Rookie Podcast 71: Auctions, Section 8 Tenants, and 16 Doors in South Chicago with Martin Neal

Rookie Podcast 71: Auctions, Section 8 Tenants, and 16 Doors in South Chicago with Martin Neal

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Martin Neal started his career as a police officer during the great recession. His family convinced him to buy a condo since prices were near rock bottom, this is when Martin was bit by the real estate bug. When he was transferred to another police station, thus doubling his salary, he knew it was time to do something with the condo. He paid off the loan and set up a HELOC (home equity line of credit) so he could purchase cash flowing rentals!

Now Martin uses the BRRRR strategy to buy homes that need rehabbing, rehab them, rent them out, and get them into conventional loans. As of now he has 11 properties with 16 doors, most of which was picked up just in the last 3 years.

Martin has done what many investors advise against, worked with his family. He has his dad running management on some of his properties and helps when rehabbing them as well. How did Martin work with his dad without jeopardizing their relationship? He sat down with his father, laid out the roles and responsibilities of the project, and paid him for his time. It’s tough finding trustworthy workers and partners in real estate, so don’t disregard family just because they’re family!

Martin also gives some great advice on finding high-quality section 8 tenants, many of which helped his real estate portfolio through the COVID-19 shutdowns due to their government subsidized rent. He also talks about buying homes off of auction sites, but making sure you’re able to do your due diligence before putting in an offer.

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Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie, show number 71.

Martin:
Things are not going to be as bad as you typically make them out to be in your head. After I got that tenant in there, because I did fortunately screen properly with that particular tenant, I was, “Hey, you know what? This is nearly not as bad as a lot of people try to make it out to be.”

Ashley:
My name is Ashley Kehr and I am here with my co-host, Tony Robinson, and we just met in-person for the first time.

Tony:
Which is so crazy. If you guys don’t know, Ashley’s actually like, 6’4″ in-person. She just looks a little petite on camera.

Ashley:
I’m pretty sure most people listening have seen our Instagram content of us hanging out and our Instagram Reels and our TikToks. I feel like, probably 70% of the time we spent together was creating Instagram Reels and TikToks.

Tony:
Yeah, so big shout out to Nikki from the BiggerPockets social media team, but also big shout out to my wife, Sarah, because she was the standby creative director for a lot of that stuff, so you did a good job, wifey.

Ashley:
Yeah. It was a lot of fun. We went to the BiggerPockets headquarters. We got to meet a lot of the BiggerPockets team. We got to meet Tyler Madden, who was a guest a couple weeks ago on the show. So, we really had a nice time in Denver.

Tony:
Yeah. Ashley and I had long, deep conversations about life as well, right? Getting to know each other. I know all of Ashley’s dark, deep secrets now, so if you guys want to know, just let me know. I’ll sell it to TMZ, Ashley, maybe, if I get a good enough deal.

Ashley:
Well, you know what’s really funny is, when we were doing photos, they were taking pictures of us and doing headshots and the one time… I don’t remember who was taking your picture, but they’re… Oh, I think it was Zack, who’s on the YouTube team for BiggerPockets. He’s, “Okay, now look into each other’s eyes and then when I count to three, turn towards the camera.” I couldn’t stare into his eyes without laughing, this is an engagement photo shoot. The whole time, Tony’s wife is coaching us, “Okay, do this, do that, do that. Okay, you guys look great.” She was our hype girl.

Tony:
Yeah, the whole weekend.

Ashley:
Okay, well, besides reminiscing on our trip-

Tony:
Well, we got a good guest today. Right.

Ashley:
Yeah, let’s talk about our guest. We have Martin Neal today on the show. Tony, tell us a little bit about Martin.

Tony:
Martin, he’s a police officer in the Chicago area and he’s got 16 units. I think he got most of those in the span of three years. He shared a lot in this episode about how he’s leveraging lines of credit to really build his portfolio, how he’s buying from auction, Section 8. Just lots of really good strategies that I think people can use to invest in lower price points. Because, he’s buying properties, like what you’re able to pick them up for in the Buffalo area, and just ways to get started quickly, I think.

Ashley:
Martin really gives a lot of great advice. Of course, I ask about what I’m personally interested in on every show. So, we talk about auctions and basically tells you, step-by-step, what the process is like when using auction.com, which he has used in the Chicago market. But, that’s a nationwide website where you can get properties all over the US using that website. So, make sure you guys listen to that part if you’re interested in finding another deal source and want to learn more about the online auctions.

Tony:
Martin, welcome to the podcast, brother. Super excited to have you on.

Martin:
Thank you guys so very much for having me. I appreciate it.

Tony:
Absolutely, man. You’ve got a really cool story. I was looking through the notes the producer put together for us, so excited to dive in. But, before we start talking about real estate investing, Martin, let’s just hear about you. Who is Martin as a person and what initially piqued your interest in real estate investing?

Martin:
Me personally, I went to school for law enforcement and justice administration, which is just a fancy way of saying I went to school to be a police officer. Been a police officer for 12 years now. Love just spending time with the family and playing chess and a variety of physical activities, working out, things of that nature. Doing that 12 years, being a police officer. I bought my first condo in 2011 and got bit by the real estate bug several years thereafter and just hit the ground running recently.

Tony:
Now, was that first condo an investment property, or was that just your primary residence?

Martin:
It was my primary residence.

Tony:
Got it. So, what was it about that first condo purchase for your primary that made you think real estate investing might be the path you want to go down?

Martin:
To be completely honest with you, my family really had to strong-arm me into it because they was, “Hey, real estate’s on sale right now after the crash of 2007, 2008.” You’re just seeing so much property just available and it was, “Hey, if you ever was going to buy, now is the time to buy because it’s not going to get too much cheaper than it is right now.” So, some good convincing by them, I was able to finally say, “All right, you know what? Let me find my own spot and let me just get into it and we’ll go from there and see how I like real estate.”

Tony:
See how it turns out.

Martin:
Exactly.

Tony:
That’s so cool, Martin, because I think what Ash and I usually hear on this podcast is the opposite, where the family members are saying, “No, don’t buy,” or, “The crash is coming. You should wait it out.” So, lucky for you that you had a family that thought the opposite and said, “Okay, now is the time for you to finally get started in investing.” Did you have someone else in your family that was actively investing, or were they just encouraging you to do so?

Martin:
My father, he had been buying properties all when I was a younger child in my early teens, so he had been buying properties. He convinced my older brother to buy a property as well, so they had one or two properties, nothing crazy, nothing as many property as I have now, but that’s where they were with their real estate journey. They were like, “Hey, I’m going to buy a property here and we’ll see how it goes.Or, “I’m just going to have an extra one to supplement my income, and then we’ll see how it goes from there,” was always their mindset.

Ashley:
Martin, before we really dive into everything, can you just tell us what your portfolio looks like now?

Martin:
Yeah, absolutely. So, my portfolio consists of 11 properties, totaling 16. doors. I have a 6 unit building, I have a one condo, the original condo that I started with, I have 8 townhouses, and I have one house.

