BiggerPockets Podcast 086 with Jonna Weber Transcript

Link to show: BP Podcast 086 – House Hacking Your Way to 97 Units (While Holding a Full Time Job!) with Cory Binsfield

Josh: This is the BiggerPockets podcast show 86.

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Josh: What’s going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast, here with my cohost Mister Brandon Turner. What’s up, Brandon?

Brandon: Not much. How you doing?

Josh: I’m good. I’m good. It’s good to have you here as my cohost.

Brandon: Thank you, thank you. I’m still on the road. I think last week I was in North Dakota, wasn’t I? Then this week I’m actually in Minnesota at my sister’s house so if you hear little kids yelling in the background that is why. She’s got four little ones. It’s awesome.

Josh: That’s great.

Brandon: I love being an Uncle.

Josh: You’re a good guy, man. That’s awesome. That’s great. Well, listen, we’ve got a really cool show today with Cory Binsfield, and we’ll talk about that in a second, but all’s well with us. BiggerPockets is rocking and rolling. We just brought in a new Community Manager and Lead Editor, Allison Leon, and she’s fantastic. Hopefully everybody will jump in on the forums and welcome her and greet her. She’s rockin’ so definitely say what’s up for her. Otherwise, that’s all I’ve got for you. We’re just working away growing and making moves.

Before we introduce Cory let’s get to today’s—

Josh and Brandon: Quick Tip

Josh: Alright, guys, today’s Quick Tip is: check out the BiggerPockets tour! We don’t really tell a lot of people about this and, in fact, not a lot of people end up on this page which is why we’re trying to promote it here, but, listen, it’s a really good page. It’s BiggerPockets.com/Tour and if you’re trying to figure out how the site works, if you don’t really have a full understanding of everything that we offer, just go there BiggerPockets.com/tour and you’ll find out pretty much all you need to know about using the site, just kind of in broad strokes, what’s available to you. So, that is today’s Quick Tip: check out the tour and learn more. Hey, that rhymed.

Brandon: Wow, that was really good.

Josh: Alright, guys, so let’s bring him in. Cory, welcome to the show, man! It’s great to have you.

Cory:: It’s amazing to be here.

Josh: Amazing.

Brandon: Amazing. You listen to the show, right? I mean, you’re a fan.

Cory:: I have listened to every podcast.

Brandon: Awesome. That’s exciting.

Cory:: Big fan.

Brandon: I love having podcast guests on here because you know what to expect kind of, but hopefully we can still throw some curve balls at you. Hopefully.

Josh: Hopefully.

Brandon: Hopefully. You know, one of the reasons we wanted to bring you on today is because you started, I don’t know if we want to call it a debate, a debate on BiggerPockets in the past couple of weeks. That’s been kind of fun so we’ll get to that, I’m sure, today.

Cory:: Yeah, I—okay. Alright.

Brandon: Yeah, I mean, it was good. Debate is very, very good so I think—

Josh: We like debate. Listen, the beauty of what we do is this: there is, despite what the gurus will tell you, there is no one way to do anything, right?

Cory:: And I totally agree.

Josh: There is no “right” way, well, I mean there is approximately a “right” way, but there’s not a single way to get anything done and there’s room for different theories, and different ways to go about doing things, and I think that’s one of the most beautiful things about BiggerPockets is we encourage that. I want to hear your opinion and the opinion of ten other guys with similar opinions so the listener, or the reader, can then go and make their own judgment on which path to take. There is not a single path to success in real estate. Alright, cool. Well, let’s get into your background.

Cory:: Alright.

Josh: Let’s talk about who you are, how you got started, what you do. So, you are a real estate owner. You own properties, you own rentals. When did you start doing that and how did you get going?

Cory:: Okay. I started in 1998. I came back from San Francisco, I moved back to my home town after watching my brother make a lot of money in real estate and I was a little bit envious, as well as for some other reasons, and I pretty much said, “if my brother can do it, anyone can do it.”

Josh: Ooh. Ouch.

Cory:: I know. I got four brothers so we don’t know which brother it is so this is perfect.

Brandon: He’ll know, he’ll know.

Cory:: So it ends up that I had to rebuild my business. I was still growing a business at the time, but fortunately I was able to plunk it down in my home town. I knew that because the cost of living was lower, smaller town, easier to buy real estate. You know how it is, Josh, you’re from a big city. Trying to buy your first income property where I was living at the time, San Francisco, is just not going to happen.

Josh: Yeah, yeah. Well, not in San Francisco, but within an hour or two there’s certain—

Cory:: Right. You know, I had an offer to get a property in San Francisco, but she basically said, “marry me and you’ll get all of this,” and there was this saying from my dad that was just ringing in the back of my brain like, “if you marry a money, you earn it,” and I was just like, “yeah, I don’t want to do it that way,” so—

Josh: Wait, wait, wait, let’s go back to that. I mean, how much money are we talking here?

Cory:: If I would have married her we would have inherited, well, not really inherited… her dad was a huge real estate investor and he ended up moving to Hawaii, but he had this beautiful duplex up on Knob Hill and it was incredible. Probably worth maybe 1 or 2 million dollars.

Josh: Wow. Gotcha.

Cory:: And that was, like, an extra property he had that was basically he was going to give to his daughter to start her out.

Josh: Hey, you know.

Brandon: So, you didn’t marry her.

Cory:: No, I didn’t marry her, but she was a sweetheart so if she’s listening, which I doubt, she’s a sweetheart.

Brandon: Nice. So you didn’t do that. So what happened after that? Is that when you moved to where you live right now?

Cory:: Yup. So I moved back to my home town, Duluth, Minnesota here and—

Josh: Duluth!

Brandon: Duluth.

Cory:: It was just voted number 1 city by Outside Magazine!

Brandon: Really?

Cory:: To live in.

Brandon: It is a great city. I mean, I spent many a weekend up there in Duluth when I was growing up. I grew up in Minnesota.

Josh: You know, I wonder if BiggerPockets votes up a city. Like, can Brandon and I just say, you know what?

Brandon: Vote up Podunk, Washington?

Josh: Yeah, we’re going to just vote up Podunk and I wonder if people start quoting it, “hey, I live in Podunk,” “oh! Podunk! That was voted the number 1 place by BiggerPockets.”

Brandon: That’s a funny idea, yeah.

Cory:: You guys should do a vote on the best rental market in America.

Brandon: We should. We should do that.

Josh: We’re just going to decide and it will be so.

Brandon: Yeah, we’ll get a ton of press and New York Times will publish BiggerPockets says this is the best rental market in America. Great. That’s how I’m going to get my properties sold! We’re going to make the market nationwide the best one. This is a great plan. Cory:, this is amazing.

Cory:: Well, I’m hoping this gets promoted so that more people move into my town, they raise the prices and then I can sell them.

Brandon: Exactly.

Josh: Nice. Isn’t that, like, rigging pricing? Does that create an unfair advantage? I don’t know.

Cory:: Josh, that’s the beauty of real estate. You can price rig.

Josh: Ooh.

Brandon: Yeah, there you go. It’s not like the stock market, right?

Cory:: Let’s not go there.

Josh: Alright, alright.

Cory:: Actually, that’s the advantage of real estate; it’s not a regulated market when you think about it.

Josh: Yeah.

Cory:: It has high barriers of entry, and because of that it’s not as liquid as the market.

