Richard

Bill Rudin, Rudin Management Co. co-chairman and CEO, joins ‘Squawk Box’ to discuss Rudin’s concerns with the regional bank sector, the state of commercial real estate and how to balance the need for revenue and desire to attract wealthy people.

By Ashley Sharp, executive director at Dwell with Dignity.

Being a mom is hard. Having a job is hard. When you put those two things together, what do you get? One of the hardest jobs in the entire world. As a working mom myself, I can attest that the challenges we face are plentiful.

They can range from feelings of guilt to the struggle to achieve an effective work-life balance, the pressure of societal expectations and stereotypes, and the impact on one’s mental and physical health.

Let’s delve into these difficulties and discuss how best to navigate them. You’ve got this, girl.

The Worst Kind Of Trip

Let’s start with the obvious one: the never-ending guilt trip.

No matter how much we achieve at work or how much love and care we pour into our families, there’s always that nagging voice in our head that tells us we’re not doing enough. It’s like we’re running a constant marathon, trying to catch up with the expectations of the world around us.

And the sad part is that, in my experience, these expectations are often self-imposed.

So, my advice: Cut yourself some slack, sister. You’re doing the best you can at work and home, and that’s what truly matters. One thing I’ve started doing is writing in my journal daily and listing out my personal and professional accomplishments.

Ran a successful meeting and energized my team: check. Got all my kids to school on time: check.

The Balancing Act

As a working mom, I struggle to balance work and home life.

On the one hand, you want to give your best at work and climb the corporate ladder. On the other hand, you want to be there for your kids, be the best mom you can be and give your partner the support they need. It’s a delicate dance, and it’s not uncommon to feel like you’re failing at one aspect or the other.

The reality is that there’s no such thing as a perfect balance. It’s all about finding what works for your family and your business and making compromises when needed.

There will be some weeks where you feel like you’re failing left and right at work. There will be other weeks when you feel like nothing you do as a mom is right.

Instead of getting stressed out over not being perfect (nobody is), focus on what you did well and congratulate yourself. If you land a new client, treat yourself to your favorite dessert. If you finish potty training your child, reward yourself with a relaxing night out.

Walking The Line

Now, let’s talk about the stereotypes and the double standards. As working moms, we often face criticism from all sides.

Some people assume that we’re neglecting our children or that we’re not committed to our careers. They may perceive us as being too aggressive or too soft.

It’s a no-win situation, and it can be tough to navigate. But you know what they say: “What other people think of you is none of your business.”

Do what’s best for you, your family and your business. Don’t let the whispers of others deter you from achieving your goals.

Making Time For Yourself

Finally, let’s not forget the impact these challenges can have on our mental and physical health. The stress and the constant hustle can take a toll on us, leaving us feeling exhausted and burned out.

It’s important that we take care of ourselves. Do what you need to recharge your batteries, whether it’s having a night where you watch movies and eat ice cream or taking time for a quiet coffee break in between meetings.

Not only can taking a break help to improve your well-being, but it can also make you a better employee, leader and mom.

Letting Your Strength Shine Through

Being a working mom is not for the faint of heart. But, let me tell you: It can also be one of the most rewarding experiences you’ll ever have. It’s a journey filled with challenges and triumphs, and it’s a testament to the strength and determination of women everywhere.

So hold your head up high, stay positive and don’t be afraid to ask for help at work or at home when you need it. We’ve got this, ladies.

This article is presented by New Western. Read our editorial guidelines for more information.

Let’s face it. It would be tough to become a local expert in every market where you are interested in buying an investment property. It takes a great deal of time and effort to become an expert in your own neighborhood. 

You need to build relationships with contractors and real estate agents and learn about zoning, permitting, city ordinances, development rules, and short-term rental regulations– this is all in addition to constantly staying up to date on what homes are selling for in your neighborhoods.

It’s time well spent on your business. And investors looking to expand and grow their fix-and-flip or buy-and-hold rental business eventually realize that building a team becomes crucial for sustainable growth. And sanity, of course. 

Hiring a CPA, real estate attorney, and virtual assistant are pretty straightforward additions to help you organize and operate your business.   

But there are seven crucial relationships you need to develop to truly become a local market expert. How they can help you, however, might not be obvious.

City and County officials

Why do you need to know city and county employees who just pass laws, require permits and lengthen timelines? 

Those city and county officials live in the community and care enough about their city or county to participate in the management and growth of that community. They also look out for their neighbors. They are not the evil, unseen “man behind the curtain” pounding a gavel and finding pure joy in crushing your investment goals. 

City and county officials know everything about zoning, ordinances, and development. Before you consider investing, city and county officials can let you know if you are even allowed to do that type of project and, even better, how you can do it. Imagine how much time and money you could save if you knew that the zoning and regulations don’t allow short-term rentals, that city water isn’t available, or that the property next to your cute little rental home was just zoned for commercial use and a Walmart is being built. 

Lenders

Why do you need to build a relationship with a lender? Will they give you more money if you do? 

Not likely. But the more types of lenders you do business with will allow you to do more business in general. Your lender doesn’t have to be a big national bank. Local banks and credit unions loan money in their communities and often can get creative with their loan options and offer better rates than big banks. They also know land owners, business owners, and people in the community who are looking to buy and sell their homes or may be headed to foreclosure.  

You’ll find out about more deals when you work with multiple lending partners, especially if you start using creative financing strategies. When you work with private money lenders, transactional lenders, and syndicates who pool money together, you open yourself up to more opportunities. You can build a partnership, gain equity in a project, take on a piece of an investment property, and grow your portfolio and reputation.

Real Estate Agents

Why would you need to spend time developing a relationship with a real estate agent?

Not all real estate agents work with investors. In fact, even if they’ve worked with investors, that doesn’t mean they have enough knowledge to support your business strategy. You need a real estate agent that only works with investors and is an expert in the market you are looking to purchase in.

Not only do investor-focused agents know home values and have access to the MLS–but they also have specialized local data, know how to calculate after-repair value, have access to off-market properties, and have relationships with everyone. A real estate agent might be the most important relationship to have in a local market because they are constantly transacting and working with every type of vendor you could possibly need, from contractors to attorneys, title companies, lenders, and of course, buyers and sellers.      