Ashley:
How long did it take you to accumulate that?

Martin:
So, I picked up the most of them, obviously, with the exception of the condo. I picked up the vast majority of them in the last three years. So, 20 of June of 2018, is when I got my first intentional investment property, what I like to call it and from there, it’s just one after another, after another.

Ashley:
That’s amazing growth. Congratulations.

Martin:
Oh, thank you, appreciate it.

Ashley:
So, let’s start there with, okay, you buy the first property? How did you scale? What was major factors, do you think, that helped you scale so quickly?

Martin:
I think, just really defining my plan, what it was that I wanted to accomplish in real estate, and then just being brave enough to take the action and go for it. Because, like I said, with the condo, I really became an accidental landlord with that particular property. And, from there, I was able to see… because I wasn’t spending any of the money that the tenant gave his rent, I just put it all in a bank account. And, if a repair came up, I used that money, and I just let it sit there. And, after seeing that money grow in a bank account, I was like, “Hey, it could be something to this. If I had 10 more of these properties, I wouldn’t have to work at all.”

Tony:
So, Martin, you mentioned being brave enough to get those next purchases. What a beautiful thing for you to say, or what a unique way to phrase that because, a lot of times, it’s not a lack of capital or a lack of ability that holds people back, it’s that fear, or that lack of bravery, like you said. What do you feel you did, Martin, to help mentally prepare yourself to be courageous or brave enough to actually dive into buying a 6-unit and all these townhouse houses and condos?

Martin:
I think what helped for me best was, me being fearful of being a landlord, hearing the horror stories about all the things that could go wrong, thinking about, oh, what, if a tenant calls in the middle of the night with a leaky toilet, or what if they can’t afford to pay or what if I have to do an eviction? Being forced into this situation that didn’t initially want to be in and then realizing, things are not going to be as bad as you typically make them out to be in your head. Fears, false evidence appearing real. And, that’s a lot of what it really was.
After I got that tenant in there, because I did, fortunately, screen properly with that particular tenant, I was, hey, you know what, this is nearly not as bad as a lot of people try to make it out to be. So, I’m, you know what, you can do this, you have to believe in yourself, you have to have that mindset of feeding yourself positivity all the time. And, when you feed yourself positivity and optimism, good things can happen. And, that’s really where it came from. It’s like, hey, you know what, don’t believe in the naysayers, feed yourself the right mindset, and you can accomplish the goals that you’re trying to accomplish.

Ashley:
That’s really great advice. I love that because a lot of real estate is mindset. Because, there’s going to be really hard days and there’s going to be really great days, and you just have to keep riding the roller coaster. So, Martin, when someone accumulates so many properties, I think a common question right off the bat is, how? How are you financing these properties?

Martin:
So, again, it comes back to that condo that I bought in 2011. Again, I bought that condo just to go into the numbers a little bit for $46,000. It was a 10% conventional loan. And, so I put down the 10%. And, my mortgage and principal interest tax and insurance and homeowner association was about 150 bucks, roughly rounding up. And, from there, I really was just living paycheck to paycheck because, at the time, when I had my police job, I wasn’t making a whole lot of money, but then I left one Police Department for another in which my income essentially doubled. And, I was already used to living on a fixed salary.
So, from there, I just took that money and said, hey, I don’t really need this money, let me just pay off my condo. I paid off that condo, the condo appreciated, it tripled in value, until I bought that first townhouse and I was able to get a home equity line of credit on that property and use it to invest and buy all the other properties that I have today.

Ashley:
So, you didn’t increase your lifestyle when your salary increased, instead, you use that extra money and basically invested it because you’re saving yourself by paying off your mortgage early. So, that’s really awesome that you did that.

Martin:
Thank you. Yes.

Ashley:
That has to be a mindset shift, too. So, how old were you at that time?

Martin:
At that time, about 2011… sorry, I’m aging myself, I was 25. 24, 25.

Ashley:
Think about all the other things you can want. You have your first really high paying job, you could have gone out and bought a brand new car. You could have went and bought a big house. So, can you talk about the mindset of that? Were there books that you read? Or, was it your parents? What gave you that money advice to do it that way?

Martin:
For me, personally, I grew up poor, to be completely honest with you. I grew up in some of the worst neighborhoods in Chicago. And, I’ve always had this mindset of watching people spend money that they couldn’t afford to spend, and to live a lifestyle that they couldn’t afford to live. And, I remember being a child, and I owed my brother $5. And, I finally got my allowance at $10. And, then I had to give him back five. And, I was, that’s the worst feeling on the face of the earth. I think I got $10 and then I had to turn around and give somebody that I owe $5.
So, I just always had this frugal mindset of, only spending what you actually have in your pocket and don’t borrow if you don’t need to. So, that’s really where my mindset came from of, those around me who lived outside their means, and they really couldn’t afford it. And, I was like, you know what, I’m learning lessons every day that, that is a bad thing, in certain regard.

Ashley:
Isn’t it funny looking back on your childhood and realizing little tiny life events that occurred that actually, you look back and, wow, that set me on the path to this. That made up my mind about something or even having a little lemonade stand or something. Even if you learned one little thing about managing money, it’s funny how much of an impact your childhood can have, and these little tiny events or occurrences that happen during it can really help you. Be lessons along the way and help you as as an adult.

Martin:
Absolutely. I definitely say those things, throughout my life, shaped me, especially. Every little thing that we do, I think there can be a lesson from it. Even me personally, when I play sports in high school, I really found myself realizing that, I’m playing a sport here, but I’m really learning a lot about life. I’m really learning a whole lot about life. These are life lessons. And, that’s one thing that I always tell my son, religiously, as I’m, hey, we may be playing a game here, but I want to let you know, I’m really teaching you about life.

Tony:
I’ve got to jump in there, too. So, my son, he’s playing basketball right now, too. And, we’ve been investing a lot of time and energy into his training and things like that. That’s literally, Martin, what I always tell him. I was like, like, the lessons that I’m teaching you right now, son, it’s about basketball, but it’s really about life, right? The lessons that you learn in sports and things like that, they translate to every other area of your life, man. So, I love that you’re also preaching that as well. Sorry, not real estate related at all, but the mindset thing, I feel like-

Martin:
Oh, absolutely. It’s just mindset. Because, I feel like it’s more mindset to be successful in real estate than it is actually more so to fiscal execution. Because, I think mindset hold people back substantially from accomplishing the vast majority of the goals and dreams that they want out of life. And, if you have the right mindset, I think you can really achieve anything.

Tony:
I think you’re already giving people, Martin, a playbook on how they start building that right mindset, right? First and foremost, is having your personal finances in order. Ashley, you preach this all the time as well, right, having a strong financial foundation to start from. Second is, making sure that you’re investing the right way. You bought something, you paid it off quickly. And, then you were smart enough to say, let me get a line of credit to then use that to expand my portfolio.
So, there’s a lot of, I think, actionable things. I’m just recapping this for the listeners that you’ve already said, Martin, what, 10 minutes in, they can really change people’s lives if they apply those two simple theories that you’ve got.