Josh: Right.

Cory:: And, I mean, anyone can buy real estate, but it’s not the FCC coming down your back saying you can’t do that.

Josh: That’s not completely true, but, I mean, the FCC can come in if you’re doing things that violate the FCC and you can do that in property.

Cory:: Yeah, if you’re raising capital that’s a totally different animal.

Josh: Yeah. Alright. So let’s get back to you.

Cory:: Yeah, here we go.

Josh: We lost, you know, this whole thing so this woman and she’s going to give you millions and you say, “you know, I don’t want to marry you. I want to work hard and marry somebody else,” which is good because marrying for love is certainly the way to go.

Cory:: That’s correct.

Josh: You know, if somebody had walked up to me and said, “hey, when you marry me you’ll be a multi-millionaire,” I too would have probably turned them down because of something like that.

Cory:: I’m an idealist, Josh.

Josh: Man, oh, man. Alright, so what was your first deal? How did you jump in?

Cory:: First deal was, she was my fiancé at the time, and I had been studying real estate for years and my first deal was a crappy triplex. It was a For Sale by Owner, and I called up the phone number posted on this property and I just called the guy up and said, “hey, how much do you want for the property?” and he says, “hey, bring a 12 pack of beer and we can talk,” and so I ran to the liquor store, got a 12 pack and literally drove up to his house and we sat down and did the deal on a napkin and drank beer. Then after I was pretty buzzed I drove home and told my fiancé we just bought a property.

Josh: Oh, jeez.

Cory:: The next day I run to the lawyer’s office and I said, “is this legit? I have it in writing, it’s on a napkin here,” and he’s like, “well, yes, but let’s see if he follows through on it,” and that was my first deal.

Josh: Wow. So you did the deal on a napkin, you drank and drove, what else did you do wrong in this first deal?

Cory:: Oh! I didn’t tell my fiancé what property we bought.

Brandon: Oh.

Josh: Okay, and you bought a property without talking to the boss.

Cory:: Exactly.

Josh: Gotcha. So check, check, check, check don’t do that folks.

Cory:: That didn’t go over well, too, by the way.

Josh: Yeah, I can imagine.

Brandon: I bet.

Cory:: I brought her over to the property, I put my arm around her, you guys ever see family vacation, the Griswolds…

Josh: Of course!

Cory:: National Lampoon! Okay.

Josh: Brandon, do you know National Lampoon’s Vacation?

Brandon: I know what it is!

Josh: I’m just checking!

Brandon: I gotcha. I’m a child of the 80’s – sort of.

Cory:: Alright, so I’m feeling like Chevy Chase, you know, I put my arm around my wife’s shoulder, I go, “honey, we’re gonna be rich, we just bought this property,” and she just starts bawling. I mean, tears everywhere, and I am so stupid. I go, “oh, honey!” and I give her another hug and I’m like, “those are tears of joy, right?” and she violently shakes her head back and forth and she’s like, “Nooo!” and that was my first deal.

Brandon: Wow.

Josh: So what did the numbers look like? It was this ugly Triplex, I mean, was it falling apart? How much work did it need?

Cory:: It wasn’t falling apart, but it was pretty nasty. I mean, I got it for $5,000. Speaking of IRAs, I took $5,000 out of my IRA and I was able to do it through a first-time home buyer exemption so it was penalty-free and then I got it on contract for deed for, like, $35,000 I think? And I had to pay it off over 10 years.

Brandon: How long ago was this?

Cory:: This was back in 1998.

Josh: ’98, if you were listening you would have heard that, but yeah.

Brandon: I was doing my nails, sorry.

Josh: Clearly. So, alright, so this Triplex as a first-time homeowner presumably you bought this to live in one of the units.

Cory:: Exactly. I lived in one unit and then I went to Home Depot, bought a Big Orange Book and said, “okay, I’m a handy man!”

Josh: Nice.

Cory:: And I had no clue what I was doing and I started fixing it up.

Josh: That is a great book, by the way.

Brandon: That is exactly how I learned. The Orange Book from Home Depot. I bought my first house went to Home Depot, bought the book and I was a handy man.

Cory:: The problem was my wife knew I wasn’t a handy man.

Josh: So did the tenants who moved in later!

Cory:: Yeah, I have a job, I’m wearing a suit and tie and everyone thinks Cory: Mister Professional and that dude can’t fix anything!

Josh: Alright, now I wasn’t listening so yell at me! What was the final purchase price?

Cory:: It ended up it was, let me think about this now, it was $39,000 was the final price. $5,000 down, $34,000 contract for deed, is that right? Yeah.

Josh: Okay, so $39,000, you’re living in one unit with your wife who’s choking you and then the other two units they were presumably unoccupied when you first purchased it?

Cory:: Yup. I had to bring in new tenants, I rented the basement apartment, which I’ll never buy a property with a basement apartment ever again, I rented that to a buddy of mine.

Josh: Okay.

Cory:: Then the upper unit was a 2-bedroom and I just put an ad, well back then they didn’t have Craigslist, so I put an ad in the newspaper.

Josh: Alright, so you did what Brandon likes to call house hacking?

Brandon: Yeah.

Cory:: Exactly.

Josh: And, Brandon, you wrote an article on house hacking, didn’t you? Why don’t you talk about that really quick?

Brandon: Alright, I wrote an article on it, so.

Josh: I guess on BiggerPockets.com/show86 on the show notes we’ll have a link to this.

Brandon: It’s called, yeah, it’s called How to Hack Your Housing and Get Paid to Live For Free, and it’s the same idea that you’re talking about. Buy a small multi-family, live in one of the units, rent them out. It’s a good way to jump start your investing business, and yeah we’ll link to it at BiggerPockets.com/show86. Read it, and anyway. What are your thoughts on that, Cory:? Would you do it again? Do you recommend people do that? Do you think that’s crazy?

Josh: House hacking.

Brandon: House hacking, yeah, that’s the idea.

Cory:: Josh is going to laugh. Brandon, I think you’ll agree with this.

Brandon: Okay.

Cory:: I’m still house hacking.

Brandon: Are you? Good!

Josh: Really?

Cory:: Now I live in a really nice duplex in a really nice neighborhood.

Josh: And you’re not 20 years old anymore.

Cory:: No, I’m older!

Josh: I mean, you’re a couple years older.

Cory:: Yeah, I’ve got a birthday next week.

Josh: I mean, that’s great.

Cory:: I’ll just say it: I’m going to be 50.

Josh: “I’m 50!” Alright, so you’re 50 years old. You’ve been house hacking since 1998 and I don’t have a problem with that. I wouldn’t do it today because I’ve got lots of little ones running around and, you know.

Cory:: I have two kids, I know where you’re coming from there, but it’s a big house.

Josh: Alright.

Brandon: So you don’t—

Cory:: I mean, everyone has their points.

Josh: I’m not judging you! It’s awesome. I think house hacking rocks and being able to offset your own expenses by having your home be a rental property is fantastic.

Cory:: Now, my wife is now my ex-wife and she never agreed with the house hacking concept.

Josh: You should’ve gone with the rich chick, man.

Cory:: Yeah… I think, guys, listen to the boss because she has to be in on your strategy.

Brandon: Well, and I think that’s a really important point there, right? So a lot of people tell me they want to house hack, they want to do that, but their wife/fiancé/girlfriend/whatever doesn’t want to, they don’t like it.

