BiggerPockets Podcast 146 with Enrique Jevons Transcript
Josh: This is the BiggerPockets podcast, show 146.
Enrique: Here I am every week being reminded of—oh my goodness, I don’t want to be me anymore. I want to be that guy.
Josh: Those are big checks huh?
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Josh: What's going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast. Here with my cohost, Mr. Brandon Turner. What is going on?
Brandon: What’s up Josh? Look at me at my standing desk.
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Josh: I’m just giving you grief because.
Brandon: Yes, yes, I got the nice window.
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Brandon: Ridankulous. It’s a cool view, but yes, you know. Cool how have you been doing? What’s new?
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Josh: We’ve been working on some—you know, a new look/feel, logo design, it’s very very exciting. I’m jazzed so definitely looking forward to that.
Brandon: We have something else new as well, which leads us to today’s Quick Tip.
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Thank you. Alright guys and so for today’s show we’ve got Enrique Jevons. Enrique is a real estate investor who has scaled a pretty impressive business and investing business of his own properties and has also scaled pretty impressive management business. We talk all about it. We definitely get into word of mouth. How do you build a business through word of mouth and it’s fascinating. It’s really cool stuff. Enrique is an amazing guy. We’ve got lots of great tips and let’s get to this thing. Alright Erique, welcome to the show man. It’s great to have you.
Enrique: Thank you. Thank you. I appreciate it.
Brandon: Yes, glad to have you. Enrique, your name is Enrique was it Jevons? We just talked about this a minute ago.
Enrique: I know.
Brandon: That is a very Spanish first name and a very English last name. Is that correct?
Enrique: Yes, yes, that’s exactly it so actually yes, I’m actually 100% bilingual so.
Brandon: Are you really?
Enrique: I am probably 95% Spanish.
Josh: I want to do the entire show in Spanish.
Enrique: Okay bueno. Okay vamos hablar en Espanol. Estabien conmigo.
Brandon: I have—I’m lost already.
Josh: I don’t know what the hell he said, but you know. That sounded like a good idea at first, but.
Enrique: It’s actually been really helpful so that was in my previous career in the hotel industry. It was really helpful because of all the housekeepers that we employed in California, but certainly now I have pretty sizable chunk, maybe about 25% of the tenants that I have are Spanish speaking. Of them, maybe 15% are Spanish only speaking and so it’s actually helped out with my growth tremendously to be able to speak Spanish.
Josh: I want to go there. I want to get into that—that’s sounds fascinating. I think it’s super smart to focus on niches and particular niche that you can dominate on and being bilingual that’s a great way to do it. Let’s get there—before we do, let’s take it back. You talked about the hotel business.
Josh: Talk about your journey from you know professional.
Enrique: Yes, yes so.
Josh: Career to becoming a real estate investor and manager.
Enrique: Yes, to start out, I got a degree—got my bachelor’s of science, went into the hotel industry just because that’s was my original true passion and so I was in there for a good 21 years.
Enrique: Worked myself all the way up to becoming general manager and so the Marriott Hotels. I was in Marriott Residence Inn in Palo Alto, California and so I thought that—I mean that was my goal always was you know.
Josh: Was that where homeless engineers would.
Josh: Spend their days because they couldn’t afford to live anywhere else?
Enrique: You know the—that’s where they spend their days and I tell you they’re—yes we got plenty of money from them so they’re not homeless, but.
Josh: Yes, it’s a tough market.
Brandon: It is a crazy crazy world.
Enrique: Yes, yes, so yes I thought oh this great, I’m going to be general manager. I’ll be you know at the top and but then once I became general manager, I realize that no, that I still had to answer to somebody. I mean there was still the owner of the hotel and then there’s also because Marriott is a predominantly franchise and this one was—that there’s also Marriott Corporation, you know, that I’m answering to. It was really then with the Rich Dad, Poor Dad, reading that—reading the book.
Enrique: There I am every week. I sign a check signed all of the checks. We do check runs weekly and so once a week I’m signing all these checks and one of the checks of course to the owner and so here I am every week being reminded of oh my goodness, I don’t want to be me anymore. I want to be that guy.
Josh: Those are big checks, huh?
Enrique: You go there. Wait a second. I’m not at the top yet. I’m nowhere near the top so it and you know, I’d only meet with the owner in the beginning it was like once every three months and then pretty soon it was once every six months.
Enrique: He had no knowledge really of the hotel industry. That wasn’t in his background and so he’s developer. He’s pretty much a retired developer because he did so well and so you know, he’s making a ton of money for some very good investment so obviously he took risks and now comes his reward and but I decided you know, I’m just making a paycheck and I would much rather, you know, go out on my own and be able to try and become that owner.
Josh: Nice. Nice.
Josh: How did that transition happen? You know, you were definitely in there for yes, 21 years is forever so.
Enrique: Yes. Yes.
Josh: Stepping away couldn’t have been easy. Did you just rip the chord or did you, you know, start doing stuff on the side? What was the process?
Enrique: Yes, I ripped the chord, but it took a couple years to get the guts up to actually yes, pull chord. What it was was every year we have some family in Yakima, Washington so that’s just, I mean Brandon thinks he’s in a small town, but at least he’s got you know some normal—some humanity around him since.
Josh: You just pissed off half of your audience.
Enrique: Exactly. There’s places he could go. Alright.
Brandon: You are a little more out there in the.
Brandon: The middle of.
Enrique: This is just very rural agricultural town, but every year we would fly up from the San Francisco Bay Area and visit and every year, we’d talk about it with my wife’s relatives about the cost of real estate and I would just—every time I’m floored at how inexpensive housing is in—you know in a small town compared to you know, a large urban area. I knew that I wasn’t going to be able to buy rentals in the San Francisco Bay Area. I mean I was just completely priced out in the market there so we decided to cash out. We had one rental, actually and we had our single family home.
We’d had it for 15 years and so we had a tremendous amount of equity built up in those 15 years, yes. We cashed out, moved to Yakima and then started buying property and then in the beginning, you know, it felt like Monopoly money. I was like, “Oh my gosh, everything’s on sale!” Well oh and I timed it right, sorry. We moved in 2008 so.
Enrique: We sold right at the peak. We sold in February of 2008 so I hit—I just—I truly hit the peak of the market in the Bay Area and then everything tanked and I started buying up properties then in the summer of 2008 and so it really felt like everything was on sale.