Martin:
Yes, absolutely. It’s funny, because I was sitting in the dentist’s chair yesterday, and, again, me just feeling like I’m always the youngest guy in the room, realizing that I’m no longer the youngest guy in the room. And, the dentist has literally asking me, “Oh, what do you do for a living?” I’m like, “Oh, I’m a police officer, I do real estate investing.” When I told her about real estate investing, her ears just poked up. And, I literally felt like the whole time in a dentist’s chair, I’m just telling her about real estate and how she should invest her money and what passive income and freedom could do for you. And, she was literally hanging on every word. I had finally asked her, I was, “How old are you?” And, she’s like, “Oh, I’m 25.” I’m, oh my God. I never felt so old in my life.

Tony:
Yeah. Well, I love the advice that you’re giving to people. And, as someone who’s a podcast host in the real estate space, I talk real estate to everybody all the time. My wife has to nudge me to say, “Can we just like not talk about real estate for a night?”

Martin:
Yeah.

Tony:
But, I want to go back, Martin, to your point about how you funded those next deals, right? Because, you said that you paid off your first property, you then got a line of credit that you used to purchase your next property. So, I guess, give us a little bit more insight into how you’re doing that. Were you then using that line of credit to pay cash? You’d fix them up, and then pay off that line of credit with permanent financing? Or, what was your strategy that you actually used?

Martin:
Yes, that’s exactly what I did. I just used the birth strategy, literally, for all of my properties, with the exception of one, which is the 6 unit, I did the birth strategy. So, I were buying for low, I will rehab for an average rehab budget about 25,000. And, I would just rent it out, refi, and do it over and over again.

Tony:
Now, were you managing these rehabs yourself or were you hiring these out to people? How are you managing that aspect of it?

Martin:
So, my father, he became a big helping hand for me, because he’s a jack of all trades. And, he agreed to essentially be my project manager on every project. And, I paid him, essentially, a flat rate fee for managing the project. And, he would handle the day-to-day operations. And, the day-to-day operation, which consists of, once we bought a property, we would put a lockbox on it, we will put the SimpliSafe alarm on it. And, we would have contractors come through give us bids. He would either meet him in-person, or if it was someone that we trusted and we couldn’t meet him in-person, then we will give him the lockbox code. Tell him to go in, take a look, let us know what the numbers were.
And, from there, he would just manage the day-to-day activities and help them pick up supplies and making runs to the store for me and making sure that the contractors were doing what they’re supposed to do and needed what they needed in terms of materials.

Ashley:
How did you guys track this? So, your dad’s doing part of the work, you’re still involved, are you guys using any tracking system or software or just texting each other to communicate and to manage these contractors just so you guys stay on the same page.

Martin:
I literally was on the phone with him everyday. Literally, text messages, phone calls, emails. Whenever it came to materials, I actually had got a business credit card, and I put him as an authorized user. So, again, I trust my father, like I trust no one else. So, he was able to go to stores, buy materials, every day. As you like to say, Ashley, I was a freak in the spreadsheets, documenting every single last thing, every dollar that we were spending. So, I promise you, I just got all types of spreadsheets to track everything that we do.

Ashley:
Do you guys have any other processes? What does it look like when you hire a contractor? Are you guys actually doing contracts with them? Is it more of a handshake? Is it word of mouth? What does that look like?

Martin:
So, typically, we try to do actual physical contracts. Only a couple of contractors, we’ve gotten really familiar with where we wouldn’t do contracts. But, for the most part, I go above and beyond and make sure because there’s nothing like an understanding. I think the biggest breakdown typically occurs when you don’t have something in writing. So, I would literally go out and find a contract online, have a look at the BiggerPockets files or the forms section. And, I will go through there and look at other people’s contracts. And, I’ll see things that they might have had in theirs and I’ll incorporate it or I’ll just, quite frankly, plagiarize it and then add my own little things to it, and say, all right, this is what I’m going to do for the painters, this is what I want to do for the electrician, yada, yada, yada.

Ashley:
That’s why I love BiggerPockets. And, there’s a million other resources too, just by googling that you can get and plagiarize, other people’s contracts. But, that’s why they put them out online so that other people can use them. You don’t have to recreate the wheel. And, it’s going to be very hard to find a contract that is specific and will work perfectly for you. There’s going to have to be things that you change, but like you said, you just continue to add to it or change it and develop it, especially as your business grows. It’s probably not going to stay the same forever, you’re going to start to add more things to it or understand things that are more important. Especially, if something goes wrong, okay, well, next time, that’s not going to happen. Let’s add that into our contract.
So, for anybody that is starting to work with contractors, what would be some advice you can give them as to what they definitely need to put into their contract?

Martin:
So, first and foremost, when dealing with contractors, I specifically always like to put a timeline and I’ll ask them, specifically, how much time is it going to take you to get this done? And, then I always add an extra week on top of it. So, let’s say, for example, I’m dealing with the electrician. The electrician says, oh, it’s going to take two weeks to do this job. All right, realistically, I’m thinking three weeks. All right, so we have an agreement that you’re saying two weeks. I’m going to also put a clause in here that says, if you’re not done by the end of two weeks, we need to reconvene, we need to have a conversation and figure out how much longer it’s going to take you. If you’re not picking up materials, you don’t get any money upfront. It’s just that simple. You don’t need any money upfront if you haven’t done any work.
But, it’s one thing if you’ve got to pick up materials. I also have it in there where we structure how the payments are going to be paid out, so a payment system. If you finish 25%, you get this much. If you finish 50%, 75%. And, upon completion, this is how much you get. And, you’d really just want to make sure that if you are giving them money upfront, because they have to pay for materials, that you always hold something back at the end to incentivize them to finish the job. Because, once you give them all the money, they have no incentivization, whatsoever, to come back and finish up the work. And, that’s happened to me time and time again, dealing with contractors.

Tony:
How are you finding the good contractors, Martin? If I’m a newbie investor, where should I be looking to find someone that I can trust to do the high quality work that you’ve had done?

Martin:
To be completely honest with you, I really get a lot of good referrals from word of mouth. So, other investors who say, oh, I’ve used this painter, oh, I’ve used this electrician. I’m in Facebook groups, where I can vet out some of the contractors. Some are the painters, some of the handyman who’s done jobs. So, I can see some of their work. I could talk to some of their past clients because they’ll say, hey, I just did this job for such and such, or a client will go on there and say, I want to thank such and such so much for helping me do this, they did a great, fantastic job.
And, I can go back to them, hey, tell me about this contractor was on this job, I’m thinking about hiring him for this. So, I think word of mouth really is the biggest way. But, I think just being in a job, you have to understand that you’re going to have to deal with some bad contractors. There’s no if’s, and’s or but’s about it. But, when you find a good one, you do your best to hold on to them, treat them right.