Josh: Don’t do it.

Brandon: I was thinking that, don’t do it.

Cory:: Don’t do it. Do not do it. I agree.

Josh: Yeah. Hey, Cory:, can we jump back to something you were just talking about?

Cory:: Sure.

Josh: You had talked about never, never wanting to have a house with a basement. Let’s talk about why you would not want to own such a property. Not with a basement, but with a basement rental.

Cory:: No, basement apartment. Yeah. Okay, what I have found is the basement apartment attracts a certain type of tenant.

Josh: Creepy people?

Cory:: Not really—it’s creepy or people that are going through a really tough time in their life. I’ll say it: creepy. They’re cave-dwellers. They’re weird. They’re, like, gamers that stay up all night and drink lots of Mountain Dew, you know, it’s like, “wow, go for it, guys”.

Brandon: Are you making fun of me, Cory:? I don’t—

Cory:: No, but—

Josh: I lived in a basement—

Cory:: As a landlord I’m all about ease of management.

Brandon: Yeah.

Cory:: And I found the basement dwellers, that place—the turnover is nuts. You’re constantly re-renting it.

Brandon: Yup.

Josh: Interesting.

Cory:: Because if you live in a basement you meet a girl, the girl goes, “I’m not dating you, you live in a basement,” so then the guy moves, you know, or vice versa.

Josh: Gotcha.

Cory:: Actually, I’ve never had a girl live in a basement so there you go.

Josh: Interesting.

Brandon: I’ve never—oh, wait! Yes, I have, but they left. Yeah, I have one basement apartment right now. It’s kind of like a daylight basement. It’s the one that Ben Labovich if people remember back I don’t know what episode. Last time we had Ben Labovich on the show.

Cory:: Was that Waldo?

Brandon: Yeah, Waldo, right. So we talked a lot about this property I was buying. It was a triplex, I got it for $70,000. Big, ugly purple thing, and he called it Waldo because it stood out, you know, it was ugly and I don’t know. I have a basement apartment there. Ironically, out of the three units—we need to do another show with Ben at some point and do a year later—

Cory:: Oh, yeah, I love Ben.

Brandon: We need to do a year later on how this property turned out, but it’s great—I still swear it’s a great investment. That said, I’ve had two evictions on that property out of three tenants we’ve had in there and the basement apartment is the only one that hasn’t given me an eviction yet. The other two units—

Josh: Hold on, I’m going to do this just for my buddy Ben, “I told you so,” you know, that’s a type of Russian accent. “This is Ben, I told you so.”

Cory:: Nah, here’s a Ben, “how cool is that?”

Brandon: I love it!

Josh: Oh, Ben.

Cory:: I love Ben.

Brandon: Yeah, so Ben was—

Cory:: By the way, I bought his course.

Brandon: Oh, did you?

Cory:: He can teach an old dog new tricks, yeah.

Brandon: Alright, there ya go. So, okay. Ben said that the basement—he said the exact same thing that basement apartments, because they’re weird, because houses like that attract the wrong type of people, so I will concede that you and him are correct in that. I still don’t regret buying the property, but I do recognize that the people that we’ve attracted have been difficult, and I blame that on the fact that I didn’t rehab it before moving them in. I thought, “well, you know, it’s ugly right now, I’ll paint it in the summertime. We’ll make it look nice in the summertime,” well that was a mistake because the only people we attracted were the people okay with a big, ugly purple thing. Today it looks beautiful. Both tenants are gone, it looks beautiful, we’re getting it re-rented right now, but it’s been a, what? 9-month stabilization process, and that’s what Ben warned me.

Josh: So is this show about you?

Brandon: It is about me.

Josh: Or are we talking Cory: here? I mean, seriously. Alright.

Brandon: People want to know.

Josh: Yeah, yeah, yeah.

Brandon: It’s like a continuing drama, or saga. Anyway, alright, back to you.

Josh: Alright.

Cory:: Okay, so first property ’98 and then it was a grind. It took me probably another 2 years to get the next property. Unfortunately, my wife moved into the next one with me and she was getting a little antsy so I bought a nicer duplex, lived in that one and then from there I just started leap frogging. I would buy, hold, re-fi, cash out and then go into the next one, and my goal at the time was I just wanted 10 duplexes and I’d be set. That was my theory at the time.

Josh: Yeah.

Cory:: Kind of like a John Schwabb, or whoever that guy is.

Brandon: Yeah.

Cory:: You know, buy one house at a time and you get ten homes and I said, “forget homes, I want duplexes,” and I’ve had 20 units within 10 years and that’s how I got started.

Brandon: Did you hit that goal?

Cory:: Yes.

Josh: Gotcha.

Brandon: How many do you have now? How many units total?

Cory:: I’m up to 97 now.

Brandon: Phew! That’s nice.

Josh: Okay, gotcha. So you’re at 97 units. Really quick, a couple things, are you self-managing or do you have a manager?

Cory:: I set up my own management company.

Josh: Okay, so you’re doing that 100% you?

Cory:: Yes.

Brandon: Do you have any employees or anything like that?

Cory:: Yeah, I’ve got, basically I’ve got 1099 part-time employees.

Josh: Gotcha.

Cory:: And they handle everything.

Josh: Okay.

Cory:: I’m like the conductor of the orchestra.

Josh: Got it. So 97 units and you’re working a job as well, correct? It’s not only a job, but it’s your own business, right? So your own business and you’re doing all this so I guess I can’t really complain anymore about me not being able to acquire new units because, you know.

Cory:: Oh, Josh, when you complain about being a business owner—

Josh: Oh, you know what?

Cory:: It just goes right over my head. I’m like, “really, Josh? C’mon”.

Josh: No, but 97 units—

Cory:: Yes, you have to work on Christmas, Josh. I’m sorry, your employees want the day off.

Josh: I know.

Brandon: There you go! See, look at that.

Josh: They get the day off. How about that?

Cory:: Give Brandon a raise.

Brandon: OH, this is a good guy. I like this guy.

Josh: Wow. Wow. Really? Really?

Brandon: You give me your $20 later, Cory:.

Cory:: Hey, perfect.

Josh: Listen, listen, alright. So 97 units is not an insignificant number to be self-managing, acquiring new ones and running a business on the side.

Brandon: Yeah, I want to know how you do it.

Josh: How do you do it?

Brandon: Yeah.

Cory:: In the beginning I was working my tail off. I wouldn’t recommend this to most people, but if you are passionate and you say, “you know what?” cause I’m the type of guy when I do something I’m all in. I used to be a former Airborne Ranger so in the Rangers they taught us you don’t just go into it, you go 110% on anything you do, and so my theory was I’m not going to buy 1 or 2 properties and be happy. If I’m going to do this I’m going to turn it into a steady income stream and I’m going to be set for life and that’s pretty much what I did, but going back to your comment, Josh, I was working 12-13 hours days.

Josh: Yeah.

Cory:: You know, you get off work and throw on grubby clothes and all of a sudden you’re playing landlord and handy man and showing places and you’ve got an old, beat up truck and you’re just working it.

Josh: Yeah.

Cory:: That’s not easy.

Josh: Yeah, for sure.

