BiggerPockets Real Estate Podcast

BiggerPockets Podcast 382: No Money Down BRRRR Investing with Josiah Smelser (Part 1, Recorded Pre-Coronavirus)

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Today we bring you Part 1 of back-to-back episodes with real estate investor/appraiser/author/all-around good guy Josiah Smelser.

This first conversation was recorded pre-coronavirus lockdown, but it's packed with tips you can put into action today. You'll learn how Josiah solved the No. 1 bottleneck in his business (capital!), allowing him to BRRRR at scale and rack up rental properties with very little money out of pocket. Even more impressive: he's doing it long-distance. (The properties are in Dallas, Texas, and Josiah lives in Huntsville, Alabama.)

And if that weren’t enough, the guys go in-depth on appraisals—and the techniques you can use to help appraisers see your side of the story. Josiah’s a longtime licensed appraiser, so he speaks from experience… and he shares his playbook for giving yourself the best chance to pull all your money out of your deal.

If you like what Josiah has to say, then be sure to check out Part 2 tomorrow. We bring him back on, post-COVID-19, to discuss the serious challenges he's faced: lenders pulling out, property values dropping, and even a domestic violence issue at one of his rentals.

The good news: he made it through. Tune in tomorrow to hear how!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon: This is the BiggerPockets Podcast show 382 part one.

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Josiah: Take a measuring tape… Go to Lowe’s, buy yourself a measuring tape, take it with you to some of these properties you’re looking at and measure the property real quick. Figure out the square footage and you’re going to discover that some of these properties are listed for 1200 square feet and the thing’s actually 1600 square feet. If you’re in a hundred bucks a square foot neighborhood, that’s $40,000 of value you just found.

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

Brandon: What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast here with my cohost Mr. David Green. David Green man, how’s it going man?

David: [crosstalk 00:00:56], any better. I’m living the dream brother.

Brandon: Are you locked in your house still?

David: I’m locked in my house. I get outside to go running a little bit. The sun’s finally out, but I’ll tell you what I love is when I wrote Long-Distance Investing, I was mostly investing as a police officer. So I had to figure out how do you make all the things happen that need to happen while you’re at a full time job? How are you super efficient? How do you get other people doing the work? And now the same thing’s happening in the real estate agent world. How do you put deals together when you can’t drive and talk to people in person or sometimes you can’t show homes, right? How do you structure an offer to protect your client and get them to feel comfortable with what they’re doing while working under these new regulations?

Because, Oh my God, there are such amazing opportunities for people that are still looking right now and it would be a shame if they didn’t get something in contract, but it’s trickier. It’s absolutely outside of the norm of what you’re used to doing and it forces your brain to get creative, to think of solutions. Maybe to question, well, why did we always do it like that in the first place? This is kind of how innovation works. So while I’m pasting around the pool table at my house, talking on the phone all day and having zoom meetings, it’s halfway driving me mad because it’s just horrible being at home all the time and the other half it’s super exciting and new because it forces you to look for new solutions. Yeah. That’s how it’s going in.

Brandon: Adversity forces you to come up with new ideas.

David: [crosstalk 00:00:02:10], is the mother of invention. That’s right.

Brandon: And speaking of adversity, having you come up with new things. Today’s show is part one. You heard me say that a minute ago. Part one of a two part series. We’re actually launching part one today, part two tomorrow with a buddy of mine named Josiah Schmelzer. So Josiah is a real estate appraiser and real estate investor, also a podcaster or an author, but Josiah is a good dude who does primarily the burst strategy to buy rehab, rent, refinance, repeat, which if you don’t know what that is, we’ll get into that a little bit in today’s show. So here’s the interesting thing about today’s show. We recorded the show a few months ago, I think two months ago before the COVID thing happened.

And so on this episode like that we recorded. Josiah goes through all of his strategy, how he did it, how he’s bought like almost $4 million of real estate using the burst strategy. What he’s doing. Why he has got 10 properties at one time going down, all this stuff and then we spent a lot of time talking about appraisals and how to talk to your lender or your appraiser about adjusting the numbers and how to make sure you get the highest appraisal possible and you guys, this stuff is so important and we didn’t even know the COVID thing was going to happen but now that information is even more vital than ever because appraisers are getting nervous.

They’re getting like, they don’t want to get in trouble for giving you a too high of a value. So they’re being way more conservative. In fact, my own personal house just got reappraised because I’m getting refinance done and it was way under where it should have been and so that’s what’s going to happen. So this show is super timely for that reason, but then COVID happened and a lot of Josiah’s what was going to be just simple, easy thing that we kind of glossed over on today’s show just a little bit. We didn’t spend a lot of time talking about the refinance part of it now suddenly became much, much, much harder and Josiah had to fight his way through to figure out his way through that. That’s what part two is about.

So here’s the deal part one is live right now. You’re listening to it. This is part one. Part two episode 382 part two, comes out tomorrow. So it’s a two-part show over two days. If you’re watching this in the way future or listening it in the way future, obviously you can go find it. Show 382 part two later, but listen to the show first then go listen to that one. It makes sense. Did I explain that well enough David Greene?

David: That was awesome. This is like you’re following the saga of Josiah Schmelzer as he-

Brandon: Yes.

David: … as he navigates the perilous ups and downs of real estate investing.

Brandon: The real estate quest. All right.

David: Oh, yeah. You’re going to hear a lot about that too. [crosstalk 00:04:26], part two.

Brandon: Yeah, part two. I talk about my new quest, but before we get there, let’s get to today’s quick [crosstalk 00:04:35], tip.

David: Tip.

Brandon: What have you got David?

David: Today’s quick tip is get out of binary thinking. It’s too easy for us to fall into a trap where we think this or that. Should I do Burr or should I not buy real estate? Should I invest in real estate or should I stick all my cash under the mattress? Should I extreme this side or should I extreme that side? The better way to look at things is to understand how all the pieces fit together as a whole and ask yourself how much of each of these do I need in my arsenal so that I can feel comfortable moving forward. See the key to being successful is always making progress. It’s not always being perfect.

So you’re going to hear in Josiah story, how he used different techniques for real estate investing to help them out in different parts of the journey. He didn’t put all of his eggs in one method of real estate investing. So as you’re listening, think about it in your own life. Where am I thinking it’s got to be this or that instead of a little bit of both.

Brandon: Very good. I like it. Springing it on you at the last second and you delivered. You’re like the Shaquille O’Neal of the real estate quick tip world.

David: [crosstalk 00:05:38]. Are you referring to Karl Malone being the Mailman because he always delivers, but you called me Shaquille O’Neal because he was just a-

Brandon: I don’t know. He was the only basketball player I could think of on a fly.

David: I think that’s what you were doing and I only-

Brandon: [crosstalk 00:05:50]. I didn’t even know… Who is Karl Malone and why is he a Mailman? Like was he actually a Mailman?

David: No. His nickname was the Mailman because he was [crosstalk 00:05:57]. Okay, so you do know. Wow.

Brandon: All right. With that, let’s get to today’s-

David: By the way this is the same way Brandon plays poker. He pretends to have no idea what he’s doing with hopes that he will lure you into a false sense of confidence so he can just destroy you.

Brandon: Well, no, because half the time in life I really don’t know what I’m doing. So if I always pretend I don’t know what I’m doing. I can-

David: Yeah, no one will ever take you serious-

Brandon: Nobody would ever know. Yeah.

David: [crosstalk 00:06:21], they won’t realize you did. Yeah. It’s actually brilliant in an idiotic kind of way. Good job.

Brandon: Without further ado. It’s time to get into today’s show with Josiah Schmelzer. Let’s do it. All right, just dial welcome to the BiggerPockets Podcast, man. It is an honor to have you here, man. I’m pumped about today.

Josiah: Man. I’m so excited to be here. Thanks so much for having me guys.

Brandon: Yeah. So you and I got the pleasure of hanging out in person last year. We spent a few days in Maui masterminding and having a great time and I learned a little bit about your story then, but not as much as I wanted to and so I’m excited to dig in a lot deeper today and find out how you got into this game and how you got to the powerhouse machine you are today. Book writer and Real estate investor and all that. So podcasts and everything. How did you get started? Go to the very beginning of your journey.

Josiah: Yeah. So after I graduated from undergrad, I took a job doing public accounting. I’m in Dallas, Fort Worth. Absolutely hated it. Spent a year doing that and after that I was like, I have to do something else. I couldn’t stay in the sitting in a cubicle thing. So I left that job and helped one of my buddies start an appraisal business and we started that out of the back of his house. You know I was, I think 22 years old, he was 23 and it was exhilarating working for ourselves, running our own thing, being our own bosses and the cool thing is… And this was in Fort Worth Texas. The cool thing is I got to go into a lot of properties. Got to be around a lot of real estate investors and I got to learn the Dallas Fort Worth market one house at a time starting off.

So got my appraisal license in 2005 and then started just kind of gradually buying some properties here and there. I was single. I wasn’t married. Did that up until about 2008 and 2008 I decided to sell the properties I had. Go hike the Appalachian trail, go back to grad school. So I sold everything just completely dumb luck, right about the time, right before the market crashed, I dumb luck just unloaded everything and I had a lot of equity in the properties I had and looking back on it, I really wish I’d held on to everything because you know how it is a lot of these investors that we talk with on our podcasts and stuff.

A lot of the guys that held on to stuff, they make money because it’s a get rich slow scheme. I mean, you can build a lot of wealth over time doing this. So anyway, got married after going to grad school. Long story short, started listening to BiggerPockets several years ago and got interested in doing the real estate investing thing again. So my story is a bit different because it’s not like I just started, I started back in ’04, but I sold everything then I started over and we have a portfolio worth about $4 million right now of one to four family properties. We’ve got 20 properties worth about 4 million bucks and we’ve done the lion’s share of that in the last 12 months.

Brandon: Wow. All right. So most important question. Did you really hike… You hike the whole Appalachian trail or what was that?

Josiah: Yeah. So I hiked Georgia to Pennsylvania.

Brandon: Wow.

Josiah: So I did 1100 miles in about three and a half months. So had everything in my backpack and sleeping out in the woods and went with some buddies and it was… Man, it was extraordinary. If you’re into that kind of thing, I highly recommend you try the A.T. It’s so much fun.

Brandon: Yeah. Someday I [inaudible 00:09:34].

Josiah: In the living out of a backpack in the woods kind of thing.

Brandon: I don’t know if I’m into that kind of thing, but I liked that idea. I like that idea of things.

Josiah: You’ve got the beard for it.

Brandon: I do. I have the beard for it. I was telling this buddy yesterday, there’s a book we’ve talked about on the show before it’s called Wild at Heart and I know David, you’re a big fan of it. Josiah, have you read that one?

Josiah: Yeah. I have.

Brandon: Okay. So while you read that book and you’re like, I’m going to go shoot an elk and hike the Appalachian trail. Like that is-

Josiah: Yeah.

Brandon: Like you read that book. You just want to like go do cool stuff like that.

Josiah: Yeah.