Tony:
Now, trust is super important in your real estate investing career, right? Finding people that you trust. Now, obviously, you trust your dad, right, and you’ve done a lot of work with him. But, a lot of people also, I think, are hesitant about partnering with family. But, it seems like you found a way to really make it work. Some people swear against partnerships and partnering with people that they know, other people say that’s the only way that I do business. What makes you feel that, that’s the right path for you?

Martin:
I would agree that sometimes it’s hard to work with family. I can tell you about the arguments that I’ve had with my father. I can tell you about, partnering with my brothers and my sisters on deals. So, it definitely can be a challenge. But, no matter, if you’re working with a stranger, or you’re working with a friend, I think the one thing that we did is, before we even agreed to go with the first project, we sat down and had multiple conversations like, hey, this is what the expectations are going to be going forward. This is going to be my role. This is going to be your role. If there’s ever, at some point in time, where we miss something, and we don’t know who’s responsibility it is, then we’re going to talk about it and figure out, who’s responsibility it should be and define those roles.

Tony:
Yeah, I love having that clarity upfront because it removes any sense of ambiguity as you guys start to move through the process. If you can say upfront, you’re going to do this job, here’s what the compensation is for this job, I’m going to do this job, here’s what my piece of the pie is for this job, then, as you guys saw are moving through the process, there’s no surprise or things that could cause some of that friction.
Now, I guess my last question, Martin, is, do you have any advice for people that… I guess, any additional advice when it comes to specifically working with family, like you said, lay things out upfront? Like you said, lay things out upfront. But, you said, you’ve had some heated arguments with your dad, as you’ve gone through that. Any other advice for people that might want to partner with family?

Martin:
Yeah, like I said, I think, specifically, you have to be able to make it clear. No matter what happens with this investment, whether it works out or doesn’t work out, we’re still going to be family. So, I don’t want this to terminate our relationship because this deal went south, or we didn’t work well together. So, I think it’s really just about that understanding, like, hey, we’re going to be business partners, we’re still family, we love you, we can have these conversations. If this deal doesn’t work out, I don’t want there to be any sour or hurt feelings between us.
So, really just, again, communication. Like I said, it’s nothing like an understanding. So, you want to make sure that you over communicate, in the beginning, in the middle, and in the end, to make sure that you’re on the same page, because that’s the key. That’s the key, communication.

Ashley:
Yeah, I 100% agree with you, Martin. And, just the communication upfront, when you are putting together your agreement of who’s doing what, look further down the road, too. So, maybe one day someone doesn’t want to manage that property. Well, what happens then, okay, that was their responsibility. Now, they just get out of it and now everybody has to pay a property manager. So, looking down the road, too, is really important. For example, my sister, she is house hacking, and we own her house, 50/50. Well, what happens when she moves out of the house? Do we split the cash flow, 50/50? Is she going to use that cash flow towards her next property? Just, all those little different things, are so important with any partner, not just family. But, you really want to protect those family relationships.
It’s a lot easier to do one deal with a random partner and say, okay, this didn’t work out and see you later.

Martin:
And, disappear. Yeah, right.

Ashley:
[crosstalk 00:25:01] across the Thanksgiving table with your family.

Martin:
Exactly.

Ashley:
So, let’s really dive into a deal. So, I want to hear the numbers, the purchase price, everything like that. So, do you have a deal in mind that you wanted to talk to us about?

Martin:
Yes, I can tell you about my best deal.

Ashley:
We’ll just go through a couple quick questions. And, then you can pretty much tell us the story about it. But, when did you purchase this? What deal number was it?

Martin:
So, this was actually deal number three for me and I did this deal with a partner.

Ashley:
And, what was the purchase price?

Martin:
The purchase price for this property was just under 30,000. So, call it 29,500.

Ashley:
It looks like you’re in an area like me, where is 20 to 50,000 houses.

Martin:
Oh, yeah. Absolutely.

Ashley:
What market is this one in?

Martin:
Again, this is in Chicago, specifically the South Side of Chicago.

Ashley:
And, what was the plan for this one, a flip, a BRRR?

Martin:
It was a BRRR.

Ashley:
And, what was the rehab cost on that?

Martin:
So, the rehab costs on this was originally 35,000, but with the holding costs, and some of the things that popped up, it wound up ballooning into a little bit over 37,000.

Ashley:
Well, I’ll save the ARV and what it appraised for and all that for the end of your story. So, why don’t you go in and just start, how you found your partner, how you found the deal, how you guys financed it?

Martin:
So, yeah, I was really just telling everyone that I could tell about what I was doing in real estate. And, so this partner came along, and it was like, hey, you know what, I see you doing some things in real estate, would you mind partnering with me on a deal? I was like, yeah, absolutely. So, they actually went and found the deal, because I was telling them, hey, this is what I’m doing, I’m doing townhouses. I was like, hey, there’s a townhouse that’s on the MLS, but it’s also on the auction. And, I was like, all right, well, if you organize it and go to the auction, because I actually had to work this day, and make sure you don’t pay more than 30,000 for it, we’ll be able to make this work.
Because, one of the cool things about being able to see this property, even though it was on auction, we were able to get access to the inside of it. So, we were able to see what type of condition it was in. So, we knew, all right, this is pretty much our budget here, is going to be a 35,000 on the rehab. So, that’s what we were able to do with it.

Ashley:
How were the responsibilities divvied up? So, he went to the auction, but did he do anything else? Did your dad manage this property, the rehab for it?

Martin:
Yep, my dad managed to rehab as well. He went on the auction. In terms of the responsibilities, it was really, again, just for the most part, 50/50. I was doing the tracking and expenses. Every once in a while, I would ask him to do some things. But really, I’m a control freak a little bit, so I really did a good chunk of work myself, but they helped out significantly and we use Google Spreadsheets to really track everything. And, when I couldn’t put something into the document, he would go into the document and and put in information as well.

Ashley:
So, what happened, you finished the rehab and you refinanced. Let’s go through that. The exciting part.

Martin:
Yeah, so we rehabbed it. Like I said, me, personally, when I do rehabs, I would like to say that I over-rehabbed and under-rehabbed. I just want to make sure that I’m given a great quality product. I feel like, in the Chicago land market, you hear a lot about slum lords and just not getting great quality for the amount of money that tenants are paying rent. And, so we go in, and we try not to leave no stone unturned. So, we update the kitchens, the bathroom, we refinished the hardwood floors, we repaint the whole house, we replaced the mechanicals, we did all those things. And, after that, we got to the refi.
And, well, I guess, I should probably talk about renting it out, too. When we put it on the market, this is how we knew that we had a great product, we literally, probably, had over 90 calls the first week.

Ashley:
Oh my gosh.

Tony:
Wow.

Martin:
So, people just was calling us religiously, just like, hey, is that three-bedroom still available, I want it, just take it off the market. And, I’m like, well, wait, that’s not how this works. Just slow down, you still got to fill out application, you got to see it in-person, make sure that you really want it. But, we wound up finding a great section A tenant, and she’s been great there. And, then we went to do to refinance and the refinance came in. We thought it was going to appraise at 100,000, it came in at 97, which is not a big difference. And, we were able to get out every single last dollar out of that.