Brandon: When you say that—just real quickly, like what are we talking about price ranges here? I mean what does a single-family house sell for? Stuff like that.
Enrique: Okay so well the first property that I’ve purchased in Yakima was a 13-unit apartment complex and.
Enrique: I paid $380,000 for it.
Josh: Oh man.
Enrique: Yes, I put 25% down and got just tanked.
Josh: $29,000 a unit.
Enrique: That’s low, yes.
Brandon: I want to ask you, why did you start with a 13-unit. I mean we—people ask that question a lot. Should I start with res—or multifamily or single family and.
Enrique: Well so I had been researching it for a couple of years so even though like when I quit my job, I actually—well I gave two hours notice so after 21 years, two hours notice.
Enrique: I was out the door. I jumped on an airplane and took off because I was closing all these deals. I had deals lined up and—so I was closing on them and everything and so I needed to fly out immediately to take care of it all. The—in deciding to go multifamily versus single family it’s because essentially because I had the money and because I knew that to—in this particular property had you know, just excellent cash flows. I mean just the history of it and it was just from an old couple who had had the property themselves for a good 20-30 years and the, but the you know, they were at the end of their life. As a matter of fact, the husband even passed away two months later so it was just something that they took it all the way to where they could no longer manage it.
Enrique: It was a screaming deal, but multifamily just cash flows better and there’s just so many economies of scale so my recommendation would be to anybody is get as many units as you possibly can under one roof. It spreads out the risk, if one unit goes vacant then that’s only 1/13th of the revenue is lost, you know at that point versus 100% of you revenue if somebody in a single family home moves out and then the insurance just you know, the more units you got under one roof, the—versus a single family home insurance-wise. It’s more cost effective so the economies to scale just work out.
Enrique: Much much better.
Josh: Right on. Right on. Alright so you know, this 13-unit, how did you find that? I mean you said, “It’s a screaming deal.” Sounds you know. I don’t know what the rents are, but.
Josh: Sounds pretty good. How did you go about finding it from this couple?
Enrique: Yes. Yes for me it was a screaming deal. I mean the cap rate was about 14% and.
Enrique: I’ve been able to increase it from there so that’s what I’m referring to is yes. It worked out. It was a great deal. The—I actually found this one by using an agent so this was an MLS listed property and with an agent, but being the you know, real agricultural, smaller town, essentially there’s not a lot of investors with that kind of money and they had been approached many many times about seller financed and they didn’t want to seller finance.
They wanted to use the cash for medical expenses and just cash out. They’re—you know, they weren’t going to be sticking around for another 20-30 years to you know, get paid off over time so for them it worked out better to get cashed out. For me I had the cash available so that right there kind of knocked out a lot of the competition.
Josh: Right on. Right on. Awesome.
Brandon: Can you kind of walk me through that—like here you are as a fulltime job, a career like you had all that and all of the sudden you’re going to quit and then jump into.
Brandon: That. Like that’s a scary prospect for most people like what was your mind going through.
Brandon: During that time?
Josh: Wait and before really really quick I want to add one thing. I mean presumably as a manager of a Marriott Hotel, you were making pretty good income.
Josh: I’m assuming off the $30,000 a door you know, building here, you’re not making close to what you were making so.
Enrique: Oh no.
Josh: If you had a—right so let’s talk about that as well.
Enrique: Sure, yes so yes, family of five. We’ve got three kids and you know I had spent my entire career, you know, earning a paycheck and so it was not something I could do in the Bay Area because I needed to make you know mortgage payments there; however, because then moving to a smaller area the—we were able to—to buy a house and then we bought it. I was able to actually get an interest only loan on it so then my payments were only $800 a month when I completely maxed the—what it was is it a HELOC, a Home Equity Line of Credit in the first position, which is pretty unusual, but what it allowed me to do is because I didn’t want to use all of the money I had right away.
I bought that house so I now I’ve got that with the line of credit so sometimes my interest only mortgage payments were only $300 a month. Sometimes they’d go up to $800 a month when I used that full line. Then I purchased you know the—I had the 13-unit and then very soon after I bought another eight unit and then another eight unit very quickly, all within about a year’s time. It’s because I had enough money also saved up that because we had you know, planning for this—we’d saved up money because I had enough money saved up I realized that it could actually go a whole year without needing a salary. I knew that we could live for a year without any income whatsoever and that was what allowed us enough time to make these purchases, get some cash flow going, but then yes, it was still very scary.
Enrique: Because I knew that it was a one way ticket I mean there was no going back and so I knew that I was forced to have to make it work so thank goodness it did, but I guess my fall back plan would have been move to Seattle or someplace—well Seattle’s expensive.
Enrique: Move to someplace affordable and you know, get another job in a hotel.
Josh: I’m sure you would have had no problem finding one, yes so how many units do you currently own now?
Enrique: Yes so it’s about a hundred, just over a hundred units at the moment.
Enrique: That I personally own and then I manage another 500 for other owners.
Enrique: Property managing company that I have.
Brandon: That’s significant so hundred that you own just on your own.
Brandon: I mean like maybe you can kind of—are those single family? Are they multi—are they all multifamily? Do you have any single family like kind of what’s been your strategy the past six-seven years?
Enrique: Most of them are multifamily and that’s what I like the best.
Enrique: I do have some single family homes and actually the ones I’ve purchased more recently have been the single families, but those have been just now that I’ve kind of established myself and so now it’s just much easier people often times come to me just because that I know that I can buy so I have couple of different lines of credit and so I use these lines of credit to go and purchase, but I—it’s—when I get these calls, typically it’s a you know, they want to close same day. I mean I’ll get a call from an attorney. He’s got an estate that he just needs to settle the individual is deceased. He doesn’t want to have to have it on the market for six months and, which is in the area that I’m at, it takes that long often times to sell a home so.
Josh: Hey, Enrique quick question so are these all located in Yakima, all the properties?
Enrique: Yes, yes all the properties that I’ve got that I own are in Yakima, now.
Enrique: I’m starting branch out from there so I just moved you know, a few months ago now to a place called Issaquah, Washington so another smaller area, but it’s a suburb of Seattle so essentially now I’m in Seattle area.
Josh: Okay and you had talked about, you know, the attorneys will call you up and ask for you know, say hey can you close on Monday, they know you can do that.