Title Companies

Why do you need a relationship with a local title company when title companies basically do the exact same thing in every city? 

Not all title insurance companies are created equal. On the surface, it might look like title companies provide the same services. They are a neutral third party that researches and insures the title on a property and helps facilitate the closing process between buyers and sellers. 

But, not all title companies work with investors or have experience closing on investment properties where buyers and sellers have multiple strategies. A traditional home transaction usually involves one buyer, one seller, and one lender with standard escrow instructions. Investors often deal with properties that have complicated title issues, not to mention they also have partners, business entities, creative financing, double closes, varying inspection periods, and specific escrow instructions. The documents and amendments involved in an investor transaction can get very detailed, and every deal is different. 

You can build relationships with multiple title companies that know how to work with investors and grow your business with them. In fact, they will even call you when they need a reliable investor to get a deal done rather than letting it fall apart and missing out on their fee. 

Surveyors

Why do you need a relationship with a surveyor at all? Aren’t they just licensed, neutral third-party vendors who cost a lot of money? 

Yes, surveyors are licensed and regulated, and the documentation they create on a property is filed, recorded, and becomes a living legal document. That document protects your investment whether you are buying or selling because a current survey will represent boundary lines, improvements, utilities, easements, and right-of-ways. It is the legal road map of a property. 

Surveyors also know people. They know property owners, neighbors, real estate agents and have personal relationships with city and county employees and officials. They also know the zoning and ordinance laws and what’s happening with the city council and local development projects. They know the history of a city and county and also where that city and county are headed when it comes to highways, new businesses, and planned communities.  

Wholesalers

Why would you want a connection with an unlicensed wholesaler who never actually owns the property he is selling? 

A better way to define wholesaling is that it’s an investment strategy, not just a person’s profession. Wholesaling a deal is just one way to approach buying and selling real estate. And wholesale investors can’t take on every deal they come across and often have deals to pass on to other investors. 

And one step further—the investors, real estate agents, business owners, or entrepreneurs who wholesale will also have a deal to sell, are looking to buy, partner, recommend vendors, and contractors. When you do business and build relationships with people who wholesale as a career or as a strategy, you can do more business and get better deals just by helping each other out.    

Other Investors

Why would you ever need to be friends or business associates of your direct competitors? 

Other investors are your competition and could snag your deals and steal your contractors. That’s one way of looking at it but also extremely short-sighted. Investors who come together have more resources. A newer investor could partner with an experienced investor to gain knowledge, and that experienced investor could gain equity or profit in the deal. Some experienced investors are exiting the market and need to offload properties. Rather than pass on a property, an investor could give that deal to another investor. One investor may be looking to park cash in a project, while another is looking for funding. The greatest network you could build is one with like-minded professionals who can help each other achieve larger goals and ultimately get to financial independence faster.  

This article is presented by New Western

New Western makes it easy to buy an investment property.

As the largest private source of investment properties in the nation, New Western buys a home every 13 minutes for our marketplace of more than 150,000 investors looking to rehab houses. Investors have access to a large volume of inventory and to our licensed agents who are local experts in over 50 markets across the country.

Join our marketplace for free.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

By Nathan Beckord

Sometimes a company comes along with an idea that seems so obvious in hindsight (Oh, of course—that makes sense!) that it’s almost surprising to learn its product hasn’t been the industry standard for years. Product management platform Productboard is one of those companies.

After raising more than $260 million with a total valuation of $1.725 billion, it’s clear that investors see Productboard’s value. But that wasn’t always the case. Cofounder Hubert Palan tells me that early on, he made the mistake of pitching investors who just didn’t “get it.”

He spent quite a bit of time trying to persuade VCs with no product background that there was a market for a platform similar to Jira or Salesforce designed specifically for product managers. Platforms like Jira are essential to the task management process of developing apps and web features, like coding, testing, and other aspects of engineering delivery.

“But product management is not project management,” says Hubert. “It is about understanding who the customers are and the pain points they have.”

Before Productboard, there was no end-to-end platform for the entire product management lifecycle. Product teams often relied on a patchwork of spreadsheets and workarounds to incorporate things like customer, design, and manager feedback into their processes. A better product management system assures that startups can “de-risk the whole delivery process,” Hubert adds. “And end up building the right things … not waste years of our lives building stuff that nobody needs.”

Rest assured, that’s not Productboard. Here Hubert shares his top tips for raising capital, whether or not you’re the next startup unicorn.

How to raise capital for your startup

1. When raising capital, know what you really need

Productboard wasn’t an overnight success. Hubert and his cofounder, Daniel Hejl, founded the company in 2014, but didn’t debut the platform until TechCrunch’s Disrupt Startup Battlefield in September 2016.

And the road to unicorn status is paved with quite a few rounds of fundraising. Most founders I speak to haven’t gotten quite as far as a Series D—or raised $260 million. “It is a big number,” says Hubert. “But for me, the absolute number is almost irrelevant, because it’s like, What is the opportunity?”

The opportunity, of course, is massive. The product management space is broad and Productboard is quickly becoming essential to companies large and small, especially those with distributed teams. That’s why Silicon Valley was very interested once Hubert and Daniel found VCs who understood Productboard’s value: Dragoneer Investment Group and Tiger Global led the Series D, while previous rounds included funding from Bessemer Venture Partners, Sequoia Capital, Kleiner Perkins, Index Ventures, and Credo Ventures.

Hubert says that whether you’re raising a Series A or D, the basic concepts of fundraising are the same. You should ask yourself questions about what you really need: Mostly cash? A great board member with experience in a specific market or a specific skill set? Someone who can help you attract the best talent to build out your team?

“Optimize for your goals,” he says. “Clearly spell it out.”

By the time Hubert and Daniel raised the Series D last year, Productboard needed capital that would allow the company to scale. It had already grown to about 400 employees (there are 500+ today) serving more than 6,000 customers, including household names like Disney and Volkswagen, big startups like Zoom, legacy institutions like JPMorgan Chase and “many, many small customers.”

2. #IYKYK: Find investors who understand your value

Before Productboard became the hottest tech startup in Silicon Valley (as well as the Czech Republic, where Hubert and Daniel built their initial engineering team), it found a champion in Ilya Fushman, a former partner at Index Ventures and former head of product at Dropbox.