Brandon: You said you don’t generally recommend that, you know, having to power through like that necessarily; the thing that stands out to me is it shows you were willing to hustle, right? Like, if you want something bad enough you’ll work at it to get it, and I know people from time to time say, “I want to get into real estate, but I don’t want to do this, or that, or whatever”

Cory:: Right.

Brandon: But, you know, “then how bad do you really want it?” Is kind of what I like to tell people. Do you really want it? “I want a rental property, but I don’t want to have to actually do any work and I don’t have any money, and I don’t want to do anything and I don’t want to,” and I’m like, “okay, well something’s gotta give”.

Cory:: I totally agree. You’ve gotta pick your goal and you just have to say, “I’m going to complete it,” and failure’s not an option. That’s the other thing I learned in the Army, you know.

Brandon: Cool.

Josh: Gotcha, gotcha. So power through, hustle—

Cory:: Creative finance.

Josh: Failure’s not an option, creative finance, snowball method. We’ve got a lot of things happening here to get from one place to the next.

Cory:: I’ve had every loan out there, Josh.

Josh: Well, that’s great. I want to hear about it. So you had this first property, the first duplex, you got the first homeowner’s.

Cory:: Okay, that was a contract for deed, the first one. Then, the second one was an FHA first-time homebuyer. I got in for 3.5% down, something ridiculously low, and then I don’t know why I was thinking about this, but for some reason I thought I couldn’t get a VA loan on a duplex and then one day I’m talking to my banker and he goes, “get a VA loan,” so then I bought my primary residence with a VA loan, and the whole time I kept buying more and more properties doing the side hustle.

Josh: Yeah. Well, let’s, I think we’ve talked about VA stuff briefly so maybe we can really glance over it. I know we did a show with James Vermillion and I thought that was a really, really great show. I don’t remember what show number is what, but he—I feel like he was in the Air Force. James is a good guy.

Cory:: I think he was Air Force. Was he New Mexico? Somewhere down in there?

Josh: No, he’s in the south.

Cory:: Okay.

Brandon: Kentucky, I think.

Josh: Yeah.

Brandon: Anyway.

Josh: Anyway. So, VA loans are for Veterans, obviously.

Cory:: Right.

Josh: And maybe, for any Veterans that might be listening, maybe you could kind of give the goods on how a VA loan works and is there any advantage to that as it comes to income real estate?

Cory:: Let me make a little disclaimer: I’m not a mortgage broker, okay? But at the time when I got mine I found out I could buy either a single-family, duplex, triplex or fourplex so if I were to do it all over again I would’ve used a VA loan to buy, let’s say, a fourplex and hack my house. Now, you have to live in the house. It’s like a first-time homebuyer loan, you know, with an FHA; you have to live there, but there’s nothing stopping you from, let’s say you buy a decent single-family and you want to rent it out down the road, you want to leap-frog into a nicer home, you buy that and just because there’s a VA mortgage on it doesn’t mean you can’t rent it out. You just have to live there a couple years and then say, “oh, I’m moving, I’m getting a big house cause I just had two or three kids I need a bigger place”.

Brandon: I think a lot of people don’t realize that is that you don’t have to—when you move out of a property to rent it you don’t have to get a new loan, and it’s probably basic to us, but maybe we don’t say that enough.

Cory:: Exactly.

Josh: Yeah.

Brandon: That just, yeah, people I think are confused by that.

Cory:: Here’s another thing I don’t think people realize about the VA loans: you can use them more than once.

Josh: That was going to be my follow-up question.

Brandon: Yeah, I didn’t know that.

Cory:: Yeah, so I used the VA loan twice to buy two separate properties and to this day one of the duplexes that I moved into still has a VA loan on it.

Josh: Now is a VA loan—do you get close to that 3.5% or how does the VA loan—?

Cory:: Oh my god, it’s ridiculously cheap. It’s almost 0 down including closing costs. Now, you’ll still pay something in closing costs, but the interest rate on the mortgage is wonderful, you know, it’s low.

Josh: Yeah.

Cory:: And it takes, I think my last VA deal was a $200,000 duplex, I probably got into it for $5,000.

Josh: Well, why not? I mean, you have 97 doors, probably, I’m going to guesstimate 30-50 properties, why not use VA loans on all of them?

Cory:: You can only use it once and it has to be your primary residence.

Brandon: Like, once at a time, and then once you sell that loan or refinance it you can get another one, right?

Cory:: No, you have to live there in the property.

Josh: So you live in the property, but then you can move. Can you then acquire the new property with a VA loan saying, “I’m moving into this new property”?

Cory:: You could, and you could keep moving into new properties, but I found the last time I did it my banker said, “hey, I need a letter stating why you’re moving because they’re not going to just let you move with this loan”.

Josh: Okay, so it’s not as simple as it sounds, you know, just getting one after the other.

Cory:: No.

Josh: There’s a process.

Cory:: No, and a good loan officer will tell you how it works.

Josh: Okay.

Cory:: But that was my big “ah-ha!” moment was like, “hey, I can use my VA loan again to get into something at basically almost nothing down, like a Robert Allen deal”.

Josh: Now, can anyone get a VA? I mean, you would need to be a Veteran, presumably, but would you just get it from any mortgage broker or do you have to go to a specialized VA broker of some sort?

Cory:: I would say all of the mortgage brokers can do them. I mean, they have to be approved, but most mortgage brokers can do VA loans.

Josh: Okay.

Cory:: I just went to, like, a big bank and that’s where I got mine.

Josh: I guess, to anyone listening, ask around. Ask if they do VA loans if you’re a Veteran.

Cory:: Right.

Josh: And if they can’t then they can’t and you move onto the next banker and maybe they can help you out.

Cory:: Exactly.

Brandon: Alright, so, I guess now we’re talking about financing. So you’ve done VA, you’ve done FHA, you’ve done owner carry back. How are you financing them today? I mean, with 97 units most people are like, “oh, I have four properties, I’m done,” how did you get over that and what are you doing today to buy properties?

Cory:: Okay, today—well, what happened was because I got that VA right now I have 11 conventional mortgages. So, 10 conventional plus the VA.

Brandon: Okay.

Cory:: So I was shut out of the market and that was probably one of the most frustrating experienced I ever had. So that’s when I said I have to go into multi-family and that’s where I built a relationship with a number of local banks, you know, like, regional banks. I didn’t have to go into a Wal-Mart store like Arthur was. I’d have to find a bank there, but I was able to work my network and they said, “hey, go talk to this guy,” and that’s when I basically telexed the portfolio and said, “I want to go into multi-family as my next level,” and that was kind of like the after 10 duplexes they said, “what’s next?” and I said, “you know what? I like being a landlord, I like this business so I’m going into multi-family next,” so that’s what I did.

Brandon: That’s cool. So when you go to those banks are you typically putting down a 20-25% down payment? Are you raising money for any of that? Is it just your own cash? How do you do it?

Cory:: It’s all my won cash. Once again, I’m pretty conservative. I’ve got to learn how to work a partnership because I’m deathly afraid of partners from watching my father and my other brother in a partnership and that brings up a whole host of issues investing with family yada, yada, yada. I’m not going to go there, but the bottom line is: I think the toughest ship to sail is a partnership. I mean, so I just said, “no partners. I’m just going to do this on my own”.

Basically my favorite deal is this: I put down 10%, the seller carries 20%, and the bank’s only in for 70%.