Tony:
Yeah, so that’s a super successful BRRR, right? That’s exactly what you want to happen. And, yeah, obviously, you guys have done a great job with the rehab, if you had that many people calling in the first week that you had it up. Now, I want to talk a little bit about that, right, because you said that you built a really nice product. But, you also said that you’re investing in maybe the rougher parts of Chicago. Some people shy away from low income areas, right. And, I think it’s because there’s this stigma that low income means bad person. But, it seems like it’s been working well for you. So, what was your thought process on investing in that market specifically, and why were you not afraid to invest there?

Martin:
Yeah. So, specifically, when I look at these neighborhoods, I’m not necessarily investing in a $30,000 house, that ARV is going to be a maximum for any house in that area going to be 40 or $50,000. If you buy a house, let’s say not a townhouse, but an actual physical house on that block, that house on that block could be worth, 150 to 200,000. So, it’s not that much of a low income area, it’s just more so, I chose the cheapest product that I could get, but in a decent neighborhood.
So, I will still say it’s probably a B-, C+ type neighborhood, but it’s still me just getting any type of box that I can get to put a tenant in. It’s like, hey, if I can just get a box and decorate it and make it look nice, then we’re great here. So, that’s what’s the mindset of, all right, you’re going to get a house quality, or you’re going to get a really nice product quality in terms of granite countertops, and stainless steel appliances, but you’re not going to own it. And, you’re going to be able to say, hey, I live here, I enjoy where I live, I respect where I live.
Chicago, again, it’s just so block the block, so you can go one block, and it could be a great neighborhood, and you go to a next block, and it could be a not so great neighborhood. And, so really just understanding, no matter where you are in Chicago, you’re always going to find people who want to live in those neighborhoods. So, it’s never really as bad as it may sound, or it may seem, according to public perception.

Tony:
Now, you also mentioned Section 8, and for the listeners who maybe aren’t familiar with what Section 8 is, or why maybe it’s a good strategy to use, can you walk us through what it is and why you chose to use it for this specific deal?

Martin:
Oh, yeah, absolutely. So, again, I think Section 8 is just government housing assistance for people who, economically, they can’t afford it. And, there’s a lot of stigma around Section 8 about what type of tenant class you get, but I promise you, they could potentially be one of the best tenants that you’ll ever get, you just have to screen them the same way that you would potentially screening a cash buyer. Just take money out of the equation. And, when you do that, like I said, you can really get, what a lot of people consider, guaranteed money. Especially when COVID hit, I was more concerned about my cash tenants than I were to my government assistant tenants, because they were the ones who are having problems with the cash tenants. Because, they were getting the hours cut, or someone was getting laid off. And, I’m, okay, so what we’re going to do here?
But, my Section 8 tenants, when their income went down, the government stepped in and said, hey, we’re going to cover your portion of the rent that you need to pay. So, now, essentially, they’re carrying my portfolio, when I’m worried about, hey, this person who had the hours cut or got laid off, if and when are they going to pay rent?

Tony:
All right. So, the big benefit of Section 8 is that the government is subsidizing a portion of that tenant’s rent payments. So, say whatever your rent that you charge is $1,000, maybe the government is going to cover 80% of that. So, the government is giving you a check every month for $800. So, you then only need to ask the tenant for 200.

Ashley:
Yeah, so I have a couple Section 8 tenants I’ve had over the years. And, they don’t want to lose their voucher. So, they stay in their place and they pay their portion, because it’s usually very minimal. They’re getting that huge amount. And, at least in Buffalo, the waiting list to get Section 8, or any housing support, is 3 to 5 years to wait to actually get a housing voucher here.

Tony:
If I’m a landlord, and I want to become a Section 8 landlord, is it like a difficult process? Are there a lot of hoops I have to jump through? Maybe, Martin, if you want to talk about Chicago first. And, Ashley, you can share your experience in New York.

Martin:
So, yes, it’s not a difficult process at all. Again, you just have to be committed to doing the things and providing a product that Section 8 comes to expect. And, on their website, they lay it out real thick, like, hey, this is what every potential piece of the property that you’re going to have will be expected to look like. This is what the walls need to look like. This is what the toilets need to look like, in terms of condition. Work in good condition, fair work in order, this is what the floor is, this is what the landscape… yada, yada, yada.
So, they make it very clear. When you sign up again, it’s not a lengthy process. You sign up. It’s more so just a waiting game of waiting to be put into the system in Chicago land area, because once they’re trying to push you into the system, you could be a 60-day wait, but once you’re in the system, you’re good. So, it’s not a long and lengthy process at all. It’s not hard. Again, you just have to be committed to being a good person or being a good landlord.

Tony:
Ashley, I know things are always complicated in New York, so is it the same process?

Ashley:
Yeah, you have to follow their guidelines as to how they want the apartment to be like. It has to be habitable. But really, their expectations aren’t that high. So, it’s not like you need to go in and put a grand in or put a ton of money into your property. But, if you are not meeting their inspection requirements, then you probably need to do these improvements to your property anyways, because they’re so standard, it’s so basic. You don’t want to be a slumlord.
They come and they inspect the property yearly, too. I have worked with one other different county, Erie County that Buffalo is in, and that county will actually sometimes do three-month inspections for one of the programs they have. So, it’s, they make sure that the resident is taking care of the property, too. They’re not just looking that the landlord is, keeping up on repairs and stuff like that. But, they’ll do listings for you, too.
So, once you become approved, anytime you get a vacancy, in Buffalo, you just fill out a form and you email it to a guy that works at the Housing Authority, and he’ll upload it into their database. And, that way all of the caseworkers, see it, get access to it, and they bring you somebody that’s already pre-approved for their voucher, and they know how much they can afford.

Martin:
Yeah, and I do want to make sure I say two things about Section 8 as well. Like I said, if it ever gets to a point where, let’s say, they had a part time job, and they can’t afford to pay their portion… like, when COVID hit, Section 8 stepped in and said, all right, we’re going to cover 100% of your rent now. So, I’ve had that happen where one tenant, she lost her job during COVID and they said, all right, we’re now covering 100%, immediately. So, it’s about also making sure that they know that they had that benefit as well if their income goes down, that they have the benefit of covering it.
And, as well, I think as Tony mentioned too, as well is, those Section 8 tenants as well, they can lose that voucher if they don’t protect it. So, it’s about making sure that they are doing the things that they need to do and being the appropriate, good tenant as well. We actually had a situation, a police officer was a Section 8 tenant who was driving us crazy at work. And, we found out that she was on Section 8. And, all we did was make one phone call about her issue that she was having, how we were repeatedly showing up there as the police, and they gave her an official warning. And, it just instantly ceased. She became a model tenant. The police never showed up to her house again. So, it was great.

Ashley:
It’s almost like having a mom or dad to supervise a resident. I was just telling Tony the story of how the one time, a mom co-signed for her daughter who’s moving out of the house for the first time and the daughter stopped paying rent. So, I contacted the mom who had co-signed and I said hey, I will give you cash for keys if you get your daughter out of the property and have her leave. And, I actually wrote the mom the check instead of the daughter who was the actual tenant.