Brandon: But anyway. Yeah. Someday

Josiah: I had read Into the Wild you know. This is when I was single. I had money saved. I read Into the Wild and I was like, man, I need to go do something like that. I just need to have a life adventure and the A.T was a blast, man. It’s like a little family out there. You meet all these cool people and you’re hiking you know months at a time with the same folks and it’s really cool. It’s really cool experience.

David: So you wanted to go hike this trail and you happen to sell your entire portfolio right before one of the biggest real estate crashes in the history of man. Tell me how that all worked out.

Josiah: I just have to say that was lucky. I mean, I did learn a lot going into that time because I was doing appraisal work and I was seeing a lot of crazy things going on just on a lot of refinances that were happening because people were refinancing houses that they bought six months ago and then they’re refinancing trying to pull 10 or 15% more equity out of these things than they went into and they weren’t renovating these.

There was no value add going on and we would have people call us up and say, “Hey, can you guys get $300,000 for me on this refine?” We were like, that’s not really how this works and they would hang up the phone and they would call another appraiser and find an appraiser who would do that and that’s where a lot of… You know, some of these bad appraisals were coming from at the time, they would find an appraiser who was willing to just make a value and they would get that loan done and pull that cash out and a lot of these guys had almost no equity in their properties that really lost their property in foreclosure at that time so.

Brandon: Yeah. Wow. Okay. So let’s unpack this a little bit. So since that time now you know, the market came back. It started to climb back up and you thought okay, I’m going to get back into this again. What was the first purchase then? We’ll go to the second phase of your career. What was the first purchase you did then?

Josiah: Yeah, so we house hack to duplex. My wife and I house hack to duplex, just kind of what you hear on bigger pockets a lot. We found a deal. We felt like we could move into one side that was vacant. The other side would cover our mortgage and we could fix up the unit we were in, raise the rent and then move out and rent that unit out as well. We moved into the unit that we were living in and got that fixed up. The next door neighbors moved out, so we renovated that unit as well and ended up doubling the rent essentially on that duplex and after we moved out, it was a cash cow and that was in Dallas.

That was in a good area of Dallas but we ended up selling that one as well and rolling that money into some more rental properties, but that was the first one we bought, but you know, I was a part of this mastermind with Brandon and we were working through identifying some areas in our business that were really our bottlenecks and what was holding us back and I was attacking this thing from the perspective of, I have this much money, this is how much I can do and at the mastermind we were trying to figure out, okay, what’s holding you back from really accelerating your… to meet your goals and stuff and mine was, I was bottlenecked by my own capital and when identified that, I’m like, okay, well, how can I open that flood gate?

And I identified, like I need to start figuring out how to get more money for the equity piece of these because as you know, you put money down on a deal. That money’s locked in, you do your value add, you get your refi done. That money’s locked in for a certain time period and I only had so much money. I could only do so many deals at once. So the first… So somebody said, what would happen if you went out and got $200,000 of private money? I was like, well, that would completely change my business.

David: Someone said, what would happen if you got $200,000 of private money? Was that someone on the podcast with us right now listening too. That just [crosstalk 00:13:43], exactly like what someone I know would say.

Josiah: I actually don’t think it was Brandon. I think it was somebody else and we were in groups and there were a lot of really, really great investors there. I don’t think that was Brandon, but Brandon did say a lot of good things.

David: Brandon will take credit for that.

Josiah: Will take credit for it.

David: Don’t worry. Okay. Sorry. Go ahead. So somebody had said to you, what would happen if you had $200,000 of private money?

Josiah: Yeah.

David: And it got your creative juices flowing.

Josiah: Yeah.

David: You played the what if game?

Josiah: Yeah. So I said that would completely change everything in my business. So I mean, we could accelerate everything and so I said, okay, I’m going to try that. So literally the first person I talked to after that conversation… That was at the mastermind. Said, “I’ll give you $200,000.” Just like that. I was like, my mind was blown and it has absolutely changed my entire investing experience. So like one thing that I will highly recommend to investors listening to this that are trying to figure out how to supercharge their business is identify the bottleneck in your business.

There is something that is making you go slower or causing some inertia that you can remove or fix that will absolutely supercharge your investing experience. Mine was private money. So the way we do things now I’ll identify a property that’s distressed and I buy most of my stuff from wholesalers. I’ll buy the property with hard money and they’ll give me a 90% loan to cost alone on the property and then I’ll use the 10% equity that’s being brought in from my private money lender. So I’m buying the property with 100% of other people’s money and then I do the value add with the hard money lender and then I do the cash out refi. Pay both those guys off and own the property at 75% loan to value or less and that’s been how we’ve been able to do almost 4 million in deals over the last 12 months.

Brandon: All right. So that sounds amazing and I want to go deeper on that because a lot of people probably listening are going, wait, wait, wait, what? No money. So let’s dive in. Maybe give us an example of how that would work, whether it’s one of your previous deals or just a hypothetical. Something simple that we can kind of walk through from the beginning of that.

Josiah: Sure. And I also want to say that on our average deal, we are not getting 100% of our money back. That’s the goal. That’s always the goal. [crosstalk 00:15:58]. Some of them we get more than… We get the hard money and the private money rolled into one loan and we get some extra money back. Most of them were leaving five or $10,000 in. So to compensate for that, we’ve actually started flipping some as well to raise capital, to give us reserves and also money for when we do our refi. If we come up five or 10,000 short, that money covers that. So let’s talk about an average deal. So an average deal, I’ll get an email. I probably look at eight to 10 deals a day and it’s got to where I can look at these really quickly, but the average deal will say it’s in an area that I already like, so I already know, okay, this is worth looking at.

Brandon: And where is that by the way? Where do you buy?

Josiah: Yeah, so we own… So I live in Huntsville, Alabama. We own here and we also own in Fort Worth, Texas.

Brandon: Okay.

Josiah: And I know Dallas, Fort Worth from my time running my appraisal business there. So we started first here in Huntsville and when we weren’t able to find the volume of deals we wanted, we expanded out and we targeted Fort Worth because I know the area really well and I’ve got boots on the ground guy there that goes into all these properties for me. We’ve got contractors and we’ve got this whole process nailed down, but anyway, average deal, I get an email from a wholesaler. Let’s say I can get this property for 105. The property is worth 200 fixed up. So I need to be in it at 150 or less to be at 75% loan to value. So I’ll then pull comps because I’ve got access to the MLS out there. I’ll pull comps, verify that it’s worth 200.

Then I’ll do a quick estimate of what I think the repair costs are going to be and see if my numbers work. If I’m like, okay, this isn’t even close. I just discard it. If it’s close, sometimes I’ll go ahead and buy it sight-unseen. I bought a lot of these sight-unseen sometimes I’ll hold off if it looks like it needs a lot of repairs, get my boots on the ground guy to go out there with my contractor, walk through it, get a firm… Get a good handle on what the repairs are going to be and then it’s just basically backing into your numbers, right? If I get it for 105, I’ve got closing costs. So maybe 5,000. So that would put me at 110. I’ve got holding costs for my loan, with my hard money lender and my private money lender. I’ll factor that in and then the rest is repairs and so I got to be at that 150, that 150 is my target. So if the numbers work, I buy it and that’s essentially just how we’ve been doing these.

Brandon: Yeah, that’s so good. Actually, one of the most popular Instagram posts I ever put. I put on my Instagram, like last week it was called how to make… It was called How To Make $50,000 in the next 90 days, right and it was just like exactly what you just said, like work back… Like figure out what it’s worth when it’s all fixed up, work backwards from that, factor on a $50,000 profit, then go out and find the… You know, basically do that exact same thing and so it’s like real estate is so fun because we can back into our profit, at least with flipping and with borrowing investment and really with rental properties as well. You can back into the number that you need and in fact, right about this time actually BiggerPockets is releasing all of our calculators, our broke calculators to make that even easier.

Just FYI, everyone, go check it out. We’re launching it. I think rental came out already. Flipping came out already and I think the Burr I think and wholesale are coming out shortly but with that idea of making that even more simple, because you can back into these numbers and then figure out what you can pay for it and now you’ve got a budget. Okay, well now I’ve got to get this done for 30 grand and if you go inspect the property or you go and run your rehab budget and it’s going to be a $70,000 rehab. Okay, well that means I can’t 105 for it I guess I’m going to be paying 75 for it.

Josiah: Exactly.

Brandon: And this goes back to that thing that I say all the time on webinars on the podcast. Every property out there has a number that makes it a good deal. So your job as an investor is not to blindly walk around, hoping somebody gives you a good deal and toss it in your lap and like, there you go. Like most of what we do today is just like get, like you said, eight to 10 leads a day. You run those numbers, you figure out and every once in a while you get one that’s pretty close, but either way every property’s got a number and usually that number is way far off and not even worth pursuing, but occasionally you get one that you can make happen and so what I find fascinating though is this idea of that you pulling in the private money lender to cover basically the down payment and the rehab costs you say or was the rehab costs getting paid for?

Josiah: Yeah. So the hard money lenders covering 90% loan to cost on the whole thing. The private money lender is covering the 10% loan to cost plus closing costs.

Brandon: Yeah.

Josiah: So the closing cost will suck money out of your account just like anything else. So we started rolling that in as well. So we’re reserving all of our cash for actual repair issues or servicing the interest only payments to both these lenders.

Brandon: So if they’ll do 90% loan to cost… Let’s use some basic numbers here. You know earlier, we talked about that 150. You want to be total at 150 in?

Josiah: Yep.

Brandon: So if they’ll cut… So 150 is the total amount of cost you have invested in the deal roughly. Does that mean that hard money lenders are going to cover up like 135, 131-135?

Josiah: 135. Yup.

Brandon: 135 and then you only need 15 grand-ish from the private lenders.

Josiah: 15 from the private money lender plus we’ll say 5,000 for closing costs. So 135 would come from the hard money lender. 15 plus five would come from the private money lender. So we will have a 135 loan and then a $20,000 loan and then we’re servicing the interest only payments out of our cash reserves, thus the need to be really accurate on our numbers on the refi.

Because as you know, sometimes on the backside, when you go do your refinance, your appraisal comes in low and that’s something I want to talk about as well from the perspective of being an appraiser and maybe some tips and tricks to help out on that but when it comes in low, you got to have some reserves to get this refinance done or else you’re stuck. So got to have that money to service those interest only payments along the way, and then to be able to get your re refinance completed.

Brandon: Unless you can find a hard man lender and they do exist out there or private money lender, which will let you basically bank all of your payments to them until the very end. So just to [crosstalk 00:21:52], as long as you… It’s actually a fairly simple thing and let me explain what I mean by this because I never even thought about this until somebody mentioned on the podcast, a few… I don’t know, four or five years ago to me. That they-

PART 1 OF 4 ENDS [00:22:04]

David: We mentioned on the podcast, I don’t know, four or five years ago to me that they do this. And I was like, “Wait, that’s a thing?” And here’s what it is guys, let’s say normally you’re going to pay your hard money lender $1,200 every month in interest. And so you pay him 1200 then 1200 then 1200 and 1200, 1200, 1200 for six months. And then you then find you’re done.