Brandon: Okay, and that’s worked out? Bank’s usually okay with that? Like, they’ve been fine?

Cory:: You’ve gotta have a good relationship with the bank. You have to have a proven track record, but most banks love it because they’re only at risk for 70%. The seller’s got a note for 20% and I just come up with the 10% through cash flow.

Brandon: Have you had a hard time finding people to agree to the 20% second mortgage?

Cory:: In the multi-family, no. it’s pretty common place that the seller’s going to carry something.

Brandon: Do you mind me asking how big—what’s your largest property? Like, the number of units?

Cory:: My biggest one is a 13-unit.

Brandon: Okay.

Josh: Gotcha.

Cory:: I’ve got a total of, I think, 29 properties?

Josh: Gotcha.

Cory:: I’ve got, like, 6-plexes, 8-plexes, stuff like that.

Josh: Okay. So I was going to ask, you talked about this aversion to partnerships and you’ve got on the show Brandon who is like the King of partnerships who pretty much won’t do a deal unless it’s with a partner so, I mean, I think it’d be kind of fun to hear: why are you so adverse? Hey, maybe we can help you out here. We can all come together and work together, you know?

Cory:: Call me old fashioned: I’m afraid to lose someone’s money. What if the deal goes sour? I don’t want to be the guy who says, “that guy lost me $100,000. He’s an idiot,” you know?

Josh: Yeah.

Cory:: And also because of my other job I have to be really careful. I can’t go talk to other people and say, “hey, give me $100,000. We’re going to go do a 30-unit apartment building”.

Brandon: That makes sense.

Josh: Gotcha.

Brandon: So, I mean, I’m the exact same way. Honestly I wouldn’t use partners probably if I didn’t need to use partners. I mean, it would be much easier if I just always had my own money to be able to do that. So I kind of like the idea of you talking about the 10/20/70 kind of loan and as I get more into multi-families, larger properties, I might look into that more, but I do like the idea of a partnership in that it shares some of the level of responsibility, right? But I have that fear always, like, what if I lose their money? And that’s why I’ll only buy a deal that’s an incredible deal. I’m not going to buy anything that’s even mediocre, but still there’s always that risk. There’s always that risk and I don’t always sleep well because of it.

Cory:: On the flip side I think if you spell out the terms you get someone—let’s go back to the IRA example, okay? I’m not opposed to taking IRA money and using that as a partnership interest. You know, someone’s earning 1 or 2% in their IRA cause it’s stuck in a CD, you know, hey that person could loan you the down stroke, you create a promissory note within the IRA, that’s really easy to manage by the way, that I could see using an IRA for, and you might be helping out a friend or family member that just can’t get a high return on their own so you’re going to help them out. I could see something like that, you know?

Josh: Yeah.

Cory:: I personally can’t do it, but I could see other people doing that.

Josh: So what is your buying criteria then? I mean, let’s kind of go back. You’ve got 20 something plus units and you’ve been financing it various ways other than partnerships, but what are you buying? What makes you—are they all in proximity of one another? Is there a specific number per door that you’re looking for?

Cory:: Oh! I see what you’re saying.

Josh: Are they ugly, beat up units that have low vacancy? High vacancies that you’re looking to turn around? What are you aiming at?

Cory:: Okay, number one: it has to be in what I call my strike zone, or my target zone.

Josh: Which is?

Cory:: It has to be within, basically 5 miles of my house.

Josh and Brandon: Okay.

Cory:: And I’m in a college town so I have a lot of choices when I’m driving to work I can drive down different streets, I can see different properties. So, it has to be in the zone, and then number two: there has to be some kind of distress. It could be the city’s shutting them down cause their rental license is going to expire, they’re a terrible landlord so they have really bad tenants in there, or they’re just a tired landlord and they’re fed up with dealing with tenants, taxes, and toilets.

Brandon: Yup, which I think there are a lot of those.

Cory:: I call them value plays, basically. That’s my classic one is a value play.

Brandon: Yeah. So, you mentioned, well, a couple questions. One: you mentioned a college town. I get that question from time to time on BiggerPockets and other places, they want to know: should I invest in a college town? And I’ve never done it, you know, I’ve got a community college in my area, but that’s it. What are your thoughts on investing in a college town? What are the difficulties? What are the good things? And then, more specific, what do you do? I mean, I know my friends who went to school in Duluth. I wouldn’t rent to them, right? So, how do you handle that?

Josh: It sounds like we’ve got some stories.

Cory:: Hey, Brandon, did you have any friends that were in the TKE Fraternity? The Teeks?

Brandon: I don’t think so. Did they rent your place?

Cory:: I actually own a frat house.

Josh: Oh, nice.

Brandon: Oh, okay. Interesting.

Cory:: So, there’s 9 kids in there, but here’s my general philosophy: I love college towns, I love college kids because they can get loans from the government to pay the rent.

Brandon: AH, interesting.

Cory:: And it’s amazing, don’t get me going on college education, but here’s my deal: I do not like how all these poor kids can go so deep in debt to basically finish off a college education, and I see that with some of these college kids. They’re paying their rent with college loans and some are really frugal and others are just—they got nice cars and they are going nuts.

Josh: See, but I don’t think that’s the worry of the landlords.

Cory:: No, it isn’t.

Josh: I think the worry is the government going to give them the loan to pay for the damages that they caused from the kegs and the parties that they have at the college rental?

Cory:: Well, you can throw overlays on any lease agreement and as long as you enforce it, and they know that you’re going to enforce it – that’s the key, then you’re going to be fine. Because 80% of tenants are awesome, including college kids. It’s the 20% that give you all the trouble.

Josh: So how do you do that? How do you show a college kid, or anybody else, that you’re going to enforce your lease and that you’re not going to put up with BS?

Cory:: I’m basically really firm, and I’m really polite, and if there’s any lease violation—let’s just do something real simple. Let’s say I’ve got a duplex and I see a couch on the porch. I’m going to send them a text and I’m going to say, “hey, there’s a couch on the porch. According to the lease no indoor furniture outside. If you don’t move it I’m going to fine you,” it’s that simple, and if they don’t then I fine them.

Josh: Yeah.

Cory:: So basically you have to be, I don’t want to say I’m heavy-handed, I’m just saying, “look,” I tell these kids, “you’ve got neighbors. Have fun, but no big parties, and if I get calls from the neighbors we’re going to have a talk and if we can’t work it out then I’m going to be calling your parents and then we’ll have a talk and if that doesn’t work out then we’ll be calling the police,” because we have a three-strike and you’re out policy in this town.

Josh: Nice.

Cory:: I guess, college party houses and stuff like that.

Josh: Gotcha.

Brandon: So what about the fact that kids go to college for 9 months out of the year and then they have 3 months off? Do you require one year leases, then? Or do you just have empty summers?

Cory:: Yup. Everyone’s a one-year lease. Everyone has a strict background check, and I treat them like any other person.

Brandon: Do you ever make the parents cosign?

Cory:: What I do is I have a letter guarantee and if the student has terrible credit then I’ll set up a cosign, or if they can’t show proof of income. So a lot of these kids will show me a financial aid award letter and I can basically go off of that.

Josh: Gotcha, interesting. So, I’m just curious, you own a frat house. Presumably that’s considered, that one of the rentals you have, you said there’s 7 kids living in it so do you consider it seven units or whatever it is?

