BiggerPockets Podcast 127: How to Use a Partnership to Acquire (and Manage) 100+ Units with James Wise

by | BiggerPockets.com

As you grow your real estate business, a partner can help you achieve incredible levels. That’s why today on the BiggerPockets Podcast we sit down with James Wise to talk about how he used a partnership to build his own investment portfolio, as well as build a thriving brokerage and property management business. In this interview, you’ll learn how James finds and screens tenants, uses BiggerPockets to raise money, and much more.

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In This Episode We Cover:

BiggerPockets-Podcast-Cover 300 300

  • How James got started with real estate
  • How he (unknowingly) house hacked his first property
  • How he moved on to his next deals
  • Tips on finding a business partner
  • Learning the hard way through trial and error
  • How James screens tenants now (and the mistakes he used to make!)
  • Valuable tips on finding partners
  • How he’s using BiggerPockets to grow his business
  • His take on starting a brokerage or real estate management company
  • Tips for real estate agents working with an investor
  • Where to get the cash to actually live while investing in real estate
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “You’re always going to have vacancies. It’s part of the business.” (Tweet This!)

Connect with James

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 1500,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!

38 Comments

  1. Darren Sager

    Yeah James is definitely part of the welcome committee here on BP! Fun Podcast guys! Great story James. It’s inspiring to hear about the success you’ve had. Just goes to show you that all those hours you’re putting in are producing results. Can’t imagine the cash flow you’ll have 20 years from now!

    And Josh’s recommendation about Draft Day is spot on. Great movie!

  2. Juan Cristales

    Excellent Podcast guys! James, you called me out on my “feeble” BP Profile… no picture… no posting… lackluster profile… I’ll get that corrected immediately. I’m always in awe of the BP guests and their success. ALL of YOU have certainly achieved a great deal of it thus far and I wish you CONTINUOUS “3-pointers,” in Game 6 vs. Cleveland, when you’re up 3 games to 2, for the championship! …too soon? too soon? Ok, seriously… On tenant screening: I’ve met people that have rented out their property on a handshake and I simply CRINGE at the thought of doing that now… but I have to admit, there was a time back when I too thought, “well, he seems like a real honest and nice dude.” WRONG! SCREEN THEM TENANTS!

    • James Wise

      Glad you enjoyed it Jaun. Glad to see your going to get that mug of yours on your BP profile!

      Back when I started I had no idea how to even go about doing a credit screen on tenants. It’s great that other new investors can come to sites like this and learn from the mistakes of others before making any costly mistakes of their own.

      P.S.
      I predict that the Cleveland Cavaliers will win it all next year.

  3. Kevin Elwood

    I have to admit, I have been here for awhile without a profile picture until hearing you talk about that. Mid podcast I posted my mug from my LinkedIn.

    On the other hand…..I am a disappointed Lakers fan! <–Almost shameful to admit these days.

  4. Peter Mckernan

    Hey James,

    I have made two deals, working on finding my first flip, and grabbed my real estate license last year. Also, I formed an LLC with two partners for the flips that we will be performing and formed an S-Corp for a property management company that I have started from scratch.

    The property management company is for myself to produce cash flow once I step away from my W-2 job, and the flips are for the increased capital for reinvestment to other deals.

    It’s been a great experience getting into the mindset of looking for deals and knowing what is good and what is bad. I want to that you again for welcoming me to the site!

    Keep up the great work!

    Peter

  5. suzy pierchala

    Excellent podcast. James was one of the first investors to reach out to me as a newbie. He even sent me a detailed map of the city of Cleveland’s market cap rates. I was reminded from his podcast of this massive tool in my hands called Bigger Pockets. Looking forward to more from James!

  6. mike williams

    Great podcast as always guys. One thought about the reasons a real estate agent would want to develop that relationship with investors – the buy and hold guys do buy more often than traditional primary residence buyers, but quite a few investors want to flip it, at which point you get paid the higher, retail-priced commission as well. I love my investor clients, they buy often, flip some, keep some, and there is money to be made several ways with those guys…eventually, they will want you to partner with them too if you are a talented agent that understands the numbers.

    • James Wise

      Mike, exactly my thoughts on everything as well.

      In the podcast I mentioned that we own about 100 rental units. We also manage another 150ish rental units for other investors. Some of those properties that we own are owned in a partnership with people who are also our property management clients.

      After you help an investor buy several properties and act as their boots on the ground that trust really builds up and you can start doing joint ventures together.

  7. Mark Redmann

    Great content. I’m just starting out and feel like everything I do, I have done wrong! Just got to keep at it though. A lot of the podcast hit on things that I am or will be going through. Thanks for taking the time to record your podcast!

  8. raven dorminey

    Thanks for sharing your story and experience, James! I like how you jumped in and focused on one aspect and mastered it.
    I also have made the same mistakes and lucked out on them. Lessons learned. I let 2 brothers rent from me because ‘I liked them’ but quickly found they hated each other and I was left with the lazy one! Too Much Drama!
    SInce I got strict I have had no problems. It’s business. And I am glad I figured it out without a huge expense.

    Can’t wait to see more of your posts!
    Raven

  9. Stephanie Dobbs

    Excellent podcast! As far as vacancy rates, area vacancy rates are stated on city-data.com and census.gov. Census.gov states housing vacancies for rentals and home ownership. Such information can also be found on some county sites (through digging, depending upon how user friendly the county website is). July 8th, census.gov is hosting a webinar, which will show how to use the under construction and housing data that they provide.