Ilya was one of the first VCs who, because he shared a background as a product manager, “understood the pain point,” Hubert recalls. “I didn’t have to explain to him what product management was about. Zero time spent on that—it was much more about like, How are you going to solve it? What proof points do you have?”

With Ilya’s support, Index Ventures co-led Productboard’s $1.3 million 2016 seed round (with Credo Ventures and participation from Spread Capital).

Lesson learned? Don’t waste time trying to educate investors who don’t understand the problem your startup solves. “There are people who invest in the space who understand the problem. Find those people,” Hubert says. “You want to go the easiest route, the fastest route.”

That’s why it’s critical to research and identify your ideal investors. Hubert took a “segmentation” approach to this step, creating a spreadsheet that listed the characteristics of each firm, its partners, its reputation, and even its logo. He noted whether a firm or VC had previously invested in a similar space. But he cautions founders to beware of anyone who might have invested in a competitor. Reputable investors will quickly exclude themselves from making a deal that represents a conflict of interest.

More articles from AllBusiness.com:

3. Gather momentum among venture capital investors

When raising later rounds, Hubert asked his investor, senior advisors and mentors to review that spreadsheet with him. He asked them to rank those firms, so to speak, based on how well they knew them, whether they had partnered with them before, and how good of a fit they were for Productboard.

“Later on, I had some inbound interest because we were known already,” Hubert says. But before he started getting approached, Hubert asked his network—professors at the University of California, Berkeley, where he earned his MBA, and friends in the industry—for introductions. He often wouldn’t provide any digital information prior to initial conversations with investors: “I would just show up and talk to them about what we do, without any deck . . . just paint the vision.” That allowed him to gauge interest and compatibility without spending time on a formal pitch.

Each round became easier and easier. After Kleiner Perkins led Productboard’s Series A investment in 2018, the startup became a known entity in the VC community. Sequoia and Bessemer agreed to share its Series B round after fundraising became what Hubert tactfully calls a “very competitive situation.” Representatives from a team of interested investors “showed up in our hallway and said, ‘We’re not leaving until you sign our term sheet.’ They literally did leave for the night, but they were there back again at 6 a.m. the next day.”

(Readers: If you walked into the offices of a venture fund and told them you wouldn’t leave until you got a term sheet, you’d probably get arrested. But I guess it’s cute when VCs do it.)

4. Build a dream team—and steer clear of the jerks

A startup is only as strong as its team, and Hubert emphasizes the importance of hiring great people.

“Take time to back channel people and learn about who they are,” he says. He recommends asking investors to introduce you to potential team members in addition to fellow VCs. They might provide an intro to someone who has “been through a rough patch” that proved their mettle, or even people from a company that went bankrupt—“investments that didn’t work out,” Hubert adds. “The best investors will happily introduce you.”

They might even be a CEO who was fired by the investor, he notes.

“But was it for the right reasons? Was the investor reasonable and empathetic about the situation? The job of the investors is to protect the investments and do the best thing for the company, which might be to fire the CEO or founder . . . But if you’re being militant, unfriendly, an ignorant, no-empathy type of person . . . that tells you something,” he says.

“And I did find people like that even amongst the top firms, I did dig out stories and was like, ‘Well, I really don’t want to work with that person,” he adds.

Basically, investors are people too, with interpersonal disagreements and opinions you might disagree with. “Your ability to sort out these differences and opinions is critical,” says Hubert, who advises founders to choose their partners wisely—and work to nurture those relationships.

“Sometimes people raise the money and then they see the investors once during the board meetings,” he says.

Hubert recommends instead, “Get to a texting basis. Involve them even in things [even if] you don’t really need the input . . . just bringing them there with the intention to build the relationship. Especially now in this crazy, ‘distributed’ world—how much time are you actually spending together? You need to engineer it. But it pays off. Because then when things get tough, when you really need deep advice . . . you know them and you can rely on them. It’s all a matter of trust.”

Article is based on an interview between Nathan Beckord and Hubert Palan on an episode of the How I Raised It podcast.

About the Author

Nathan Beckord is the CEO of Foundersuite.com, which makes software for raising capital. Foundersuite has helped entrepreneurs raise over $9.7 billion in seed and venture capital since 2016.

David:
This is the BiggerPockets podcast, show 749.

Rob:
I never thought that while I was DoorDashing in college, not having the most clear vision of what I wanted to do after, that real estate would allow me to own over 10 properties right around a million and a half in valuation and have the ability to create some long-term consistent cash flow.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets podcast. Here today with my co-host, Rob Abasolo, with a show that is going to blow your mind. Today’s guest is 22-year-old Josh Janus, who has already established a real estate portfolio over 10 properties, is also selling houses as an agent. He sold $17 million last year. In this episode, Rob and I get into how he’s doing it and what he’s figured out that other people haven’t. My mind is still blown, Rob. How are you feeling?

Rob:
It’s one of those things where I’m just like when you find someone that unlocks something in real estate and they’re absolutely crushing, it’s super impressive, but when you find someone that’s 22 years old making six figures a month doing really well in real estate, it really is just one of those things where I’m like, “Man, I got to catch up.” And I’m like 10 years after this guy.

David:
That leads us to today’s quick tip: Get started in real estate early. How can you get started now? I’ve often heard it said that the best time to buy real estate is 10 years ago. The quicker you get that clock started, the better it’s going to be for you. The best deals that I have is the stuff that I bought the longest time ago. That does not mean to buy bad deals early, but buy good deals early and wait. Rob, what’s something about today’s show that you think people should keep an eye out for?

Rob:
Even with Josh’s success and how much money he was making, which we’ll get into that in the episode, he was still really honest about his fears getting into his first property that he probably could have straight-up paid cash for in one or two months. And so, it was just nice to hear that even someone that could be making so much money could still be vulnerable and fearful in their first deal, but it was really cool to see the glow up and to see that that first deal catapulted him to where he is today. Yeah, just a really cool inspiring moment, I think, to just hear him put it all out there.