Josh: How did you become that guy, right I mean obviously you became that guy. You had the cash you know, in the first properties and things like that, but you know how did you become known as that guy. It’s one thing to go out and find a real estate agent/broker who can you know, source deals for you. How do you kind of expand from there and all of the sudden people in Yakima know like hey, this guy is the business. This guy’s is going to close on deals.
Josh: How does that transition happen?
Enrique: In the beginning, it was talking to a lot of different real estate agents so I was letting real estate agents know that I’m a buyer and so because a lot of agents have pocket listings is what they were referred to. Pocket listings are listings that agents know about, but they are not on the MLS. Sometimes their owners and I’ve got owners myself too that we managed for that tell that you know, what I really would like to sell this property. I don’t want to have to go through the trouble of getting it on the MLS or anything else like that because I don’t want to spook my tenant, but if you come across a buyer, I’ll sell it.
Okay so now I know so I was talking to agents in the beginning and then from there it was a lot of networking so it was for example, joining the Landlord Association. Pretty much every town has a landlord association, which is just a immensely wonderful resource so it was going to those meetings and talking to people letting people know, “Hey if you ever get tired of your rental, I’ll be happy to buy it.” A lot of times people don’t you know, they’re not thinking necessarily ahead of time they really want to sell sometimes when they just come across somebody who they get to know a little bit over time and they then find that yes, this guy really has a lot. You know, it adds credibility having you know, the more properties you can get. Obviously, the more credibility you can have to persuade, you know, owners that, “Hey, look I can follow through. I can buy from you.”
Brandon: Yes, you know, I really like what you said, you know, about the pocket listing and talking to agents, telling them what you want.
Enrique: Oh yes.
Brandon: You know, I never really—I mean like honestly, I never really realized in the past what like—why in a person who have a pocket listing right. I’m like well why not just list your properties, but now when I think about it, I have said those exact words to my agent multiple times. Just hey, I don’t want to go through the trouble of listing this, but.
Brandon: If you happen to know anybody, I would definitely be willing to sell and so I’ve got, you know, a number of properties that my agent knows that I would sell and yes, now it—I mean it was like one of those moments that click.
Josh: Thus the pocket listing.
Brandon: Thus the yes, it totally clicks now in my head like why that is so anyway that was cool, I guess.
Josh: You are blonde aren’t you?
Josh: I mean by the way to all the blondes listening.
Brandon: I was not agent. You guys are agents. I don’t.
Brandon: Yes, yes, yes, yes, alright so.
Josh: Brandon is an insult to you.
Enrique: Yes, yes. I’ve got one guy with tri—an owner of a triplex who I keep trying to tell him it’s been—oh over a year now that you know, he’s really actually wants to sell this property, but the problem that he has—it’s seller financed and the relationship he has with his seller is such that he doesn’t want to let on that he actually is essentially he needs to get rid of his property.
Enrique: That’s another reason too for pocket listing so they’re out there if you talk to agents.
Josh: Hey Enrique on the management side though you also have an advantage right so you managed properties, you’ve got 500 properties under management. Surely, you’re hearing from landlords as well. I mean I’m sure you do a good job of managing, but at the end of the day even if you do a great job I mean there’s headaches that come up no matter what so.
Enrique: Oh yes.
Josh: I’m assuming that’s a good source of well pocket listings.
Enrique: Yes, no definitely. There’s a lot of—a lot of the owners that have got—or actually they don’t actually want to own the property. This is with single family homes so there’s a lot of people that have single family homes that have moved and they would ideally like to have sold the property just, but because the market was bad at that particular time they decided that they’re just going to rent it out and wait it out until the market improves and then sell it. I have a lot of properties that are like that as well, that I haven’t really talked so much about it, but I know because that’s how I acquired the property from them, that under management that they would actually like to you know, prefer to sell you know whenever the market gets better.
Brandon: Yes, that makes sense. That makes sense. I just—I love that concept of you know, using your network and finding deal through your network.
Brandon: We’ve heard that theme a lot lately here on the podcast. Like a lot of our guests have been saying that that their leads are coming from their network and people that they know.
Brandon: Because they just let people know so.
Brandon: I mean maybe I’ll just challenge everyone of the listeners today. Really really easy way and free that everybody can go and let everyone you know that you want to buy property. Go write on your Facebook today. Go put a Facebook status say, “Hey, if anybody knows anybody looking to sell a house. I’m looking to buy something in this town.” You know, you’ve got hundreds of Facebook friends, everyone does and so there’s a very good chance somebody will know somebody who might be wanting to sell and it might give you a good deal. I mean it takes two seconds and.
Josh: That’s a great challenge.
Brandon: Thank you.
Josh: Nicely done, Brandon. Nicely done.
Brandon: Let me up this challenge.
Josh: You keep surprising me man. Wow.
Brandon: I’m going to up this challenge so if you guys do that I want you guys to go in the comment section on the show notes page, which is at BiggerPockets.com/Show146. I want you to go just in the comment section, leave a comment and then in that comment somewhere you know ask a question or leave a comment for Enrique, but also just say and I did the Facebook challenge and we’re going to pick one person and I’ll give him a copy of the new book on rental property investing that should be out any time now. Couple weeks still I think it’s coming out, but you—I’ll give you an early copy as soon as it’s published for free so.
Brandon: That’s my challenge. Yes, so anybody who does the Facebook challenges let me know in the comment section. You like that Enrique?
Enrique: I do, I do.
Enrique: Go right on.
Brandon: Alright, alright anyway.
Enrique: I paid for you last book so I figured.
Brandon: Okay, well yes I’ll.
Josh: Thank you for paying for the last book I.
Brandon: Yes, thank you for paying for The Book on Investing in Real estate with No and Low Money Down, which people can get at BiggerPockets.com/NoMoney.
Josh: How we got you—you bought it. What did you think? I mean it was pretty good book.
Enrique: Oh yes. No it was an awesome book and so, yes.
Brandon: Thank you.
Enrique: It truly is because it’s so just factual, nuts and bolts. There’s a lot of you know, a lot of books out there that are more kind of trying to get you motivated. The more motivational books, but don’t really tell you kind of step by step or you know, what are the different things involved and different ideas whereas you know, oh my goodness. Yes, it’s a great book.
Brandon: Thanks. Look at that. I’m going to put that on the sales page.
Enrique: Yes, thanks.
Brandon: “It’s a great book.”-Enrique Jevons.
Josh: Manager of hundreds of apartments.
Josh: There you go.