Martin:
Nice.

Ashley:
So, Martin, one thing I’m really interested in, and I’m sorry, everybody, but I like to use the show for my own benefit, but I want to learn more about auctions. So, you purchased this property at auction. Can you give us a step by step breakdown as to how you even find an auction in your area and what that whole process looks like?

Martin:
Yeah, so we were using a couple of different auction sites. Auction.com is the first one that jumped out to me immediately. And, they happen to advertise on MLS as well, too. So, as we’re scanning Zillow, the MLS, whatever listings that we have popping up for us, we’ll see these properties and it will say in the description, go to auction.com, bid on this property, yada, yada, yada. So, that’s immediately what we did, we will go to auction.com, create a profile, and it will tell you about the applicable fees that go with trying to purchase this property if you’re the winning bid.
So, I’ve actually purchased a couple of properties off auction. That first one, we were the winning bid at 29,5. So, it was pretty simple there, and they make you sign all types of disclosures and they give you a warranty deed. I know that’s a big one, too. It’s like, hey, am I going to have to worry about any type of hidden liens that pop back up? No, we didn’t have to worry about that, because they gave us a warranty deed at the end of it. So, that was great.

Ashley:
And, is that something that they only do for some properties?

Martin:
Right. In my experience, it’s been all of my properties in which they gave us a warranty deed. Now, each auction could be different. There always could be some hidden liens that pop up. I don’t want to say it’s for every property that we’ve purchased across the board, they’ve always given us a warranty deed and all the liens, if there were any, outside of the mortgage, were wiped out.

Ashley:
You said that, for this property, you got to walk through it before. What about the other ones? Did you buy any sight unseen?

Martin:
Oh, no, I didn’t buy any sight unseen at all. The properties that I bought off auction, they gave us access to, which was great.

Ashley:
Do you use a realtor for that? I’ve seen the auction.com website and played around, and I see that they have, realtors can sign in for an access code.

Martin:
Yes, actually, I went and got my real estate license after I bought my first townhouse. I was like, I just want to be able to go when I want to go, I don’t want to have to wait on a realtor again. That’s my control issues. I’m, I don’t want to wait on a realtor, I just want to go see the property when I want to go see it, I want to be able to negotiate directly with the seller, which I was able to negotiate what I think is great deals at times, to get the seller down. So, again, that’s just me being a control freak.

Ashley:
Okay, so then for the auction, you put a deposit down, correct? Once you win that bid you have… how long is it before you have to… Is it a credit card payment? Do you have to wire them cash? How does that work? And, then how long is it usually until you actually have to provide the cash funds.

Martin:
So, we wired the money in. Usually, you put the deposit down, whatever the required deposit amount is, sometimes it’s 10%, sometimes it’s more or less depending on what that particular auctioneer says you have to do. And, from there, they start working on the paperwork on the back end. And, so they’ll tell you, hey, we’re ready for you to close on this property, how much more time do you need? And, so that’s exactly what happened.
So, the first one was like, hey, we’re ready when you are, and we closed right away. And, then it was another one in which I got, which I was like, you know what, I’m actually refinancing on one property, so let me close extra three weeks later. And, they was like, okay, yeah, that’s no problem. I was like, wonderful.

Tony:
I didn’t know that they gave you that much flexibility at auction. I thought it was like a tighter timeline. That’s like a really good tip for people that might want to buy for auction, there’s that flexibility there.

Martin:
Yeah, all you got to do is ask. Because, sometimes they’ll be like, all right, we’re ready. And, I was like, “I’m not ready, you mind if I get an extra 30 days?” They’ll give you whatever time frame that you guys negotiate on, as long as it’s not too strenuous, or too egregious, they’ll give it to you.

Ashley:
Any other advice you want to give to rookies who maybe want to try the auction route, especially buying through an online website?

Martin:
Yeah, like I said, I think being able to go and see those properties was really a game-changer. Like I said, I was able to use cash, from the HELOC. The HELOC’s been great. It’s just like cash, you literally just go to the bank and say, give me X amount of funds and we were able to wire it in. So, I would definitely say if you can get access to those properties, that’s a game-changer, because you can actually physically walk the property, know what you’re getting yourself into, versus having this buy sight unseen, especially for a rookie, when you’re first trying to buy your first couple of deals.

Ashley:
Well, that’s great. Thank you, Martin.

Tony:
Yeah, so many good things, man. Buying from the auction, you’re using the BRRR strategy, you’re taking a lot of these cool new, unique strategies, and you’re leveraging them to build a pretty big portfolio so far, man, so kudos again to your brother.

Ashley:
And, you got your real estate license? You can’t forget that, too. But, real quick, before we move on to our mindset segment, I want to know how are you managing these properties? Are you outsourcing that, you’re doing that in-house in your Excel spreadsheets? Any software for that? What does your property management look like?

Martin:
So, I’m using cozy.co. So, I’ll take all the phone calls. I could probably be a walking advertisement for some of your sponsors, because I’ve also used Stessa as well. Stessa’s been great. Especially when I’ve been trying to rent out some of these newer properties that I got. Literally, one of these properties for a newer three bedroom townhouse that I got. Again, we rehabbed it. And, in the first two days, we have 76 calls. I’m like, oh, my goodness, if I didn’t have Stessa, my phone would have just been blowing up crazy.
So, I’m able to see all the analytics and the data via Stessa, how many people are calling. I just set up automated messages to say, thank you for your interest in this property. If you would like to schedule a viewing, this is how you can do it. At this time, we’re only doing virtual showings. Or, if you’re looking for the requirements, because you have a lot of people who don’t want to read what’s in the list, even though I put in the list what the requirements are, and I’ll say the requirements are listed as follows. Then, again, Stessa records everything. So, I can go through and I can hear what people are dropping out at. So, I listen to the recording and after it says, required 600 credit score, hang up. I’m like, okay, they didn’t have a 600 credit score, I guess I know what their problem was.
Or they say, oh, criminal background check required, hang up. I’m, okay, I guess I know what their issue was. So, I think those have been great in terms of helping me manage the properties. It’s just, again, me on the back-end. And, because we’ve rehabbed the property so well, I don’t have a whole lot of maintenance costs. So, I think that’s been great as well, too. So, it’s Cozy, it’s Stessa. I use Dotloop for electronic signatures. Those are all great things that I use to help me get the things. Google Sheets, again, just managing what the tenant is paying, what expenses came up for that particular property, looking at what the budget is for Capex, and vacancy. Again, I can do that from anywhere. You’re not going to be out and about. I blow it on my phone and just pull out my Google Spreadsheet out from my phone and just put it all in which is great.

Ashley:
So, with you doing the property management, when you have partners, are you paying yourself a percentage or a fee or that is part of your partnership interest in the deal?

Martin:
That is part of my partnership interest. That’s one of my duties and responsibility.