But to them, it’s really the same math if they get the money monthly or if they just get a big lump sum at the end and you just work the math out later. And so some lenders will actually let you just make a big lump payment at the end, based on exactly how long you held the property for. Same amount of money goes in their pocket.

Now, it’s a little more risky for them to do that because they’re not getting payments along the way. But if they’re going to trust you with 135 grand, what’s an extra $5,000 of delayed payments if you can work that? And you never know till you ask. So the first time I learned that I just asked somebody if I could do that and they’re like, “Oh, yeah, no problem.” And it wasn’t even an issue. I’m like, “How many times in my life have I just been paying interest every month?” Which again, it’s the same math but I don’t have to actually pay out of the pocket while I’m working on the flip, which makes me just a whole lot less stressed.

Josiah: Yeah. That’s great.

Brandon: And you may get one that says, “No, I don’t want to do that. That’s riskier. At least if you default, I got a couple of payments.” And I would just say, “Okay. That’s no problem. But what if I gave you a couple of thousand dollar bonus up front and then I pay the rest at the end? So you could do it your way, which is what you think is less risky or my way and get an extra $1000.”

They very well may say, “Oh, okay. Yeah, that does sound better because I do know you’re going to pay me back.” There’s usually something you can give to the other person to be willing to agree with what’s better for you if you take the time to ask them questions and figure out what really matters to them. They might say, “No, I don’t want to do that.” But very few people ever say why. If you say why and the answer that they give you makes sense you could come up with a solution that would work for both of you.

Yeah. That’s great when you don’t have to make that payment during the actual process, because stuff comes up that you’re not expecting. That’s a part of real estate investing. You have to just welcome that fact. It’s what keeps most people from getting involved so that there’s deals for people like us. Being able to mitigate the risk that you’re taking is just one more way you can increase your success.

Josiah: Yeah. So anyway. Absolutely.

David: Yeah. I just wanted to cover that point because it’s funny because, again, I’d never even thought about that before until somebody mentioned it, and all of a sudden it’s like, “Oh, that’s just the thing.” Kind of like the guy that mentioned to you, well, what would happen if you got an extra $200,000 what would that do? Of of a sudden, it’s like, “Oh.” Just these little things you hear, which is the value of listening to podcasts like this and podcasts like yours. You just hear stories of people and all of a sudden you can do it.

So yeah. Anyway, all right. So I want to move on, but you mentioned the ARV, because here’s the thing, this whole birth strategy and this buy properties either flipping or BRRR they really, really, really depend on nailing that ARV, the after repair value. So if you think that price is going to be worth $200,000 and the banks couldn’t give you a 75% loan at the end of the day on that, that means if you want to get that 150 loan you to hit it $200,000. And if not, you’re going to be coming out of pocket with more money. So how do you do that? I mean, you know the appraisal business. So how do you make sure that you hit that 200 correctly?

Brandon: Yeah. So it’s all going to come down on the back end to your appraised value. So on the front end, you need to be good at pulling comps and figuring out what the value will be based on the improvements that you’re going to do. How do you do that? You’ve got to practice at it. I like doing it myself. If you’re relying on somebody else to do this your numbers are only going to be as good as the job they’re doing of course.

So if you’re relying on a wholesaler’s numbers they’re selling you the deal. So you can assume that they’re probably going to fudge the numbers to the upside, right? Not always. Sometimes the wholesalers are accurate on what the ARV is, but 9 times out of 10 I’ve found the wholesaler’s ARV and mine are a bit different.

So I highly recommend having access to the multiple listing service in the area that you’re buying so you can jump on and see what’s actually sold. And I like bracketing my properties by square footage. And let’s say we’ve got a 1500 square foot property. I like starting with a smaller adjustment, so a smaller square footage difference, and then going out from there. So if I’ve got a 1500 square foot property and there’s three comps between 1400 and 1600 square feet that have sold in the last six months in my neighborhood similar in amenities and similar in year built and that kind of thing, those are good comparable sales. So I’m going to look at those first.

Let’s say we find that one of them is a distress sale. The other two were arms length. They were fixed up. They were nice properties. Those two properties are going to be good comps for my ARV. The first property, this is a distress sale is not going to be a good comp because I’m not planning on selling my fixed up property as a distress sale. So you want to discard that one, right?

And David, you run comps all day long, doing what you do, running your team. So this is stuff you already know, but a lot of people when they’re figuring out value, they just pull every comp and they’re like, “Oh, well, I’m just going to put this at the top of all these comps.” They don’t drill down and look at what’s going on with the comps. Why did this one sell for higher than these others? Why did these sell for much lower than these others? It could be that one is on the other side of a street, a major street, and you don’t need to use those comps because you’re not in the same area. One could be the amenities. One may have a pool. One may have… There’s a lot of stuff going on with comps. So you got to know your comps really well.

And then of course, sometimes you’re going to nail your ARV and sometimes your appraiser is just going to be really conservative. They’re going to come in low anyway. And we’ve even run into that as well. So you have options in that situation as well, but sometimes you just can’t control what the appraiser is going to do, but you can hedge your bets a lot by knowing your data really well.

Josiah: Yeah. But you are an appraiser. Correct?

Brandon: Yes.

Josiah: Can you give our listeners a basic overall understanding of what appraisers do and maybe a 30,000 foot overview of the big things that you want to make sure you get right to get the appraisal you’re hoping for?

Brandon: Yes, yes. Absolutely. So an appraiser is tasked with providing an opinion of market value. And it gets more complicated as you get into different property types. So I’ve got my commercial appraisal license, which means I can appraise residential or commercial. And I’ve done both. On the residential side, since we’re talking about residential investment properties, you’re looking for comparable sales. So when people ask, “Okay. Well, what would you do in this situation? What would you do in that?” it all depends on the comparable sales there that are available.

So like I was saying, you look for the best comparable sales available and you work out from there. Let’s say you have a property that’s in a really rural area and there’s almost no sales around it. David, what would you do in that situation?

David: If I was trying to run comps?

Brandon: Yeah.

David: I would go back further to see what was there, further back in time. And if I couldn’t find anything at that point, I’d have to go to a different rural area that has a similar situation a little bit further away from my property than I ideally would like. And I’m looking for similarities like if they’re both agriculturally based, are they both on a well, are the lot sizes of the same. That’s what I’d be looking into. And then the last thing I’d say is, well, if the house was not in a rural area, so I couldn’t find a comp that was rural to rural, then I’d ask what the price per square footage would be. And I would try to figure out based on that our rural house is selling for more or less based on the price per square foot and use that information to come up with my price.

Brandon: So that’s exactly right. So if you’re in a rural area and there’s no sales directly around you, you have to expand your parameters to see where the closest comparable sales are. And then you might have to go further back in time. So it’s all about finding the most comparable sales available and figuring out what that data is telling you. Brandon, at work and you’re building your mobile home park thing. It works the same with mobile home parks. What are your comps with mobile home parks? Well, it’s other mobile home parks with similar utilities. And then you’re looking at the income stream those are producing, trying to figure out what’s the cap rate, what’s this market data telling us about this mobile home park based on its location, its income producing ability, the cap rates in this area for this class of property.

In a residential it’s what’s going on amenity wise at this property, where is this property located, what’s the square footage, those type things. So an easy appraisal is one where there’s a lot of sales right around your subject property that happened recently that are similar in size and amenities. So in that situation where you’ve got a lot of sales that happened recently, similar in size and amenities, you’re going to pull the comps that are closest to you. Look at those comps first and that sold recently and say, “Okay. This is a three bed, two bath, 1500 square foot house, fixed up. It’s got granite. It’s got refinished, hardwood floors, refinished new bathrooms. And that’s what we’re going to do with our house. And so that one’s selling for $150 a square foot. Our house is likely to sell for $150 a square foot because we’re similar in size.” That’s going to be a good comp. So did I answer your question, David, about… Or you want me to pick out items that you can renovate and get the most bang for your buck on or-

David: Well, usually when we ask the question of how appraisers do their work or what they’re doing it’s when the appraisal comes in low. So you thought you were going to get a value of $150,000 on your property because some wholesaler told you that that’s what it’s worth.

Brandon: Sure.

David: But then the appraiser comes back and says, “No, it’s worth 125 or 130.” Then everyone wants to say, “Well, what can I do to change the appraiser’s mind?” That’s usually how this whole thing comes up. How do I make someone else see it the way that I want them to see it when maybe there were 12 comps that all showed 125, but that wholesaler showed you the two that were for 150. When you run into this problem, “I’m trying to sell my house. My agent got me a great offer, but then it appraised low,” or I’m trying to BRRR but I got a low appraisal. What’s the best thing that people can do in that situation?

Brandon: Yeah. So I mean, there are two times that you can, I would say, help your cause. One is going to be before the appraisal is done and one is going to be once the thing comes in low approaching the appraiser in the right way. So you can’t interfere with the appraiser’s opinion of value because that’s their opinion of value. Not recommending anyone do that. Some things you can do on the front end would be have the place clean, light and bright when the appraiser goes over there to appraise it. If it smells good, the same with selling a place, if it smells good, it’s clean, it’s light and bright that’s going to make a good impression on an appraiser, just like it would a potential buyer.

Another one, when the appraiser is going in there is to have a list of the repairs that have been completed along with cost for those repairs. So if you’ve replaced the AC, you’ve replaced the roof, you just put granite countertops and stainless steel appliances, did all these things, have a list, print it out with the dollar amount and those things itemized out and hand it to the appraiser to put in their appraisal. I love when I get that from an owner, because it gives me ammunition when I submit my appraisal to defend my opinion of value.

Another thing is print out some comps that you like and give them to the appraiser. The appraiser doesn’t have to use them, but it helps them from missing something. Sometimes you have a property that’s in an area that doesn’t have a defined neighborhood. Okay? Let’s say that an appraiser comes from 30 minutes outside of your town to do the appraisal. This happens all the time. And they just pull comps from the neighborhood that’s listed on the MLS with your property, but that’s been entered incorrectly by the agent. Okay?

They’re not going to get all the data they need and they could miss some comps. So sometimes when the appraisal comes in low, the appraiser may have missed a comp. I don’t know a lot of appraisers that are open to looking at comps if you have good comps that they could use that are better than what they have. So my first question is if somebody asked me about a value, I’m like, “Hey, I’m trying to use the best data available. Do you have better data?” And if you have better data, send it to them and they can use it. So I would say on the front end, give them the best comps you have.

And then lastly, don’t be a jerk to the appraiser because they’re writing your report. And some of these guys are pretty salty and persnickety. But if something comes in low on the back end you could get your comps out and say, “Hey, here’s the comps I was looking at. Here’s the updates I’ve done. Have we considered all this? Tell me what you’re seeing here. And if you didn’t use these comps I have please explain why. I’m not upset. I’d just love to know why.”

David: So it reminds me a little bit of… So I’ve got pulled over quite a bit in my life for random things. Usually I’m swerving because I’m sinking so loudly to the music and I’m not paying attention. But I get pulled over I never get tickets. I mean, hardly ever. Yet I’ve got a buddy who gets a ticket every month. He constantly gets pulled over as well. He gets a ticket all the time. And he was asking me why that is. And I was explaining what I do when a cop comes up, and I’m like, “I’m super nice. I put my hands on the wheel. And I tell him I’m going to go in my glove box now and grab something.” And I make a joke to them. I’m friendly.

And, David, you might completely disagree with this, but it works so good. But my brother… Well, okay, I’ll just say, it’s my brother-in-law. So my brother-in-law, he’s belligerent to the cop. He’s instantly like, “I wasn’t doing anything.” And every time they give him that ticket. And if you go to an appraiser like a partner, like, “Hey, let’s work this together. Let’s get through this together. Let me be kind to you. I know you’ve had a long day. Let me make your life easier,” you’re going to have a much better chance of getting… They’re just going to work harder at wanting to make sure they help you versus, “Let’s just see what I can throw the book at this guy.” So yeah, I love that idea of giving better data to them because again, they’re not your enemy. They’re just doing their job. Having good data, be friendly. Yeah.

Josiah: Especially if you approach them like, “Hey, you suck at what you do. Let me show you how to do your own job.” You’re not going to get that far. If you say, “Hey, I see what you did here. It actually looks really smart. Your logic is flawless,” and you start the conversation there and go on to say, “but it would really help me if you could factor these costs in. Let me show you why. If this doesn’t happen, I’m going to be out of pocket $25,000. And I don’t have that much money.” You paint this picture for them that’s like when you tell a cop, “Oh, my God, I’m so sorry. I was speeding. I know I was wrong. I should never have done it. But if I get a $300 ticket I’m not going to be able to feed my kids.”

Now, that’s a dramatic example but for some reason that makes it clear that they don’t necessarily want to hurt you. They’re more likely not to. I see, Brandon, what you said is what most people do. They get angry and they want their emotions validated and they want to lash into someone else and tell them how they’re wrong thinking that person is going to change their mind because you made them see it from your perspective. But nobody looks from someone else’s perspective when they start the relationship off on the wrong foot.

If you go in there, say, “You did a great job. I think you’re a great appraiser and it would really help me if you could factor these comps into the work you came up with. This is what I was thinking. Am I wrong? Am I a complete idiot?” And the appraiser’s going to say, “Oh, no, no, no. Let me teach you something about how we do our job.”

Brandon: Oh, that’s such a good technique right there.

Josiah: Now, they get to talk about it, right?

Brandon: I use that constantly.

Josiah: And at the end of that they’re going to be like, “Yeah. I can probably work these comps, and let me show you how I would do that.” Boom. Now you have a new appraisal that’s $15,000 higher. If people just learned that one skill, they wouldn’t be on the forums complaining all the time saying, “This appraiser screwed me. How do you get an appraiser that doesn’t screw you?” type of a thing where it’s really just basic how to talk to another human being type skills that are going to get you through that problem.

Brandon: Absolutely.

David: Have you ever had somebody that changed your mind when you did an appraisal?

Brandon: Yes. Yes.

David: Okay. Tell us more about that.

Brandon: Yeah. I have. Exactly what we’re talking about happened. I did an appraisal, they came to me and said, “Hey, we just wanted to talk about some comps, and we might have some cops you didn’t see.” “Okay. Let’s talk about it. Send them to me.” So they sent them to me. There were some off-market sales that had happened that I didn’t have access to on the MLS that nobody had given me, these builders hadn’t given me. That helped their case. And so I said, “Thank you. I’ll put it in the appraisal.” I sent a revised appraisal.

And 9 times out of 10 though, that doesn’t happen. Nine times out of 10 it’s a homeowner that’s doing a refinance that wants their property worth 300 to appraise for 400. And you say, “Hey, show me the data. I’m not concerned with what it appraises for. I’m concerned with the market value of this thing. Show me the data that supports this being worth 400.” They don’t have it. and so approach with data. I would say just approach with support for what you’re saying, not just a wing and a prayer and saying, “Hey, it’s the best property in the neighborhood because I live here.” You know what I’m saying? And I’m an investor. I empathize with the investors. I know the BRRR process well. I empathize with appraisers coming in low. It’s happened to me. I hate it when it happens to me. The best way you can help your case is approach with data and with tact and being nice.

David: I think in general, what you’re saying is that you should know who you’re talking to. And I’m just a huge proponent… I was teaching a class last night for home buyers and explaining how I will absolutely present information to people completely differently than others. That’s one reason why I use the disc profile. If you’re this way, I’m going to talk to you this way. If you’re that way, I’m going to talk to you that way. When you’re talking to an appraiser, what they care about is data and numbers and facts. That’s how they arrive at their decision. If you come to them with a sob story or a, “But I love this house. I poured my blood, sweat, and tears into it,” they just don’t care. I’m sorry, but that doesn’t matter. You’ve got to approach that person with data.

When you’re approaching your contractor one of the things I tell people is I ask them what kind of work they don’t like to do and I never ask them to do that work. If they say they’re a great contractor but they have a bad back and they hate laying tile I just put laminate floors in instead. And I hear him say, “Oh, heck yeah. In fact, I’ll do it at a really cheap price if you’re going to do that for me. Thank you for that.” Most people would never even think that that’s a question that they should ask, but it makes a big difference in your relationship with that person.

But if you get into the other person’s perspective and you see where they’re at, you can tailor your approach to it just like we stated earlier. When you go to your lender and you say, “Hey, how can I make all my payments at the end of this deal?” “Well, I’d rather not.” “Okay. Why not?” “Well, I mean, I guess it’s not really that big a deal. It’s just I like knowing when I’ve got money coming in every month.” “Well, what if I make it worth your while and I sweeten the deal and I give you a little bit extra up front so I can pay at the end?” That’s often enough to push them over.

You can’t approach every human being the way you want to be approached or the way that you approach the last guy. You’ve got to tailor your approach to who you’re talking to. That works in everything. You’re trying to get a off market deal. You’re trying to buy directly from the seller. Well, every seller is different. They have a different story. They have a different pain point. They have a different motivation for why they want to get rid of that property. You can’t just say, “What’s the step by step process? Okay. I want to follow what Brandon does and just go copy it.” Because Brandon has to tailor his approach differently to everybody that he talks to also. That’s a really wise principle. That’s why I love talking to people like you because you’re going to tell us, “Well, this is what works on me.” So I put that in my memory bank. “Okay. When I come across a Josiah this is the way I want to approach them.”

Brandon: Yeah. It’s so true, man. It’s such a great point. Know who you’re talking to. And it just goes without saying, if you want something to be reflected in its best light and receive its best appraisal value, present it in the best light possible. If you’re trying to sell a flip are you going to leave it full of junk and smelling bad and… No. You’re not going to do that. Do the same thing with your appraisal. I mean, the appraiser is going to walk in there and spend sometimes 30 minutes measuring the house, taking pictures, and they’re going to leave. You don’t want to make a bad impression during that time.

Sometimes it takes hours, but sometimes it’s you got 30 minutes to make a good impression. Then they’re going to pull market data and they’re making adjustments based on the condition of that property. If the thing is a hoarder house and it’s got magazines stacked up to the ceiling and dead animals in there and dingy carpet and just broken stuff everywhere they’re going to factor that into the condition of the property. So present it in the best light possible just like you would when you’re trying to sell something.

David: Yeah. If they step on a dog poop when they’re in the backyard, they’re not going to like that. That’s going to be impacting their emotions when they write the appraisal. One of the things that I learned was… Brandon, and I’ll let you jump in in a minute. I had an appraiser who called me one time on a house that I was listing. And he said, “Hey, how many offers did you get?” I was like, “Oh, I got quite a few, but what makes you ask?” “Well, you sold way higher than the other comp in the neighborhood. And I’m trying to figure out how I could justify that.” I was like, “Oh, well I got like 20 offers. And all of them were… In fact they were even higher than this one, and we just went with this one because they wrote a better letter.” And he goes, “Okay. Cool.” And it came in at value. And I realized, “Oh, that’s a thing they look at.” How many-

Brandon: Yes.

David: … people are trying to buy in this neighborhood. So now for my clients, when I meet the appraiser to let them in the house, I’m like, “Isn’t this a crazy market. I got 14 offers on this house somewhere even higher than this one. Can you believe?” Right? Before he ever even looks at the house. I’m setting the frame for him to look at it in that direction because I learned, “Oh, that’s how appraisers think.” That’s the way that they’re thinking. Much harder to do that on a refinance because you’re not getting that, Oh, everybody wants to buy my house.”

Brandon: Exactly. Yeah. But that’s smart. Actually recently that just happened on a deal I just appraised. It was a fourplex I showed up out there. The property is going per square foot above… Well, slightly above the highest comp. Okay? So this is a tough appraisal because here in Huntsville just like nationwide the real estate market is on fire. There’s not enough properties for sale. Everything is appreciating really quickly. Right?

And the first thing the agent says to me is, “I had four offers on this. This was a bidding war. There was a bidding war on this property. I had four offers above asking price. This is the guy that got it. Okay?” So I automatically know… And these parties aren’t related either. This is an arms length transaction. I automatically know the market is telling me this property is worth this. How do I support that with the data? And there are ways to do that. So what I ended up doing was making a time adjustment because if you.

PART 2 OF 4 ENDS [00:44:04]

Josiah: … There and so what I ended up doing was making a time adjustment, because if you can prove that the market is appreciating at a certain rate, you can make a time adjustment to some of these things. So, how does a property ever appreciate in value? You got to-

David: Oh, this is so good.

Josiah: … Yeah. How does a property ever appreciate in value? Well, if you can show that… We have right now, we have a difficult environment to do appraisals in right now because everything is going up in value quickly and there’s not enough properties for sale. So, it stands to reason that most sales are going to be going at or above the highest sales caps. So how do you support that? Well, you can support that with a time adjustment. So-

David: I have never heard of that phrase time adjustment, but it makes so much sense. I explain this to people all the time as a real estate agent. This is a conversation I have almost daily, is that I realized that in a completely objective world, home values would never appreciate because the appraiser would say, “Oh, the high comp is 500. It won’t go over that. I don’t care if you’ve got 550, it’s worth 500 and the sales would all be dropping,” but that doesn’t happen-

Josiah: Right.

David: … Why? Because of the multiple offers. The appraiser factors that in and says, “Oh, well, if everybody wants to buy it, well, I guess it is worth 530.” So the only thing that can push a new high value up in a neighborhood is when there’s a lot of buyers in that market that all can afford to and are willing to pay over asking price. When do we see that happen? Seasonally, that’s in the springtime and the summertime. So, for almost all my sellers, I’m telling them if you can wait, wait, because when you get all these buyers, not only are you going to get a better offer or a faster offer, the appraiser is more likely to give you the value. I can be an amazing agent and sell your house for double what it’s worth. It doesn’t matter when it appraises low, you’re going to have to sell it for whatever the value is.

And what you’re basically describing is, is verifying that yeah, that is correct from what an appraiser is looking at. And then you get into the winter time where you’re not getting multiple offers, it’s very hard for them to say it’s worth more than whatever the high comp is and neighborhood, because it sat on the market for 90 days just to get asking price, right?

Josiah: Mm-hmm (affirmative).

David: So I, as an agent, I factor that in and people should be thinking about that when they’re trying to sell their house and you’re actually telling you them. It was just a theory, but now it’s a fact.

Josiah: Now you know.

Brandon: Hey Josiah, so when you talk about good data, I want to bring this back to when you have good data, you’re presenting good data to the appraiser that’s going to help your case, which is true. How do you get good data? If you’re not a real estate agent, earlier you just said, get access to the MLS, but what does that mean? How does somebody do that? Do they have to become an agent or can they just work through one?

Josiah: No, you can definitely work through an agent. You don’t have to become an agent. You just need to have somebody that can pull comparable sales for you or you need to be able to do it yourself somehow. I can get access to the MLS because I’m an appraiser and you can call up your local board and ask, “How can I get access to MLS?” It depends on their rules and regulations around that. I can get access to MLS just because I’m an appraiser. Licensed agents and brokers can get it as well, but if you’re just an investor, you don’t have access to MLS and you’re in David’s market and David works with investors, I would call up Dave and say, “Hey, David, I want to buy investment properties. I need to be pulling comps on a regular basis. How do I go about doing this? Help me out. Help me come up with a way to do this.”

David may say, “I got some guys on my team that want deals. They’ll help you pull comps and exchange for them being your agent, how does that sound?” Just figure a way out to get access to it because you got to have it. And if you’re doing it based on Zillow alone, those Zestimates are wildly inaccurate-

Brandon: Yeah.

Josiah: … You can’t do this based on this Zestimate alone. So, be able to verify things what they’re worth on the MLS. Not saying Zillow is always wrong, sometimes they’re right. Sometimes they are low and people are selling stuff below what they should-

David: Yeah.

Josiah: … And you get a really good deal because of Zillow as well, it’s a double edged sword.

Brandon: So David, I have a question then for you as the agent side of this. So, let’s say I’m a new investor, I’ve never bought anything before, I go to David Green, who is one of the most busy agents in your market and I say, “Hey David, here’s what I needed. I need you to drop everything you’re doing every time I need a comp and I want you to send it to me within five minutes. Go.” Now, David is not going to like that. So David, how do you approach, how do you want a new investor or even an established investor, but you’re more likely to work with an established investor, but if you’re they are new investors, how do you want them to approach you and what’s going to get them primed so that they do get comps from you or how would you recommend that?

David: Oh, this is such a good question because I use this when I’m looking for agents out of state and it works. And then other people come to me and say, “Well, I can’t find a good agent. All the agents suck.” And I’m like, “Well then how do I find them if that’s the case?” It’s just that I am an agent, so I understand what the agents are going through and I approach them in the way, I know who I’m talking to like we said earlier, I tailor it the same way. This morning before the podcast, I had a conversation with someone who said, “Hey, David, we’ve talked twice before, it’s my friend’s dad. I want to sell my house. I’m going to 10/31 into a new house, can we go over all these numbers?” And we had talked about me selling his house and helping them buy the new one.

So, we spent 45 minutes talking on the phone about how a 10/31 works, all the information, what he asks, watch out. His plan had a couple holes in it, I helped him seal it. Then what markets he should be looking to when he sells his primary, how he’s not going to pay capital gains, a very long conversation. And at the end he goes, “Yeah, I tried to sell the house directly to the tenants themselves, but they wanted to get an agent and I didn’t want to pay that agent’s commission. So I’m not going to do it.” And I was like, “Wait, why have we been talking this whole time if you’re trying to sell the house directly to the tenants yourself? Why would you even be talking to me?” He said, “Oh, I know you know a lot about real estate, so I wanted you to help me.”

And the conversation ended right there, I’ll probably not talk to that person ever again because his words were nice, but his actions said, screw you. I don’t care about your side of this deal. I just want to use you for what I can get. And when agents smell that in an investor, they’re just going to give them back the same energy. I want you to run market data, run comps, I want you to find all this information, but I want to use a Redfin agent who is going to discount me and give me back part of the commission when I buy the house or I want to go to a wholesaler to have you look at the deal, but I don’t you to be involved. You shouldn’t be asking that person to look over what you’re doing if you’re not going to use their services. This is what real estate attorneys hate because everyone says, I don’t want to pay a retainer, but can I just ask you a quick question, for the CPAs.

I don’t want to sign them through with your firm, but can you just ask me this question? Anytime you catch yourself doing that with somebody, stop, because you wouldn’t want someone doing that to you. Nobody likes that. So the smart investor would say, “Hey, this is what I’m planning on doing. This is what I know, this is what I don’t need to know, what would you recommend we do?” And let the agent paint a picture and you can decide whether that will work for me or will it not. I’m at the point now with my business, where if you’re my client, okay, you’ve signed a buyer representation agreement or listing agreement with me to buy a house or sell a house, I will prioritize you and it’s my job to build your wealth. I will look at your deals, I will give you advice, I’ll connect you with agents in other markets. I will try to find deals for you, whatever the case may be.

If you’re just kind of sniffing around like, “Well, what can you do for me? And what can you do for me?” I’m not doing any of that because I’m a professional and I expect to be treated like a professional. The answer to your question, Brandon of how should you approach agents is treat them like they’re a professional. And you should be figuring out, are they any good? If you were going to hire a lawyer, I would say, “What’s your win/loss record? When was the last time you had a case like mine and you won it.” I wouldn’t just ask him a million legal questions and then wait to make my decision to the end. Why don’t you ask agents, how many houses are you selling? What’s the last deal you found for an investor? On the last house you sold, how much money did you get? What’s your strategy?

And they should have a lot of information to give you. They should be like, “Oh boom, boom, boom.” And it’s flowing out of their mouth because if they’re good, they’ve been doing it a lot. Brandon, if I asked you to tell me about the last mobile home park you bought, you would know the numbers, you would know the ROI, you would know what your investors made or what projected to make. If I asked you that question and you have no information for me, you probably don’t do very many mobile home parks and it’d be very risky deal to put money into your fund.

Brandon: Yeah.

David: That is the best way to approach someone when you don’t know yet, is this person good? Tell me about your experience, tell me about the last couple of deals and what they look like. Now tell me what I can expect if I work with you, what do you want for me? And what are you going to give?

Brandon: Boom, that is the answer.

David: We actually spent all night last night, I did a seminar for home buyers. It was 35 people that came and they’re all people that want to buy a house with me. And the purpose was for me to get to know them and them to get to know what happens when you buy a house, but even more importantly, do I want to work with you? Are you just going to kill my energy and drain me and then go use another agent after you got my knowledge or are we going to be in a good relationship? And people here say all the time that those relationships really matter and it’s completely true. You have to get to know the person you’re dealing with.

Brandon: Well, one more tip there is, if you approach people with honesty, let’s say you are brand new, you don’t have any deals under your belt, you’re coming at an agent… I guess if I was an agent or even if somebody came to me as an investor and was like, “Hey, I know…” And don’t try to pretend that you are something you are not because the agent is going to see right through that.

It’s okay to say, “Hey look, I know that I’m a new investor. I know that will be investing time in me to get me these comps or to answer questions for me. I understand that that is a risk for you. I want you to know that I acknowledge that as a risk for you and here’s how I’m going to make sure I overcome that. And I’ve read 18 books in the past three months, I’ve listened to 400 episodes of this Real Estate Podcast, I’m not like everyone else.” And all of a sudden that agent’s like, “Oh, okay, thank you for…” Because again, every agent has that fear. I’m going to spend a ton of time working for this person and they’re not going to use me. That is a gigantic waste of time and especially if you’re new.

David: Yeah. If they step on a dog poop, when they’re in the backyard, they’re not going to like that. That’s going to be impacting their emotions when they write the… Because I promise you, I’ve never met a human being yet who said, “I can’t sleep at night, that guy put me in his car and drove me around to show me houses for three weekends in a row and then I used a different agent to buy it.” It just doesn’t happen. Nobody feels bad when that’s the case. Or I had this agent come look and tell me everything I need to do to change my house, how he’s going to sell it, what the market is doing, what the comparable sales are, what they do to sell houses and then I went to my cousin and had her sell the house instead based on everything that David just told me. People just don’t feel bad about that.

So agents, we get training specifically to look for the person that is taking advantage of us and say no. The same way that investors are getting training for what to look for in an agent. And you got to realize if you think that you’re slick and you think you’re getting over on them, you’re only getting over on the bad ones. You’re probably having a bad experience with every single agent that you end up using. Brandon, you’re 100% right. If you say, I know that I could waste your time and I really don’t want to. Tell me what this would look like in a way that doesn’t waste your time, it doesn’t mind. If someone said that to me, I could say exactly what they’re getting into. Here is what it’ll look like, here is what we would do, here is how it looks in the end. And if they say, “Oh, I would never want to do that,” then we are a bad fit. If they go, “Oh, that’s all? That’s easy,” then we’re a good fit. That’s probably the easiest way to start that conversation.

Brandon: Yeah, so good. All right, let’s just-

David: Much more concisely than me, good job.

Brandon: … All right Josiah so, let’s go back to your story a little bit. So, you are doing these BRRRR investing deals with basically no money down, sometimes you have to leave a little bit of money in there, which is why you’re flipping houses to generate some more cash so that way you’re okay with that, which I think is super smart. You are also doing some multifamily, are you as the BRRRR with the multifamily as well or what does that look like?

Josiah: Well, so what I’ve been trying to do, and I’ve talked about this with my mentor, that is kind of helping me think through these things, but we’ve been making so much traction on the BRRRR stuff on the one to four family deals that instead of stopping that, I’m continuing to do those because I’ve got the system in place. I’ve got the contractors, I’ve got the boots on the ground, I’ve got the leads coming in, I’ve got the systems in place. That doesn’t require a ton of time for me to run it at this point.

Brandon: You should write a book called Rinse and Repeat.

Josiah: Rinse and Repeat. Yeah, I like that.

Brandon: I’m going to come up with a book title for every episode, now-

David: Every single guest gets Brandon book title.

Brandon: … Every single guest is going to have a little book title. Yours is called Rinse and Repeat. [crosstalk 00:55:44]

David: You should sign up for that, call Brandon Turner tell him what you’re doing in life and then after 30 minute call, he’ll give you the name of the book you should write.

Brandon: Rinse and Repeat: A step by step guide to build in a deal funnel that… Whatever. All right, anyway, okay. So-

Josiah: Maybe I’ll rename my book-

Brandon: Yeah, you can rename your book too-

Josiah: … Yeah, here we go.

Brandon: Okay, so you rinse and repeat your current one to fours, perfect.

Josiah: Yeah. So, we’re still doing that and we’re flipping some of those, we’re keeping some of those-

Brandon: Okay.

Josiah: … So we started working on the multifamily thing. I made it my goal to put together a multi family deal and do my first syndication. Started working on that, long story short over about two months, found a deal in Dallas, Fort Worth, went and saw the thing. I mean, drilled down and nailed every number on the whole thing from the rents to the repair numbers, management, insurance, the whole nine yards. 16 offers on the property. The highest eight offers made it to the highest and best round and the highest and best round we were the highest offer and did not get the deal.

Brandon: Wow.

Josiah: And we did not get the deal, we had a 100,000… So the purchase price was 6 million bucks, we had a $100,000 earnest money going hard the first day. Meaning if we go under contract and walk away for any reason or the thing falls apart for any reason, they get $100,000, no questions asked. Doesn’t matter what the inspection shows or anything else, day one, when they sign that contract, a 100,000 bucks is going over to them. We’re not going to get that money back. The party that won offered $50,000, less than us, but they had $250,000 earnest money going hard day one. So, I was a bit blown away that the seller decided to embrace losing $50,000 on the purchase price of the sales price in exchange for having $150,000 of extra earnest money going hard day one. But that’s what they decided to do. So we were disappointed we didn’t get the deal, but we worked really hard, I learned a ton, but yeah, that’s the market we are in right now.

David: Who was communicating to the seller? You or did you have an agent?

Josiah: No. No, it was just the broker-

David: Okay.

Josiah: … The broker listing the thing was doing that.

David: Did you ask that broker what matters most to your client? Do they want security? Do they want price? What’s important?

Josiah: Yeah, we did. And they gave us a heads up, they said they are big on earnest money going hard day one. We had less than $100,000 earnest money originally. And I have a team of people it’s not just me and so we went to everybody and $100,000 was the most everyone was comfortable with putting in. So, that’s the most we came to the table with, remember we had a $50,000 higher offer price. They were hoping that would sway them-

David: Yeah.

Josiah: … But we didn’t know they would go with the lower offer price to have the earnest money, but that’s what they did. So-

David: And I’m not trying to say you did something wrong because you did what you could-

Josiah: Yeah, sure.

David: … But it’s more for the listeners benefit-

Josiah: Sure.

David: … Listen, when people talk, if they tell you… What probably happened is that property probably filed a contract a time or two or three already and they had PTSD from, we got excited, we got let down. We got excited, we got let down. So to them, that 50,000 more that they could get on the upside was not as important as the feeling that they’re not going to back out or our downside is protected. And what you find is a lot of human beings, they don’t know what matters to them until they’ve gone through a little bit of life. When you first sell a house and you get a really good offer price on it, but the offer comes in with an inspection contingency, an appraisal contingency and then the clients back out or the buyers back out, you start to realize, oh, I got way too concerned about the price and I didn’t look at the big picture.

And some of that other stuff goes up as far as how you value it. And when you’re in Josiah’s position or you’re the buyer trying to buy, the more you get to know about what the seller will tell you about them, their situation, what they’ve been through, the better you can kind of tailor your approach. And now for Josiah, he can go to his team members and say, “I don’t want this to ever happen again. We’re finding some way that we could borrow more money on the earnest money deposit so we don’t get beat.” And now your business is better.

Josiah: Absolutely. Another thing I was thinking through, okay, why did this happen? Because we couldn’t find that it had been up for sale before. My best guess was that these guys were involved in a 10/31 exchange and they a hard date that they had to complete this transaction by. And if this thing did fall apart, even though they get $100,000, their other deal would fall apart too and that loss was of greater monetary value than taking 50K less and having that higher earnest money there.

Brandon: Yeah. So, I mean, I’m thinking in the seller’s shoes too. Had I been in that boat, a $6 million property, 50 grand versus the 250 versus the 100, I’m not sure I would have taken your offer, because especially the 10/31, for sure, I wouldn’t have-

Josiah: For sure.

Brandon: … Yeah, but even if not, I mean, there’s a big difference, 250 to 100 for going hard and that-

Josiah: Sure.

Brandon: … So yeah, you never really know. And so-

Josiah: Yeah.

Brandon: … But the bottom line is, I love the fact that you swung for it, you went for it-

Josiah: Yeah.

Brandon: … You learned a ton, it’s the same advice that I know you give it, I give it, David gives it to the newbie who’s trying to buy their first property. They want to buy that duplex for $112,000 and they get outbid and they’re like, “Oh man.” What would we tell those people? No, that was awesome. You went for it. You swung, you didn’t get it this time, but the more you do that, the better you’re going to be the… What do you got to do next time to get more of those? And the question I was asking I’ll and again, you know this, but how do you do that same thing you just did every single week going forward? Not like, “I did a deal,” but how do you do that every week? Or at least every month? How do you put that effort in every single week? Answering that question is what is going to give you consistent deals versus-

Josiah: Yeah.

Brandon: … I did a thing. So what is your plan for that? What do you… Find more and more?

Josiah: I think, if we’re talking 10X, how do we 10X this effort?

Brandon: Yeah.

Josiah: It’s going to have to be creating a team of people doing this, similar to what you’ve done with your mobile home park team and David, what you’re doing with your real estate team. I only have so much time to be working on all these things, so I’m going to have to have a team of people doing the same thing I did on this deal and kind of scale that way, scale the number… I say scale, but just gives me more capacity to be able to have one of these going out every week. So yeah, I mean, it’s certainly possible, but I got to amp up the amount of effort going in to get the output I want, so.

Brandon: Just this morning we had a call, we had opened our capital team call or mobile home park fund call, and we’re talking about acquisitions. And we set a lead measure, we’re really big on lead measures and we set a lead measure to make an… I think it was 24 letters of intent by the end of April. I think that was what the plan was, I might be off slightly there with the walker with no more than I, but I think it was 24 or 23, something like that. And it was basically one a week for the first month, two a week for the second month and then three a week for the third month. And we’re looking at that and the conversation came up is the amount of work we put in… Of all the leads that come in, we only actually end up analyzing about half of them. Half of them we can just toss out without even look at them. Of the ones we analyzed, only half of them we actually ended up writing a letter of intent and each one is taking 15 hours to underwrite.

And so they said to me… I don’t know where it came up, but in the conversation is we can’t do 24 offers. I mean, we can barely do one a week right now, there is no way we can do three a wee. And I said… I don’t know if I said it, but the question is not, we can’t do it, it’s how do we get three a week? Okay, well, we’re going to need 15 legit offers every single… Sorry, legit leads every week. Solid leads that we can actually make 15 every week.

Right now we’re getting barely 15 a month. So, the question was, well, how do we get that? And so again, the better questions lead to better… And this works if you’re trying to buy your first duplex, trying to buy a 50 unit. So, what we did is we launched a site, bringbrandonadeal.com. That’s that’s our strategy. And I’m actually implementing it right now, here on this webinar, I mean podcast. Because I’m like, “If I just tell the entire world that I’m looking for mobile home parks, they can bringbrandonadeal.com and get paid a commission, referral fee, piece of the deal or partnership, whatever.

David: Well, you also put it on that Instagram post, you said that it was one of- [crosstalk 01:03:49]I saw that.

Brandon: I did, I put on that. Yep.

David: And my business partner said, “Hey, did you see what Brandon did? We should do the exact same thing.” He actually said, “He’s a marketing genius.”

Brandon: No, this is telling people what you want and then making it worthwhile to go get it.

David: And giving guide while you do it.

Brandon: Yeah.

David: Here’s what I want to point out about what you said that I 100% agree with, you didn’t say what’s the answer before you started, you started, you had a problem, I cannot analyze all these deals. Then you thought of a solution and your mind gave you the answer when you were in the mud, like, “Oh, I’m overwhelmed. How am I going to get out of here?” That is how our brains work and you got to just submit to that process and quit trying to have the answer to everything before you start, because you’ll never get it. The reason I did that home buyer seminar last night was because I had about 25 to 30 people that have all said they want to buy a house or they want a house hack or something. And I was doing those meetings individually.

And I know I’m going to see Brandon on Wednesday, there is no way I can do 25 of these before Wednesday. And I don’t want people to say, David didn’t have time for me to get their feelings hurt. My mind came up, what if you do it all at once? Well, then what if they feel they don’t matter to me, they’re just part of everyone? Then buy a bunch of pizzas and sodas and make it a big party and everyone can hear everybody else’s concerns. So, we can all bounce ideas and I can answer every question they have about the real estate market at the same time and they all get to hear it. Now, it’s like a free class that they’re getting an education in real estate. It’s not an impersonal thing. And they still get the information that I needed them to get to decide if we want to work together.

My brain never came up with that solution until I had a problem that there was 30 people and there’s no way I can get this all done. And that’s why I want to just highlight what Brandon said, that’s how we think, it’s how our brains work. Josiah had this problem, how am I going to buy more houses when I don’t have more money? And he was talking about it to other human beings and someone said to him, “What if you had private money?” That wasn’t really a crazy solution, but he was never going to think about it until he got in the point where his emotions were bothered and he was feeling like, “What do I got to do to get out of this mess?” So run forward into the mess, let yourself get overwhelmed. Let yourself say, I don’t know what to do here and then watch as your brain gives you an answer or another person gives you an answer to get through it and then take the next step and run forward until you get jammed up again. That is how progress gets made in this game.

Brandon: Love it. David, you should write a book called Once More Into the Fray-

PART 3 OF 4 ENDS [01:06:04]

Brandon: … More into the fray.

David: All right that’s a really funny joke. Because that’s an inside joke that Brandon and I have. I really liked that movie, what’s the movie called? [Crosstalk 01:06:10]-

Brandon: Gray, yeah The Gray.

Josiah: I’ve seen that! The one [crosstalk 00:00:13].

Brandon: War into the fray-

David: Yeah wolves.

Brandon: … Into the last good fight I’ll ever know. Live and die on this day. Live and die on this day.

David: I love that Poem.

Josiah: Beautiful!

David: That’s funny Brandon.

Josiah: Once more into the gray.

Brandon: There you go. All right guys. Josiah so let’s move on. Last question I have is that the plan, then the plan is to keep where you’re, keep the one by four with the rinse and repeat, you can keep rinse and repeat. And then you’re going to just keep pursuing these larger multifamily and syndication raising money. That kind of stuff. Is that correct?

Josiah: Yes. Yeah. We’re going to keep doing the bird deals. Our goal is to also speed that up. So, we’ve got, 4,000,000 our goal is to speed that up and have 10,000,000. We’re going to try to do that, and about 40 to 50 single families have 10,000,000 that are cash flowing. These are cash flowing about 200 bucks, profit a door.

Brandon: That’s awesome!

Josiah: And, also do flips. And I’ve got that system set up. That’s kind of running itself with a little oversight by me. And then I’m also working on trying to find off market apartment deals and trying to get into that. My progress for the amount of effort going in there, the results are not very good so far. So I’m not making a lot of traction, but I’m learning a lot. So I feel like that’s good. On the one to four family side, I’m making a lot of progress. The results are great over there. So I want to keep that going while I’m working myself into the multifamily thing.