Enrique: Oh yes.
Josh: Alright Enrique, let’s get back to you and away from Brandon and his super.
Brandon: I like talking about me.
Josh: Overly inflated ego. What the.
Brandon: It’s very—it’s a level ego. It’s a level ego.
Josh: Oh it’s far from level my friend. Far from level, alright so you know, some of these deals you had talked about the MLS. Is that where you find the bulk of your deals. I mean you’re finding pocket listings. Are there other sources that—are you doing any kind of marketing to find deals?
Enrique: That’s how I think I—well, that’s how I did find things initially. Now, things are coming more often to myself. I’m spending definitely much less time and time is going to definitely an issue for me so I’m spending less time actually searching because it—you know, it does take a long time to just to be searching and searching. I’m in a position now where I don’t have to buy so it’s—I’m fine if you know, if I go a few months—two-three-four-five-six months without buying something I’m okay. I start getting a little antsy, but.
Josh: A little shaky right?
Enrique: Yes. I want to buy something—I want to buy something, but I’m okay so I’m in that fortunate position. Things do snowball so that’s definitely the nice thing is that over time the business definitely snowballs. I mean right now too as far as acquiring new properties to manage in the beginning. You know, it was really, you know, a lot of pounding the pavement. A lot of you know, going out there and trying to seek out owners to try and you know, see if they’ll allow me manage the property for them. Whereas now, it’s all just—it’s all coming my way. It’s over for all business coming my way.
Brandon: That’s great.
Josh: We talked about you know, the word of mouth through the networking and you’ve established the same thing through your management business. Is—are there any tips that you have for the listeners to expedite the transition from a active marketing to a more passive word of mouth growth business model.
Enrique: Yes, it’s really having to put yourself out there then so it’s—some of the key locations for sure is going to be BiggerPockets because you know, the network is so huge on BiggerPockets now that truly there are people. You know, members of BiggerPockets. I got to say everywhere throughout the United States and.
Enrique: Certainly now and many other countries as well so that’s a huge resource. Meetup.com, Meetup.com is a great resource too where there’s lots—it’s a way to find real estate groups in your area. If there are none then it’s an easy way to start one up yourself. Then the—of course LinkedIn is not—it’s just a way to kind of add credibility to what you do.
If you—so you have to use all of these online resources to put yourself out there and make sure it’s up to date. Make sure people can find you, but also the different REA groups, the real estate investment groups. There’s always real estate investment groups in every town and even—you know what going to courthouse steps. Okay so typically every Friday morning and most every town on county courthouse steps—they have the you know, real estate owned, bank owned auctioning off of properties. The process takes awhile so what do you do when you’re standing around? You just start chit chatting with everybody.
Enrique: Those are all buyers and those are all people in the b—buyers and sellers both. I mean and so that’s a way to start to meet all of the local investors in your area too.
Brandon: I love that.
Josh: Great tips.
Brandon: Yes, I love it. Cool, I want to go over to the financing real quick and how are you actually—I mean are these all loans are they seller financed? What are they? How are you getting them?
Enrique: Personally for me, I like lower interest rate so in the—and I always end up with a conventional loan.
Enrique: In the end I’ve always got 20%-25% equity, but as far as how I go about purchasing them, it’s either typically now it’s using a line of credit. That I’ve got established and I have a couple of different lines of credits. One line is on my personal residence, another is just a line of credit I was able to establish for the business. Another line of credit is backed by properties that I own outright and these are little—I’ve got a bunch of little single family homes that one of them for example doesn’t have a foundation and so a bank isn’t going to lend on it.
A couple of others the price that they’re in the $30 to $50,000 range, actually several of them that are higher in that price range, it’s just not worth it to a bank. Banks often times don’t want to lend out typically less than $40,000 and the closing cost involved in closing on you know even a $40-$50,000 loan, you know kind of add up. I mean for them it’s the same amount of paperwork for a bank to close $40-$50,000 loan than to close $1-$2-$3 million so obviously, their going to prefer the higher loans. On those ones, I was able to get a line of equity without having to go through the appraisal process because what we agreed on with the bank was just to go ahead and use the county assessor’s price so typically a county assessor’s price is a little bit on the low side so they’re comfortable with using that number.
I was fine with it because I’ve got enough and I’m not trying to milk out every nickel and dime so what I’ve said is, “Okay, every time I take on a property that I own—that I purchased out right—these little bitty ones then they just keep upping my line of credit by that much.” If I buy a $30,000 one they will give me 80% of that $30,000 they just add it on to my line of credit, no closing costs, no appraisals. It’s just a piece of paper.
Enrique: They’re not charging me.
Enrique: Yes, they’re not charging me a one point or anything else like that.
Brandon: That’s cool and that is kind—almost would I be correct in assuming that’s the commercial loan department at that bank?
Brandon: How does that work?
Enrique: Yes, there are different banks that do differently so a lot of the larger—so this—I use now just all smaller banks.
Enrique: I have loans at several different smaller banks because what I’ve found is that when you go to the bigger banks, you know, Wells Fargo, Bank of America, Chase, and all of them, they are much more stringent and they are definitely looking for large and you know, large loans.
Enrique: The smaller banks, I’ve got typically due consider, you know, one to four units as being a residential loan and five plus a commercial loan. Five plus actually has to be a commercial loan regardless.
Enrique: There are some banks that will also treat the one two four units as a commercial loan so I have others—a particular credit union in my area that treats them that way. The interest rate is a little bit higher on commercial loans. Typically, it runs one point higher, commercial versus residential loan. That’s been my experience, but at least they call and I use them always in the beginning because they would qualify the loan based on the cash flow of the property, not based upon my debt to income ration.
My debt to income ratio was holding me back. I had good credit, but because I wasn’t—I didn’t have a paycheck in the beginning, that’s what the—that’s what was holding me back, but now I’ve got enough years of you know, tax returns that I can show my income and now my debt to income ratio is much better and allows me to get some residential loans, but this line of credit with the houses it’s at 4.5%. It floats. It’s a two point margin so now it’s at 4.5%, but it could float upwards if interest rates did go up and it’s only $50 a year is the maintenance fee on it.
Enrique: It’s a great loan.
Brandon: Yes. That’s great. Now let me ask you—did you go to the bank and say, “Hey, this is the kind of loan I’m looking for” or did you go to them and say, “I want to work with you. What can we work out?”
Enrique: I went and said, “I want to work with you. What can we work out?”
Enrique: It was and I found that just talking to the branch manager and I started out in the beginning you know, they would put me in touch with a banker and now you’re starting by relationships with always with them first, but I then very quickly got to know the branch manager and so getting to know the branch manager really in my opinion helps out tremendously.
Enrique: It was you know a matter of—I came in—I came in fully prepared so I you know, I had tax returns. I had my, you know, financial statement and both my personal financial statement, my business financial statements. They could see everything, my profit and losses statements so you know bring that in and show that this is who I am and I started working out, you know, tell me what’s available, what can you do. Then I would start to run ideas past them and so it was definitely kind of both ways.
Brandon: That’s cool and that just kind of illustrates how flexible—especially like commercial lending or small banks, those are like—it isn’t like a Fannie Mae/Freddie Mac loan. It’s not like this is what we’ll do for you ABCDE and you have to have EFG whatever right so like they move around. I got a friend who’s kind of one of my mentors we’re going to get here on the show pretty soon I think, but he has awesome loan where they customize it just for him and his business models.
Brandon: He goes and buys properties with a huge line of credit and as soon as he buys them they transfer it to a fixed rate mortgage through that bank as well.
Brandon: He just buys and he’s basically doing that BRRR strategy right, the buy, rehab, rent, refinance, repeat, and it’s all within this one loan package through a local lender.
Josh: That’s awesome.
Brandon: Yes, it’s awesome right like.
Josh: That’s great.
Brandon: I need him to like introduce me to his guy who did that for him and have him do it for me because it’s just.
Enrique: Yes, it’s amazing.
Brandon: It’s cool.
Enrique: How much banks can actually do. I mean, it—they don’t have to do just one loan on one property, they can do one loan on multiple properties and they can you know, of course do the line of equities. They also—one of the things—I didn’t—I had no idea, but I just assumed you know, in the beginning that they would have to send out an appraiser. I had no idea that they would just.
Enrique: Base it upon the county assessor side.
Brandon: Yes, I have not heard of that, but it makes sense. They can do—they can do what they want.
Enrique: That’s right. They were going to do what they want. It’s the different banks and it—what I noticed too is you know, so banks have—at sometimes, they’re cash heavy and they need to make loans and other times then, you know they’re—you’ll notice that sometimes they’re advertising really pushing, trying to open up new accounts and so they’re giving out, you know, give you $50 if you open a new account. That sort of thing so then you know the bank actually needs cash. Alright so that’s probably the time not to necessarily be start.
Enrique: Approaching them for loans.
Josh: That’s interesting. Yes, it’s great, great.
Enrique: When they start advertising auto loans and here’s our you know, rates and stuff, okay now you know they’re flushed with cash and so they go back and forth, this balancing act for them and so that’s the times you want to hit them up and so definitely it’s advantageous to work with multiple banks for that reason too.
Josh: Smart guy.
Brandon: Yes. I never heard that before.
Josh: Smart guy, yes it’s awesome.
Brandon: I like that.
Josh: Hey so I had a quick question, take us back a little bit and then we’ll want to continue to kind of move forward here. You quit your job.
Josh: I’m sure you were doing pretty well when you quit your job.
Josh: You said, “Hey, I’m going to have a year where I can survive.”
Josh: When you bought that first property and then the subsequent properties that followed, what did you do with the revenue generated from the property? Did you?
Josh: Put everything back into the portfolio or did you start to take money out as a salary, how did you do that?
Enrique: I’ve never actually taken a salary so—it’s only—yes, I, you know, some people do, they pay themselves a specific salary. I don’t I just—I try and live as meager as possibly can and I then try and reinvest everything that I possibly can. In the beginning, I went and I was scrubbing the toilets, you know, when the tenants moved out and I was the one who was doing all the work. I was the one who was sheet rocking and painting and doing al of that because in the very beginning I had that time available. Now over time then as soon as I bought then the next property, okay now, I have a little bit less time so then I figured out well what’s the thing that I really don’t you know, dislike, don’t want to do. Okay, the toilets alright so.
Josh: It always falls back to the toilets.
Enrique: Yes so I hired you know the housekeeper so I have the housekeeper to help me out and you know it’s just on an on call hourly basis and then pretty soon it’s the maintenance you know becomes a little cumbersome and so now I’m hiring out the maintenance and then after that I needed somebody just to help me out with answering the phone calls admin type of work so then I hired my first admin and then so little by little by little. Now I have five fulltime staff members in my office and I have two virtual assistants that I’m using.
Brandon: That’s awesome.
Josh: That’s awesome. That’s great.
Brandon: Okay, I’m assuming in your office you are agent as well a broker, correct?
Brandon: How many of them are sales people versus infrastructure.
Enrique: I kind of have under my LLC is kind of an umbrella. I have two and I’m pushing a cat out of my way sorry. I have two.
Josh: Oh cat people, great so I’m full. Can we have a show now?
Enrique: That’s I think—that’s why you invited me on call?
Brandon: Yes, yes.
Brandon: Because I like cat people.
Enrique: I have under my LLC. I have essentially two businesses going. I have my property management business and then I also have and my real estate business. I have five real estate agents that work under my license. They’re doing traditional you know, representing the buyers and sellers.
One of them specifically is pretty much just multifamily only. Alright so then I’m able to it’s definitely works out well because even though I might—I don’t consider myself a traditional agent. I have bought and sold many of times, but it’s not the career path I wanted. I was actually very reluctant to become an agent. I was kind of really in the beginning fighting with the Department of Licensing saying you know, “Come on, I don’t want to have to get my license. I want to manage for others.” You know, they’re required in the state of Washington and pretty much most states require that you actually have a real estate license to manage for others, which I think is kind of crazy too because.
Brandon: I do too.
Enrique: Yes, I mean you can manage thousands of your own properties.
Enrique: You know.
Brandon: I don’t have a sales person license.
Enrique: You don’t get licensed.
Brandon: In order to manage my neighbors.
Enrique: Come on.
Josh: The sales person license doesn’t actually educate you on how to deal with tenants.
Brandon: Yes, I know. It’s nothing.
Josh: Tutorial. Investing in real estate or anything else.
Enrique: Yes, no I totally agree with what you guys—but yes, but to manage one, you know, your next-door neighbor’s property.
Enrique: You want to manage that property, you have to have a license for it so.
Enrique: I had to get the license now having gotten the license then, I just—I had agents approach me and they said, “Oh you know, how much would you take?” Well I figured you know, what I’m just going to take a very small cut and so as a result what I’ve gotten is established agents because I’m not in a position to be out there training new agents, but I’ve gotten established agents who just want to have a—you know, a smaller you know, percentage taken from them and so now I’ve got five that are working under me so that’s actually worked out really well. It’s kind of really more of a side business for me.
Enrique: As a result of having the license.
Josh: That’s great. That’s awesome.
Brandon: Yes, that’s kind of a cool idea, I never really thought about that. It’s just you know, I’ve been where you are or I am where you were in that I struggled.
Brandon: I battled with should I get my license or not and you know, I go back and forth and I took the test. I mean, I took the class once and never took the test and that was probably a mistake, but like now I don’t want to go the 90-hours and go redo it. I’m like ugh, I don’t know what. It’s kind of a cool idea just to get to my license. At least then I can become a broker later on. I think what you have to do two years or something like that.
Enrique: Yes, so state of Washington is three years, which is pretty typical. I’m pretty sure that most states are the same thing where you have to be licensed under somebody else for three years. The whole idea is that it’s kind of like an internship.
Enrique: Where you’re actually learning from an experienced broker on you know, what does it take and so it’s actually is a very good thing. As managing broker, it just means also that you’re responsible though for every single transaction so every single transaction that these five agents are doing, believe me, I spend a lot of time on the paperwork reviewing it to make sure that it’s absolutely 100% correct and if not, I kick it back to make sure that you know, because I am ultimately responsible. As an agent, yes Brandon, definitely, you got to get your license, get it now because it does take three years.
Enrique: To then go out on your own right and so the thing is is that if let’s say you know, this next month you decide, hey I really do want to follow through and make my wife go you know start up a property management company.
Enrique: Then you know you’re going to be kicking yourself that getting.
Josh: Make my wife start a property management company. I don’t know about you guys. I can’t make my wife do anything.
Brandon: There’s a back story here.
Enrique: Isn’t that what this is all about?
Brandon: This is a.
Enrique: I thought the only reason I came up is you know.
Josh: I know the backstories.
Brandon: You brought it up.
Josh: Alright, you can’t make any of your wife. Listen.
Josh: Honey is you’re listening I would never try make you do anything I love you and I don’t know about Brandon and Heather, but you know.
Brandon: I can try. It doesn’t mean I’ll succeed.
Brandon: No, okay so this is the back story right so an we’ll go there next because you brought it up so me and Enrique actually met at a BiggerPockets get together, a meet up. There’s probably 40 or 50 people there and at one point everybody went around this big huge table. We were at The Ram Restaurant up in Lakewood. Everybody went around and said what they did and we got to Enrique and he’s like, “You know, I’m not much. I just have a 100 properties and mange 500.”
I’m like, that guy. I got to go talk to him right because when you go to those meet ups, you go and talk to people you want to become like. Like I’m a big believer in that. Find the person at the next level and go talk to them right? Enrique is at the next level so I’m like I got to go get so I went and cornered him and like, ooh we have to talk and so in that conversation.
Josh: You do like the corners.
Brandon: I do like the corners so we started talking and I asked him like you know, we—my wife and I have thinking of starting a property management business. Should we do it? That’s what kicked this whole thing off so I’m going to go ahead and ask you that again, Enrique? Should be and my wife start a property management business?
Enrique: Yes, so you definitely should. You really should so that’s the thing is that there’s so many you know, economies of scale and there’s so many things that if you’re managing a few properties of your own to begin with that it just makes sense to take it to the next level and that is you know, managing for other owners. If you are in, you know, in the very beginning, I was using Excel spreadsheets and then I was using QuickBooks and then I used Google Docs online to be able to create online applications and you know, feed that all into Google Docs. I eventually then got over to a property management software company and so that it allows me to manage all the maintenance aspect of things as well as the accounting portion and the rental applications and also if you going to go to the trouble of you know, I would actually need all of that stuff anyway just to manage a 100 units, anyway.
Since I already paying for all those things, I already have that set up and now with a 100 units too, I needed an office space so that people can come you know to actually have a location whereas you know in the very beginning I was just working out of my house like you know, so many other people start out and so if you have that all already it just makes sense, why not manage for other people.
Brandon: Yes, yes, yes that makes sense.
Enrique: It’s worked out well.
Brandon: That makes sense, makes sense. Well cool. I think we probably will at some point open a property management company. I heard about.
Josh: I will someday.
Brandon: I will do it. I’m actually hoping to get my license probably this winter. I know I’ve been saying that here on the podcast for a year, but when things slow down a little bit this winter. I’m going to get my license. At least because like for the reasons said.
Josh: Slow down. Post book launch.
Brandon: Three years. Post book launch.
Brandon: Yes, like you said, “Three years from now I might want it.” Now, there is a rule and I don’t know the whole rule, but maybe you know it. If you’ve been involved in real estate for a number of years, I think it’s like three years, but not been an agent you can take like the test and become a property manager still. Have you heard that? There’s some weird exception.
Enrique: Yes, okay so there is. There is a waiver. You can contact the Department of Licensing and request a waiver for the number of years and so it is possible to do. I didn’t do that I you know, just was good boy and followed the steps, but if you want to be a rebel and you just want to you know do things your way then yes, I would suggest contacting the department of licensing and ask them.
Josh: That’s a great tip.
Enrique: How much of my experience can count towards that three years experience?
Brandon: Yes, yes, I’m going to do that. I think I’ll probably look into it so anyway very very cool. I will get my license. I promise you. I promise everybody this. I’m going to do it at least some point so cool. Alright we got to get out of here pretty soon, but before we do I wanted to kind of wrap up with final question before the Fire Round and that is do you think—do you recommend every investor should get their real estate license?
Enrique: Yes, I think so. The thing of it is—is that there are also when you get your license, you know, the first few years. You got to hang it on under somebody; however, that being said, there are—you really got to shop around for a managing broker because the fees vary wildly. If you go work for a large franchise, you know, Remax, Windermere, one of these larger ones like that, of course they’re going to have some pretty high fees involved, but usually an individual doesn’t charge nearly as much. If you just need a place to hang it often times, you can even sometimes just get them to hang it for free and just say, “Ah.” As a matter of fact, yes, one of the agents that I’ve got, he might do one a year and so I don’t charge him anything. I just do a you know, a cut a percentage when he actually sells something. That’s just because he just wants to have it on the side because he really wants to be able to look on the MLS.
Enrique: Directly himself. See all of the private notes. There are—there is a private notes section in the MLS that only agents can see. There’s two boxes, a public remarks and private remarks and so the private remarks can you a lot of information that you can’t get just by looking online so there’s—there are definite advantages to becoming an agent and the cost isn’t really that much in my opinion.
Brandon: Yes, okay.
Josh: Right on.
Brandon: You convinced me. I like—I want to know that private stuff so cool. Alright well why don’t we move on. Right before we do get to the Fire Round, let’s have our sponsor of the Fire Round.
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Announcer: It’s time for the Fire Round.
Brandon: Alright this is the world famous Fire Round. These questions come direct out of the BiggerPockets forums so let’s get to it. Number one, user asked, I’m looking to buy property for under $45,000 as a cash flowing property. From your experience as a first property, should I buy an apartment like a condo or a single-family house?
Enrique: Okay so as my thing is get as many units as you possibly can under one roof. That’s just been my personal experience has worked out to cash flow better.
Brandon: Okay, but they’ve only got $45 grand so if they can’t find.
Brandon: A duplex what do they choose? A condo or okay, okay.
Josh: Well in Detroit, they can get like a 30-plex.
Enrique: Yes so I mean yes, if you’ve got $45 grand well then then maybe you network and meet with somebody and then you go in. You know, maybe somebody else has another $45 grand and you can take your two $45s together and there you go. You’ve got a lot more purchasing power.
Brandon: Cool. Cool.
Josh: $45 grand is not a terrible down payment on a property.
Josh: In a rural.
Brandon: Rural area.
Josh: Yes, alright, what kind of education is needed to build a successful property management business?
Enrique: Yes so that’s the first thing you need to do is just know what you’re doing. I mean and so you can go about it a couple of ways. I mean, yes, you can start buying your own properties and then you just kind of you know, hard knocks. Figure it out. You can also then just go work for another management company so that’s where I would definitely steer somebody. If they don’t have you know, a lot of money to start with is go work for another property management company because there you will get paid to you know, it might not be very much, but you’ll get paid to learn.
Josh: Right on.
Brandon: Cool, cool. Perfect.
Josh: Cool, awesome.
Brandon: Alright, next one should I hire a property management company to manage my triplex if I’m living in it. I’m living in one unit, renting another two, should I hire somebody to take care of it?
Enrique: No so yes, my experience has been live in managers and so I’ve had a few over the years. They start out great.
Josh: No, I don’t think she’s asking about hiring a live in manager.
Brandon: They actually live in it.
Josh: She lives in—she lives in one of the units and instead of actually managing the two other units in her building. She wants to hire somebody or is wondering if she should.
Enrique: No. I don’t think it’s worth. I mean you’re—if you’re living next door, if you’re in a duplex, a triplex and you’re living there, it’s going to drive you crazy I think to have to go through somebody else. I would just say, no. Just be the landlord yourself and you know manage it yourself. If you’re not a confrontational person, which is what you know people are afraid to ask for the rent or they’re afraid to say no, you can’t pay late. You got to pay on time then you need to—well if you’re going to continue in business, you need to get a little tough.
Josh: Grow a pair.
Enrique: Then you can somebody to help you with that specific thing, but don’t hire a management company for if you live there.
Josh: Fair enough.
Brandon: There you go.
Josh: Alright, last question of the Fire Round, what questions should I ask when interviewing a property management company so give me your top three questions to ask a property manager during an interview.
Enrique: Oh well, actually just go on BiggerPockets because it’s been talked about so many times you can see.
Josh: So many times. Oh, don’t cop out though Enrique. What are your favorites?
Enrique: Yes, we should ask a management company. Alright, so you got to ask them all their fees because there are a lot of different fees that different companies charge. We just charge a percentage of rents collected, but a lot of other people will charge a lease up fee in addition to that they will charge a annual inspection fee. They will charge a fee for when then tenant moves out. There’s oh my goodness. There’s so many fees that you can charge.
Josh: Oh yes.
Enrique: That has to be really clear. That’s probably the very first thing. Secondly is get references. I’m always shocked at how many people do not—it’s actually pretty infrequent that I get asked for references and I always think that you should. Just like if you’re going to hire an employee, you want to check their job references. You should and if you’re hiring you know getting a tenant you should check their previous landlord references. You should do the same in with a management company. Thirdly, you should take a look actually at how they’re advertising their properties.
Enrique: What I mean by that is you know, take a look at the quality of their website. The quality of the photographs that they’re using to advertise versus somebody else so now we’re large enough we actually use for example a professional photographer and that was easy enough. I went on Craigslist. I posted an ad for a photographer and I got tons of people, you know it just said, “Part time, freelance photographer needed.” I got tons of replies. I went through you know, all their pictures and it was really easy to hire a professional photographer, but not that many management companies use one and so.
Brandon: That’s a great idea.
Josh: That’s a really good idea.
Enrique: Oh they advertise.
Josh: What does that cost by the way? I mean on average what does it cost to photograph a unit.
Enrique: Okay, hopefully my poor guy is not listening, but so I’m actually pay him only $25 per apartment and $50 for a house.
Enrique: If there’s travel time involved, you know, he’s got to go a long ways then I’ll pay him for mileage as well.
Enrique: Yes, $25 bucks, to me that’s worth it and I get awesome pictures as a result.
Josh: Yes and he’s awesome.
Brandon: I love it.
Josh: His name is—no.
Enrique: Yes, well he’s got another job where he’s actually making money so.
Josh: Right on man.
Josh: Right on.
Brandon: Cool, well.
Josh: Thank you. Thank you for those and I think it’s time for something else.
Brandon: It is time. It is time for the.
Announcer: Famous Four.
Brandon: The Famous Four, which we ask every single guest so why don’t we jump to it. Number one, what is your favorite real estate related book?
Enrique: Well, it was—okay actually, okay now my favorite real estate book is your Brandon.
Enrique: Because you guys the BiggerPockets real estate.
Enrique: I don’t even have notes in front of me to be able to read off the incredibly long name that you’ve picked for it.
Brandon: The Book on Investing in Real Estate with No and Low Money Down.
Brandon: Thank you.
Josh: I can barely get it right and I’ve yes, don’t worry about.