Ashley:
Awesome. Well, thank you so much for sharing your deal with us and all of our auctions and your property management system. So, let’s move on to our mindset segment. So, once you’ve started investing in into real estate, before you started, can you think back, did the expectations live up to reality? What you thought it was going to be? What you thought it was going to bring you? Is that happening? Or, has it vastly exceeded that or been a huge disappointment?

Martin:
I will say my mindset going in again, you never really know what to expect, you can project out what you hope that you can gain from it. But mostly, I will say it’s been a roller coaster of ups and downs. So, I’m in between where I’m like, hey, there’s been some surprises and good and bad. So, in terms of mindset of what my expectation was, I would say specifically, I didn’t go in too high and I didn’t go in too low, it just went in with the workers mindset of, all right, you know what, this is going to be a challenge, it’s going to be something new that you’ve never done, but you have to be willing to embrace the challenge, embrace the surprises and grind your way through it.

Tony:
What resources did you use to help get yourself ready to make that first actual investment? I know you said you had your family behind you. Was it just books? Was it just podcasts? Or, was it something else that helped you get mentally ready to take that leap?

Martin:
To be completely honest with you, I will say life prepares you. Little small victories that you have in life, what is, getting that first job that you wouldn’t so nervous about that it took six months to finally… employer call you back and say, hey, you’re the candidate that we want over all these other candidates. Small wins like that really builds the mindset of, hey, you know what, I can do this, I can succeed in this world that we’re living in. But, specifically, in terms of learning what I needed to learn, 1000%, I would say, is the BiggerPockets podcast.
When I really realized that I didn’t know what I didn’t know. And, that could hurt me big time, I realized that I needed to go through and listen to every podcast that I could possibly listen to specifically started with the BiggerPockets podcast. They were on episode, I want to say, 248 at the time, and I went back to episode 1. And, I listened from episode 1 to Episode 75 before I was really confident that, you know what, I can repeat these terms and phrases about real estate investing backwards and forth. I can have an intelligent conversation with someone. Now, I’m ready to do this.

Tony:
I love that approach, right. Because, that’s something that I say all the time is that, you obviously want to educate yourself before you buy your first investment property, right? No one advocates going into this recklessly. But, if you get to the point where you, like you said, know these terms like the back of your hand, every podcast episode you hear isn’t really new information anymore, it’s a regurgitation of the systems and processes that you know, it’s just a slight spin on them.
Once you get to that point, then you’re probably ready to do that first deal, right? If you can listen to a podcast and you know 80% of what’s being said, then it’s probably time for you to get that first deal done. And, it sounds like you were self-aware enough to have that realization to say, I think I’m mentally ready, now let’s go out and take the actual action.

Martin:
Yes, absolutely.

Tony:
All right. Awesome.

Ashley:
So, we’re going to take you to our next segment here. It is the rookie request line. So, this is where anybody can call in, leave us a voicemail at 1-885-ROOKIE. And, just let us know who you are, where you’re from, and what question you have. And, we may play it on the show for a guest to answer. So, Martin, are you ready?

Martin:
Yes.

Speaker 4:
Hey, guys, this is Doug from Reno, Nevada, I just purchased my first place in December 2020, two-bed townhouse that I’m house hacking. I’m not sure if it’ll be a long-term hold for 20, 30 years, as I don’t love HOA’s, and the townhouse concept and when I move out, more of a base hit than a home run deal. So, I’m trying to understand why and/or when the stack philosophy might make more sense than just living in a house for two out of five years to avoid capital gains tax, especially if I sell near term 5, 10 years instead of having the townhouse as a long-term buy and hold. I’m just trying to understand, for the stack, is the concept that you’re treating each of those properties as long-term buying holds, you’re not as worried about living in them for a couple of years. Appreciate your insight, and thanks for your time.

Martin:
If you could rent it out, then go ahead and rent it out. If the association is not going to allow you to rent it out, then you forced your hand on what you’re going to do. Essentially, you’re going to need someplace to live. So, if you’re going to do to stack motto in terms of, hey, I’m going to move to a duplex and then live in that one, then I think your answer is clear that you got to sell that property in order to keep growing and then use the next property as your true investment property. You’re kind of, already house hacking right now, so I think it’s a great idea to continue to house hack, and when you’re ready to move on to your next investment property, whether you take equity out of that property and continue to live in that one or you decide to just go ahead and completely rent that one out, and no longer house hack.

Tony:
So, Martin, can you define what the stack philosophy is for those that haven’t heard of it? What does that mean?

Martin:
Yeah, so it was coined by the great, Brandon Turner, where he talks about, you start with one investment, let’s say, a one unit property of some sort, it can be a house, it can be a condo, townhouse. And, then from there, you buy two. It could be a duplex, it can be two individual properties. And, from there, you keep stacking to 4 to 8 to 16, and so on and so forth.

Tony:
Got it. And, is that what you’re using in your portfolio, you feel, where you’ve scaled in that similar fashion?

Martin:
No, me personally, I will say that my philosophy on what I’ve done with my portfolio is, again, I’m a big systems guy. So, I actually read the book Traction, and Traction talks about, defining this 10-year plan. And, I went through and said, all right, in 10 years, this is how many properties, or how many doors that I want to do, and this is how much cash flow I want to make. And, so for me, what I’ve done is, I just said, all right, every year, I’m going to buy two doors. Me personally, I’m overachiever. So, I’m, if I buy more than two, that’s great.
So, that’s what I’ve done is, I just said, every year, I’m going to buy two properties, two doors and keep going and scaling from there. And, so, that’s been my plan and my goal.

Tony:
Awesome, brother. Awesome. Well, I love your advice there. Hopefully, the listeners got some value out of hearing that as well. I want to take us to one of our final segment, which is the random question segment. This is where we get to know you a little bit more, and pick your brain about the world of real estate investing. So, I’ll go first. I think my question is about your strategy. So, you said that you’ve focused in on town homes. Is that the building type that you think you’re going to stick with or do you have plans to scale? Or, not scale, but, I guess, change to some other type of building? And, if you’re sticking with town homes, what is it about town homes that you like so much?

Martin:
Yeah. So, for me, town homes, I felt like they were undervalued in a neighborhood that I was buying in. Like I said, on the same block that I bought my first townhouse, there was a condo that had sold for 200,000. And, so I’m like wait, you got a condo that sold for 200,000, but the maximum ARV of these townhouses are 75, 80, 100,000. And, I’m, to me, it’s no difference. Once you decorate it on the inside, they’re both going to rent for the same dollar amount, if you put granite countertops, stainless steel appliances, hardwood floors, two-bedroom condo versus a two-bedroom townhouse.
Some people even like a townhouse more they like a condo, because you don’t have anyone that’s living above or below you. I was like, you know what, this is an undervalued asset. Let me take this asset, develop it. And, so that’s been my philosophy with the townhouses. Like, hey, let me find a cheaper house on a very nice block, and develop it and let it cash flow.