Cory:: No, that’s actually a triplex, but I’ve got 9 kids living there.

Josh: Okay.

Cory:: So they treat it as one residence.

Josh: Gotcha.

Cory:: Because there’s a rule now in this town that City Counsel implemented that said you could have no more than six people in a single-family house if they’re not related.

Brandon: Okay, yeah. That makes sense. Do you look for a certain cash flow amount when you’re buying these properties? Like, do you say, I want $100 per unit or 10% return on investment, what do you look for when buying them?

Cory:: Oh, I see. Every house has to cash flow right from the beginning so typically, you know, in the beginning I was shooting for $200 a month cash flow after all expenses, make sure you get all the expenses in there.

Brandon: Is that per unit, or total?

Cory:: On a duplex I always wanted $200 minimum, and then if I could get higher than would be nice. So, let’s say $100 per door.

Brandon: Yeah, okay.

Cory:: These days I’m a lot pickier and I’m shooting for a lot higher amounts.

Brandon: Smart.

Josh: Gotcha.

Cory:: In the beginning I didn’t know what I was doing so I learned the hard way, put it that way.

Josh: So where are you finding these deals? Are you finding them just driving through towns or are you finding these doing marketing, or do you have an agent who calls you? How do you find the properties that you’re acquiring?

Cory:: You know, I’ve used 10 agents in this town and no one will call me and say, “hey, Cory:, I’ve got a deal for you,” I don’t understand. It’s like, these agents, why won’t you work with me?? So I’ve had to find everything on my own.

Josh: What does that mean?

Cory:: No MLS. In the beginning I used the MLS, now I knock on doors. I go to the courthouse; I look up records. I see a house that I know is a rental and you can tell they’re not taking care of it. I’ll call up the landlord and say, “hey, if you ever consider selling give me a shout,” and then the other thing I do is I mow a lot of my own lawns for exercise. I figure instead of going to the gym I’m going to mow my lawns.

Brandon: Interesting.

Cory:: I probably picked up, maybe, 8 properties just from mowing lawns.

Josh: Talk about that. I mean, listen, I’ve mowed my lawn. I stopped, I’m glad I stopped, that was a happy day, but while mowing I rarely picked up rental properties as a result so tell me about that.

Cory:: I love mowing! I listen to the BiggerPockets podcast, and—

Brandon: Yes!

Josh: That is better than the Bigger podcast cause those guys are real jerk.

Cory:: I got my noise-canceling head phones on, but what I do is it allows me to see the property, make sure my tenants are taken care of, and meet the neighbors and in one scenario I picked up four properties on the same block. I call it pod-vesting: you want to get three properties per block so if you have three properties and you have a maintenance call you can go to all three. If you have a showing you can show them all three various units. So just through mowing I was able to basically create my real estate pods, if you will.

Josh: And that’s just through the relationships of the people in the community.

Cory:: Yup. Meeting the neighbors, or one time, Josh, do you remember the palm-trio?

Josh: The palm-trio? Listen, dude, I’m not like, 50 years old.

Cory:: Okay.

Josh: I know what the palm was.

Cory:: I don’t think Brandon knows.

Brandon: I don’t even know what you’re talking about. I have no idea what you’re talking about.

Josh: Palm Pilot.

Cory:: Yeah.

Brandon: Okay, I have no idea.

Josh: Yeah, it was pretty much the iPhone before the iPhone.

Cory:: Okay, here’s a classic example of this; so, I’m mowing my lawn, I lost my palm pilot. It fell out of my pocket so I get a call the next day because on a palm pilot what happens is it locks out and you can put a message on the screen that says, “if found call this number”. Guy calls me up, he says, “hey, I’ve got your palm pilot,” so I go over to his house and I give him $50 and say, “hey, thanks,” you know, just as a bonus, and we start talking. He goes, “hey, by the way next door that guy’s probably going to sell,” I’m like, “what are you talking about?” it was a beautiful 6-plex so I go, “well, what’s the name of the landlord?” so sure enough all of a sudden I’m talking to the landlord, he wants to sell, and I pick up a 6-unit property on a contract for deed so just by mowing that little yard I probably picked up a couple hundred thousand in equity.

Brandon: That’s awesome.

Cory:: You know, over time.

Brandon: That just goes to my point that I like to make a lot is that you never know where a good deal’s going to be so networking is a lifestyle. Networking is not something you do when you go hand out business cards at some event with a suit on. Networking is everything you do, everywhere you go, who you are.

Cory:: And you’ve got to be open to—it’s almost like I believe in the abundance mentality. So if I’m having a bad day I’ll say to myself, “god I’ve got to give more, what could I do?” you know? And when you’re driving through these neighborhoods… let’s say you’re driving to work. You always take the same route. Don’t do that. Take a different route. Keep your eyes open. Look around. Look at different houses and just go, “huh. That might be a house I should call on”.

Josh: That is a really, really good piece of advice. In over 80 something, we’re 86, so 85 shows I don’t think we’ve heard that, and I love that. That’s a really, really good way to find new neighborhoods, find new opportunities.

Cory:: I have found so many deals by just driving around taking a different route to work.

Josh: Yeah.

Cory:: It’s amazing, you know?

Josh: Awesome.

Brandon: And here’s what I love about multi-family properties, and I think you’ll probably find this as well is: when you’re a multi-family investor it’s a different mindset because you’re dealing with landlords more than you are with home owners which some people think is a negative cause you’re dealing with more sophisticated people, but in these small multi-family spaces, which is what I’m in and what you’re in, I find that it’s very easy to spot the troubled landlords. The ones that are tired, and there’s so many of us, right?

Cory:: Yup.

Brandon: There’s so many landlords that just, hopefully I’m not one of them, but so many suck, right? That are really bad. Every property that I ever bought almost has been a bank repo. Almost every one, or has been in foreclosure, or about to be foreclosed on. They’re all failed landlords. I harp on the all the time. Why do so many landlords fail? It’s cause they don’t do the math right, they don’t do the numbers, they don’t look forward to things, they don’t treat it like a business, for whatever reason people make mistakes, and with small multi-families it’s very, very evident. Those people are usually willing to sell and to be creative in that selling.

Cory:: Exactly. I mean, I met a lady that was—at the time I think she was 85, her name was Myrtle and she sold me her fourplex and I thought, and I was really worried about this, “god, she’s 85 and I don’t know,” so we were having trouble coming up with a price and finally I said, “okay, let’s just have an appraisal done. You have an appraisal done, I’ll have an appraisal done,” and sure enough we came to terms on it and she was the toughest negotiator I ever met in my life. I mean, she was just brutal, but I was so happy I was able to buy that property.

Josh: Nice.

Cory:: You know, she was tired. Her and her husband had it, they bought the property back in 1964.

Josh and Brandon: Wow.

Cory:: Yeah, and I bought it, maybe, 10 years ago? But they were buy and hold investors and they picked up the property, oh, let’s see—I don’t know, $10,000 back in the ‘60s. Beautiful brick fourplex and that took care of them in retirement. They did really well with that property.

Josh: That’s great. Buy and hold, buy and hold. Alright, so you’ve been doing this a long time. You laughed when we talked about college towns. Surely you’ve a couple of fun stories, we’ll keep it brief, what is the craziest thing you ever dealt with with a tenant?