Brandon: I don’t think you’ve ever gotten it right, Josh.
Josh: Oh come on.
Brandon: Let’s try it right now. Let’s put Josh on the spot. Josh, what’s the title of my last book.
Josh: The Book on Investing in Real Estate with No Money Whatsoever.
Brandon: Good try. Good try. Alright.
Enrique: That’s become my new favorite.
Enrique: In the beginning it was Rich Dad, Poor Dad, which is you know not specifically, actually it’s not even real estate that’s a first one that I read, but that’s what really made me go for it. I would have loved to have jumped in and bought a hotels, but that’s.
Enrique: Whole lot of money needed to do that.
Brandon: Let me ask you, are you going to eventually do that?
Josh: [Inaudible][56:30] through and yes.
Brandon: Are you going to buy hotels now that you’re in the—you’ve been in the industry?
Enrique: I would love to get back to that if ever it got to the point, but it would have to be a nice hotel. I—so, yes. That would be awesome, but I don’t know.
Josh: You know you could come to Denver. There’s a street called Colefax and there’s like a strip of like 50 motels. I don’t know that you’d want to go there without a biohazard suit, but I’m sure you could probably pick one up for about $20,000.
Brandon: Sounds good. Sounds good.
Enrique: I’m going to stay away from that deal.
Josh: Yes, right on. Alright, next question. What is your favorite business book?
Enrique: Yes and so business book is The Rich Dad and so you know what so then I started reading you know, pretty much most of his books. Now, I’m also want to say you know what? Go to the library. I went and got them all from the library.
They were all available and then I just started reading you know, like crazy all sorts of books from the library on you know, on real estate and business and listening to audio tapes then and now for me, you know, podcasts the last several years have been you know, the big thing there’s all sorts of different you know books that you can get on podcast as well. The Rich Dad, Poor Dad series was what really kind of shifted my in a way of thinking which it did for so many people.
Josh: Right on.
Josh: Brandon, do you know what a tape is?
Brandon: I’ve heard of such things.
Brandon: I used to you know, sit and record radio songs on a tape.
Brandon: Listen to them later.
Josh: Just checking. Just checking.
Brandon: Just my jam.
Josh: There you go. There you go. Alright Enrique, back to you. Hobbies? What do you do for fun?
Enrique: Fun, fun, yes well now it really is all my time is definitely spent on real estate and researching real estate and managing the—in the business, but I do enjoy mountain biking. I was big into mountain biking at one point for one year when I was very young, worked for a mountain bike manufacturer and it felt like I was on vacation the whole year so, but there was no money in it so finally had to get back to work. Then—so mountain biking and skiing are just things that I—I really enjoy doing and there’s skiing right close by to where I live too so it’s great.
Josh: Oh right on.
Brandon: Alright, my final question. What do you believe sets apart successful real estate investors from those who give up fail or never get started?
Enrique: A lot of these meet up groups and REA groups that I attend and go to and I go to them you know, always religiously. You always see the person who shows up just once and they always ah, yes, and I want to get into real estate and then you never see them again anywhere, ever. There—it seems to me that it’s just—it’s perseverance, you got to stick with it. It’s not something that happens over night so if you want to become you know a property manager, you want to get property management company going.
It takes a long time and so it’s not that you can immediately start work and immediately earn a paycheck. You’re—you know, over time, you’re going to be able to you know, really create a lot of wealth for yourself, but it just doesn’t happen overnight. You’ve got to persevere.
Brandon: Yes, I love it.
Josh: Yes, that’s great. Alright, where can people find out more about you? Where can we find you?
Enrique: My website is JevonsProperties.com so J-E-V-O-N-S properties.com and so I have tremendous amount of information there. I do have my bio and stuff up on BiggerPockets and so you can definitely reach me there as well and LinkedIn and Facebook so I try to put myself out there.
Brandon: Cool. Cool. Hey I have a quick question for you. I’m going to put you on the spot here.
Brandon: We’ve got a book launch coming out. We’ve got The Book on Rental Proeprty Investing and The Book on Managing Rental Properties. Names might shift a little bit from when they come out, but when we release that we’re releasing some bonus content with it and I would love to sit down with you and.
Josh: Oh yes.
Brandon: Pick your brain on the landlording side of things. We didn’t even hardly touch on that today, but how you actually manage properties. Are you willing to sit down?
Brandon: With me for a little while and we’ll put it in the bonus content?
Enrique: Oh definitely.
Josh: If he’s not, you know, 60,000 plus people are going to know about it.
Josh: He better.
Brandon: You better.
Josh: You just trapped him.
Brandon: I did.
Josh: That’s kind of messed up man.
Brandon: I did, you like that?
Enrique: You know what I’m like every other landlord. Landlords love talking about properties.
Brandon: We do right?
Enrique: I mean yes, I—every time I go to a landlord you know, association meeting, oh my goodness you can’t get people to shut up about their properties. No, I’m.
Brandon: That’s true.
Enrique: Always happy to talk about my properties.
Brandon: Cool. Well we’ll schedule time in the next week or so and we’ll sit down and we’ll talk and then we’ll put it in the bonus content so.
Brandon: There you go.
Josh: Enrique, well listen, thanks so much for being on the show. We definitely appreciate it. Lots of great stuff and we will certainly look forward to seeing you around on BiggerPockets.
Enrique: Thank you guys. Thank you very much. I appreciate it.
Brandon: Yes, it was fun. We’ll see you around.
Enrique: Great. Thanks, bye.
Josh: Alright guys thanks so much for listening to show. Enrique, thank you for being here. That was just fantastic.
Josh: I mean, really good guy.
Brandon: Like I said on the show, you know, like he’s definitely like you know the next level where I want to get to—very much so so it was fun to like pick his brain both in person a few weeks ago when I met him and them today. Just to bring back that what I talked about earlier, I mean go to those local meet ups. Meet with people that you want to become like—like it’s just so cool like and people are so willing to share.
Brandon: I mean not just Enrique here, but every—I mean there’s a 100,000 Enriques or a million Enriques or more in America that you can just go meet with and talk with and learn from so. Hey get out there go some—somebody like Enrique and take your business to a new level.
Josh: Do it, do it. Alright guys well thanks so much for listening. This is show 146 of the BiggerPockets podcast. You can check out the show notes at BiggerPockets.com/Show146. Thanks for listening. We’ll see you next week. I’m Josh Dorkin, signing off.
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