    • James Wise

      Stephanie,

      Thanks for listening and providing all of that information on vacancy rate.
      Investors should note that I don’t know how reliable the information they are pulling from those sites is going to be. The reason I have my doubts about those sites being able to accurately provide that date is my company is running a portfolio of 250 or so units. When we have units go empty we are not reporting that date to anyone. So I don’t see how a site would be able to create an accurate number for an entire city.

  10. Stephanie Dobbs

    Mr. Wise,

    I understand what you mean. The omission of 250 units can greatly impact the reality of vacancy in an area! All the best to you in your endeavors! I look forward to building my portfolio to house as many units (and more), so thanks for the great information to help me get there.

  11. Doug Markworth

    I found BP a few weeks ago through the podcasts and recently joined. As I listen to many BP podcasts each week while driving I can honestly say this was a very good one with tons of helpful information. I am now telling lots of people about BP and this is one of the podcast I tell them not to miss Well done!

  12. Randy Campbell Sr

    Just listened to the podcast and was very impressed. James truly had some great advice. Being from Cleveland (Go Browns), I could relate to a lot of what he said. I learned that I househacked my first property back in 94. Also didn’t really think about not renting to people who were evicted some years ago, but will not do that. I’m just getting into investing and was going back and forth about a 4 suite apartment that is being sold by the owner. The owner said that all units are full, which I thought was good until I listened to this podcast. Now I’m thinking what a headache it might be to deal with 4 tenants somebody else put in. Thanks for the great advice. I also will be looking to use your companies services possibly.

  13. Braden Hobbs

    James, re-listening to the podcast and had a question for you. How did you structure your partnerships with investors providing the capital for the deals you and your main business partner were buying? Did you just pay interest on the loan until you could pay the capital back? Or did you give them profit share?

  14. Eli N.

    Thanks @James Wise, I enjoyed your podcast, thanks for sharing with all of us and very informative! James, I wanted to ask you for your thoughts, hopefully that will benefit everyone reading!
    ?
    1) Do you prefer a blended portfolio (Dup’s, Quad’s, Apt. Complexes), if you had a chance to start over, or would you stick to one, and why?

    2) How do you usually structure your partnerships for acquisitions? Would be in this order: Identify a party to work with, agree on common terms and varying %’s based on who will be doing what/how much work, create an LLC and then purchase? Can you please share a blog or two where you share a few interesting JV structures?

    3) ‘How’ do you find a person who can be your boots on the ground wisely as you expand your radius to allow you to scale and prevent you from “having to be there right there and then” if anything were to happen (instead of continuous trial and error)? In summary, how would you manage your properties from a distance if you still wanted to manage your properties – as I remember hearing that you like to manage your own?

    4) How did you personally streamline your work to manage and scale? Interested in your own growth strategy and steps that you followed.

    5) Do you see a lot of law suits come your way owning these many units? I heard it’s a matter of time as you grow?

    Thanks and looking forward to your reply!
    ?- Eli

    • James Wise

      Great questions Eli. Q & A Below.

      1) Do you prefer a blended portfolio (Dup’s, Quad’s, Apt. Complexes), if you had a chance to start over, or would you stick to one, and why?

      I prefer larger buildings. Specifically mixed us with retail & apartments. The reason why that is my favorite is that the retail provides tons of additional exposure for Holton-Wise and also incredibly low maintenance long term tenants. The apartments ensure it’s always occupied even during long vacancy periods between retail tenants.

      As for small properties I think those are great to get started with. Nothing beats the 30 year loan but you will be limited to 10 of those loans attached to your name and you can’t get those 30 year loans in an LLC.

      2) How do you usually structure your partnerships for acquisitions? Would be in this order: Identify a party to work with, agree on common terms and varying %’s based on who will be doing what/how much work, create an LLC and then purchase? Can you please share a blog or two where you share a few interesting JV structures?

      Take a look at these. They should answer several of your questions & remember EVERYONE MUST BRING VALUE TO THE TABLE! There are no free lunches.

      https://www.biggerpockets.com/blogs/4704/41582-a-biggerpockets-635-000-joint-venture

      https://www.biggerpockets.com/blogs/4704/39719-creative-re-financing-625-00000-biggerpockets-jv

      https://www.biggerpockets.com/blogs/4704/43735-another-j-v-between-a-bp-member-and-the-holton-wise-property-group

      3) ‘How’ do you find a person who can be your boots on the ground wisely as you expand your radius to allow you to scale and prevent you from “having to be there right there and then” if anything were to happen (instead of continuous trial and error)? In summary, how would you manage your properties from a distance if you still wanted to manage your properties – as I remember hearing that you like to manage your own?

      Our company is 60+ employees strong. When this podcast aired we were much smaller but I am still here on the ground and don’t plan on going anywhere. You see nothing runs on auto pilot. Even with 60+ trusted employees there still needs to be a manager. Maybe as things progress and people are groomed the guy in charge can step away but there always needs to be a responsible party. If you are looking to invest out of state what you’ll want to do is hire a company like mine where there is someone local in charge. To attempt to build your company from afar is impractical.

      4) How did you personally streamline your work to manage and scale? Interested in your own growth strategy and steps that you followed.

      There is no secret sauce. You need to work harder, longer & smarter then everyone else. Real Estate is not as sexy as people make it out to be. If you consistently grind it out day in and day it things will eventually start to pay off then they will begin to snow ball as you gain momentum. You just can’t take the foot off the gas pedal when that happens.

      5) Do you see a lot of law suits come your way owning these many units? I heard it’s a matter of time as you grow?

      Not particularly. The most common lawsuit we face is tenants challenging their security deposit refund. That happens on a monthly basis. It used to not happen as much but the Cleveland housing court went through some recent personnel changes which has led to a much more left leaning process. Time will tell how long this left lean will last.

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