Cory:: Okay, there was a text I received that said, “holy crap, Cory:, there’s a shakedown going on,” and basically—

Josh: Was Tony Soprano there?

Cory:: I pull up to the property and it was my 13-unit multi-family, I had a lot of college kids in there along with some other people that I was trying to get rid of at the time, and the whole property was surrounded. There was a SWAT team, ATF, the local police department, the sheriff, it was just nuts and I found out later on that these tenants I rented to that were from Mongolia actually weren’t from Mongolia and they ended up being some really bad people, and that was before I was doing background checks.

Josh: Gotcha.

Brandon: Whoa.

Cory:: So, that was my worst one. Then I’ve got a funny one where with college tenants you get a lot of drama with roommates.

Josh: Yup.

Cory:: So they’ll call the landlord thinking they can solve it.

Josh: Yup.

Cory:: And in one scenario I had a girl that called me and said, “look, I can’t take it anymore. My roommate is having strange men over, and you have to get rid of her,” and I said, “well, it’s not really a violation of the lease to have friends over,” and she goes, “she’s advertising on Craigslist, and they’re coming over to lick her feet”.

Brandon: What?? Wow.

Cory:: It was like the shoe-fetish tenant and then I found out that lady that complained, this poor college girl that was dealing with this, her dad was a district attorney down in Saint Paul, and so I had to get rid of that tenant right away. I mean, I got the district attorney calling me and I was like, “oh god. This is ugly”.

Brandon: Wow. That’s crazy.

Josh: Wow. Wow. So, Brandon never got busted? You didn’t find out it was him?

Brandon: Okay, so this brings up a good question and then we’ve probably gotta move on, but I want to know about when you rent to people who have multiple, like, college kids in an apartment, right? So, let’s say you rent a 2-bedroom apartment, right? This happens to me because, like I said, I have a community college in my area, we rent to, I don’t know, probably 20% of our people are students. They move in together, two students together, and then they get into a fight or they get into a problem or something happens and one of them wants to move out. How do you handle that when it’s a 2-bedroom apartment that they rented together and now one of them wants to leave? Do you have them resign a new lease?

Cory:: No, I don’t let them move out. I don’t care if the person’s not living there. They signed a legal contract that says they’re going to pay rent for the next 12 months. Now, what I have done to accommodate them if they’re pretty good tenants is I’ll say, “hey, if your roommate will allow it you can basically find a new person, but they have to approve of that person, the roommate that’s staying there,” you know, this person can’t go on Craigslist and bring some creeper in there and so I basically say, “you both signed the lease, work it out,” otherwise in a lot of cases I’ll let the other person move in if they’re acceptable to it, but I had one roommate that said, “no way. I don’t care. They’re gonna pay rent for the next 9 months and I’m going to live here by myself,” and sure enough they did.

Brandon: Do you make them pay like one person in charge of actually writing the check, or do you let them each pay their half or their quarter?

Cory:: No, they each pay separately. I use AppFolio and this other program called PayLease.

Josh: Gotcha

Brandon: Okay. We’ve always made them have one person be the point of contact.

Cory:: Right.

Brandon: And what I’ve found is, it seems anyway, that their friend that they live with is a much bigger motivator than I am in getting them to pay rent. That’s my theory, anyway.

Cory:: I do that with my frat house. The frat house I appoint a housing manager and he has to collect all the rent.

Brandon: Yup.

Josh: Gotcha.

Cory:: But all the other college rentals they can each pay separately if they want.

Josh: Yeah.

Brandon: What do you do, then, if one doesn’t pay? Do you evict one? Do you threaten to evict one of them?

Cory:: Everybody.

Josh: Ooh. There ya go.

Brandon: So you’ll evict the whole entire group? So that’s the motivation.

Cory:: Yup cause they signed the lease.

Josh: That is motivation.

Cory:: Yeah.

Brandon: Interesting, okay.

Josh: Have you had to, I’m assuming you have, enforce that a few times?

Cory:: You know, I’ve only been to court probably three times.

Josh: No kidding?

Cory:: In housing court. It hasn’t been bad. Maybe I got lucky, I don’t know.

Josh: Yeah, well, there you have it. Awesome.

Brandon: Well, the last question I’ve got before we head into the Fire Round is: what mistakes have you made in your investing? What have you done wrong or screwed up on or anything like that you can share that you’d do differently?

Cory:: In the beginning I thought appreciation would bail me out.

Josh: Ooh.

Cory:: Yeah, so I was buying properties that had, let’s say $100 a month, $200 a month in cash flow and then I made all my projections at a 3% growth rate, you know, I wasn’t projecting really high numbers, but being a finance guy I said, “god in ten years these properties are going to double just like they say in the real estate books,” and they didn’t. So I’ve still got three properties that are under water, but fortunately they cash flow.

Brandon and Josh: Yeah.

Josh: Gotcha.

Cory:: I mean, you make all your money, you guys heard this, you make all your money going into the deal.

Josh: Yeah.

Cory:: And real estate is not forgiving if you buy it wrong.

Josh: Yeah, for sure. Well, I’ve got one last question myself, and that’s you’re a guy who manages 97 units by yourself, you have a couple part time guys, and clearly you probably want to go away for vacation for a day, a week, whatever, what do you do? What do you when you’re in the Bahamas and one of your tenants calls and says their apartment is flooded, the roof’s caved in, and, you know, the garage is on fire?

Cory:: I have them do a Skype call and I say, “talk to the hand,” you know? No, I’m just kidding.

Brandon: I was like, “really???”

Josh: Whoa! Wow! Do not rent from this guy.

Cory:: No, I’ve got my maintenance staff, you know? And I just say, I give everybody the number and I say, “look, call this guy if there’s an emergency”. Now, you know, I was in Mexico for a week this year and I was sitting by the pool so periodically, and Josh, you’re a business owner so you know how it goes, you’re going to get a google text or something that says, “what should we do?” but if you’ve got a good team in place, you know, you’re not that important when you think about it. Other people can figure out these problems.

Brandon: Yup. That’s true.

Cory:: So that’s what I do.

Brandon: I always tell Josh he needs to take more vacations. I always encourage that. So, where are you going next?

Josh: Yeah, because when I go away Brandon gets to play.

Brandon: The irony is that every time you’re gone is always the biggest BiggerPockets weekend if you’re gone for the weekend. The more you leave, the better the site does.

Josh: Alright, I’m out of here. Bye! It’s been fun.

Cory:: This is Josh Dorkin, signing off to the Bahamas.

Josh: Yeah, baby!

Brandon: There you go, there you go. Alright.

Josh: Alright. Let’s take this to the next part of the show which is the—

It’s Time for the Fire Round

Brandon: Alright, these questions all come straight from the BiggerPockets forums and we’re going to fire them at you just like you’ve heard on 80 some podcasts.

Cory:: Alright. Here we go.

Brandon: Alright. Number one: how do you find good team members like contracts, agents, etcetera?

Cory:: I tell everybody I know, I don’t care who I run into, that I’m looking for this type of person and hopefully I can get a referral.

Josh: There ya go.

Brandon: Great. Actually, I need to do more of that.

Josh: Line it up and see what happens, yeah.

Cory:: It can be I’m at the dry cleaner and I’ll ask the dry cleaner, “do you know anyone?” and you never know.

Josh: Yeah.

Brandon: Awesome.

Josh: That’s great. Alright. Number two: long term would you rather remain a landlord or flip houses—oh, we’re not going to go there. That is not a Fire Round question.

Cory:: Gee, what’s the answer to that one?

Josh: No, we know Cory: is not a fan of house flipping.

Cory:: Josh, there’s no flippers on the Forbes 400, so let’s get that straight.

Josh: Oh, man. So when all the flippers come pile in and beat Cory: up on the show notes just be nice a little bit.

Cory:: Isn’t Warren Buffet on that list? Huh…

Josh: Alright. Let me get to my question, stop it!

Cory:: Okay.

Josh: Alright. Long term would you rather remain a landlord or switch to 100% passive income via master leasing, note investing, some other type of passive “real estate investing”. I mean, listen, I call true real estate investing what you’re doing. Everything else I still consider real estate investing, but unless you physically own property it’s kind of an entity within the realm, right?

Cory:: You know, and someone pointed this out on the forum, you know, one of the flippers said, “look, being a buy and hold is not passive,” and I totally agree. It’s a lot easier now than it was before, but that’s something I’m wrestling with. The most successful investors I know have kept all their properties, but put in a management team or what do I do? Maybe I’ll 1031 exchange and go into some giant apartment buildings and just be a limited partner with a lead passive investor.

Josh: Yeah, so it’s something that you would consider, I mean—

Cory:: I would consider it.

Josh: At a certain point you get to, like, oh, okay this a lot let me pair down—

Cory:: Right.

Josh: Okay. Right on.

Brandon: Cool, cool. Alright. What is your greatest technological aid in terms of your investment company? Like, an app, or software or anything, like, what do you use technology for in your business the most?

Cory:: I would say my property management software. So I currently use AppFolio and I used to use RentManager, but I could not manage 97 units without a professional property management program. It’d be impossible.

Brandon: That’s something I need to get still.

Cory:: Yeah.

Josh: Nice. Final question: do you think holding a single-family is better, or multi-family? Clearly you’ve been buying multis, but I guess, why? Why not just buy a bunch of houses?

Cory:: It really depends on your goals and objectives. Bottom line is: multi-family I can create value. Single-family I can only create value one way and there’s a limit because of sales comps. Multi-family I can go in and, you know, Ben Labovich talks about this, you can increase the rents, lower the expenses, put in better tenants, voila! You make $100,000 in instant equity.

Josh: And you’re talking about 5+ units, you’re not talking about 4 and under.

Cory:: No, 5+. That’s my only focus now. I don’t want any single-family anymore.

Brandon: Do you buy duplexes still?

Cory:: No.

Josh: Well, cause you can’t change valuation based on—

Cory:: You can’t, and that’s the thing. Even up to a fourplex, those darn fourplexes are still based on sales comps.

Brandon and Josh: Yup.

Brandon: I agree, cool.

Josh: There ya go, awesome.

Brandon: Alright, let’s move on to the last segment of the show, everyone’s favorite, which we call the—

Famous Four

Brandon: Alright, Famous Four, first question:

Cory:: I won’t tell you about my day job.

Brandon: What is your favorite real estate book?

Cory:: I’m really having trouble with that one and so I’m going to say the Gary Keller one. The Millionaire Real Estate Investor.

Josh: Good book.

Brandon: Nice. Cool.

Josh: Right on. What about your favorite business book?

Cory:: Alright, favorite business book would have to be, and this is kind of a weird one, but it’s Warren Buffet Berkshire Hathaway. You go to the website, and I’ve read all of their shareholder letters.

Brandon: Really?

Cory:: And you’ll get an MBA in finance if you just read the shareholder letters going all the way back to the start of the partnership in the 1960s.

Josh: Nice.

Cory:: It’s just a walk through finance. It’s amazing, and that guy is spot on.

Josh: Yeah, I’ve had a lot of people tell me the same thing.

Cory:: And then The Snowball, that’s a good book. I’ve got that book right here, my girlfriend got it for me. I’ve got the best girlfriend in the world, she got me this book.

Brandon: Aw, cute.

Josh: Nice. Aw. Alright, hobbies? Besides hanging out with your super cute girlfriend.

Cory:: Oh, hobbies. I’ve got two just crazy kids, they’re so fun. 13 and 11.

Josh: Nice.

Cory:: And then we do paddle boarding, I’m a skateboarding so I still longboard.

Josh: You’re skateboarding at 50. You’re that guy.

Cory:: I love skateboarding. I was a skate punk in high school, but I wouldn’t wreck property like they do now.

Josh: Right, right. So they had skate parks in the 60s huh? 50s? 40s?

Cory:: Try the 80s buddy. I had a Bonsai board, you know what the Bonsai was?

Josh: Yeah, I think I had one too.

Cory:: It was made out of aluminum. That thing had razor-sharp edges.

Josh: Oh, I didn’t have that, no.

Cory:: Yeah, we used to get in skateboard fights with those.

Josh: Awesome.

Brandon: Alright, that’s awesome. Alright, my final question for the day is: what do you believe sets apart successful real estate investors from those who give up or fail or never get started?

Cory:: A good life. What I mean by that is: what gets in the way of a great life? A good life. I saw that one day and I was like, “god, that makes so much sense,” you’re happy, you’re content, you’ve got an OK job, why take on risk? But if you want a great life don’t let the good life get in the way. Go out there and do something.

Josh: Ah, very fancy, very fancy. Awesome, man. Awesome.

Cory:: I’m Tom Voo. You know who Tom Voo is?

Brandon: No.

Josh: No, don’t go there. Alright, Cory, it has been a pleasure. Where can people find out more about you, or find you around online or anything like that?

Cory:: Just use BiggerPockets.

Josh: Okay, right on.

Cory:: That’s the best way.

Josh: And of course you’ll be around on the show notes at BiggerPockets.com/show86 to answer any questions.

Cory:: You know it!

Josh: We definitely appreciate you coming on board, thank you so much! Good luck to you as you continue to expand your entire empire of rental property, and frat houses, and whatever else it is you decide to pick up next!

Cory:: One frat house is enough.

Josh: Alright.

Cory:: Never again.

Josh: Alright. Cool, man. Well, thanks so much. We’ll see you around.

Cory:: Alright, thanks guys!

Brandon: Alright, thank you, Cory.

Josh: Alright everybody! That was show 86 of the BiggerPockets podcast with Cory Binsfield. Big thanks to Cory for coming on the show. We really, really do appreciate it. Always something to learn on the show. What do you think, Brandon? I mean, 86 shows and there hasn’t been one where I haven’t walked away saying, “wow, okay. I picked something up”.

Brandon: I agree. Especially today because I am a multi-family investor. I love small multis, I love getting into larger ones and yeah, I think it’s great. Cory> is a bright guy.

Josh: Yeah, for sure. Cool. Well, guys, listen, we hope you enjoyed it. We hope you enjoy all our shows and if you haven’t listened to any of the previous 85, or even selected previous shows, make sure to jump in and check them out. Also, if you are a listener and you have not yet left us a rating or review on iTunes we would really, really appreciate it. We’re getting close to 900 now with 30,000 plus listeners per show surely there’s 29,000 of you who can stop by and leave us a review, an honest review, some kind of feedback. Let us know, let other people who might be willing to check out the show know, what it’s all about and that would be awesome. Thank you very much in advance for those of you who decide to do that.

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