BiggerPockets Podcast 385: Once Homeless, Now Investing in an Expensive Market (With No Money of His Own) With Greg Gaudet

BiggerPockets Podcast 385: Once Homeless, Now Investing in an Expensive Market (With No Money of His Own) With Greg Gaudet

78 min read
The BiggerPockets Podcast Read More

Join for free and get unlimited access, free digital downloads, and tools to analyze real estate.

Flipping with no money down… in Hawaii? You heard that right.

Greg Gaudet actually considers himself “risk-averse” and still holds a full-time job, but he’s able to make nice chunks of change by hustling to find deals and managing rehabs for Brandon’s team on Maui.

Today, Greg walks us through his journey from “rock bottom,” including bouts with addiction and homelessness, to living the life of his dreams, buying a Porsche cash, and owning a handful of properties free and clear.

You’ll learn the right way to approach investing in condos, how to bring value to a potential partner or mentor, how Greg manages risk by keeping his living expenses low, and the mindset shifts that allowed him to 1) get clean and 2) “get out of his own way” in the real estate business.

This is truly one of the most powerful stories we’ve told on the BiggerPockets Real Estate Podcast, and it’s guaranteed to get your wheels spinning!

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Brandon:
This is the BiggerPockets podcast show 385.

Greg:
Desperation. It wasn’t until I had the desperation, it wasn’t until, I had just been working the nine to five working I’m working, I’m working on got years and years of that, where I was not happy and knew that I had to find another way, but I wasn’t desperate, so it wasn’t until I got desperate that I became willing to do anything.

Speaker 2:
You’re listening to bigger pockets, 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 for another phenomenal show with my cohost, Mr. David Green. Welcome back to the show. David Green.

David:
Thank you, Brandon. This is a really, really good show. We have an inspiring story today of a person who overcame a lot of tough life obstacles to make it in success in real estate and I personally had a really good time listening to this story.

Brandon:
Yeah, yeah. Really, really powerful stuff. We’re actually interviewing a guy named Greg. And Greg is actually my business partner out here in Maui where we flip houses together. So we actually did this recording, he’s in my shed, my sea shed here chatting with us, and I honestly didn’t even know 80% of this story that I’d heard glimpses of it over the years of getting to know Greg, but man, it floored me, what he overcame in his life to get to where he is today.

Brandon:
So really good stuff, so make sure you guys hang tight for that today, before we get to that, let’s get to today’s quick tip. Quick tip is very simple today. Greg talks about a vision board and now if you know what a vision board is, somebody who might be like, that sounds cheesy, or that sounds amazing.

Brandon:
Maybe you do it. Maybe you don’t know what it is. You’ll hear about what it is today. But basically my quick tip is try a vision board. Grab a bunch of old magazines and a big piece of paper, like a large, three foot piece of paper and try to plan out what you want your vision of your life to look like a few years down the road.

Brandon:
You’ll hear more about why that’s important later with Greg and his Porsche, but hang tight for that. All right, here we go guys. So we’re going to get into this show, make sure you guys listen. A couple of really powerful points today that Greg talks about one. He talks about his, the addiction and homelessness he went through, he talks about why he doesn’t really spend any of the money he makes in real estate, which is kind of a really cool strategy.

Brandon:
You’ll like that he talks a lot about condos. Now, condos is something that we shy away from like me personally and so therefore the show, we don’t talk a lot about them, but we made a lot of money this year on condos. So we’re going to talk about that, Greg and I, and really just a ton of really good stuff. So keep in mind, this show was recorded pre Corona virus, but we caught up with Greg the other day. I mean, I see him every single day cause we work together and like really everything here stands the exact same today that did three months ago. In fact, he’s very risk adverse. He knew just like we’ve been talking about for a while that a recession was going to hit and so the way he invests is to make sure he’s not caught in a risky situation.

Brandon:
So you’re going to hear more about that, about how he does it, how he burrs and some of that stuff there. So without further ado, let’s jump right into the interview with Greg.

Brandon:
What’s up, man. How you doing?

Greg:
What’s up? Thanks for having me on the show.

Brandon:
Welcome to the sea shed.

Greg:
Thank you.

Brandon:
Yeah. So we’re going to go through your story today and to be honest, I don’t even know a lot about your story pre last year, we’ve had a few surf sessions out there in the water talking about your story and I was like, “dude, we got to get you on the podcast.” So let’s just start early on, like tell us about yourself before getting into real estate and kind of how you got into it.

Greg:
Yeah. So, well, I’ll just give a quick summary of where I come from, grew up in Miami, Florida. And I grew up in a upper middle class family and had a picture perfect childhood, an amazing dad. My dad was the senior vice president of real estate financing development for carnival resorts and casinos. And so he was a real estate developer, amazing man, but he passed away when I was 14 years old. So I didn’t really get to learn much from him on the real estate front.

Greg:
So obviously that was devastating, I was 14 years old and my life was completely flipped upside down. My personal reaction was, I spiraled completely out of control. I got into all kinds of trouble. In order to cope with the pain, I guess I went out and just caused any trouble I possibly could to escape myself. That resulted in me ultimately being addicted to drugs and alcohol and it got pretty bad for a while.

Greg:
And that’s kind of, I’m really grateful for that because that has led me to exactly where I am today and today I have an incredible life, beyond my imagination and yeah. So during that time I did discover real estate while I was struggling with drugs, which was over a 12 year period. It was a long time and I first discovered real estate when I was 19 years old, right out of high school I became an appraiser and instantly fell in love with the industry and I knew that’s what I was going to do.

Greg:
I knew it was real estate. I didn’t know in what, at that time I thought it was going to be an appraiser for my entire life. But obviously, well that was in 2003 and in 2006, 2007, I was 22, 23 years old.

Greg:
I was the newest, youngest intern status kind of appraiser and lost my job. So that, also fueled my addiction to get even worse, and I went back to school at that time well tried to go back to school. Kind of struggle just was lost for a long time, ultimately ended up overcoming addiction, and once I was able to turn my life around. That’s when I got back into real estate, I had dabbled in and out of working in real estate throughout that whole time. But, and I had always, always been fascinated and obsessed with investing in real estate, but never had the education or I didn’t have the skill set. I didn’t know how to invest or where to even get started or let alone have funds or any way to actually do it.

Greg:
So that all changed in 2016, I made my first vision board, which I’m glad you mentioned in the quick tip because I’m a huge advocate for vision boards. I believe that vision boards and podcasts are what changed my life. So I made a vision board in 2016 that had two specific things that stand out to me is that it had a picture of a bunch of properties that were symbolized rental properties to me, and then it also had a picture of a single family home that symbolized a single family home. That me and my wife, Jamie, had been wanting to build our own home at that time, less than a year later, I owned my first rental property and we had our house being built.

Greg:
That’s something I never could have imagined, when I made that vision board, I never could’ve fathomed how I could ever possibly, actually purchase a rental property, let alone build a house for us to live in, and I attribute that all to the vision board, then ultimately after making the vision board, something in the universe happened where one day, all of a sudden I had never listened to a podcast. I’d heard the word podcast, I didn’t even know what a podcast was, and I one day was like, “let’s see if there’s a podcast about real estate?” And so that’s how I found BiggerPockets and yeah. That’s kind of how I got started. Yeah.

Brandon:
All right. So there’s a few things I want to dig into here. First of all, this is totally non real estate related, but I’m just going to, there are people that listen to the show right now, they’re struggling with things like addiction and problems. What do you think was the key to overcoming that? Was there like, you shifted your mindset, you grew out of it, there was somebody who came alongside you, is there anything that, and I know it’s a very, you read books on that topic, but anything that people who listen to the show that might be dealing with that might learn from your journey.

Greg:
Like you said, you could just go on for hours about that. For me personally, I believe that just hitting rock bottom is what did it for me, and some people have this event that just changes their life. For me, it wasn’t one event. There was multiple events, I’ve been in jail, I’ve been homeless, I’ve overdosed, I’ve had my mom find me not breathing, without a pulse and give me CPR. That was a big life changing event.

Greg:
But all of those things happened within maybe a year or so of each other, and I didn’t stop instantly after one of those, but that was the process of me getting to where I needed to be to know that that was not the life for me. Now, I also had a period of, I first went into recovery when I was 22 years old.

Greg:
So when I lost my job as an appraiser, actually, but I didn’t change my life at that time. That’s when I realized that I wanted to change, but it was from then until I was almost a, probably eight year period of me struggling to try to get better and getting worse and worse and worse, but also getting these spouts of being sober for longer and longer periods until ultimately…

David:
Yeah, no, this kind of reminds me of the conversation you and I had last night about how most people won’t change or make really big progress in life until they feel desperate, and desperation comes in lots of different ways.

David:
Sometimes it’s a financial desperation, sometimes it’s an emotional one or a relationship that went wrong. Sometimes it’s just like this ache in side that you’re lonely and you want a different kind of a life, but all of us have a desperate version of ourselves that lives very deep inside. And most of the time we don’t connect with it because we’re trying to numb it with everything, and in your case, you shared there was substance abuse, but that’s not a different pattern than everybody else. There’s people that are addicted to buying things online, there’s people that are addicted to food, there’s people that are addicted to attention.

David:
Right? And I think what Brandon and I were talking about was that if you really want to be successful, you usually already have the pieces inside that you need. You’re bearing them and you’re drowning them with something to numb it and when you stop doing that and you get to that desperate part of you, you’d be amazed how much motivation you actually have when we hear new investors talk about, “Oh, I just can’t get started. I’m scared.” No, you’re just not desperate enough, because when you’re desperate enough, you don’t care.

David:
And the second thing I want to point out, that I really like about your story was that you admitted, I didn’t just get clean and then that was a part of my life that was over right. There was times that you regressed back into that habit and then you fight your way out of it and you regress back.

David:
That is actually much more comparable to what the journey of an entrepreneur looks like. I had some success and then I screwed up. I had some success and then I got left by my higher, I had some success and then I got too big headed and I tried to invest in something I didn’t understand, it is a process of successes and failures being combined together that we go through as real estate investors. Before we get to the point where like Brandon, he started a fund right now and you have to be okay with that. If you have this idea, if you’re a perfectionist and you live in that world where everything has to be perfect, you’re just never going to make progress. The real journey looks like I got in shape, and then I fell off the wagon I got in shape again, I fell off the wagon.

David:
It’s that going and quitting and going and quitting that builds the muscle up. That eventually it becomes a habit. And once it’s a habit, now you’re on the way to success.

Greg:
Yeah. That’s deep.

David:
Yeah. And I think the thing I like about your story was that what you’re saying is during that process of fighting, you fell in love with real estate, right? It didn’t just walk in your life and change your life, but you found something that you loved, it woke something up inside you and you clung to that, like an anchor, no matter where your substance issues were kind of taking you. Right? and by the way, thank you for sharing that. I think that’s incredibly brave.

David:
Tell us what that feeling was like when it woke something up inside you and you knew, I love real estate. What thoughts were you thinking? What were you going through?

Greg:
Well, when it first happened, I mean, like I said, when I was 19 years old and started doing appraisals, I specifically remember an encounter where, I was living in Miami and I pulled up to, I was doing an appraisal on a total war zone property, and this kid was the owner, borrower pulled up to meet me in some ridiculous car, like a Ferrari or something and I know that material things are not important, but as a, one thing that I shared with my dad is the love of cars, so we were very passionate about cars and some people might think driving a Ferrari silly, but there’s, I appreciate it.