Brandon: All right. Well, so let me ask the final question then on that note before we move on. What do you need? From our audience there’s a quarter 1,000,000 people potentially listening to this right now. What do you need in your business? What would help you right now?

Josiah: Off market multifamily leads, is what I need.

Brandon: All right. If people got those, you know where to contact Josiah.

Josiah: Yeah. Shot me a message [crosstalk 01:07:56].

Brandon: Yeah, we’ll give you your contact info at the end of the show. But before we get there, we got to get over to our world famous.

Speaker 3: Deal Deep Dive.

Brandon: All right, Josiah this is the part of the show where we dive deep into one deal you’ve done and pick it apart a little bit. You ready for that?

Josiah: Absolutely! Let’s go.

Brandon: All right, so let’s start with the question. What kind of property is it?

Josiah: It is a duplex.

David: How did you find this duplex?

Josiah: Found the duplex on the MLS.

Brandon: MLS, all right how much was it listed at, do you remember?

Josiah: I believe the duplex was $225.

Brandon: Okay.

Josiah: And we made an offer at $205. So most of our deals are not on the MLS. The reason I like this one, is this is one of the best ways to find good deals. Try to find some inaccuracy on the listing.

Brandon: Mm-hmm (affirmative).

Josiah: I noticed-

David: I do that all the time.

Josiah: Yeah, I looked at every multifamily listing in Huntsville. And nothing looked decent except this one. And I was like, “Okay, what’s going on with this? This looks like it’s priced a little bit too low. The dollar per square foot price on it was 150 bucks a square foot. And then I noticed this duplex is listed at about 1,200 square feet. But it looks like it’s about 2,500 to 3,000 square feet. There’s no way this whole duplex is 600 square feet a side. And the multiple listing, the MLS listing was showing 1200. I jumped on the tax records and found that it was 2,500 square feet. So for some reason, the MLS was pulling in only half the square footage on this thing. So I bought it at about half of what it should have been priced at.

Brandon: Great!

David: There you go.

Josiah: Yeah.

David: That’s one of those, you didn’t find a deal, you made a deal. By looking at things other people miss. We do the same thing, that’s why I’m having luck with the buyers I have in this super hot market. Is I’m literally looking in the MLS for keywords, like keyword alerts on BiggerPockets. I have this set up in the confidential remarks, that only agents say to each other. Saying things like unpermitted addition or unfinished basement or something where I’m like, “Oh, that’s house shows 900 square feet, but there’s another 700 square feet that we could convert that nobody sees when they’re looking on Zillow.” And that’s a great point Josiah! You look for what other people are missing, even on the MLS. Okay.

Josiah: Absolutely!

David: So, how did you end up funding this deal?

Josiah: We funded it with the same strategy. Hard money for 90%, private money for 10%.

Brandon: That’s good. Hey, what do you pay-

David: I love how simple that is.

Brandon: I know I did too. I know this is not one part of the Deep Dive, but what typical rates are you paying for hard money and private money?

David: Dude, I am completely spoiled. Because I started off trying these hard money lenders that were charging 10, 12% right now for both blended. My blended rate for the entire 100% is eight and a half percent.

Brandon: That’s awesome!

David: Yeah, and about one point. So, and they’re giving me a good deal, because I give them a lot of business, I refer people to them. But that’s not super expensive for what’s happening with it, how quickly it can close and stuff, so.

Brandon: Cool, that’s awesome! All right, so you fund it that way. So what did you do with it then?

Josiah: Yeah. So, the cool thing was one side was rented out, one side was vacant. So we kept the tenant that was there, paying what they’re paying. Renovated the other side, the side that was rented, was rented for $650. We renovated the side on the right and rented it out for $1350. Now we’re working with the tenant on the left side. They’re going to be coming up to $1350 as well. So we more than doubled the rents at the duplex.

Brandon: Wow!

Josiah: We’re in it total for $250 and the property is worth $400.

Brandon: That’s awesome!

David: What if instead of that $225 that was listed at. You went in and said, “I’ll give you $245.” Would you still buy that deal?

Josiah: Absolutely!

David: Isn’t that funny?

Josiah: Yeah.

David: Who cares what the list price [inaudible 01:11:35]. I love this!

Josiah: Yeah, and the crazy thing was this thing had been under contract before and it had fallen through. The thing was $225, we went in at $205 and they took it. We would have given them $225.

David: But it’s exactly right!

Josiah: But I mean, I was like, this is a smoking deal.

David: Yeah.

Josiah: It’s mis-listed and nobody’s recognizing it for whatever reason. The thing had been on the market for three months. It’s crazy!

David: But it’s worth $400 now, right?

Josiah: Yeah.

David: So, and you got it $205, you could’ve got it at $225. You still could have bought it at $250. And it would still be a great deal to make. And that’s how I want people’s minds to be thinking. Is quit thinking if I got it at less than lease price I won, and if I got it over lease price I lost. Ask yourself what’s that property worth to you? You made that property worth $400,000. You could have bought it at $300,000 and then it still would have been a great deal.

I see these deals blow up all the time because the seller doesn’t want to fix the deck in the back that has some dry rots, so people back out. And I’m like, “You just lost $150,000 of equity to save $2,500 of a deck. Was it really worth your ego in that case?” But yeah anyway, so did we ask what the outcome was on this deal?

Josiah: Yeah. So, we’re working through the second renovation. They’ve already agreed to the $1350 in rent. And so after that’s done, we thought about selling it just so we could capture that massive amount of money in such a short amount of time. But we’re just going to keep it, we’re going to burr out of it. It’s going to cashflow nearly a $1,000 a month. And so we’re just going to keep it man. It’s going up in value so fast. It’s in a really great area, great schools. So I mean, I would live in this property and yeah, we’re pretty proud of it. It was one that really worked out well.

Brandon: All right. The last question then. What lessons overall did you learn from this deal?

Josiah: There are really good deals on the MLS. The MLS gets beat up because everybody says it’s picked over, it’s a place where only retail buyers go. But there are really good investment deals on the MLS, if you’re willing to look. And also think outside the box. Don’t just look at the data being presented to you think, “Is this data correct?” Because there’s a lot of bad inputs that go in on the MLS, that if you recognize, if you find that something’s listed at a lower, or a smaller square footage than it actually is, there’s value there.

David: Exactly right!

Brandon: There you go.

David: Yeah. Just don’t look for the easy stuff, right? What I tell people is everybody’s looking for the same [dang 01:13:50]three houses on Zillow. They’re all chasing the same one, right? Like, “Oh, look at that. It’s amazing! It’s beautiful! It’s gorgeous!” And then they try to get it, they don’t. They say, “Oh the MLS is no good.” Right? But I’m looking for the one that everybody else doesn’t want or passes up. The one that they don’t even take pictures other than the outside, so you can’t see the inside.

Josiah: Yeah.

David: The normal person goes, “Nope, screw it! I can’t see what it’s like.” And they move on. And I stop and go, “Oh, can I get into the chance and go see this one? Maybe it looks terrible and that’s why they don’t have pictures. We could get a better deal.”

Brandon: That’s a great-

Josiah: Yep.

Brandon: … point!

David: You’re giving some really good advice.

Brandon: I never thought about the photo thing. I mean, I kind of do that too. If I can’t see a picture, I’m just kind of like, “Ah, that’s annoying! It’s more work than I can analyze it.” Yeah.

David: Because your brain is in that spot where it’s like, “I want to understand, do I want it or not.”

Brandon: Yep.

David: And it’s running it through this filter that you already have in your own mind. “Oh, it doesn’t fit what I want.” And you move on. But when you have an agent, like me on my side. My filter is, “Please don’t go after that same house that everybody else wants. I don’t want to try to chase it. That’s really hard to get.” So when I see that same deal with no pictures, my brain, my reticular activating system goes, “Oh, heck yeah! Let me look at this one.” Right? Or, “Oh, those pictures look terrible! That the realtor took it with his own phone and see his gut hanging out in the bathroom mirror.” Type of a thing. And nobody wants it except that for us, we’re calling that agent frantically.

There’s one I have right now in a city called El Sarita. That would be a perfect house hack, listed at $850. It’s been on the market 90 days. And I’ve already talked to the realtor three times and previewed it. And she’s told me that if we get an offer at $750, they’ll take it. It’s a super good deal! But nobody else is looking at that house because she listed at a 1,000 square feet. When the whole downstairs part, that’s almost pretty much done is another 1,200 square feet. It’s really 2,200 square feet that she priced too high for 1,100, but way low for the 2,200. And this is why like you said, “There’s deals on the MLS. By having a guy that can kind of navigate these waters is really helpful. Whether that’s an agent or even a person on your team that’s experienced with this.” Brandon, you look like you are so deeply thought right now.

Brandon: No, I was just thinking about how that same strategy, I always talk about where I look for two bedroom houses that have 11, 1200 square feet, 1300 square feet. Because that’s my way of finding hidden deals on the MLS is like-

David: Yeah everyone skips the two bedrooms [crosstalk 01:15:56]-

Brandon: Because nobody likes-

David: The search app to be-

Brandon: Three bedroom houses, yeah.

David: … three bedrooms and at least two back [crosstalk 01:16:00]-

Brandon: Yeah, because nobody likes two bedroom houses. You’ve got in a 1,400 square foot house. I mean, I [inaudible 01:16:03]I knew that it was 2,200 square foot house with two bedrooms. And I was like, “I guarantee you something is wrong on that listing. Or that house is the strangest house with like this…”

David: Or it’s a discount realtor who got screwed on their commission. And so they don’t care, right? If that’s mine. I’d put four bedrooms. And then when they went to see it, they said, “There’s only two.” I’d say, “Well, one of them’s the dining room and one of them’s a family room, right?” But at least you went in there to go look at it. ” And It’s 2,200 square feet! How much, we’ll fix the rooms for you. If you want to buy the house.”

Brandon: That’s funny.

David: I know it’s really, but yeah, it sets everybody’s got the same parameter set up on their search. Everybody’s mind works the same way. They’re all filtering deals through a very similar lens that they’re all missing the same stuff. But Josiah, he comes in. And he finds what everybody’s missing. And that’s why he’s on the BiggerPockets podcast.

Brandon: There it is.

Josiah: Well, let me get, Hey, let me give you a free tip here.

Brandon: Please!

Josiah: Okay. That can help you make a ton of money on a deal. That almost nobody does. If all the BiggerPockets listeners start doing this. I guarantee you some of you guys have this workout really well for you. Take a measuring tape, go to Lowe’s, buy yourself a measuring tape. Take it with you to some of these properties you’re looking at and measure the property real quick. Figure out the square footage. And you’re going to discover that some of these properties are listed for 1,200 square feet and the thing’s actually 1,600 square feet. If you’re in a 100 bucks, a square foot neighborhood. That’s $40,000 of value you just found.

Brandon: That’s awesome!

Josiah: Try it!

Brandon: Yeah. That’s a great tip!

David: 40 thousands of dollars of value-

Josiah: 40.

David: … Dropped on us right here. Josiah the value dropper smelser!

Josiah: I’ll take it.

Brandon: I like it. All right, well now it’s time to head over to the world famous.

Speaker 3: Famous Four.

Brandon: All right. This is a part of the show where we ask the same four questions every week to every guest. Josiah, Famous Four number one. What is your favorite, other than your own. What is your favorite real estate related book?

Josiah: It’s going to be crushing It in Apartments and Commercial Real Estate, by my Brian Murray.

Brandon: Yeah. Great book! Great guy!

Josiah: It’s a must read.

Brandon: Yeah. Brian Murray is the man. He’s part of Open Door Capital, you know that. He’s a…

Josiah: Yeah.

Brandon: We brought him in. He came to that mastermind, that Maui Meetup Mastermind thing we did last year. And both of us hit it off with Brian really well. And we’re like, “That guy is somebody we want to know.” So now both of us are involved with him-

Josiah: Yeah, He’s awesome!

Brandon: … Heavily. Yeah it’s awesome!

David: Yeah. He’s in Goban-dance as well.

Brandon: He is.

David: He came and talked to me when I was out there in Denver a couple weeks ago.

Brandon: He’s everywhere.

David: And he was very impressive. I was like, “Oh, I’m really glad knowing that you’re the one that Brandon has watching over his [crosstalk 00:12:27]-

Brandon: Yeah he-

David: It was like when one of your friends is exposed. But you relay at their body guard. That’s how it felt.

Brandon: Nice!

David: I felt that I’ve really good knowing you’re the one that [crosstalk 00:12:34].

Brandon: I think we’re going to go with, you met your friend’s girlfriend. And found out she was really cool. And you’re like, “Oh, I’m so glad that he got a good one.” That’s, Ryan’s like.

David: If I was married like you, and I thought that way. My filter would work the way that yours works.

Brandon: All right.

David: But now I still think like a cop in everything I do. All right, Josiah what is your favorite business book? Other than the one that Brandon just created for you out of thin air, like 30 minutes ago.

Brandon: Rinse and repeat.

Josiah: All right, I’m going to apply this as a business. But it’s Meditations by Marcus Aurelius.

Brandon: Cool!

Josiah: Absolutely love that book!

Brandon: I’ve only read clips of it, I’ve not read the whole thing, but.

Josiah: So good!

Brandon: I have the-

Josiah: Check it out.

David: Are you a stoic?

Josiah: I don’t know that I would call myself a stoic. I aspire to be though.

David: Would a stoic call you a stoic?

Josiah: Well, probably not. They’d probably say you’re too… Yeah, but no, I think the principles there are just so sound. I mean, it’s keep your eye on the ball. Don’t be swayed by all these other things going on. So, figure out the meaning of life and go with it.

David: That’s all.

Josiah: Don’t worry about it. Yeah, that’s all.

David: On that note. What do you do for fun? What are some of your hobbies?

Josiah: I’ve got three little kids. So just hanging out with a family. I like hiking outdoor stuff. I really do real estate investing for fun as well. So I mean, it’s really a lot of fun for me to mess with these properties. So, yeah I also do Fantasy Football. I get a big kick out of that. Yeah.

Brandon: All right. Well last question from me. What do you think separates successful real estate investors from those who give up fail or just never get started?

Josiah: I would say it’s just grit. Just a perseverance through adversity, being willing to keep trying and keep trying. They got to have that grit factor there. If you’re willing to give up. You’re going to have so many problems coming your way, that it’s going to make you quit pretty quickly. If that’s where your mind is and your mindset.

Brandon: Great answer!

David: Last question. This has been a really good show! In a way you actually kind of ended up interviewing Brandon and I. It’s such a cool little trick, Jedi mind trick that you pulled. Got a lot out of us, that’s a very good job. Brandon said some of the most intelligent things I’ve ever heard him say on the show.

Brandon: Sweet! [Crosstalk 01:20:36]. But yes.

David: So for people that want to be Jedi mind tricked themselves, by you. Where can they find out more about you?

Josiah: Yeah. So, I’ve got a podcast called The Daily Real Estate Investor. And David I’d love for you to be on there. Brandon’s been on there before

David: That’s why you interviewed so good?

Josiah: Yes, yep.

David: You’re a ringer. I didn’t realize that we had a… You’re Like a secret agent. That Liam Neeson came in here.

Josiah: I backdoored this on you?

David: Yeah you did!

Josiah: Yeah. Got a podcast called The Daily Real Estate Investor. I would love for you guys to check that out. It’s basically sharing the journey of building my investment property portfolio. I love having guys like Brandon and David on the show to share what they’ve done and how to avoid making mistakes and that kind of thing. So, and then I’ve recently published a book that I would love for all of you to check out the title is Dream It and Build It- How to Crush Your Real Estate Investing Goals. And the Kindle version is on Amazon. The physical version is there as well. But it’s sold out and I’m a bit frustrated over that. But I can’t seem to get enough physical copies over there.

That’s a good and a bad thing, right? I’m happy it’s selling out, but I’m also wish they would stock more of them. But it’s also on BookBaby. You can get the physical version over there. But Kindle versions they’re readily available there. And you can find me on Instagram @dailyrealestateinvestor. And I would love to connect with you guys. Shoot me a message and let me know what you’re doing and that kind of thing, and let’s connect. And if I can help you with your business somehow I’d love to, so.

Brandon: Awesome, man! And I do want to recommend, I think your book is fantastic. I like the format, the layout, the way you did it. It’s different than most real estate books. It’s not like a step one, step two, step three. It’s like a-

Josiah: Thank you!

Brandon: Sounds like meditations of a… I don’t know, yeah.

Josiah: Yeah.

Brandon: Good.

Josiah: I read the book Turning Pro by Steven Pressfield.

Brandon: Yeah.

Josiah: I love that book! And I was like, “Man, I need to format my real estate book this way.” Because I want it to be kind of really easily digestible thoughts on real estate investing that you could-

Brandon: Yep.

Josiah: It wasn’t really labor intensive going through, so-

Brandon: I keep a copy of that.

Josiah: Thanks for that! I really appreciate that.

Brandon: Yeah. I keep a copy of Turning Pro in my diaper bag, our baby diaper bag. So, if I’m out of somewhere.

Josiah: Nice!

Brandon: I can pick it up and read it for a minute. And like, give my “God, that’s really good!” So anyway.

Josiah: Nice!

Brandon: Very cool.

Josiah: That’s awesome!

Brandon: All right dude. Well, this has been fantastic. Thank you so much for joining us today. And again everyone go check out Josiah and the show notes @biggerpockets.com. We’ll put a link to the episode I also did on Josiah Show in the show notes.

David: There you go.

Josiah: Awesome! Thanks guys.

Brandon: All right, guys. That was a show with Josiah. Hope you enjoyed today’s show. Remember this was part one. If you want to listen to part two that comes out tomorrow. If you will listen this in the future. Just go look for episode 382 and a half or 382 part two. I’m not sure what we’re actually calling that. I think we’re going to call it 382 part two. Go look for that.

You’ll learn more about what Josiah’s has encountered since the Covid thing ended. About the whole mess with the refinancing. A lot of us [revise 01:23:26]ended up falling apart. He’s asked about what he’s doing because of that and how he was able to battle through it. It’s such a hero’s journey story. I think you’ll enjoy it quite a bit. So go listen to it right now. Again is episode 382 part two. And I’ll tell you more about my new video game at the end of that show as well.

Speaker 4: You’re listening to BiggerPockets Radio simplifying real estate for investors large and small. If you’re here looking to learn about real estate investing without all the hype. You’re in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home or real estate investing online.

PART 4 OF 4 ENDS [01:24:07]

Watch the Episode Here

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In This Episode We Cover:

  • Why Josiah sold his properties pre-2008 crash (and why he still regrets it!)
  • Combining hard money and private money to BRRRR with no money out of pocket
  • How Josiah uses “boots on the ground” partners to invest at a distance
  • Why he analyzes 8-10 deals per day
  • Buying houses sight unseen
  • Why BRRRR investors must keep cash reserves
  • How to talk to appraisers (like getting out of a speeding ticket!)
  • Why a property’s list price is irrelevant
  • Deals… on the MLS, in 2020?!
  • The square-footage trick that’s made him thousands of dollars
  • Losing out to a lower offer on a big multifamily deal
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Tweetable Topics:

  • “You’ve got to know your comps really well.” (Tweet This!)
  • “Tell people what you want and make it worthwhile to go get it.” (Tweet This!)
  • "There are really good deals in the MLS if you're willing to look and think outside the box." (Tweet This!)

Connect with Josiah

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...
Read more
    Joseph M'Mwirichia Rental Property Investor from Sarasota, FL
    Replied 3 months ago
    Just the pre-run..and a massive value drop right out of the gate! You have my full attention!
    Brennen McConnell Rental Property Investor from Memphis, TN
    Replied 3 months ago
    Josiah's website link does not work!
    Katie Rogers from Santa Barbara, California
    Replied 3 months ago
    Zestimates are NOT wildly inaccurate. Their algorithm is constantly improving, and the value of the comps is usually withing 95% of "true" value. Once in a while they are way off because maybe there was a renovation after the last sale and of course Zillow doesn't know about that. I have had no trouble running comps with Zillow because by definition I am looking for recent sales, and Zillow has that actual sale price. I don't even need to look at the Zestimate most of the time. I long for a decent buyer's agent who actually fulfills their fiduciary duty to put my interests first. In my experience, the vast majority of buyer's agents put their own interests first. Real estate agents do not work for the client; they work for their broker of record. They won't do any homework. I have to do my own homework. I might ask, "Is this work permitted?" They answer, "I don't know. You should call the city and find out." They never say, "I don't know. I will call the city and find out." My community is especially bad because the median local house is about three times the median US house. So for the same work, they take home three times the commission, but they are unwilling to do the same work. They do less. I have worked with enough buyer's agents that I can usually head off problems, but not always. The first house I bought had a lot of problems in the home inspection. The agents said, "Don't ask for a purchase discount to cover the cost of everything. Pick the three or four issues with the highest priority and ask for that." So I did. It was bad advice. After closing, another expensive issues was discovered that required opening the walls. We were also able to determine that the sellers knew of the problem but did not disclose. The concealment was actually quite clever. We should have asked for and gotten everything in the home inspection. We didn't and the result was we paid far too much for the house.
    Katie Rogers from Santa Barbara, California
    Replied 3 months ago
    Why doesn't paragraph formatting work anymore?
    Elizabeth Esplin from St George, UT
    Replied 2 months ago
    Question When he says to give the stats of the renovations that have been done to the appraiser when your selling what if you diyed a lot of it? We're going to be listing our primary soon and I got estimates on everything and we diyed about half of our improvements doing it for about 1/4- 1/2 of what we were bid. Do we put the value of the improvements or what we actually paid?