Tony:
Now, I just want to point out, what you’re doing is, you said, I know the market that I want to invest in, but let me find the right strategy and niche for that market. And, you found out that, like you said, town homes are an undervalued asset that fit my strategy, to fit my niche, so let me go all in on that.
So, we talk about this all the time about, you can’t do certain things in certain markets, right? It probably doesn’t make a ton of sense to do traditional single family home, long-term rentals in Southern California, but it makes sense to flip in Southern California. And, it sounds like you found what that sweet spot is in your market. So, for the listeners, whatever market you’re in, there’s probably a strategy or niche that you can employ to make real estate investing, make sense. You just have to take the time and be familiar enough with your market to know what that is. So, man, I just love that you shared that. I wanted to point that out for the listeners.

Martin:
Yeah. Thank you, appreciate it.

Ashley:
Okay, so Martin, you have 16 units, you have to at least have one funny or crazy story related to the property or to a tenant. Do you have one you can share with us?

Martin:
Oh, I got a bunch. So much has happened that I take it for granted, the things that happened. I just gloss over them like, yeah, that happened, we got through it. And, here we are today. For example, the very first time that I became a realtor, I went and showed the property. I went and showed the multi-unit building. I got my son with me. And, we’re walking through this property. And, I’m not thinking nothing of it, I’m just oblivious, which I’m ashamed to say being a cop. But, we walk into this first apartment, and I’m looking around and, next thing you know, a lady pops her head out the door and I’m like, “Who are you? Who are y’all? I’m the realtor showing the property. Who are you? Oh, I didn’t know that this property was vacant. Nobody told me that.”
Three more of the ladies come out of this room and they all scurry out of the property. I walk into the room that they were in and, of course, there’s all type of drug paraphernalia and stuff like that. And, I’m like, oh my god. Are you serious? I’m telling my son, “When we walk into these properties that we show and I’m always on you to make sure you stay on my hip because you never know who’s in these properties.” So, that’s one crazy one.
It was another one where… I love my father to death. I love him to death, but sometimes he overlooks things. And, so I’m telling him, I’m, we have a situation where the lockbox, or the mailbox is just not working. We trying to get it open, we can’t get it open. I’m telling him, all right, check all the keys because when we bought the six-unit property, it came with 50 keys in a Crown Royal bag. I’m like, okay.

Ashley:
[inaudible 00:55:35].

Martin:
Exactly, right. It’s like, a Crown Royal bag is never used for anything, but Crown Royal, right. So, I’m, all right, just check all the keys, make sure we do not have a key to his mailbox, because I’m calling the post office, the post office is having issues where they’re short-staffed, they’re not having anybody going out and delivering mail. And, when they do deliver mail, it’s an overtime assignment. And, so we can’t consistently get someone to come out and open up this mailbox so we can change out the lock.
So, I had a buddy, the great thing about policing is, you meet people of all different backgrounds that become a police officer, he was a locksmith. And, so I’m in my office, and I’m, hey, I need you to teach me how to do your locksmith skills. He’s, oh, yeah, I got you. So, he’s teaching me how to pick the lock and stuff like that and we playing around at my office desk, and I’m, oh, yeah, I think I could do this, I think I could do this. So, I’m popping the office desk open. And, I’m like, all right, I got it, I got it.
So, the very next day, I go to the property, and I’m working on a mailbox, and I’m trying to get it open, I’m trying to get it open. And, finally the tools break. And, I’m like, oh, no. So, I asked my father again, I was, “Are you sure you checked all the keys and mad sure?” He’s like, “Yeah, I checked them.” I was like, “Well, let me see the keys?” So, he goes into the bag, pulls out the key, labeled the apartment unit number, and opens up the mailbox. And, I’m like, really? Are you kidding me? “I swore to you, I checked the bag. I checked the bag.” I was, “You couldn’t have checked, it’s labeled, the unit number on it. How did you miss this?”
Oh, my goodness. So, literally, just stories like that, where, literally, my father’s like, “I promise you, I checked it, I checked it.” And, then I go behind him and checked it and we find it. I’m like, oh my goodness.

Tony:
But, I think every real estate investor has crazy stories like that, right? Or, they have some story where it shows that there’s always going to be some kind of challenge, there’s always going to be some kind of obstacle, nothing’s going to be as clean and cut and easy as you want it to be, but that’s why you’re successful as a real estate investor, because you persist past those things. You continue to do the things even when they get hard, and that’s how you find financial success.
So, thank you for illustrating that for us and given us a funny story about your dad in the making.

Martin:
Oh, yeah, no problem.

Ashley:
So, Martin, where can people find out some more information about you or get in touch with you?

Martin:
Well, I’m always on BiggerPockets in the forums. I’m on the Facebook groups. I’m in the BiggerPockets money, BiggerPockets rookie. I’m in the original OG show, podcast, or I’m in the Facebook group as well. You can reach me there. I’m on Facebook. I prefer you actually reach out to me on Instagram, that page is specifically dedicated to my real estate journey. So, I’m there in Martin REI. Or, excuse me, Martin New Rei. What else?
I try to do a little bit on LinkedIn, I’m trying to get into these other platforms, but really Instagram and Facebook is the social platforms for me as well. And, again, the forums, I’m on there as well, trying to give advice. I’m a little shy at times, because I’m, oh, it’s already got 46 comments, should I really add 47. Be that 47th person adding a comment. But, I try to give my input and my two cents as well.

Ashley:
Well, I think a lot of people will take value from your input, so definitely don’t be shy to add a comment. So, thank you so much, Martin, for joining us. Before we close out today, we want to give a shout out to this week’s Rookie Rockstar. So, this is Lily Kay and she just closed on her sixth deal. It’s actually a college house and it has been for 17 years. So, she said there’s lots to clean. But, she’s going to BRRR the property and is looking for inspiration on how to rehab it. So, if you guys want to go to the show notes at biggerpockets.com/rookies71, we’ll attach a link to the Facebook posts and you guys can give Lily some inspiration there on what she should do with the rehab.
So, yeah, again, thank you, Martin, for joining us today. We had a great time and took a lot of value away from your information and your story.

Martin:
Oh, thank you so very much. Thank you again so very much for having me. I really do appreciate it guys. Thank you so very much.

Ashley:
I’m Ashley at Wealth From Rentals. And, he’s Tony Robinson at Tony J. Robinson. Thank you guys and don’t forget to listen to the rookie reply on Saturday.

 

Watch the Podcast Here

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In This Episode We Cover

  • Using HELOCs to fund your future BRRRRs
  • Having a defined plan so you can scale faster and with less headache 
  • Having the bravery to buy more units, even when it pushes you into new territory
  • Why townhouses may be an attractive asset in specific parts of town
  • Working with family (without destroying your relationships)
  • Buying homes at auctions 
  • And So Much More!

Links from the Show

Books Mentioned in this Show:

Rookie Deal

  • BRRRR Deal 3 Bed/1.5 bath
  • Purchase Price: $30K
  • After Repair Value: $100K
  • Rehab Cost: $37K
  • Mortgage/Taxes/HOA: $408.81/$194.41
  • Rental Income: $1,140

Connect with Martin: