

Brandon: Yeah.

Nathan: So then I start, well okay, well I just I took their purchase, their sellers price and put it to the side and said, “Okay, what would my numbers have to be for me to get involved with this?” And this is how I run 99% of my deals. I don’t even look at their price they’re asking for. I put that to the side, I run my numbers, what could it be worth, what would it be worth if I flipped it early, what’s my any holding cost, what’s my renovation cost, and then what do I want to make off of this deal? Once I put that together, you know with the number I have at the end, the number I need to purchase it for.

Brandon: Yeah.

Nathan: So I came up with a million dollar, a million twenty thousand was the offer. This is the one I faxed over. So I was 1.2 million less than they were asking.

Brandon: Crazy. And that’s the one they just took?

Nathan: They took it. They accepted it.

Brandon: Wow.

Nathan: But I had everything lined out. I had everything detailed, this is how much the roof was going to cost, the windows, the holding costs, because when you buy a property like that, there’s a time you’ve got to may your mortgage and your interest and principle and taxes and insurance and you don’t have cash flow coming in. You’ve got to have some way to cover that. I put all those numbers together and they took the offer.

Brandon: Wow. That’s cool.

David: How did you fund this deal?

Nathan: So that deal, when I get into this I already have banks or private investors lined up that say, “If you find a deal in this area that meets this criteria, we’ll lend this much money on it.” So traditionally how I do that with my deals you know, a bank construction loan to take the property out with 20% down. It’s normally like an 18 month interest only note that’s convertible over to a three or five year note. And then eventually if I look at, sometimes I’ll put things into Fannie Mae, Nonrecourse, then everything if I look at, sometimes I’ll put things in the Fannie Mae, Nonrecourse assumable that then someone can come along and assume the Fannie note.

Brandon: Okay. So then what did you do with this property then?

Nathan: So once purchased, they accepted it, had a 30 day close, did my due diligence, made sure I was right on everything, we went through and closed. The property was 80% occupied and 20% paid.

Brandon: Oh wow.

Nathan: The first step was to evict 60%of the folks there.

David: Had you worked those eviction numbers into your numbers before you bought it? Did you know it was economically vacant to that degree?

Nathan: I knew it was that severely vacant.

David: So that was a line item when you sent over your fax, like this is what it’s going to cost me to kick everyone out that’s not paying.

Nathan: Right, and cover the cost of my holding costs until I get-

David: While that’s happening.

Nathan: People in there to pay to cover my just general expenses.

David: Yeah, I think a lot of people don’t realize that an empty apartment is actually better than an apartment with economically vacant where people aren’t paying because you can’t renovate it until they’re gone, and you got to pay to get them gone, and you’re still having to make that mortgage all the time. It’s almost better if it’s not full at all. It’s much simper at least.

Nathan: Here’s a side note on this that comes into play here and others. When I contact someone like that I immediately ask like, “Where are you in your leases?” Because if you have a 12 month lease, you can’t raise their rent, it’s harder to evict, give notices, so I tell people, “Look, if you don’t have leases, fine, I don’t care. Please do not go out and sign a bunch of leases with people.”

David: Yeah, you want to pick your tenants. You don’t want them to.

Nathan: Right. But it’s harder, if somebody is there on a month to month, you can give them a notice to vacate.

Brandon: Yeah.

Nathan: But if they have a 12 month lease, now you have to wait for them to violate their lease before you can evict them.

David: And you have to take them to court if they fight it and you have to spend legal fees and time and yeah, absolutely.

Nathan: Yeah. More energy, more money, I mean it just gets so, you know please don’t go out and sign a bunch of leases.

David: When I’m representing my clients and they want to look at buying a place that’s already occupied by tenants, I always tell them, “Look, there’s a very good chance you’re buying an eviction. You’re not getting an apartment with somebody already paying rent, because if they were paying and doing everything they’re supposed to do and it was going smooth like you’re thinking, the seller probably wouldn’t be looking to get rid of it. More likely than not, that’s when you decide to sell is when the headache just becomes worth or more than what the upside is to you.”

Nathan: See in my area that I’m in, I would rather buy 100% vacant because a property, with single family or multi-family, if it’s in financial issues, that means maintenances might not have been done in a timely manner.

Brandon: Yeah.

Nathan: That means things are broken and not been fixed. That means people are mad and upset. And just because you buy it, all of a sudden they don’t change their mindset. They’re still mad and upset. And rightfully so. But now you’ve got, not only do you have to fix the issues, but now you’ve got to fix somebody’s mentality and you know, I’m not a trained psychologist, so that’s not going to, so I would rather have things, I’ve bought complexes before where people there were paying, it was great, but I just went in, I evicted everybody. Gave them notices to leave and anybody who wouldn’t, I evicted them because just I needed, not only did I need to clean up the apartment, but I needed to clean up the tenant mentality.

David: Yeah. Because it spreads. When one tenant starts complaining to the new person that moves in and then they start looking at it from a negative mentality because that’s what they were told, and I mean anything can become ridiculous when you hear other people talk about it all the time. There’s nothing in the world that people can’t find to be a victim about or upset about if everyone is telling them, “Can you believe that they make us pay for our own trash? That’s ridiculous.” Well what if every other apartment complex in the area does the same thing? You’ll still look at it from that perspective, so I think that’s wise. You either evict them all or you put in the line item a psychologist that’s going to have to meet with everybody there and try to turn their minds around.

Nathan: One or the other, right?

David: Yeah.

Nathan: Yeah. Yeah.

David: Awesome, so next question. What was the outcome of this deal?

Nathan: So ended up renovating it, getting it stabilized, put it into a Fannie Mae note, had it for two and a half years and ended up selling it for 2.75 million.

Brandon: Wow. So what was the profit on that?

Nathan: So the profit outside of the cashflow was a little over $650,000.

Brandon: Wow. That’s awesome dude.

Nathan: And see, here’s another side of this, when you’re running your numbers, banks want what the market value is. So the market value to replace an HVAC is $5,000. So when I go get to my loan, I’m getting a loan based on a $5,000 expense. My cost is 3,200.

Brandon: Yeah.

Nathan: So I’m able to take my renovation money and get back most of my down payment.

Brandon: That’s awesome. Well what did you learn on this deal?

Nathan: I learned on this deal that if you’re going to cut someone, you’re going to cut them deep, make sure you got a really good reason for doing it.

Brandon: Yeah.

Nathan: Because I’ll get offers where people, you know, they just send over this letter of intent with a generic name, property owner. When I contacted this person, I put dear Ms… I can’t remember her last name. I made it very personal. I told her the story. This is where your property is, this is what’s going on with it, this is what it’s going to cost to do it. So that was the first time I had ever done that that way, and I learned that if you’re going to be successful in this business and you really want the opportunity to close a deal, the more work you can put into that story of how you can close, what it’s going to cost you to close, all of that, the better off, the better chance you stand of closing that deal.

Brandon: That’s perfect. Perfect. Alright dude. Let’s head over to the last segment of the show. We’re going to skip the fire round today and just go direct to the world famous-

David: Famous four.

Brandon: Alright Nathan, these questions are the same questions we ask every guest every week. And we’re going to throw them all at you right now. So number one, Nathan, favorite real estate related book. Other than maybe the one you’ve written. Because I think you’ve written one?

Nathan: Yeah I’ve written, I was going to say, but my answer here is any book written by Brandon-

Brandon: Yes, look at this.

Nathan: I mean-

Brandon: Oh thank you, that’s the nicest thing anyone ever said.

Nathan: You were going to send me 20 bucks for that.

Brandon: I was going to, well 20 per book you recommend, so now you get like-

Nathan: No, I enjoy, my first book that I ever bought, I don’t know if I have it… I don’t have it in my office, but was the Commercial Real Estate Investing For Dummies.

Brandon: Oh, okay. That’s funny.

Nathan: From 2005 or six, and it was a good base because it just, any of those things, it really went into the business plan, investor packet, it wasn’t really in depth. It was more just, “Hey this is what you need to know if you’re looking at this.”

Brandon: Yeah. That’s really, I actually like the dummies guides, the idiots guides, you know, I like those because they usually do a pretty good job.

Nathan: Just for a baseline, just for a foundation. They don’t give too much in depth. But just kind of if you want to know kind of a… of course I didn’t have anybody at that time that I reached out to, but I knew like your books too.

Brandon: Thank you. I’ll take a compliment.

Nathan: You did a good job on that.

Brandon: Thank you.

David: He clearly likes books for dummies, so [crosstalk 01:23:59]. Just kidding. Brandon is actually one of the most prominent authors in the real estate the real estate [crosstalk 01:24:04]

Nathan: I think you’re still the number one book on Amazon when you search real estate, right?

Brandon: I think so. That’s not me, that’s-

David: Yes, [crosstalk 01:24:09]all of real estate.

Brandon: That’s the power of BiggerPockets though and like, there’s a reason why I begged to write the book on a rental property investing, let’s but honest here, like because everyone loves rentals and I was like, “I got to be the one to write that book.” So it’s less me that it is the niche MVP.

David: Wow, what a humble brag.

Brandon: I’m a humble [crosstalk 01:24:28].

David: There it is. Alright Nate, what is your favorite business book?

Nathan: This might be unique for some people, but I really like the Bible.

Brandon: There you go.

Nathan: And when you look at it from a stance of how do you treat others, what’s your perspective on money, how you handle a conflict, whether you’re religious or not, there’s some really good information in there, and for me, for a long time I got really focused on money and I realized when my focus was just money, I became a really miserable person. And I had to back up and regear and say my focus has to be my faith and my family and my internal, because what’s the purpose of making a lot of money if nobody likes you?

Brandon: Yeah.

David: You clearly rectified that, because you’re very likable.

Nathan: Well thank you.

Brandon: [crosstalk 01:25:25]the whole yeah, 20 bucks there, right there. There’s the whole what good is it to gain the whole world and lose your soul? That’s one of my favorite lines in like all of the Bible and all of like, but anyway, what good is it to gain everything and lose your soul in the process?

Nathan: You would be hard pressed if you took any self help book, religious or not, you can find that principle somewhere in the Bible. And I don’t say that to offend anybody, it’s just my own personal faith. My next is Think and Grow Rich by Napoleon Hill.

Brandon: Yeah.

Nathan: Especially the first couple of chapters where it’s just organization. Getting your mindset right. I’ll be 46 tomorrow actually, or no, the 29th of this month. And it really has come down, life is about a choice. You can choose to be happy or you can choose to be miserable. You can choose to spend your time doing this or not, and the Think and Grow Rich has some good thought processes behind what are you doing with your life and do you have a purpose, do you have a goal.

David: I like that. Especially in today’s culture where we’re often being told that there’s nothing we can do and things are against us and society is against us and the government owes us everything. Just to remember that you choose what you want your life to be, and there’s nobody here from doing the things that you want to do. It’s very empowering, and often when you talk to someone who went from lack of success to success, what they did was they just chose to do things differently. Like Brandon gave an incredible piece of advice. If you’re sitting around waiting, what am I supposed to do, you’re actually saying it’s the universe’s job to tell me what my role is so I can go do it. And he said, “Change that.” Go say, “What do I want to do? And make that the goal of what your life is supposed to be.” And it’s really just making a choice.

Nathan: That’s good advice. It is.

Brandon: There goes David Green taking my incoherent ramblings and putting them into a nice package. Good job, David. You’re good at that.

David: Thank you. I’m glad I can contribute something to this podcast. Okay, what are some of your hobbies?

Nathan: I love boating, I love going to deserted areas and looking for shells, sand dollars, little shark teeth, things that are kind of harder to find. I spend a lot of time with my family. I actually love my wife and I love spending time with her and I’ve got a really cool 14 year old daughter who I get along with great. And then I play quite a bit of racquetball. So I hope my wife doesn’t listen to this because she’s always like, “You’re a gym rat,” and it’s like, “Well not really because I’m not actually, I’m at the gym but I’m more playing racquetball.”

David: That’s the one sport Brandon [Turner 01:28:00] actually knows.

Brandon: I know that sport. I’m not that good. I can hold my own against like newbies, but I want to play Nathan.

Nathan: We need to come up with, maybe we have some live BiggerPockets charity challenge or something, you know.

Brandon: That’s such a good idea. You got to come out to Maui and we’ll play at the [inaudible 01:28:17]. There’s only one racquetball court on that, well there’s two but one’s at the hotel you can’t get to. There’s one public at the YMCA. You and I will throw it down.

Nathan: Sounds like a plan. I like it.

David: You know he’s bringing you to his home court. I’d be very wary of that. He’s like, “You’ve got to fly all the way across the Pacific Ocean to come to this specific place.” There’s going to be booby traps, all kinds of stuff.

Nathan: See I have a strategy in racquetball. If somebody is beating me, I just start aiming at them.

Brandon: That works really well.

Nathan: If you hit someone once or twice, then they just, they get out of the way because they’re…

Brandon: Yeah, that’s it. That’s funny. Yeah, I’ve had so many welts all over it, so yeah, I hear you. Alright, my last question. What do you think sets apart successful real estate investors from those who give up, fail, or never get started?

Nathan: Not taking no for an answer. You’re going to be told no. The people who have been successful in real estate have figured out how to take that no and either change the plan or find someone else to implement the plan with. Because if you just take no and say, “Oh, well I can’t do this. I’m going to go home and stop trying.” That’s what has happened to a lot of people in real estate. When you’re told no, no to your offer, well you go find another house and make another offer. You’re told no by an investor, you go find another investor. So I think that’s really the quality or the trait that you’ll find in people who have been successful in this is they haven’t stopped when they’ve been told no.

Brandon: Yeah. Really good.

David: Good stuff, Nathan. Last question from me. Where can people find out more about you?

Nathan: So people can find out more about me at nathantabor.com and that’s N-A-T-H-A-N T-A-B as in boy, O-R .com. And on that website there’s kind of a landing page there, and I’m involved in numerous things from real estate to a ministry that I do some podcasts with and that and all kinds of other stuff. But that’s a good landing page that people can find out. And I actually have a free ebook on how to find finance fix and flip apartments.

Brandon: Oh, awesome. You have a very nicely designed website. I was actually just looking at it earlier, I was like, “What a good design. I need to get something like that.”

Nathan: I built that, so thank you very much. I appreciate that.

Brandon: Oh, look at you.

Nathan: I used to own a website company my serial entrepreneurial days.

Brandon: Oh, that’s cool. Yeah, well you got it. Alright dude, this has been fantastic. Really, really good. I love everything you had to say today. The due diligence stuff, I mean everything about like niching down, we covered that, we covered so much good stuff, the idea that every property has a number, like I hope people take that away from here and know like just don’t be afraid of rejection. Everything has got a number, go out and finfd that number, go after deals, and again, fantastic show, so thank you, Nathan.

Nathan: Hey, thanks guys. David, I appreciate it, and Brandon, I appreciate it, and appreciate you guys letting me be part of your podcast today.

Brandon: Thanks. David, you want to take us out?

David: It was great to meet you. He is Nathan Tabor. T-A-B-O-R. I am David Green 24, and Brandon is Beardy Brandon, all on Instagram. Let us know what you thought of the show. Let us know what you’d like to see more of. We love to talk to you guys on there. That being said, I am David Green for Brandon married his fairy tale Turner, signing off.

Watch the Episode Here

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In This Episode We Cover:

  • How title insurance works
  • How to check with the zoning department to make sure you don’t get burned
  • How to file a claim for title insurance
  • His fantastic advice for due diligence checklists
  • His advice for finding your niche
  • The benefits of niching down
  • How to find your passion and inner focus
  • How to handle the fear of rejection
  • The key to applying information you have in your life already
  • How to flip an apartment or apartment complex
  • Advice for raising money
  • How to understand what a cap rate is
  • Why multifamily may be less risky than single family
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “You have to show brokers that you have the ability to close.” (Tweet This!)
  • “You become an expert by niching.” (Tweet This!)
  • “If you’re afraid of being told no, real estate is not the place to be.” (Tweet This!)
  • “People who have made money and have money are normally really smart about their money.” (Tweet This!)
  • “Knowledge is knowing how to do something. Wisdom is applying said knowledge.” (Tweet This!)
  • “Don’t let the amount of money or cap rate scare you off from a deal.” (Tweet This!)

Connect with Nathan

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 investo...
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    KC Boultinghouse Rental Property Investor from Owasso, OK
    Replied 6 months ago
    Trying to learn as much as I can about the multifamily investing game, this podcast was awesome for that! Spent some time on Nathan's website and got to learn even more about what he's doing on there. My question is for anyone that has been involved in mfr flipping or holding. What is the benefit of selling these apartments once they have been flipped compared to refinancing? Seems like you can get close to the same amount of cashback, especially after taxes on the profit from selling, plus the benefit of rental income going forward. I definitely could be issing a lot here, but am thankful for any responses!
    Kevin Leonce Investor from Atlanta
    Replied 6 months ago
    Great podcast. Definitely agree that it's one that you should listen to again.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 6 months ago
    Good podcast. Due diligence doesn't get nearly enough attention IMO
    James T McBride
    Replied 6 months ago
    Money quote: "...what good is it to gain the whole world and lose your soul?"