David:
Was that on your vision board, by the way, a Ferrari, or something like it?

Greg:
Not a Ferrari, but a Porsche.

David:
Okay, awesome.

Greg:
Yeah. My dad was a major Porsche fanatic and that was something I put on my vision board that I never again ever could have imagined how I could ever buy a Porsche.

Brandon:
But didn’t I Just see your Porsche drive up my driveway like an hour ago? So we’ll get to that story. Yeah. We’re going to get there.

Greg:
Make vision boards. Yeah.

Brandon:
So you saw this guy, this kid pull up and, and he had achieved some like huge level of success already?

Greg:
Yeah, and that just symbolized to me the freedom that, obviously this guy’s doing something in real estate, that’s providing him with the freedom to live the life he chooses to live instead of living the life he has to live. So that was, sparked something inside me, it was always in there, it was kind of dormant for a while. Ultimately, like I said, in 2016, when I made that vision board, I think I was at a point where I just couldn’t imagine going to work every day for somebody else.

Greg:
I can’t like that is ultimately cannot let I would not live that life. I’m not okay with that. Like living my entire life, waking up and going to work and being at work for somebody else all day, every day, I’m actually personally have a big philosophy that we should not be working 40 hours a week, five days. We should have a much healthier balance, but if I’m going to be doing that, at least I’m going to be doing it for me and having the freedom to make my own choices.

Brandon:
That’s cool, That’s cool, man. All right. So let’s walk through that first deal. I mean, you said you made the vision board and then a year later you had bought your first rental, what was that like? Where did you buy that first of all, was that here on Maui?

Greg:
It was.

Brandon:
Maui is crazy expensive though, most people would say you can’t buy in Maui if you’re just getting started, it’s just too impossible, and people are saying that about San Francisco, about the Bay area and New York, California, I mean, pretty much every city in America, they’re saying you can’t do it. It’s too expensive. How did you pull that off?

Greg:
Yeah. So I did know, again I practiced real estate here in Maui for my first five years here or so and…

Speaker 2:
like real estate appraiser or agent,

Greg:
I did real estate escrow at a brokerage. I was a transaction coordinator, my title was escrow manager at a high end top producing brokerage here in Maui, so I learned a whole lot there. That was an incredible experience, and then I went into vacation rental management, so I managed short term rentals here in Kihei, Actually.

Greg:
I managed 70 units for a few years and learned a little bit of a different side of the business there, and actually I remember making a comment while I was a vacation rental manager to my broker at the time about this one particular building that is the only place on Maui that anybody that doesn’t have a couple of million dollars sitting in the bank could afford to purchase, and I had mentioned to her, “Hey, what do you think about this place?”

Greg:
Like they’re selling for at the time $70,000 for a two bedroom condo, which is crazy because the average, I think the median sales price on Maui right now is seven something condos. I think the median or average sales price is in the 500s, right? So it’s just this one building, there’s a couple of buildings like that, but there’s not a lot. So I made a comment, she had said, basically bashed on it, said this is, you want nothing to do with this place, not whatever, and I believed her, took her advice, stay away from it, you can’t get mortgages there, it’s useless, forget it.

Greg:
So I listened but it was still, every time I would drive by it, I just say, “man, like, you can buy this thing so cheap.” And in my head I’m like, “if you rent it out, like you can cover the expenses. I don’t understand why people aren’t buying these things.” And ultimately that is, I didn’t know how to analyze the deal also at that time, so I’m just in my head thinking, okay, maintenance fees are 500, rents are this much, and it seems like it makes sense in my head. But again, it wasn’t until I made the vision board, and listened to the podcast and your video on how to analyze a rental property.

Brandon:
Oh, the viral one on YouTube. Yeah. The horsepower one. Yeah.

Greg:
So I found that. Yeah,

Brandon:
Yeah, yeah. I think that’s got like two million views now or something down on YouTube. It’s crazy. Yeah, we’ll put a link to it in the show notes, by the way, at BiggerPockets.com/show.

David:
For the four of you that haven’t already seen it, [crosstalk 00:16:52] 2 million views.

Brandon:
All right. So you found the videos, stared to learn how to analyze deals a little bit.

Greg:
Yeah, and I had been making offers on MLS listings, which by the way I had been doing since I was working at the brokerage doing escrow stuff, I had made offers and I thought that investing in real estate meant buying something, low ball offer, get something for a good price and then you’ve got equity and then in a year you’re going to double your equity and sell it and you’ll have a million dollars.

David:
What year was this you mentioned?

Greg:
This, well, when I was making those offers was 2012 and it’s too bad I didn’t pull the trigger, I walked away from a deal over $5,000. So it was a condo on front street, Lahaina, they wanted 85,000, I offered 75,000, she countered 80,000 and I said no.

David:
How much is that place worth now?

Greg:
350,000.

David:
This is why I asked, because I knew that was coming. As an agent, I see this from my clients all the time, there’s a deal we’re trying to buy with $100,000 of equity and the seller doesn’t want to replace the roof and they’ll walk away from it over $10,000.

David:
It is so easy to get caught up in the dumb money that you think you’re losing, because that’s what screams the loudest, right? This can hurt me and that’s what you pay attention to and miss the money. You could have paid $185,000 for that and this isn’t a pick on you, right? Because we’ve all been there, man. Every one of us have done this.

David:
But one of the ways that you get over the fear of investing in real estate is to take yourself out of what I feel right now and say 20 years from now, looking back, what will I wish I did? And that $5,000, won’t even be a thought in your mind at that point, and it’s hard to do that because your emotions don’t live in the future, they live right now, and that’s what you have to deal with.

Brandon:
How much do you think that $5,000 was a dollar issue and how much do you think it was a fear issue? If you’re looking back on that it.

Greg:
I think it was a lack of education issue. I didn’t know that I could just rent the condo out. I was buying it as an owner, occupant, I was going to live in it and I thought in two years it’ll be worth more and I’ll sell it and then I’ll move up into a house and then I’ll sell that and that’s what I thought it was all appreciation, speculation.

Greg:
I also in 2012 had no education on economies, market, what was going on and on the fear topic, my fear was that we’re in a dead cat bounce right now, and it’s about to really drop, I thought if that happened…

Brandon:
I remember that was a big fear back then, yeah. All right, so 2012, you start kind of getting into it, so making offers, back out, you lose a deal and then you said 2016 is when that first deal, because wasn’t that first condo came in? The one you brought.

Greg:
I think I actually closed on it in 2017, but 2016 is when I started doing the leg rest. When I was listening to all the podcasts, I was listening to you and a couple others…

Brandon:
A couple others? You cheated on me?

David:
This is why you didn’t buy that deal. You had too many voices in your head that weren’t Brandon Turner. They cost you so much money, no more. You listen to Brandon, you listen to David and that’s all you listen to.

Brandon:
All right, so 2016, 17, you’re listening to us, and that first condo, what’s funny is you were saying that people were saying you shouldn’t buy there, can’t get a mortgage there, and this is the truth I want to bring out here, because we’ve all heard story that people, you really shouldn’t invest in real estate, uncle John, everyone’s got an uncle who lost a shirt in real estate at some point.

Brandon:
I mean, there’s all these stories. In fact, I was just sitting there talking to one of my buddies yesterday, a couple that live here in Maui, and they were talking to this old gentleman at church and they were asking, he was a lawyer, an old lawyer who has been a lawyer for 50 years, and they’re asking him, they basically said, hey, we’ve got these rental properties and they got them in Utah, and they’re like, we’re trying to figure out if we should put them in LLC, and the guy just went off for 45 minutes about how they shouldn’t buy rental properties because they’re a horrible idea, and rentals only make people lose money, and she was just like, that’s why you can’t listen to people sometimes, you know we talk a lot about mentors, but even mentors like, listen to them, because some people just don’t know what they’re talking about, even if they’re a lawyer or a doctor or a CPA or whatever, it’s hard when you just take people’s advice for…

David:
I’m guessing the person that told you, you want nothing to do with this property, did you mention what they did for work? Were they real estate agent?

Greg:
She was a real estate broker.

David:
Knew it, and this is why I’m saying that, because from her perspective, she was giving you honest, good advice. That would be a very hard property for her to sell, and she knows it might sit on the market for a long time. So from her perspective, this is a bad deal. But from an investor perspective, that’s completely different.

Brandon:
Agents don’t have an investor perspective.

David:
They don’t think that way, right? And contractors don’t have a way of looking at it like that, and neither do appraisers. It’s great to get feedback from these people, but you got to take it for what it’s worth, right? This would be a hard house for you to flip is basically what she was telling you or it’d be a hard house for me to sell, so you don’t want to buy here.

Greg:
Or it’s not somewhere you want to live.

David:
Or it’s not somewhere you want to live? But someone else isn’t going to mind living there, right? We just go through this all the time, it’s good to get advice. It’s not good to just say, tell me what to do, and I’m going to follow you. Understand the perspective that advice is coming from and weigh it as a lot of different information that’s coming in.

Greg:
Yeah, I got the same advice from a mortgage broker, I think we were talking about yesterday. One of my lenders on my second loan, buying in the same kind of area had said, “you really shouldn’t be doing this, this is a bad idea.”

David:
And he probably saw tons of people lose properties like that, right? But he doesn’t know how you live. If you live beneath your means, right? You could be Brandon Turner sleep.

David:
Right? But he doesn’t know how you live, if you lived beneath your means. You can be Brandon Turner sleeping on a couch, renting out four bedrooms in your house and you’re not going to lose that property.

Brandon:
Yeah. Yeah. You definitely got to take advice with a grain of salt from everybody because there’s well intentioned people, even real estate investors, even mentors, family members, but we all have to live our own lives. Okay, so you decided anyway, at some point you decided to go forward and move, so what was that first deal like?

Greg:
That first deal, it was a foreclosure. A girl that I had spoken to that actually lived in the particular building, which is a large building, there’s a lot of units there so it’s popular, it’s well known and it’s a popular place for people that don’t make a whole lot of money. It’s not a nice building, but it’s not horrible. Anyways, this girl lived there. She was in real estate, property management, I think kind of not very far along in her career, but she had pointed out this one particular unit to me that was a foreclosure. It was like a no contingency kind of deal. There’s a lot of risk involved in it and she knew how to get that deal. She knew the steps that I had to take to get to the bank and basically buy the property.

Greg:
She had mentioned it a couple times and I was telling her about the ones on MLS I wanted to buy. She was like, “Yeah, I really think you should go after this one.” I kept thinking, “No, no, I don’t know about it. It’s scary.” Looking back, there’s so many things that should have gone wrong, but I took the steps and I took the risk and it happened to work out. Although even if it hadn’t worked out, I’m glad that I did it because had it not worked out, I still would have learned a whole lot. It’s not like I would have lost everything. I would have lost maybe a few thousand dollars, but yeah. Another important detail you were mentioning, Brandon, being homeless and living on a couch and all that.

Greg:
I actually, so that’s an important part of my story is that throughout that entire time from 2012 basically until now still, not so much in the last six months, but I’ve lived extremely frugally. I’m very careful with my spending. I live below my means and that’s one of the ways that I was able to actually purchase that rental property. When I was working at the brokerage, making 60 something thousand a year or so, I was bringing peanut butter jelly sandwiches to work every single day.

David:
Actually. I’d like to dive into that if that’s okay with you guys, because I’m in a very similar situation. I don’t need to live nearly as frugally as I do. I’m house hacking my primary residence. I drive a Camry. I’m not driving a very nice car. I don’t have hardly any expenses other than food for the most part. It’s not like I have to do that. What I realized is that I do that because of the emotional impact it has on me to feel more brave, to be more aggressive with what I’m investing. I’m always thinking worst case scenario like many of our listeners are. I sound like, “Oh, I’ll just screw it. Go buy a house.” It’s not like that at all.

David:
I think, “What is the worst thing that could happen? I would have to make that mortgage and I wouldn’t be getting any money. What if that happened on 10 houses at the same time?” And if I think, “Oh, I don’t like how that sounds,” I won’t be bold and I won’t be aggressive pursuing deals, which is the number one thing that will cost me money. I know if I’m living way beneath my means, I can prepare for that worst case scenario that’s never going to happen, but it gives me the emotional confidence to aggressively go after the deals.

David:
By eating peanut butter and jelly sandwiches, you’re making yourself hundred thousands of dollars a year. You’re not just saving the money on what I would be spending if I went out to eat for lunch. You’re actually going to take action to go buy more deals and more people need to think about that. If you’re having a hard time moving forward, ask yourself why that is and what you can change about your life, so that you’ll feel more comfortable doing it. At a certain point, you’ll have so much income and so much equity that you’ll let those things buy the stuff that you weren’t doing, like a Porsche.

Brandon:
To throw out one, to add to that. A lot of people, I think, see people like myself like we’re here in this stupid nice area of Maui, ocean view, pool, I got my Tesla out there and they see Brandon has a lot of nice stuff, but I don’t think … I want to make sure people realize, I only increased my lifestyle with the income I was making off passive income.

David:
Passively.

Brandon:
Yeah, so I didn’t think … My wife and I were still living in a $80,000 house and house hacking everything for years. We lived in a church parsonage for free, in exchange for free and fixing up. That was seven years ago. It wasn’t that long ago. It was right before I started at BiggerPockets. We only expand our lifestyle as we make more passive income. That’s how I would encourage other people to look at it as not, “Hey, I made more money at my job. I’m going to go spend more money,” or, “I made more money. Whatever, I’m going to go spend it because they’ll make me want to …” Yeah. You expand as you bring in more passive income.

David:
Brandon, we talked about this between each other all the time. Your net, your vertical income does matter. Don’t say it doesn’t matter, but all that vertical income is meant to invest in real estate or invest in something. Then what you do is you live off of the income that comes from the investment.

David:
That’s very easy to … It actually kind of puts a governor on how crazy your spending can get out of hand because if I want nice things, I got to be a better investor. It’s not I got to go make more money because if you’re just spending the money that you make, you’re not getting anywhere. You’re working really hard to have nice things and you got to go work hard again. When you work really hard and invested, that investment can buy you a new car every three years. It can pay for the vacations you’re taking. It can pay for the house in Maui that you’re living in. That principle, I wish more people understood.

Brandon:
Can we fast forward actually to the end of your story real quick? And then we’ll go back and revisit the journey on there, so you drove up … Yeah, go ahead. Go ahead please.

Greg:
[crosstalk 00:27:19] In that whole sort of living below your means thing, that Porsche that we just kind of mentioned.

Brandon:
Yeah. That’s where I want to go.

Greg:
That, by the way, I think it’s important to mention. The only reason I bought it first off is because my truck broke down. I was trying a 15 year old truck, piece of junk, and broke down for the third time in three months on Christmas Day and my mechanic said, “You got to get rid of this thing.” That’s why I started looking for a new car. I wasn’t even going to sell it but he convinced me. He’s like, “You need a new car.” I bought that Porsche cash and I say that not to brag. I say that because I think it’s important to not overleverage, first off, and also I did that as a way to reward myself for the hard work I had done because I’m not taking any of the profits.

David:
And keep yourself motivated to do more hard work.

Brandon:
That’s exactly where I wanted to go with that. It’s because like-

David:
That Porsche would make you money.

Brandon:
Yeah.

David:
Because you’re motivated.

Brandon:
You have this Porsche now. You got it because, I mean I’m not kidding guys, Greg worked harder than I think any person I’ve ever seen work on managing a flip before and he did it on two of our recent flips. You deserve that Porsche because you hustled and you didn’t go and finance it. Now you’re strapped in a job longer because now you got all this [inaudible 00:28:22] payment. You paid cash for it. You bought it even a reasonable price.

Greg:
Got a good deal on it, yeah.

Brandon:
You got a good deal on it. You shopped for it. You knew what you’re doing so again, you used the asset that you made out of thin air, and we’ll talk about that in a little bit, how that happened, to buy you that vehicle. The same way I talk about the Tesla, I bought a rental property that pays for the payment. It’s the same concept. Sorry, I just want to bring that up again. You can have nice things as a real estate investor, just get your assets to pay for them rather than dishing out more money in a …

David:
Get your assets in gear.

Brandon:
Get your assets in gear.

David:
Get moving.

Brandon:
All right. Let’s go back a little bit. Let’s rewind. You got this first rental property there at that condo complex and you started picking up a few more, right?

Greg:
I thought it would be a one year or two years and then I’d get the next one. Basically I got that thing. I cleaned it up, rented it out and the Foursquare analysis I found while I was in the process of purchasing, was kind of like the confirmation for me. It affirmed everything that I thought. The numbers were exactly what I had thought in my mind and done my own math. And so that worked out about two months after I’d closed on that. Another one came on the MLS that kind of caught my attention. I was like, “Oh, that’s interesting.” I called the realtor just to kind of talk story and find out a little about it out of curiosity, ended up going to see it, again just out of curiosity. It was a total distressed, disgusting place and I ended up making an offer, getting it under contract and buying it.

Greg:
It went a lot faster than I expected. You guys talk a lot about how the first deal is not to get you financially free.

Brandon:
Get that momentum going.

Greg:
It’s to get you going. I can never understand that until I actually did it. That first deal, boom. All of a sudden I was buying and then two months after that second one, I bought a third one. Actually that second one, by the way, it was so bad that I was bringing contractors in to get estimates during escrow and one of the contractors has this shirt over his nose the whole time. We get outside and he’s like, “I can’t help you with this.”

David:
Wow. Wow.

Brandon:
I’ve not had a contractor do a reject.

Greg:
Yeah. He didn’t want to do it. They were all bidding $10,000. It’s a small one bedroom condo, so wasn’t a whole lot to do a full gut renovation. Ultimately, I ended up doing the renovation, the whole rehab for about 2200, I think it was.

Brandon:
Wow.

Greg:
Yeah. Something like that.

Brandon:
That’s the thing that I love about condos, is that condos are a little bit easier, especially in a place like that. The little smaller condos can be a little bit easier to rehab. We talk about condos, especially back when Josh was on the podcast every week, he would complain about condoms all the time, “Condos are horrible,” because he had some really bad experiences with condos, especially HOAs can be difficult. What’s been your experience now owning, you own multiple now, units in this condo. What’s that been like with the HOA? Are they driving you crazy?

Greg:
I’m on the boards. I kind of am the issue.

David:
Okay. Was that a conscious choice though? Because a bunch there like, “I’m going to …”

Greg:
Yeah. No, at that point I had five, four or five units there and I chose to get on the board, although it’s I don’t recommend serving on the board to anybody. Anyways, I chose to serve on the board because I have a vast majority of my net worth and life savings invested in that place and it’s important for me to protect my investment, so that’s why I serve on the board. Condos, yeah. There’s a lot, a lot, a lot you need to know about condos before you buy one.

Greg:
Personally, my background was in condos, except in Miami doing appraisals, I did a lot of single family. I did a lot of condo conversions at the time. That was the thing in Miami, but once I got to Maui and did escrow, we were doing all the high-end condos in Kaanapali, Lahanai, so I learned a lot about condos then. And then doing vacation rentals in Kihei, I learned a whole lot about condos. I understand condos. I understand the HOAs. I also work with and serve on the Condominium Council of Maui, which is an educational seminar program for condo associations, board members and all that. And so I have a good foundation to invest.

Brandon:
In other words, you didn’t just wing it. You were like, “I’m going to go invest in real estate now. I’m going to go buy a condo and just wing it with no education.” You first learned. You earned while you learned. You had a job in the space. You joined a board because you’re investing in it. Again, I love that whole thing of this is your life, this is your thing, you’re going to put effort into it. What drives me crazy is when people, they know real estate is one of the most important things they can ever do in their entire life, up there with getting married, having kids, and investing in real estate is so important because it can help you save 30, 40 years off your life of working for the man. Yet people don’t put even 10 minutes of work or education or protection against any of that. It blows my mind how little effort people put into one of the most important decisions they ever make in terms of investing in real estate.

Greg:
I’m a great example of that. In 2012, when I was making those offers, I was talking to my broker and I thought he was my great, my best source of information. Had I just Googled how to invest in real estate, I’ll guarantee one of the first things pop up would be BiggerPockets. That would have been life changing.

David:
Well, it makes me wonder how many of the naysayers, because there’s plenty of them out there that say real estate’s terrible, they had a bad experience, did zero due diligence on what they were getting into, but they had an expectation that real … I don’t know what it is about real estate that people think it should work different than everything in life, right?

Brandon:
Yeah.

David:
You’d never date you knew nothing about and be surprised when it went bad, if you married them. You would never show up to a jujitsu class with having zero experience and think that you were going to be really good at it, at least no normal person would. But with real estate, there’s this idea that you should just buy a house and your property manager should just fix everything for $114 a month and make you millions of dollars without thinking about anything yourself, but it’s like everything else. There’s got to be a thing you have to learn.

David:
You have a specific personality that will work for certain aspects of how this whole thing goes. You found a niche. Condos are your niche. You focus really hard on your niche and you do really well, but you didn’t really do that until you found that niche. You got to kind of play around for a little bit until you figure out, “Oh, this is where I’m really good,” and then you put your foot on the gas and you go in that direction. So many people that complain and say real estate doesn’t work, when I actually asked them about their experience, it was what you just said. I just bought a house because someone said I should. They bought the prettiest one off of Zillow in the worst neighborhood. Somebody else was laughing as they sold them this deal for way more than they ever should have.

David:
They didn’t even know what cash flow meant. They didn’t understand principles of investing or they bought in a terrible area then they complained about tenants the entire time. I’ve yet to find a successful investor that doesn’t say I had to learn something. It took me a minute to figure it out.

Brandon:
Remember the story I said earlier about the old lawyer that was telling my friends they shouldn’t invest in rental properties? He said to them, “Yeah. I could never get my tenants to pay rent on time. I would have to show up to their house and be knocking on their door all times the day, the nights.” And I’m like, “Okay, clearly this guy never read a single book on rental property management.” You were showing up at their house day and night to collect rent, of course you had a bad experience. What do you expect?

Brandon:
It’s the same thing like, “I don’t know why my marriage didn’t work out. I mean, I never met the lady. I just ordered her off the internet.” Of course it wouldn’t work.

David:
Exactly. The mail order bride side said that they were great. I got lied to. The whole thing’s a scam. I’m never going to marry again. That’s the same attitude we get with the people that lost money in real estate but never took any ownership over with the role they played in their mistake.

Brandon:
Yeah. That’s so true. Okay. So Greg, you said earlier that person told you, you couldn’t really finance deals in that complex. How were you able to finance these deals then?

Greg:
I called banks and asked if they’d lend.

David:
I love that.

Brandon:
Amazing.

Greg:
There was a lot of legwork that went into that. It wasn’t as simple as, “Yeah, sure. We’ll give you a mortgage.” There was a lot of things I had to find out, specifically delinquencies. Because it’s a condo, one of the really important factors that the banks would consider is the delinquencies, which means specifically the number of homeowners that are behind on their monthly HOA payments. Generally, now this is specific to my experience, but the banks would not want to really lend if there was more than 10% of the owners delinquent on maintenance fees. This particular complex had been during the recession, a lot of people were delinquent. This is a place where it’s very highly investor occupied, so it’s one that most people stop paying first. They pay their primary before they’re going to pay for their rental property.

Brandon:
Interesting, yeah.

Greg:
The delinquencies have been very high and yeah, I’m sure during the bottom of the recession, there’s no chance you’d get a traditional mortgage there but at this time, the delinquencies had gotten down and that was something that I put a lot of time and work into figuring out, what is it that the bank needs to be able to lend? My DTI ratio, I had to figure out. I figured all that stuff out just by doing the legwork, calling the banks, talking to people, and finding out what I needed to know.

Brandon:
This is one thing that I’ve always admired about you is that you are very aware of lending criteria. When we have conversations, we’ve even talked about the more we develop this flipping thing, if you end up leaving a job or do you need income of doing that? What’s it do to your debt to income? I guess we’ve had those conversations and you’re always very well aware. That would put me at 65% or that would put me at 20. You know these numbers. And again, it goes back to our saying about it because this is important to you, so why not know the rules that govern the game that you’re playing. And again, so many people don’t even know what DTI is, debt to income is. And that’s fine. In the beginning, you don’t know this stuff, but go out and research it. Grab a book.

David:
I love how you just said that. Know the rules that govern the game. Know the why behind why you got told no. One of the things that comes up a lot is the BRRRR method. And I wrote the BRRRR book so everybody asked me, “I can’t get a bank to lend to me within six months. How do I make them do it?” And none of them ever have asked the lender why, “Why is that your rule?” They come to us and they say, “Hey, tell us why. How do you get around this problem?” But asking the question of the lender why and then that will probably lead to follow up questions. “Oh, that’s interesting. Tell me more, tell me more. Let me understand the perspective of the person giving me the $150,000 when they don’t know me at all, what they must be thinking in this.” It leads to so much information that now once that’s in your brain, you can come up with a solution for your own problem. It’s really that simple, right?

Brandon:
Yeah.

David:
Just follow that rabbit hill to understanding the rules that govern the game that you’re playing and know what that person’s thinking. You should do that with your property manager. You should do that with the appraiser. You should do it with your contractor. How many people complain about contractors, but they don’t know what a contractor’s business looks like? They don’t know how to propose like, “Hey, let’s work together in a way that works for both of us,” because they have no idea what the other person’s job is.

Greg:
Yeah. I have it all the time where a contractor says, “We can’t do that. We have to do this and it’s going to be five times more expensive.” Then you say, “Why?” And they say, “Well, because blah, blah, blah.” And I say, “Okay, well then why don’t we do this?” And they say, “Yeah.”

Brandon:
Oh yeah.

David:
All the time. Oh my God. All the time. I see that as a real estate agent, it’s the same thing like, “Okay, this doesn’t work.” “Why?” And they tell me, “Well, what if we did this?” “Okay.” And it’s so frustrating because you expect the other person to be bringing you the solution. Stop expecting that.

Brandon:
When we got this house here, remember that whole thing at …

David:
Yeah, with the stairs.

Brandon:
Yeah, there was a upstairs and a downstairs. They weren’t connected inside and the bank was like, “Oh, you have to have an internal staircase. We can’t fund your deal.” And so the agent was like, “Oh, guess you can’t fund the deal,” and other people were like, “Oh man, that sucks.” And so I’m like, “Okay, well what if we put a staircase in the middle of the house?”

David:
And make the seller pay for it.

Brandon:
Yeah, yeah, exactly. Everyone’s like, “Oh yeah, I guess we could do that.” $0 out of my pocket later, we had a staircase going up in the middle of the house.

David:
The truth is the lender, the agent on your side, agent on their side, everyone should have thought of that, but if you put your success in their hands, what you’re going to get is, “Nope, it doesn’t work.” And then you’re going to go cry and say real estate doesn’t work. You benefited yourself by coming up with a solution and not expecting everyone else to do it. You took ownership of how do I do this? I cannot highlight enough how important that attitude is towards being successful. On our transactions, we’re representing clients. My assistant Chris is trained to do both sides of the transaction. Okay, we’re the buyer. It’s our job to order the appraisal. If you forget to do that, it will delay the thing.

David:
Well, the sellers, sometimes when I’m the seller, I actually check with the buyer’s agent to say, “Did you order your appraisal?” Is that my job? Not at all. But it behooves me to help them do their job and it takes 10 minutes out of the day. It’s such a good practice to get in. Now, no matter what I’m getting into, I assume that I will do everybody else’s job until they convinced me that I don’t have to and then those are the people you double down on. “Okay. This is a contractor I work with because they think of these ideas that I wouldn’t be able to.”

Greg:
I’m glad you mentioned the whole asking them why and you were talking about banks and all that too, because we were actually just talking about this yesterday. I’m in the middle of a BRRRR right now, where I have to wait six months to refi and I bought the unit cash. I have paid the rehab cash like it’s I’m all in on this thing and don’t have a whole lot left until I refi this thing. I’m going to call at the bank when we finish here and say, “Why? Why do you …” The problem that I have is that I can refinance it right now, but they’ll refinance it at my purchase cost.

David:
Loan to cost probably, not loan to value.

Brandon:
Yeah.

Greg:
Yeah. Yeah. That’s not going to help me very much. I’d rather wait six months.

Brandon:
What’s cool about the whole question of, “Okay, well how do I …” Even if the bank says, “No. That’s just our rule because that’s a federal, Fannie Mae, Freddie Mac rule or whatever.” Okay, fine. Then you ask yourself the question, “How do I do it anyway?” For example, I’ve done this on BRRRR deals where I’ve put my own cash in to buy a deal. I put my own cash in to rehab it. Now I really need some money because I need to go buy another property or whatever, so then I just go find a private lender and I’m like, “Hey, can I borrow money for six months while I’m waiting for the [crosstalk 00:42:01]?”

David:
Put a lien on my house to protect your investment.

Brandon:
Yeah, put a lien on the house. I just need my cash back. Because that’s even less risk than a normal private money loan. It’s already been rehabbed. I already did it. Here’s the price, what it’s worth today. Here’s some comps that show that. It’s already been rehabbed. I’m just trying to get my cash back for the next six months ’til I can refinance, maybe a year. “Oh, okay.” Again, it’s asking that question is what’s going to get you … In fact, I can even guarantee you, there’s people that you and I both know that would probably lend you the money if you really wanted it because that property has already been BRRRRed. It’s even less risk for them.

Greg:
I don’t have another deal, so it’s not really that urgent to me but I should get the money for my living cost.

Brandon:
Yeah, so you don’t need it. It’s not desperate yet.

David:
A lot of people, they talked about this being a chokehold in their ability to grow their portfolio because the six month period. What you’re describing, what I just realized is let’s say that you buy the house, you’ve got a hundred grand into it. You can’t buy another house because that was all your money. You go get a bridge loan for the private money for 75, $80,000 that you can now use to buy the second deal that takes you two to three months to get ready. You do the same thing on that one. Two months after that, you refinance the first one. You’re at your six month period and then buy the next deal.

Brandon:
That can jump in forward, yeah.

David:
Yeah. Who says you have to do-

Brandon:
That’s called the leapfrog method. You’ve got a book called The Leapfrog Method, David.

David:
I love you. You come up with the best times, but yeah. All you’re doing is creating several different streams of income that all run in the same direction and leapfrogging each other. That’s exactly right. That is not rocket science. I came up with that in three seconds of listening because we said why.

Brandon:
Yeah.

David:
Right? Everyone’s brain that’s listening will work the same way. You have to give it the problem. You have to not just give up. “Oh, I can’t do it. Okay, this sucks. Real estate sucks,” and give into that negative kind of thinking.

Greg:
Yeah. And I’m sure somebody on the podcast is going to recognize the way around this is the delayed financing method, right?

Brandon:
Yeah. That’s an avenue.

Greg:
I don’t know if this is a national thing or just local to Hawaii. I’m not super versed with this delayed financing, but the HUD that the delayed financing method uses, so you just write on the HUD. This is the purchase price but we paid this and the rehab, I guess, and then the bank will … I haven’t actually done one, so I don’t have a lot of experience with that, but they don’t have that anymore in Hawaii. They stopped.

Brandon:
Interesting.

Greg:
But they don’t have that anymore in Hawaii. They stopped.

David:
Interesting.

Greg:
There’s no longer a HUD in a Hawaii escrow.

David:
Interesting.

Greg:
So, things evolve, things change.

Brandon:
Things change all the time.

Greg:
Now I’ve got to find another way around it.

Brandon:
Which goes back to that thing you said earlier about, and then we’ll move on and I want to talk about the flips here. But what you said earlier about that person saying, “No, you can’t go here because of, or you can’t finance in this place” because she was probably thinking maybe delinquency is too bad. But things change constantly, and so even the rules that somebody tells you that you can’t do this because, I mean, how many times do you hear people say today, “How do you get more than four houses? I can’t have more than four houses in my name.” That rule is 15 years old, but it was changed to 10 houses and then it went down to eight for a while, I think.

David:
So true.

Greg:
Yeah.

Brandon:
And yeah, but people still say, “How do I get more than four houses on my name?” And I’m like, “It’s not four anymore, that’s so old.” So just don’t listen to old rules.

David:
That is laziness, man. When I was a cop, I realized this because they would teach us how to do something and then I’d say, “Why?” and they would be irritated. Right? And the answer inevitably came, “Because that’s the way we’ve always done it.” All the time there was this rule, “Because that’s the way we’ve always done it.” And then I would dig into it and find out that’s actually not a law at all, there’s nothing that prohibits me and says I can’t do that. When you got trained 30 years ago, that’s what the laws were, and so the policies were put in place and the procedures for how to conduct a certain aspect of law enforcement activity based on those laws. Well, those laws changed so the foundation you’ve been standing on is not accurate anymore.

David:
I can do it this way, which is faster, more effective and better because I asked a question, “Why?” And I would see that it’s a common thing in real estate that if you write an offer for a house that the listing agent is not allowed to share that with other agents, totally garbage. There was a long time ago, I finally traced this down, that when you wrote an offer, the actual contract would say, “You are not allowed to share this with other agents.” That’s a part of the offer that I’m sending you as clause that was in there.

Brandon:
Interesting.

David:
Well, the California Association of Realtors took that out 10 or 15 years ago, but everybody still thinks that’s the rule because when they got trained 20 years ago, that was the case. So I’ll call an agent and I’ll say, “Hey, we really want to buy your house. What’s your best offer? We’re going to beat it.” And they’ll say, “I’m not allowed to share that with you.” And I just pound myself in the head. “Why? Why do you think that?” And then they get really uncomfortable and they just hang up the phone, or they say, “Call my broker.” They don’t know why. Somebody just told them.

Greg:
Maybe that rule still exists in other states.

David:
Could very well be the case.

Greg:
Just not in California, so…

David:
Yeah, so ask the question of why. Say, “Why can’t you tell me?” And make it their job to go get an answer that comes back because that’s a really useful thing if you’re trying to negotiate a deal to realize I can tell them, “No, actually, legally, you can tell me that, and it’s in your client’s best interest because if you tell me, I’ll give you a better offer.” Why would you not want to do that if you thought you were going to get something more?

Brandon:
If you hear that story, I can’t remember, it might’ve been in Traction where the daughter and the mom and the grandma are all cooking Thanksgiving dinner and the daughter, who’s a grownup daughter, she takes the ham and she cuts off the very front and very end of it and puts in the pan and puts in the oven.

Brandon:
And then she’s like, “Hey Mom, how come we always cut the front and back off the ham?” She’s like, “I don’t know that’s what grandma always did.” So they call grandma in and they’re like, “Grandma, why do we always cut the front and back off the ham?” She goes, “Oh, because the pan I had was too small and so it wouldn’t fit.” And it was like-

David:
In that oven.

Brandon:
Yeah. For 80 years this whole family generation has just learned you cut the front and back out the ham and you’re throwing food away. Yeah. So again, what are we applying that doesn’t apply to our life anymore? Anyway, good lesson.

Brandon:
Let’s move on a little bit and talk about where we’re at today. So, you and I met at a BiggerPockets, just a Meetup. I think you even, I don’t know if you hosted it, I hosted, or somebody hosted it I think.

Greg:
Somebody else was hosting that one.

Brandon:
Okay.

Greg:
They stopped doing it, they got busy with their business and they stopped. So I started hosting-

Brandon:
Yeah, yeah now you host one.

Greg:
… there was no Meetup, and I was always calling that person saying, “Hey, schedule Meetups, schedule Meetups.” So ultimately I just took the action and [crosstalk 00:47:36]

Brandon:
Yeah, and now we have the monthly regular Meetup at Maui Home Buys. So if you’re in Maui, come out. Actually tomorrow night we’re doing a Meetup at the beach, which is long before this episode comes out, but-

David:
Isn’t that how you guys met?

Brandon:
So we met at a Meetup, yup. So Greg, do you remember what you asked me when we first met or how we met?

Greg:
Oh yeah.

Brandon:
How did you approach me?

Greg:
Yeah. So first off, well, I’ll just give a quick summary that everybody knew you were coming, right? I think you posted on the Meetup or something.

Brandon:
Yeah, like I said I would be there.

Greg:
Because we had usually had maybe five to eight people at a Meetup. This night, all of a sudden there was like 35 people. And we’re like, who are all-

Brandon:
It’s my good looks and charm, it brings them out.

Greg:
… and they’re all coming out of bushes. Okay, so I got there and I was very strategic about making sure the only two seats open were next to me.

Brandon:
That’s funny.

Greg:
So as people would settle in and everybody’s coming and settling in and I was making sure that-

Brandon:
I didn’t know that. That’s funny.

Greg:
… at first I was making sure I was kind of in the middle. So I’d be close to you. But all the seats filled up. There was two seats left and I just made sure that those seats were on either side of me.

Brandon:
That’s funny.

Greg:
You and Ryan came in and I was like, “Oh, there’s some seats right here.”

Brandon:
That’s really funny.

Greg:
And we talked basically the first half of the Meetup, I think. And then at the end of the Meetup, after we split up, I came up to you and I said, because I had heard you on the podcast mentioning how you were getting into surfing and you were all excited about learning to surf and this and that. So, I came up to you and said, “I have been surfing my entire life. I was a surf instructor for five years or something when I went back to school and I’m going to mentor you in surfing and you are going to mentor me in real estate.”

Brandon:
That’s about how it was. Yeah.

Greg:
Yeah.

David:
How much more did you enjoy that than, “Let me get you a cup of coffee and pick your brain?”

Brandon:
Yeah, yeah. It was great. I was like, “I want to learn how to surf,” and you knew exactly what I was looking for. So this is the lesson for people if you want to find a mentor in your area, great, find out something they’re passionate about, something that they want more of, or they need help with. And that was a great trade. We traded phone numbers that night, we chatted, and at the time I was like, “Yeah, it’d be great to go surfing with you. You’re probably really, really good. So I’ll probably learn a lot,” but you’d already taken some action in real estate too, which appealed to me. So versus like, “Hey, will you teach me everything you know?” It was like, “Hey, I’ve already bought a bunch of properties. I own all of these condos, but I want to know what you’re doing and I want to learn more from you.” And so that stood out to me. So yeah.

Greg:
It took, teach me how to analyze a rental property-

Brandon:
Yeah, exactly.

Greg:
… like the most basic stuff.

David:
Can I comment on that for the people that are listening. This is a really important thing to understand when you want to find a mentor. Alright. If I wanted to find someone to teach me how to invest in real estate, going to Grant Cardone is not the smartest move. If I want to learn how to practice Jiu-Jitsu, going to Marcelo Garcia or like the best in the world actually does not benefit me because Marcelo does not remember whatever it is that I’m going through at this stage in his career. And anyone can show me the fundamentals, right? So when you’re trying to pick your mentor, you want to pick someone that’s like a step or two ahead of you, not 25 steps ahead of you that they can’t relate to you at all. And it’s very hard for you to bring them any kind of value. What you’re describing is someone who like, “Hey, can you help me get in shape?”

David:
And you’re one of the best like training coaches in the world, right? They’re not showing up puffing and puffing because they can’t even keep up with the workout. They have really good cardio, they have a really good base. They want someone to show them how to perfect the movements of whatever that they’re trying to do.

David:
And what you’re saying is you knew enough about real estate already to be dangerous. You just needed Brandon to either add some fuel to your fire, tweak your game a little bit. I’ve noticed this with agents. If they don’t know how to do anything and they come to me, I’m not really much help to them. If they’re already selling 12 to 20 houses a year, I can get them to 50 to 60, so much easier. And I think about this a lot now. You don’t just find the most successful person and say, “Be my mentor.” You want to really find the right fit. And so the people we find that are successful in getting mentors, they were taking action before they found that mentor. You were doing something. So you had a good foundation in what you were doing. And then when Brandon came, you guys kind of connected and you became partners. How would you describe what you saw in Greg, this is to Brandon, that made you know, “Oh, I want to work with this guy?”

Brandon:
Yeah. A couple of things. One, it was the fact that you offered value, you wanted to go surf. And I said earlier about the DCI thing, the fact that you knew these terms like, “Oh yeah, my debt-to-income ratio is here and I got rejected from a loan because of this happened.” And I’m like, “Oh, you’ve read the books. You’ve listened to the podcasts. You understand the concepts. So I’m not training you.” And even then it wasn’t like, “Will you be my mentor and hang out with me every week and we’ll sit down?” It wasn’t, there was no commitment there. I am so anti-commitment. You guys know that, I don’t answer my phone, I don’t want to commit to anything because any commitment to anybody is a no to my wife and daughter and son.

David:
Yeah. That is how you look at it.

Brandon:
So everything I say yes to is a no to them. This thing right now that we’re sitting here doing is a no to my wife and my kids. But you weren’t asking for anything. You were just like, “Hey, can I bounce ideas off you? Can we get together? Can I learn from you?” It was a very like, “Yeah, we’ll do that. Let’s exchange phone numbers.” And so over time we just started hanging out at other Meetups, talking more, and eventually I don’t even remember how it happened, but-

Greg:
I wasn’t even really, at that point, actually, just to correct a little bit. I think I had said, “I can mentor you in surfing if you’ll mentor me in real estate.” And you were like, “Yeah, yeah, sure.” And the very next day I heard the podcast where you said, you were both going on about it, “Don’t ever ask anybody to be your mentor. That is the worst way you could possibly…” I was like, “Oh, I blew it.”

Brandon:
That’s funny.

David:
We got a lot of heat for that episode.

Brandon:
We did get a lot of heat.

David:
But I liked it that-

Greg:
… but it’s true. I agree with it.

David:
… it helped you with Brandon though. Right? Like the advice actually helped your relationship with him.

Greg:
Yeah. Yeah. Because it is awkward. Like, “Hey, will you mentor me?” You know, like, “Well, what am I signing up for?”

Brandon:
That’s exactly what everyone’s going through. What does that mean?

Greg:
Yeah. How about, “Can I take you surfing some time and ask you a couple questions about strategies in real estate?”

David:
You know, we talk a lot now about like how the apprenticeship method is not really a part of society, but it should be because that’s the best way to learn anything. And that’s just another thing that you might, if you think I have no value to offer or I’m not yet there go work for them for free, go see if you can do something that they need done well, and actually learn something while you’re there.

David:
But that was really good. So you recognized in Greg, this guy knows a little bit of what he’s doing. He probably had to be kind of persistent knowing you. You probably didn’t want to commit. You probably blew him off a little bit and he made you come back and like, “Hey, well, let’s go surfing this day at this time.” And then knowing Brandon, he probably didn’t say no. So you guys are out there surfing. And that’s where the conversation happens.

Greg:
After about six months, I was like, “Man, so much for that.”

Brandon:
Took a little while for us to start hanging out and surfing. And we started doing that.

David:
That’s good because now you know this is a dude that doesn’t quit easy.

Brandon:
Yeah.

David:
Do you want a mentor a person that’s going to quit after two weeks when it’s, I mean, I’ve done that, so many mistakes with people that I brought on to teach them something and they quit so easy, and I invested all that time because you and I know we’re going to give you our best. If we say we’re going to work together, I’m going to mentor you, you’re going to be on my team. I’m giving you everything I got. But I don’t know if you can necessarily commit the same to me. So by making you wait six months, by making it hard and you not quitting, you showed Brandon, “Dude, I’m not like a regular person here. I’ve done a little bit of this. I’m going to do it. Whether you help me or not. You want to get on board with what I’m doing.”

Greg:
I was also sending him deals all the time.

Brandon:
Yeah. You were staying top of mind.

Greg:
I was like, “Man, I’m driving this guys nuts. He’s going to hate-”

Brandon:
No, I never thought that I liked looking at my, and so let me actually say I don’t consider myself and I hope you don’t consider me, I’m not your mentor. I’m your partner. We do this together now and I learn as much from you as I hope you learn from me, because you came with not just the desire, you came with a mass amount of knowledge about the Maui market that I didn’t have. And so here I am brand new to the island and I don’t know anything about investing here. So most of what I’ve learned here came from you. And so it’s worked kind of two ways in that it’s helped. That’s why we ended up working together. We’ve now flipped two properties. I bought a wholesale deal off you. And we got-

Greg:
And we got wholesales together.

Brandon:
… We did a couple wholesales together and now we’ve got another one under contract right now that looks like a really good one. And we started looking for deals.

Brandon:
So I want to, I want to talk a little bit just about those, those two flips. So those were deals that you found. So first of all, how are we finding, how are you, because you’re the one that you bring the deal to the table, I bring the money and you bring the deal. How are you finding deals in today’s market?

Greg:
There’s not one particular method.

Brandon:
Everything we’ve done has been different.

Greg:
I think everybody kind of wants to know where do you get the deals, right? There’s no answer.

David:
Where’s the clearance section at the store where I can just go buy it cheap? Yeah.

Greg:
It’s everywhere. Right? You got to shop Walmart, Target, Best Buy, you got to go everywhere. We do a lot of marketing. Watch MLS. We talk to realtors, we watch foreclosures. We watch the auctions, just everywhere. We have a website.

David:
So, how about this, when you’re shopping what are you looking for that you key in on?

Greg:
Motivation, I’d say.

David:
There you go. Distress and motivation?

Greg:
Motivation. Yeah. Not always distress. So for example, a lot of people ask, “Why are people selling you this house at this price?” Right. Especially the one we’re doing right now because it’s a $1.3 million house that we’re buying for a lot less than that. And the seller’s not distressed. They’re perfectly good standing. They’re buying another property. They want to buy this other house, another vacation house in Maui and the seller on that one told them they have to close in 30 days.

David:
But that created a form of distress in their financial situation.

Brandon:
Yeah. The property’s not distressed.

Greg:
I guess not distressed in the way that-

Brandon:
They’re not freaking out. They’re not like they’re not like-

Greg:
They’re not in foreclosure.

Brandon:
Yeah, exactly. We’re not taking advantage of anybody. We just simply have a solution, which we can close fast.

David:
And it’s in their best interest to close fast so they don’t lose the next deal. They could get more, probably putting it on the MLS.

Brandon:
Yup, they can sit there for three, four months. [crosstalk 00:57:04]

Greg:
They know that they know the value. They know it’s worth $1.3, and they think it’s a little more, but everyone always do, but they’re okay with that. They understand that this other property is worth the sacrifice to them.

David:
So what you did was you found a car at the dealership that is worth much more, but they’ll sell it to you for less because they got a bunch of new cars coming in and they need somewhere to stick it. And you’re never going to just go and say, “What dealership do I get that at?” Because they don’t want to sell it to you for less. You just happen to catch them at the moment, by staying in relationship with them and being out there shopping that boom, you saw the opportunity that won’t normally come up. You cannot predict when that’s going to happen, but you don’t need to be. If you’re out there doing your job, talking to people, connecting with people, what you, what we call marketing or networking, which is really just letting a lot of people know what it is that you do, you’ll be there when that opportunity comes.

Greg:
Yeah. That’s an important note. When I, back to that first property that I was looking at buying, I had heard a guest on the podcast and I really wish I could remember who it was, I don’t know who it was, but at the end, I really connected with this guy or what he said resonated with me. At the end of the podcast he gave his phone number and said, “Yeah, call me up, you know, whatever.” So I called the guy and he spent like 15 minutes talking to me and I was telling him, “Hey, I’m looking at buying in the Midwest. I’m looking at turnkey stuff, but there’s also stuff on Maui. There’s just a couple of buildings here where I could actually buy and make sense, but it’s kind of a low, D-class sort of area.”

Greg:
And the conclusion, he motivated me to invest in my own market. And I think the reason a lot of people ask this question, right? Like, “Should I buy turnkey? Should I buy Midwest? Should I do that or should I, you know?” Personally, I think that it depends on how much time, effort and money and everything are you putting into real estate? Is this going to be your full time job?

David:
Yeah.

Greg:
I mean, for me, I work easily 40 hours a week in real estate. This is full time for me. I still have a full time job and I work 40 hours there and at least 40 hours in real estate. I’m probably averaging 80 to 100 hours a week for now. But, that’s why this is the right path for me.

David:
If you were a physician making $600 grand a year, this might be a completely different conversation because you wouldn’t be able to look for the deals around.

Greg:
Or if I just wanted to invest in real estate, get a good return, but I only wanted to work on it, maybe three, four hours a week or something, then Midwest could be a great option, or syndications, investing in mobile home parks indications. I don’t know.

Brandon:
Yeah. Yeah. You can put money. If I knew anybody who had a fund-

David:
What I really love about what you’re saying is this applies to real estate agents too. And what I found is that 80% of the business in real estate goes to the top 20% of the agents and the rest of the 80% they struggle over the scraps of the other 20%. So what I tell people, because this question comes up a lot when they say, “Should I get my license so I can save money on my own deals?” You’re going to spend so much money to be a realtor and you don’t know anything that you’re doing. You should not do it unless you’re willing to fight to get in that 20%. It is not worth doing, unless your goal is to be one of the top 20% in the market. Otherwise, don’t do it.

David:
And that’s very similar to what you’re saying. I will do this because I’m out there hustling, meeting people, marketing, learning condos, I’m involved. You’re on the board of the HOA, so you’re going to find when that deal comes up that nobody else, you’re going to know about it first. For you, makes total sense to be buying the way that you’re buying. But if you know yourself and you’re like, “I’m not going to do that. I’m not going to work to get in the top 20%.” Then don’t be stupid enough to put yourself in the arena and get clobbered by the people that are putting in the work.

Greg:
Yeah. And just to be clear, I love this stuff and I’m so grateful for the blessings that I’ve had in my life. I’m incredibly humbled to be on this show. I never could have imagined this. Right? It’s crazy. This did not just come from listening to a couple episodes, calling a realtor and sending an offer. I mean, you get emails and texts for me all the time. I know you set your phone on silent so I do this at midnight, 1:00 AM, right? Like 2:00 AM. When I have to be up at 6:00 AM for work the next day. It’s not easy. Right? There’s a lot of work that goes into-

Brandon:
Yeah. You’re hustling.

David:
But I promise you when Brandon saw how hard you work, he thought, “I want to partner with that guy.” It wasn’t because you offered to buy him a cup of coffee. It wasn’t because you said, “Will you be my mentor?” It wasn’t because you said, “Hey, tell me what you need and I’ll just see if I can help you.” You showed, I am about this life. I’m not here to talk about it. I’m here to be about it. And you impressed him over a period of time. We look for the same things, right? The best partnerships I get into, they didn’t really get a whole lot of me for six to nine months. I wanted to see, do you have what it takes to be good here? Because we know how hard this is. It is not easy to make a lot of money to be in that top 20% of people.

David:
And what you showed was, “I don’t care. I’ll do it. Whatever it takes is where I’m going to get there.” And that’s what people need to show. If you want to come work for me, if you want to come work for Brandon, we want to see that you’re actually committed to doing whatever it takes, because at the top of that hill, when you hit the 20%, oh my gosh, would you want to do anything else with your life? Could you ever make this much money with this little formal education and this much time freedom? This is just the best place to possibly be at when you get good at investing in real estate.

Greg:
Yeah, for a long time it wasn’t important enough to me. I wanted to invest. I made good offers. I wanted to, but I still wanted to watch TV at night and I still want it to go hang out with friends and I have almost zero social life, right?

David:
Does this tie into the desperation we talked about earlier? You hit a point where you were just like, “I’m desperate to be successful and I’ll just do whatever it takes?”

Greg:
Yeah. I don’t know exactly what it was, but it was a gradual sort of like my recovery, right? It was just this process of realizing I have to do something. I have to be willing to go to the ends of the earth. There cannot be any length that I won’t go. And I think about that a lot. I also think about where I came from because having experienced some of those things I talked about, I’m so incredibly grateful for the life that I have today. And there’s nothing I wouldn’t do to continue this journey and path that I’m on. I just won’t settle.

David:
I love that. What’s your process like when a deal crosses your desk?

Greg:
Well, right now it’s something we’re working on. We’ve been scaling. I’m not somebody that’s really great at coming up with systems and implementing them. I’m good at following them once I have them and get used to them, but-

Brandon:
I think you’re better than you think you are.

Greg:
Yeah?

Brandon:
Yeah. I think you good at it.

David:
Well, even without the systems, just tell me what are all the pieces that you have to figure out to know if you want to pursue it?

Greg:
The number one thing I would say is we get a deal. We got to figure out how much we can get it for and if it can meet the profit requirement that we have, which right now is just as a general guideline, it’s a hundred grand.

David:
This is really helpful. This is the whole Profit First by Mike Michalowicz idea, right?

Brandon:
We want to make a hundred grand. We’re going to start there.

David:
Now let’s work backwards. We’re we’re making a hundred grand, what can we pay, what can our rehab be, right? Okay, go ahead.

Greg:
Yeah. So that, and then for me on my rentals, it’s 15% cash on cash return and 20% equity after all expenses. That’s kind of a general also on the flips. We’ve got to be around 70% or so total cost, the ARV. That’s a kind of general guideline. We’re still kind of narrowing that down and getting more specific because a hundred grand profit would be great on a $400,000 condo. It might not be so good on a-

David:
1.7

Greg:
… $4 million house.

David:
Exactly.

Brandon:
It’s going to differ a little bit, but I think you’re better at the systems than you maybe think you are, because you process this stuff through, you get through it, and maybe it’s just hustle. I mean, you just do a lot of hustle to get through, but a couple things that we’re working on, for example, I know a big part of life, because we’re sending direct mail marketing where we’re using Open Letter Marketing, Justin Silverio’s company. So, Open Letter Marketing, check them out.

Greg:
Yeah.

Brandon:
They’re awesome.

Greg:
Doing a great job. Yeah. And I’ll just mention-

Brandon:
Yeah, please.

Greg:
… I’ve done a few direct mail campaigns. This direct mail campaign, this is my first time working with Open Letter, the response rate’s been incredible.

Brandon:
Yeah. Yeah. They’re really good. I really like their stuff. So Open Letter Marketing, we’re doing that. So that’s a system we have set up. We’re not printing letters, so that’s a system. We just signed up for a Call Porter. It’s a company that they’re a real estate investing company who trains people to take phone calls.

Greg:
And set appointments. Yeah.

Brandon:
Yep. And then, and set appointments so we don’t have to answer every single phone call. We have a DealMachine, the app DealMachine on our phones, which we-

Greg:
I love DealMachine.

Brandon:
Yeah. What you drive around, [inaudible 00:21:34], but what’s cool about that is that we have other people now in our business that are able to use DealMachine to be able to go around and work under our account. Like, you’re on my account. So when I find a deal or you find a deal, it goes into the same thing. It sends out a postcard. If we want it to, or we can just use Open Letter. So there’s a few of these systems we have in place which is super cool. So again, I think you are really good at the systems thing. We just we’re building them as we go now.

Brandon:
I do you want to cover one more thing before we move to the deal deep dive. And that is this idea of how we started flipping together because we’re making good profit. I mean, we made an average of a hundred-

Brandon:
How we started flipping together, because we’re making good profit. We’ve made an average of a hundred grand on each of the two flips we just did on condos, which was great. But what’s fun is, I do hardly any work. I don’t show up at the condo very much. I have really like an easy job. I mean, I’m totally taking advantage of you, it’s great. But you, the reason you don’t have to put much money in. I mean, other than the little bit of money that… Because we didn’t have our chequing account set up at the very beginning.

Greg:
I didn’t put any money in.

Brandon:
I mean, technically, you had like paid for a fridge and I …

Greg:
I could have come and gotten a cheque from you.

Brandon:
Correct, yeah. It was more like the hassle of not having a chequing account.

Greg:
I just did it because I…

Brandon:
But basically you’re flipping for no money down.

Greg:
Mm-hmm (affirmative).

Brandon:
And I’m putting the money in, but I’m flipping with no work down, almost at all, which is great. No work down.

Greg:
NWD.

Brandon:
Yeah. You should write a book called No Work Down. The reason I just want to say, and we’ll move on, because we make this point a lot on the podcast. The reason we were able to do that is because you bring the most rare and valuable skill to a real estate investor; the deal.

Brandon:
You bring great deals, so you can invest with no money all day long. Just find a good enough deal that you can bring a partner into a deal. It doesn’t have to be a flip, it could be a rental. It could be even a wholesale thing if you needed to work that. If they’re asking, How do I get it done? Are you able to flip now, because I put the money in? And we’re also using… I’m not even putting all the money in, I’m putting the down payment and the rehab costs. We’re borrowing from KÉC??

Greg:
KÉC?.

Brandon:
KÉC? Capital.

Greg:
Yeah, Cory Nemoto.

Brandon:
Yeah Cory Nemoto, who’s been on the podcast before.

Greg:
He’s been great at funding us, giving us great deals and helping us acquire these deals and do these flips.

Greg:
We also… You mentioned some wholesaling. If a deal doesn’t fit our numbers, we wholesale it. We are very conservative, so we don’t do a deal if we don’t feel very, very confident that we’re going to make money. So yeah, we also assign deals to other investors, people that want to rent them. Like right now I’ve got one we just assigned. We were looking at trying to flip it. The seller was so firm on the price. We could not get him down to where we needed it to be to make it work. So we said, “Okay, we’ll do your price, put it on our contract.” And found another investor that is buying as… Actually his son’s a contractor who’s going to move here, live in it and rehab it.

Brandon:
So they can spend more money because… Other people’s stories aren’t always what our story is.

Greg:
And he’s paying all cash too.

David:
[crosstalk 01:08:12] Hence the objection of why would I want your deal if it wasn’t good enough for you?

Brandon:
Yeah. It’s because people have different scenario… If you’re paying cash, if you can do the work yourself, you can have really good deals.

Greg:
And a lot of people might be not totally happy with making 50 grand on a flip.

Brandon:
Yeah, exactly. And we want a hundred because we’re splitting it. Yeah. You and I were splitting things 50-50 at the end of the day. So we want to make sure we’re getting good money. So… All right. So then I just want to make that point again, if you’re listening to the show right now and you’re struggling with getting that first deal, because you don’t have any money, just focus on the deal part, focus on finding deal and network, go to BiggerPockets events, just like you did build relationships. Don’t be weird about it. Don’t be like… Just build relationships, friendships with people. And you will find people who have more money than time. And if you have more time than money or more skill than money, then bring that in.

Greg:
I never actually asked you to do flips with me or partner or anything like that.

Brandon:
I think I asked you

Greg:
I was sending you deals all the time, but I was sending them for you. I was like here dude, check this out. There’s this screaming deal, blah, blah. Because I didn’t have the funds for the down payment. And I just, wasn’t confident enough to take that kind of leap, buy stuff for a million dollars when I’d been buying stuff for a hundred thousand. So I would send in new deals. And for some reason you asked me to meet one day.

Brandon:
We went to three’s bar and grill,

Greg:
We’re going to be… We’re doing flips on Maui. And I want you to be in charge of the flipping on Maui.

Brandon:
Yeah. I mean like, honestly. You were sending me all these deals, but I don’t want to just go do something with myself. So I remember actually Ryan and I having this conversation as we’re trying to build this Opendoor capital, which is the mobile home park business. We’re trying to raise money from accredited investors and all this fun stuff but.. Fund stuff and fun stuff. But we needed, we need team members, employees to be able to run this thing. So we’re like, well, how do we make more money? Well, let’s start flipping on Maui. Well, I don’t have time to flip on Maui. Like that’s a lot, but I have some cash. I have a chunk of change. I was like, well, let’s just see if Greg wants to flip with us and we’ll just partner with Greg and we’ll work together and we’ll just have Greg do other things. So anyway, that’s how that kind of started. So we could, again, we saw in you that hustle and that drive. And so then we were like, well, let’s just do this flipping thing. And it’s been working just awesome since.

Greg:
which is really interesting and humbling for me because I still don’t get it. And when you brought me there and you told me, this is what we want to do and we want you to do, you know, basically you’re going to run the flips and I’m just going to fund them and you’re going to do all the work, find the deals, do the flips, everything. And I was like, okay, first off, how many people are you interviewing for this position? And…

Brandon:
It was a lot wasn’t It wasn’t a Ryan.

Greg:
And you said, no, nobody. It’s just, you it’s like either you do it or we’re not going to do it. That’s what it was. And I sat there for a minute silence and I said, well…

Brandon:
Yeah, I remember that.

Greg:
What’s wrong with you? Do you realize I’m a total newbie. I don’t know what I’m doing. I’m buying…

Brandon:
You had been being interviewed for the six months that you were sending him deals. You were persistent. That’s exactly what it was.

Greg:
I didn’t even know that until right now on the podcast actually.

David:
That’s how busy, sorry. We’re not going to sit there and interview 25 people. That’s [inaudible 01:11:11].

Brandon:
You know, we’ve learned that from David Osborne a lot, like in Gabon. It’s like David Osborne is big on that. He just sees how people are and then brings them into his world because the truth is, good people is the number one best investment you can possibly make. It’s the best. It’s good people. It’s better than real estate, better than anything. And so one thing David and I talk a lot about is like, we need people like good people around us and you can’t… A resume’s a lie. I never buy a rug… Mike is here right now. You sent me a resume. Mike is off camera, but he sent me his resume. I honestly don’t think I read it.

Brandon:
I don’t think I even looked at it. Like… Oh, it’s a resume because resumes are just like a highlight reel? It’s just like looking at somebody’s Instagram and thinking that’s what their life’s like. Resumes are worthless. Let’s instead. So Micah managed the bookkeeping actually for our flips. That’s how Mike ended up getting in the world because you only know how someone’s going to be, once they start working with you, that’s the only way you know. So get people into your world and get them to start working for you. And it’s a gigantic job interview or not even job. It’s just partner interviews. So anyway, thank you

Greg:
Speaking of people… I can’t believe I haven’t mentioned this yet, but we talked about my addition and we talked about all this stuff. I owe it all to my mom. So my… There’s no doubt in my mind that I would not be where I am and not even anywhere close. If it wasn’t for my mom, my mom is just the most unbelievable, incredible woman alive. She’s the strongest, she’s gone through obviously losing her husband. She’s gone through all kinds of challenges. Me. I’ve put her through just horrible torture along with the rest of my family. But she fought for me. She never gave up on me. She never got fed up with me. She saved my life. I owe everything to her. And that’s one of my why’s, right?

Greg:
My big motivation. And on my vision board, there’s a picture of, my mom’s on there because one of my purposes is I want to get… She lives in Miami. I live in Maui, other side of the world. I need to get to where I can go out to Miami two to three times a year, fly her out here, two three times a year, spend more time with her. And, I also want to get to the point where she doesn’t have to worry about her car payment or her house is paid off. So that’s good. But I want her to be able to go wherever she wants and do whatever she wants in her retirement.

Brandon:
That makes it more meaningful to that. Even though the fact that I saw your Instagram post a few weeks ago, and it was you and your mom and in our flip, like that when she was in there, you put that somewhere anyway. I just thought that was, super cool.

Greg:
Yeah.

Brandon:
Awesome. So this has been one of the longest shows we’ve done in a long time here on the podcast and we could keep talking forever, but we got to move this thing on. So I want to shift gears here and head over to the deal. Deep dive.

Brandon:
All right. This is the part of the show where we dive deep into one deal that you’ve done. And I’m not exactly sure which one you want to talk about, but you got something in mind.

Greg:
Yeah. I was thinking, we’d talk about this one rental condo that I bought that I think was kind of my job interview with you guys.

Brandon:
Okay.

Greg:
I asked Ryan to come along with me a seller and I just kind of wanted him to be like a wing man and kind of helped me out on it. I thought he might have some… You know, I don’t know. I thought it would be fun to right.

Brandon:
Let’s pick it apart. So first one, first of all, it’s a condo you said here in Maui. That’s what it is. Second question. How’d you find it? Is that the first one? We don’t usually ever notes.

David:
How did you find the deal?

Brandon:
Here we go.

Greg:
That one? The seller called me up from, again, not particular net source. It was, I think a result of networking, talking, telling people what I do, having website, sending out postcards. Like I think one of our had seen my post. She had mentioned my postcard. She had heard about me from the association and other owners. So it was more…

Brandon:
You had a reputation and you hit her multiple touch points.

Greg:
Yeah,

David:
That’s awesome.

Greg:
I was covering all the bases.

Brandon:
That’s cool. Alright. So you found the deal that way. What was the price? [inaudible 00:09:11].

Greg:
The first time she called me, I asked her what she’d like to get out of it. And at that time, the average sales price in the building was about 120,000. They’re all two bedrooms. They’re almost all identical. So the values don’t fluctuate drastically. They go from maybe a hundred, five to 140, 50, a couple of really fancy ones, a little higher.

Greg:
So asked her what she wanted. She said she was like, Oh, maybe like 50. And I just stayed silent. And then she said, or maybe 30 to 50, I was just like, Oh my God. Oh, okay.

Brandon:
It would need a lot of work, right? Yeah.

Greg:
Yeah. It was bad. And so she was in a situation now, like I also wanted to make sure that I wasn’t being sleazy and you know, just not, I want to make sure I can sleep with myself at night and I’m not taking advantage of this person’s situation. She had inherited this unit. She was exactly what you described before. She was physically going and picking up the rent every month, the tenant wasn’t paying the rent. They were a month behind. They weren’t, they weren’t paying, she was paying their electric bill and they had really high electric bills and she owed thousands there.

Greg:
She was just… It was a disaster and she just wanted it gone. And so… Just so you understand, like these things are selling for a lot. You can fix this up and sell it for 150 pretty easily. But to her, I was buying her situation. And so I got a great deal because I was willing to take on that challenging situation.

David:
Who is the final price you pay them?

Greg:
30,000.

Brandon:
Okay. All right.

David:
So you just explained how you negotiated it. So we don’t have to ask you that. How did you fund it?

Greg:
I paid cash for that one at the time. So I don’t know if I mentioned that I don’t take any profits from my business. The Porsche was the first time I’ve actually taken profits from a business. That was my way of reporting myself from one of our flips and all the profits, all the cashflow, flips, wholesales, everything stays in the business and it grows and I buy a property and then, it goes down and I don’t do a lot of actual technical burrs because I don’t refinance.

Greg:
Actually. I haven’t really refinanced any of them that I like to have the equity… A little more secure. I’m not a big, I’m pretty risk adverse I’d say. So anyways, so I had saved up about 35,000 at the time and was about ready to buy my next deal and was that was going to be my down payment because I was putting down on these condos 20 to 25,000, somewhere around there. And so I had the cash, I bought it cash and I then refinanced it or actually took a key lock out on that one.

David:
Oh cool.

Greg:
Right after closing.

David:
All right. So I was going to ask then, what did you do with it? You hit those rental then.

Greg:
Yeah. And actually, so this is something important to me is like I mentioned, I like to try to give back and help people. And the tenants in this unit are good people. They were not good tenants before, because she was not a property manager. The old owner didn’t know… She wasn’t the right person to be the property manager. I stepped in and I told the tenants, I made it very clear. This is the way it goes.

David:
This is the way.

Greg:
Yeah. Pay your rent, You communicate. And I laid out the ground rules, made it very strict and stern and said, and if you treat me well, I will treat you well, I will do everything I can to help you. I go… I bought Christmas trees for my tenants. I’ve… I try and be a really good landlord, but I am very strict.

Greg:
You have to pay your rent on time and you have to communicate with me. And they have paid every month on time. They’re very good tenants. The guy, it’s a guy, my age and his mom who is elderly and is very, very sick with cancer. They came from China, I believe. And they don’t have anybody here. The dad died when he was young and they’ve lived in this unit for 20 years. And so this is important to me because they have… He paints cars for a living. They don’t have a lot of money. They don’t, they would have nowhere to go. The units rented way below market value, market rents. And I was able to give back in that particular case by allowing those tenants to stay, I didn’t… If I had rehabbed it, I would have to kick them out to rehab.

Greg:
I can’t rehab with the lady in there with cancer and her condition. She’s very fragile, was able to keep them in place, keep the rents in place, which is 1200 a month. The market rents in the building are 17 to 1800. So I didn’t raise their rents. I’m really proud of that. Really have if just… I’m really happy that I got a chance to help them because I feel pretty confident that most of the other buyer… If she had listed that thing or sold it, majority of buyers would either kick them out, renovate it or just raise the rents.

Brandon:
If I can make one quick point here and I don’t want to spend a lot of time in this, cause it’s the kind of fast moving part of the show. But what’s interesting is that the woman before you or the person who owned it before, I think you said woman, [inaudible 01:20:07] she wasn’t managing the property correctly. So a lot of times when people say there’s a bad tenant, I would say half the time, it’s a bad tenant. And the other half of time, it was not professionally managed. Because like, it’s one of those things. For example, you think you’re being a good landlord by not charging a late fee. What that does to people is they can pay later and later and later, because they deprioritize it. Pretty soon. They’re three months behind and now you have a bad tenant, but it’s not the tenants… I mean, yes, it’s the tenant’s fault, but it’s really your fault as a landlord because you let them get behind because you didn’t charge them a late fee. So where I’m going with that is by being a good, strict landlord, by knowing what you’re doing by knowing that’s a skill you have to learn by reading books, by talking to the landlords, by listening to podcasts, like tenants actually become a lot better and they can actually be good, great tenants. As long as you do your job of managing.

Greg:
And you’re doing a disservice to the tenant.

Brandon:
Yeah, very much so. [crosstalk 01:20:54] You are hurting them.

Greg:
And I let them slide all the time and they’ve left. And that was my worst experience with a tenant so far. Cost about $3,000, but that’s a disservice. They were a young couple. Now they think that all landlords are going to let them slide every month.

Brandon:
Yeah. Your niceness actually hurts them longterm.

David:
It works the same way with employers and employees. If the employers too nice on the person, because they’re afraid they’re going to leave them a bad rating on something. Or they, then the employee gets used to the fact that they showed up every day, they started coming in later and later they started working less and less. That person’s work ethic is ruined for the rest of their career until some other employer comes along and retrains them. And Jocko talks about that in extreme ownership. He says, there’s no bad teams, only bad leaders. And you’re the leader. If you’re the employer or if you’re the landlord, you’re setting the tone. So…

Brandon:
Don’t feel bad about holding people accountable. Accountability is one of the best ways you can love another human being. All right. Last question of the deal. Deep dive. What did you learn from the deal?

Greg:
Whew. I learned a whole lot about HELOCs. That was my first HELOC so,

Brandon:
and that stands for equity.

Greg:
Home Equity line of credit. Yeah. Yeah. So the outcome of the deal is I bought it for 30,000 to got a HELOC for 76,000.

Brandon:
Oh that’s awesome.

Greg:
Still cashflow is 500 a month or so. And so yeah, that’s great. It was a home run and I’m helping the people. So it’s just all around win-win and that seller is stoked.

Brandon:
She doesn’t deal with that anymore.

Greg:
Yeah

Brandon:
Perfect. Very, very cool. Well that was a great deal, Dave. I liked that one, but before we get out of here, we’ve got one last segment of the show to get to, it’s time for our famous four. All right. The famous four. These are the same four questions we ask every guest every week and we’re going to throw them at Greg now. So Greg famous for number one. What is your… Let’s hear what’s going on this week over on the BiggerPockets business podcast.

Jay Scott:
Hey, there are Brandon and BiggerPockets real estate podcast listeners. This is Jay Scott, your cohost for the BiggerPockets business podcast. And this week on the business podcast, we have Ryan Novak. He is a young entrepreneur who took a business that he had been working in since he was 15 years old, bought it with not a penny out of his pocket and has turned it into a seven figure empire. Got to check out Ryan and check out his awesome business called chocolate pizza.com. Check it out this week on the BiggerPockets business podcast. Now back to your famous four,

Brandon:
We’re back now. Let’s get to the famous four number one. Greg favorite real estate related book.

David:
A little cliche. Everybody says, but the millionaire real estate investor, Gary Keller,

Brandon:
It’s not as cliche as you would think, I thought [crosstalk 01:23:27],

Greg:
That was a really… Made a big impact on me too. Early on.

Brandon:
All right. What about your favorite business book?

David:
Okay, so I’m actually not a big reader, but audible is my best friend, but I would say never split the difference.

Speaker 3:
We’ve got it right here. Yeah.

David:
It’s funny. I noticed never split the difference is splitting your books. [crosstalk 01:23:49] that’s exactly right. Very clever Brandon, I’m sure you meant to do that.

Brandon:
That’s exactly what I went to do. Number three. What are some of your favorite hobbies?

Greg:
Surfing.

Brandon:
Surfing. Greg goes surfing every day. Pretty much every day.

Greg:
Yeah. I would say six and a half days a week.

Brandon:
Yeah. That’s crazy. That’s crazy. Yeah.

Greg:
So surfing and real estate and family. Yeah.

Brandon:
He’s a phenomenal…

Greg:
And my dogs.

Brandon:
Very cool.

Greg:
And cars and driving.

Brandon:
In your new Porsche. Greg, what do you think separates successful real estate investors from all those who give up fail or never get started?

Greg:
I don’t think there’s one thing. I think there’s a lot of… Everybody’s different. Everybody’s got their own path and what motivates them. I can only speak for my experience and from my experience like we discussed, it was that desperation. It wasn’t until I had the desperation, it wasn’t until like I had just been working the nine to fives, working… There was just years and years of that, where I was not happy and, and knew that I had to find another way, but it wasn’t desperate.

Greg:
So it wasn’t until I got desperate that.

David:
I love it.

Greg:
I became willing to do anything. I love my job. I have a great job too. I still have my day job and I love it there. And I learned a lot. It’s very valuable to talk to is really valuable in our last flip when it flooded.

Brandon:
What’s your day job like right now?

Greg:
Just a quick shout out to premier restoration, who I… Where a disaster restoration company with deal with water, damage, mold, sewage, fire, smoke odor, and all that cleanup. So when we had a flood in the middle of renovating, actually, as we were finishing the renovation in our last condo, the drain pipe collapsed completely underneath the concrete foundation and our first floor condo and the entire place flooded and what could have been a very long and very expensive setback ended up… My relationships and experience and disaster restoration.

Brandon:
Took care of that.

Greg:
Helped us a lot there.

David:
Yeah. Well nice work man.

Brandon:
This is very good. All right. So if anybody wants to intern with you guys or they have a deal in Maui that they want to bring your way, like what’s the best way to get ahold of you.

Greg:
They can email me. We are definitely looking for people that are desperate and eager and completely committed to doing this. If you’re not really completely committed, it’s probably more of a waste of time… For yourself as well, like they can email me. My email is [email protected] So that’s G R E [email protected], M A U I H O M E B U Y E R S.com.

David:
Very correct. I was reading it off your shirt as… [inaudible 01:26:44] .

Greg:
It’s the first time I’ve tried to say it without.

Brandon:
You nailed it. That’s awesome man. Well, thank you so much for joining us. This is really, really good. Today is awesome.

Greg:
Thank you.

Brandon:
Cool. All right. Well, David, this was a great show.

David:
This was good.

Brandon:
What was your Instagram handle by the way?

Greg:
@ MAUI homebuyers.

Brandon:
All right. He is at Maui home buyers. Brandon is at beardy Brandon I’m at David Green 24 and make sure you’re following at BiggerPockets as well. There’s really good stuff posted on there.

David:
There is.

Brandon:
And that being said, this is David Green for Brandon, the buying Hawaiian Turner, signing off.

Speaker 3:
You’re listening to bigger pockets 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 bigger pockets.com your home for real estate investing online.

Watch the Episode Here

Help Us Out!

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

This Show Sponsored By

Rent To RetirementEnjoy all the benefits of Real Estate Investing without all the headache! Rent to Retirement is your partner in achieving financial freedom & long term wealth! Retire on your terms & timeline by investing in passive income properties!

Learn more by visiting renttoretirement.com or call 307 421 4049

Oracle NetsuiteSerious entrepreneurs and finance teams run on NetSuite, by Oracle -the world’s number one cloud business system. NetSuite offers a full picture of all your finances all in one place, in real-time, right from your phone or your desktop. No more guessing. No more worry that what you don’t know could kill your company. That’s why NetSuite customers grow three times faster than the S&P 500 and you can too.

Schedule your free demo right now and receive their free guide –“Seven Key Strategies to Grow Your Profits” at netsuite.com/biggerpockets

Mid-roll Sponsor

simplisafeCheck out SimpliSafe Security’s DIY home security systems; an affordable, wireless, cellular, and customizable system that doesn’t require a contract!

Go to SimpliSafe.com/pockets to enjoy their 60-day money back guarantee.

stessa logoStessa is an essential and really cool tool that every growing real estate investor needs. Stessa helps real estate investors by automating the busy work, making tax time a breeze, and offering instant access to all your financial metrics on one central dashboard… so you can be 100% confident in your portfolio’s performance.

Simply sign up for free, add your property address and bank account, and watch the magic happen. To learn more and get started with a free account, go to Stessa.com/bp.

In This Episode We Cover:

  • How tragedy shaped much of Greg’s early years
  • Bad advice he received when jumping into investing
  • What to look for (and avoid) when investing in condos
  • How Greg bought a condo for less than 50¢ on the dollar
  • How he and Brandon structure their flip deals
  • How anyone can flip without risk—if they’re willing to work
  • Greg’s “why” (and his paid-for Porsche)
  • How to approach a mentor without making it awkward
  • And SO much more!

Links from the Show

Books Mentioned in this Show:

Connect with Greg