David:
He also shares how he got started in business making duct tape wallets and DoorDashing. This is a person who listened to the podcast driving around, dropping off Jack in the box and pizzas and turned it into a real estate empire, just like many of you that are listening to this now really want. This is one I will listen to twice and pull as many pieces of information as you can out of this story to think of how you can apply it to your life. Without any further ado, let’s bring in real estate phenom, Josh Janus.
Today’s guest, Josh Janus, knew in high school that he wanted to retire by 30 years of age, so he built and managed different side hustles, from duct tape wallets to a successful sneaker business. Josh was a college student who also drove for DoorDash. Last year at age 22, he sold over 125 properties in his first year as a real estate agent, totaling over 17 million. As an investor-friendly agent, he has purchased and renovated over 10 properties using very little of his own money in real estate over the last seven months. We are going to unpack this today. Josh, welcome to the podcast.

Josh:
Thank you.

David:
Yeah, it sounds like you have a strong entrepreneurial focus. Before we get into how you accomplished everything that I’ve said, what was it about real estate that attracted you in the first place?

Josh:
When I was younger, I was always trying to save money. I didn’t really know exactly the most productive thing to do with it, but I was like, “Hey, I might as well stash it away and eventually I’ll figure it out.” I had around $10,000 saved up, like free capital to use. I was starting my college career, and I was introduced to the idea of house hacking when basically Googling what to do with 10 to $20,000 when you’re 20. That led me to BiggerPockets and that was my introduction to real estate as a whole.

David:
Did you ever actually go anywhere with house hacking?

Josh:
I was close. So back when I was living in Cleveland, Ohio, I was looking at properties. I figured out where I wanted a house hack, but I ended up switching and going to a different college, I went to the Ohio State University, and then my next journey was going to be the house hack there, but I didn’t actually end up doing it.

Rob:
So Josh, it seems like obviously you’re a little bit entrepreneurial here. Before we get into the real estate stuff, because I think even at the age of 22, having $10,000 in your bank account is a hard thing. A lot of people are like, “How can I get 10,000 bucks?” So can you tell us a little bit about how you even got the 10,000 bucks? Did you just have a ton of side hustles or were you working a job?

Josh:
Sure. I was working. I was doing a lot of side hustles. I used to make duct tape wallets when I was in middle school and try to sell those. That was fun. The next thing was really interested in was sneakers, the whole sneaker culture, reselling, because I was a pretty big basketball player and I was exposed to that industry. I was going to different sneaker events, I would rent out a table, bring as much shoes as I could fit in my couple bags and try to sell them and basically just kept those profits over the years.

Rob:
Nice. What did a duct tape wallet run you back in the day?

David:
Oh, man, it was like $5 to sell. I mean, it was a lot of work for $5.

Rob:
Oh, I see, because I was going to say a roll of… well, toilet paper… sorry, duct tape going to cost you like three, four bucks, so yeah, if you can make-

David:
See, Josh, this is my problem, Rob always forgets to include the value of time. He only looks at the money when he calculates ROI, you can see.

Rob:
That’s true, but you had a lot of time.

Josh:
True. Yeah, I was doing it in class and on the bus.

David:
This reminds me of me. I wish I had had something. I’ve always had a very difficult time paying attention in class, in school. Anytime that I have to follow somebody else’s pace, if they’re talking too slow, I’m like, “Ah.” My brain just wanders. I can’t sit there. They didn’t have fidget spinners. Or what’s the other things that everybody plays with now, Rob?

Rob:
Fidget cubes.

David:
Fidget cubes, there you go. Right? What did we have in my day? We had stupid pencils with different colored lead that you could click the different colors and play with, or we had these bracelets that you could snap on your wrists and they would curl up in a ball. I doubt either of you guys ever saw those things, but-

Rob:
Oh yeah, you still have that bright pink one that you always play with during the podcast?

David:
Yeah. And when I work out. That’s my lucky workout wristband. Bright pink, absolutely. PinkerPockets for the win. You’re entrepreneurial at heart, Josh, which I love because I know this is where you learn the fundamentals that later translated into real estate investing. We interviewed Ryan Pineda on our podcast years ago, and he talked about how he flipped couches. He would buy couches, fix them up, and flip them, which he then later turned into a house flipping business, and now he’s built an entire empire, which I like to think we are basically the ones that launched in into the atmosphere. But Ryan took that atmospheric launch and built something pretty cool out of it. So I’m curious if you could share what lessons do you think you learned with some of these early endeavors that translated into real estate later?

Josh:
I guess in the sneaker culture you would see some of these really cool shoes that athletes were wearing or celebrities, and maybe you’d flip a few pairs, you’d make like 500 bucks. And you’d want to take that profit and immediately buy your own pair to keep and wear. My mindset was I’d rather save that money and maybe put it towards an asset. I learned the idea of assets when I was younger, where you can actually use money to make more money. I didn’t really understand which assets to use at the time. I just knew that concept, and I was like, “It’s got to be a better way of spending my $500 profit.” So I think that’s one thing that I learned for sure when I was younger.

Rob:
By the way, that’s not the worst mindset to have where you say, “I really want this thing, so I’m going to figure out how to make money with this thing that I want, sell it, make a profit, and then get the thing that I want.” That’s real estate in a nutshell, right? You want to acquire property, so you buy a property, you flip it, you take the profits, and what do you do? And usually, if you’re a good real estate investor, you go and you dump it back into another property or you buy a property and have other people pay for it, long-term rentals or short-term rentals. I think the mindset is not incorrect, it’s just really impressive that you found out at a very young age that instead of buying sneakers, you should put it into something that’s going to make you more money.

Josh:
Yeah, I think I was always trying to find more ways to be more productive with my money. I learned early on, for certain, shoes that I have to go to the store and wait multiple hours, I was thinking, “This isn’t very scalable if I want to try to get 20 pairs of shoes because I can’t be simultaneously at 20 places at the same time. I have to learn how to rely on other people.” Different things like that helped.

David:
I tried different endeavors too. I worked at restaurants, and I learned how to sell wine and steak, and then I tried to get a job selling cars at one point and that didn’t work out. But ultimately, I think a lot of us see real estate as the pinnacle we’re trying to get to. We want to sell the most expensive thing we can. Getting a real estate license is not something you need this four-year degree. I wish it was. I’d feel much better if agents had to go get a two or four-year degree to so houses because there’d be less crappy ones out there, and we’ll get into your career there too, Josh. But was it the same thing for you that real estate was just a natural progression of the best thing that you could sell?

Josh:
Yeah, I think so. It seemed like I had to put almost, now they look back on it, the amount of time it takes for me to sell one house was almost the same amount of time and energy it took for me to sell one or two pairs of shoes in some ways.

David:
And your hands aren’t sore from creating these duct tape wallets all the time. It’s easier.

Josh:
Yes, that too.

David:
You let DocuSign do all the work, less paper cuts. All right, so let’s go back in time. You’re in college… I say go back in time, you’re 22 years old, you might still be in college. Where does this interest in real estate start to come into play? How and where did you start to dig in?

Josh:
I mean, I just was googling, “What do I do with 10,000 or $20,000? How do I invest it?” I can’t remember if it was BiggerPockets right away, but I saw house hack, and I was like, “Maybe I could buy a property on the college campus I was going to. Live in one unit, rent everything else out.” That slowly led me to understand, “Oh man, if I become an agent, I could figure out a way to find potentially the best deals,” so that was my goal.

David:
So you didn’t buy a house to house hack, but you got exposed to real estate, it made sense to you, and you thought, “You know what? I’ll just get my license and I’ll help other people do the same thing.”?

Josh:
Yep.

David:
All right. So did you just look up how to get a real estate license and just start studying and do that, or did you have a mentor that guided you?

Josh:
The first thing was diving into the BiggerPockets forums, really. This podcast might sound like a BiggerPockets promotion, but in all reality, a ton of my growth really stemmed from that foundation. But that was one of the first things. And then I also got latched onto a guy named Remington Lyman, who’s also an agent. He works at Reafco Real Estate, he owns the brokerage I work at. But I messaged him, I was explaining my situation. He hopped on a Zoom call with me, explained the benefits of house hacking like, “Maybe if you wanted to become an agent here or come here, we can teach you how to find off-market deals. We can help you build those systems.” And then next thing you know, I was working as hard as I can to get my license.

Rob:
So you’re getting your license, and obviously as you establish your real estate agent business, that’s going to take some time to get that deal flow and actually closing properties and making money. Were you working any other jobs while you were doing this or were you all in at the very beginning?

Josh:
In the very beginning, I was still taking classes. I was studying computer science, and then I was driving for DoorDash 20 to 30 hours a week. And then at any moment I could, I was trying to just cold call. That was my main source of finding deals in the beginning. My plan was cold call, find a deal, or at least get somebody to talk to me about their property, get some details, bring it to one of the agents that I was working with. They would break down the deal, explain like, “Maybe an investor would like this,” or get some clarification on what the rents are, the lease terms are. It started there.

Rob:
Were you ever deep in conversation, you’re like, “Give me one second,” and then you’d pause to take a photo of the DoorDash delivery to upload in the app and then get back on the call?

Josh:
Maybe. I was trying not to do the delivery while calling to… I was doing it when I was driving, but not necessarily-

Rob:
Oh, mid delivery.

Josh:
Yeah. Yeah.

Rob:
What kind of money does a DoorDasher make? If you’re working 20 to 30 hours a week, is that pretty good income? Can you give us a little frame of reference there?

Josh:
Yeah, I mean, I was around five to $800 per week, I think, working that amount of hours. That’s pretty good.

Rob:
Yeah, that’s solid, especially if you’re in college and you’re doing all that. So you’re DoorDash and making pretty good money for where you are in life and you’re cold calling. What was that first deal like when you actually landed a lead that became a transaction that paid you out?

Josh:
Definitely. So I was cold calling four units in what I would call A-Class area. I just found a guy that happened to be motivated that day. He was pretty easy to talk with. I presented it to the agent I was working with, he’s like, “Oh yeah, we could sell this deal.” So I wrote up an email, which is the way that we market our deals, then he presented it to his investors. Somebody ended up taking the deal on. That took about a month to close, as most properties do, and I basically made what I would make in a month and a half from DoorDash from that. I was pretty psyched because I thought, “I just need to knock out a few more of these and I could end up making this produce more income than just DoorDash.”

Rob:
So you started math out like, “Oh man, if I did this three times, I’ll make this amount of money.”

Josh:
Oh yeah, definitely. And then another thing is, if you get your license, you end up making a much bigger cut because you can actually represent either the seller or the buyer, depends on the situation, so I was making a referral fee. So as soon as that deal will close, I was like, “All right, I got to get my license. Let’s start studying right now and try to knock it out.”

Rob:
Yeah. So was that more, I don’t know, a wholesale deal where you’re calling, you find someone, you get a property off-market. They’re like, “Yeah, I’m willing to sell it.” Are you then passing that off to realtors to sell or were you selling it to an investor and taking a small fee for that?

Josh:
I worked under a realtor named Abe, so basically I just wrote all the details of the property, gave to him, and then he found an investor that was interested in the brokerage that I was working at. It’s like a hybrid form of wholesaling. We just don’t actually put the deals under contract, we just present the information to the potential investors.

Rob:
Makes sense. I guess you close this deal, you’re like, “Oh my gosh, I just got to do this many times.” You start getting more into this. How were you able to balance everything from getting your license to finishing college to, I assume, still maybe working some DoorDash here and there?

Josh:
I mean, at that point, basically I was like, “I’m just going to use all of my time outside of school to dedicate towards still maintaining a cold calling schedule,” which I think is really important, “and then getting my license.” So I got my license in about two months.

Rob:
Are cold call hours always 9:00 to 17:00 or were you getting creative and calling from 5:00 PM to 9:00 PM too?

Josh:
9:00 to 11:00 was my cold, cold calls, the people I’d never really talked to. And then I would use 13:00 to 17:000 as a lot of follow-ups or new cold calls. But it seemed like if you hit somebody in the morning when they’re driving, “Oh yeah, yeah, yeah, call me back later,” then I just hit them later, and usually that ended up being a pretty decent converter.

Rob:
David, do you consider yourself much of a very good cold caller? I’ve never heard this side of you before, so I’m curious.

David:
I did it in the beginning of my career when I had to. I didn’t love it, so I didn’t do it a lot. When you’re trying to find deals, most people fall into one of two categories. There’s the direct contact person, which is a cold caller, or there’s the content creator, which gets people coming to them. Most people usually take one of those two paths. And because I ended up as a podcast host and an author, I went the content creation side as opposed to the direct cold call.
Josh, I mean, you did what you could do because you didn’t have a huge podcast behind you to spread the word. I’m curious because you mentioned something, you talked about this wholesale hybrid model. Can you give us a little more detail of what you mean by how you were making money on these deals?

Josh:
So the seller was like, “Hey, I want 450 for this four unit.” And generally wholesalers would write up a contract, get it under contract, and then sell that contract for a fee. The way that we do it at the brokerage I work at, at Reafco, we don’t put it under contract. We just take all the details of the deal, write it in an email, and then present that to our investors. And then if one of our investors likes it or they want to write an offer, we just write up the offer and present it directly to the seller.

David:
How are you being compensated? Are you getting a listing agreement from the seller when you bring the buyer to them and there’s a commission in there for you guys?

Josh:
We don’t actually use listing agreements, no. During that timeframe when I didn’t have my license, I was getting a fourth of the commission for the agent I was working under. He got 3%, then the agent that brought the buyer got 3%, and then I ended up with 25% of the 3%. That’s how we did it.

David:
How were you guys getting commissions if there was no listing agreement?

Josh:
It’s still an executable contract with commissions in the agreement, so it’s going to say, “Seller to pay 6% to our brokerage.”

David:
I gotcha. So you would bring a buyer and in the offer it would have who was getting paid as far as the agents are concerned?

Josh:
Correct.

David:
I see. So rather than putting, getting a house, putting it on the market, letting everybody see it, trying to get offers, negotiating the highest one, you guys just cut to the chase and you said, “Hey, I got a buyer that will pay this much for your house. If you want to take the deal, here’s how much it’s going to cost you. Here’s what the net to use is going to be,” and you guys were running a little more efficiently.

Josh:
Yeah. I think it allows us to take advantage of those leads that aren’t as motivated to sign a listing agreement, because there’s a lot of people that fall in that category, I think.

David:
This is also a form of off-market deal, so other buyers didn’t have access to the same stuff that you guys were bringing them, correct?

Josh:
Yep.

Rob:
Yeah, but Josh, let’s say you’re presenting this property, because you don’t have a contractor, you don’t have a listing agreement, what would stop an investor if you say, “Hey, investor, I’ve got this cool property, here’s the address,” what would stop them from just going over you and going straight to the seller and just transacting the deal themselves?

Josh:
That’s a good question. We have an off-market agreement that we present to everybody prior to setting deals that roughly states, “If you go after a deal that we bring, you have to use us as your agent.” In the beginning when they haven’t signed it yet, we’ll send people rough descriptions of all the deals. It won’t have the address, usually won’t have pictures. But then if they’re like, “Hey, I really like the concept of this deal,” we’ll set on the agreement and then they sign it and we’re good to go.

David:
So it’s a form of a buyer representation agreement. People don’t realize you don’t have to set it up for every house that I show you or every house you could buy. You can say, “For this address, I have to be your agent,” but they could use a different buyer’s agent for different properties that get brought to them. That actually makes sense. I see now why you’re calling it a wholesale hybrid, because wholesalers do it that way. They say, “Here’s a three, two with 1,800 square feet in this zip code that would rent for this much money.” That’s all that people get to start with until they want to analyze it later. So you use that marketing approach paired with real estate contracts to protect each party there. What happened next? How did you get to the point that you were making more from these commissions than you were making from your DoorDashing?

Josh:
So that first check came in, that was about a month and a half’s worth of DoorDash. I had a lot of warm leads, people that weren’t ready to sell right away but they were getting close. I was basically like, “I’m going to take the next six weeks, I’m going to go really hard at this.” At that point, I was spending two to three times more hours per week on this than I was before. Then I got my license, then I started putting a whole bunch of deals in contract.

Rob:
When you say you’re putting two or three more hours, do you mean just in the follow-up?

Josh:
Sorry, my bad, two to three times more hours per week than I was before because I was like, “Hey, no more DoorDash for now, we’ll just work on real estate.”

Rob:
Got it. Was all that time on lead generation, was it following up with… because you said you had a large pool of warm leads, so these are people that, they’re interested, they’re not ready to pull the trigger necessarily, but if you keep approaching them, coming back to them, eventually they convert, right?

Josh:
Yeah, eventually. Yeah.

David:
All right. Were there any key learning points during this difficult time? What was going on in the market at this time? Was it still red-hot? Were things slowing down? Where are we in time?

Josh:
This is the beginning of ’22, so it was still hot, definitely. It was cooling off a little bit, but every deal that was decent that hit the market would have multiple offers and the listing agent would be getting hounded. It was definitely tough. At this time, I also tried to make a bigger presence on BiggerPockets, so I was posting a lot. I think I cranked out 1,000 posts in about three months.

Rob:
Wait, hold on. Okay, so that’s 90 days, so you were posting 10 times to 12 times a day on the BiggerPockets forums?

Josh:
Yep. That was my schedule. I believe from 5:30 to 6:30 every morning I had to spend an hour in BiggerPockets by posting or at least reading content and trying to provide value.

Rob:
Where you were making posts and actually putting content out there, what’s an example of something you’d throw out into the BiggerPockets universe?

Josh:
I mean, most of it was just comments on people’s questions. I would try to answer them the best that I could. I would talk about the Ohio market, the advantages to investing here. I would talk about my journey and how I’m learning.

Rob:
Did you feel like people start to know who you were? Did you get any relationships from doing that?

Josh:
Oh, yeah. People reaching out to me in BiggerPockets. They’re like, “Hey, I see a little bit about this market or real estate investing in general.” At that point, I was trying to manage those leads, and then I was also reaching out to other people. So I set up a Calendly link. I was like, “Hey, set up a 15-minute call with me. We’ll figure out what you’re looking for and how I can help.”

David:
So when the market was hot and listing agents were getting multiple offers, how are you getting sellers to agree to sell their properties through you to a specific buyer rather than putting it out there for everyone to see?

Josh:
I think the fact that we weren’t using listing agreements, they were a lot calmer. They didn’t feel like you were trying to push them to sell. It was more so I was like, “Hey man, what do you need for this property? What number would you not deny?” If that number made decent sense, we’d spend the time to write it up and market it out .

David:
And they weren’t having to fix their house up. I’m assuming a lot of these were probably sold with tenants already inside.

Josh:
Yeah, tenants inside. We’d get the rents, the lease terms. They would almost always be as is. Yep.

David:
What were you doing to find actual properties? Were you just pulling lists? Was this you’d be driving around and just look and see a multi-unit property you thought an investor would like?

Josh:
I was pulling lists from PropStream for the most part and targeting different areas. I was trying to pull lists of people that hadn’t sold in the last year or two years or that bought it for a really low price compared to what it was potentially worth now, because I felt like those could have been more motivated people.

Rob:
All right, so you’re in this world where you’re figuring out your systems, I see that you’ve developed habits, you had a schedule, you’re now an agent. Give us an idea, how long did it take from when you got your license to the first deal that you closed as an agent? How long did that take?

Josh:
That was December to March, so basically three months. I had my first 11 deals fall out of contract. It was pretty brutal. I felt like everything was falling out for the most unique reasons, but it was a big learning experience for me because I was making mistakes, for sure.

Rob:
Man, the 11 deals, that is brutal. David, is that normal at all? I know you run the David Greene team, the most elite real estate agents out there, is it normal for 11 deals to just fall out from a first-time realtor?

David:
No, but as I’m listening to Josh’s strategy here, that starts to make sense. This is more of a volume based approach. He has sellers that are not motivated. He has buyers that they don’t have a relationship with. Everyone’s a bit of a merchant marine here. It’s just pure numbers. If you can get me a deal that gets me the cash on cash return that I want, I’ll go forward. Or if you can get me this number that was probably higher than what they thought the property was worth. So you’ve got sellers that probably want to sell for more than a buyer would want to pay. You get buyers that are looking for the deal of the century. Every time you have these expectations that are off, it’s easier for a deal to fall apart. I’m assuming, Josh, you just had to make up for that with volume. You were probably just a workhorse that was constantly looking for sellers, looking for buyers, matching them together, moving on to the next thing.

Josh:
Definitely, yes. I haven’t really heard a summary like that before. That’s a very good way of explaining it. I was basically just taking two people that had a low chance of closing and putting him together. When that happens, you get a really low chance of closing.

Rob:
David is the king of this, by the way. He is the king of summarizing something so concisely and succinct. I remember we had… Let’s see, who was it? Chris Voss. Chris Voss came on and he gave a philosophical thing, and then David comes in, he’s like, “So basically, based on this and this, it’s this, right?” And Chris Voss was like, “Yeah, it is that. No one’s ever told me that before.” It was like watching… Who painted the Mona Lisa? The painter of the Mona Lisa paint the Mona Lisa, but in the real estate world. Michelangelo. Shoot, I’m about to look so dumb. Everyone in the comments are going to be like, “No, it wasn’t Michelangelo.”

David:
Well, the key is you have to do that with Chris Voss because you don’t want to end up in a negotiation with him.

Rob:
Oh no, I remember who it was. It was also the Blue Angels guy. He had this whole story about how he made a mistake in the jet, and then he was like, “Can you guess the reason that I made that mistake?” and then David was like, “Well, it was probably because you got too comfortable and blah, blah, blah.” And he was like, “I’ve told that story 1,100 times, and no one has ever said that to me. Yeah, that’s exactly why.” He was stunned. So anyways, I always like to point that out when I see it.

David:
Well, thank you. Quick tip here, if you would like to be able to do the same thing, stop looking for patterns to follow or as far as a strategy, “Give me a blueprint, I just want to go do something,” and start asking questions like, “Well, why did that work?” or “Why did that not work?” and then this stuff jumps out. So just from that information alone, I can tell certain things about Josh. He’s a workhorse. He does not get emotionally attached to any of these deals. When he puts something in contract, he doesn’t spend the money before it closes. He’s just like, “That’s a metric that goes on a spreadsheet. I am now back to going to work.” He focuses on what we call the lead measures, not the lag measure, so what is it I can do right now as opposed to measuring something that already happened?
This is all really good advice for everyone. You see this with real estate agents where they work really hard, they put a deal in contract, they get emotionally excited, they celebrate, they go out drinking with their friends, they start thinking about what they’re going to spend the money on, they’re calculating their commissions. Real estate agents can calculate 3% of anything, which is funny because we don’t all get 3% hardly ever anymore. But they get super attached to the deal, and then when something goes wrong, the appraisal comes in low, the inspection report is bad, the client can’t get the loan, whatever it is, they get really discouraged and then they go drinking again. Which is why most real estate agents all become alcoholics, because they’re drinking when they’re excited and they’re drinking when they’re bummed out and they’re just drinking all the time. I think Josh’s approach is much better because you’re approaching the business of selling homes like a real estate investor would think, where you’re just letting the numbers make the decisions. Am I off with that?

Josh:
You’re right. Yeah, it’s just keep put them in contract, figure out what mistake I made there and what can I change in my systems and my approach to potentially avoid that in the future.

David:
Okay, so let me ask you, what are some of the key mistakes that you can share that you learned when you put these deals together that made the deals fall apart?

Josh:
The first thing would be not vetting the sellers. Sometimes they wouldn’t… I mean, kind of funny, they didn’t even really know what they owned. They would say like, “Oh, these are three bedroom units.” And then you give them a contract, the inspector goes there, and they’re like, “Dude, there’s only two bedrooms.” And it’s like, ugh, you can’t do anything about that. You can’t just build a new bedroom. So that’s one thing.
Another thing is I learned about making sure the tenants are paying and the tenants are paying on time. That’s very important, so getting those estoppel agreements potentially in the beginning because that ended up causing issues at the end before closing multiple times. And then not necessarily vetting buyers very well. One example that’s kind of funny is I had a guy trying to buy two properties for $600,000. We fell two weeks prior to close because he couldn’t get financing. I learned that he had less than $10,000 in his bank and he was trying to put 25% down. I’m like, “Do we even do the math here?”

David:
It’s so funny, because I could just totally see how this method would attract those problems. This is trying to find a date on Craigslist. You’re like, “It’s a numbers game, baby.” You just got to keep lining them up because you’re going to get these people that are looking for a deal that’s unrealistic. The $8,000 guy, I bet you what he was doing was he brought this deal to other people and he was trying to get their money on this deal that had a high cash on cash return number because he listens to the podcast and he hears Brandon Turner say, “When you have a great deal, you can find the money.” He didn’t tell you that. He’s like, “Yeah, I’ll buy it,” and then he’s running around telling everyone he can, “What’s the raising private capital script I’m supposed to use?” He’s trying to get someone to come in on the deal. He ran out of time and then he has to just back out of it.
And you, Josh, you get to work your way through all of these really incredible scenarios that normally a real estate agent like us we’re like, “Oh, let’s see your proof of funds. Oh, you have $8,000. No, we’re not going to go show you homes.” You didn’t get to do that. Did you put a system together? Do you have a checklist now? Do you have a screening process for both the buyers and the sellers?

Josh:
Definitely, yeah. I try to write procedures for as many things as I can. I’ll hop on a phone call immediately with the people as soon as I meet them, little 15-minute meeting, make sure like, “Hey, are you pre-approved? If not, I have these lenders that I recommend. They’re great in this area. You want to connect with them.” I try to figure out their timeline, when you’re looking to lock down a deal. Another thing I think is really important for working with investors is, what is your criteria? A lot of investors don’t necessarily put that forward and agents can end up wasting time because they don’t really know what the people are looking for.

David:
Yeah, I think that’s a common complaint investors have too. “I told them what I want. The agent didn’t listen to me.” That’s one way to mess it up. The other way is the agent doesn’t even think to ask what do you want. It’s funny, in our world, someone will say they want a deal and we don’t even think to ask them to define what they mean by deal. Some people mean a really high cash on cash return. Some people mean a property in the best area. Some people mean something at significantly less than ARV. Some people mean just any multi-unit property. It can mean so many different things to people about a deal. Without asking what that means, it’s very hard to make sure that what you’re bringing them is going to land. In your experience, what are most of your investor clients looking for in what they call a deal?

Josh:
Around 60% of the people are trying to get into real estate. They have kids. They have a full-time job. They’re not trying to quit everything and just do real estate. So they want properties that are turnkey or close to they’re occupied, they’re producing a good sense of cash flow. They can buy a couple of those a year and be happy with a good portfolio and they’re done. And then the other 40% of people, I would say, are looking to do value add, the BRRRR strategy, creative financing when it comes up, self-management, anything that’s a little bit more involved and requires a lot more of your time, that’s for the other people.

David:
So these are the financial freedom group that you’re basically working with. They’re trying to get enough cash flow so they can quit their job.

Josh:
Yeah. I have a lot of calls where the first two minutes it’s like, “Yeah, I want to retire in five years.” It’s like, “You can do it, it’s just hard.”

David:
Let me show you how to sell some duct tape wallets.

Rob:
So you mentioned something earlier, Josh, a term estoppel. Do you think you can just give us a quick definition of what that is because it seemed like that was something that was popping up in a lot of these deals that fell out?

Josh:
Yeah. It’s basically a summary of what the tenant is paying, what their lease terms are, and showing that they have been paying. I don’t actually use estoppel agreements. That’s just a term that I thought most people knew. But it’s basically I want to see the rent history. Sometimes the seller will just show me bank account to show that the deposits are coming in or an actual summary or an owner’s statement from the property management company, something showing that the cash flow is real, it’s not fake.

Rob:
11 deals fall through, you close your first deal. Tell us a little bit about the actual numbers on that first one. You said that it was, I guess, the same as working a month and a half in the DoorDash world, right?

Josh:
Yeah. So it was a $450,000 four unit. There was 3% paid to the agent that I was working under, so he got $9,000… oh sorry, $12,000, and then I got a quarter of that, so I got around three grand.

Rob:
Nice. How did that feel?

Josh:
That was really cool. That was the biggest check I think I’ve ever gotten. I was a little intimidated, but I was like, “We don’t spend this now. This is our life for the next two months.”

Rob:
Oh yeah, that’s a lot of ramen noodles right there, especially at the beginning when you’re grinding so much. So let’s fast-forward a little bit because I know you’re grinding it out on the agent side. Tell us about your actual first deal, because David mentioned at the beginning of the show that you bought 10 deals, which I think was about $1.5 million in total for the portfolio. So how did you actually get into the investing side of things?

Josh:
Definitely. I started to sell a lot of properties. By month six, I had scaled my business up to $50,000 a month in commission. Actually I had cash reserves. I found these two duplexes listed by the same agent. They had been sitting on the market for a few months. I called him up and he was like, “Yeah, the owner has short-term debt on it, he really needs to sell it. They’re getting ready to call his note.” They were basically willing to sell them at a 30% discount. I ran my numbers and I was like, “This could make for a great BRRRR, both of them. You could be all in right around 70 to 75% ARV. When you pull your money out, it’s still going to produce a pretty solid cash flow.” So I had to really trust my numbers, but I decided to go after one of them.

Rob:
Okay. So wow, that’s a $50,000 a month, that’s what you were making. How old were you when you reached that number?

Josh:
21.

Rob:
21. David, does that make you feel like… I feel so lazy as a 21-year-old when I was back… I was not doing that. I was trying to make… I don’t know, man. That’s crazy. Congratulations. That is so cool.

David:
I was making less than that in a year, and that was still more money than everybody else that I knew.

Rob:
Dude, that’s crazy. So all of that, the $50,000 a month, obviously that’s going to lead into your investment strategy, but that just came from hunkering down on your agent business, growing those systems, developing your processes, and then you grew it into just 50K a month. That’s insane.

Josh:
Yeah. By month eight I actually got it to about 100K. Ever since then, I’m right around 100,000 a month. I’ve been leveraging VAs for a lot of procedures. I try to delegate as many tasks as I can as a realtor. Try not to, I don’t know, spend all day writing contracts, as an example, because that can take 30 minutes on average. A lot of days I’m writing between eight and 10 offers. That would be my entire day.

Rob:
Can I come work for you, please? Can David and I come work for you? Okay, so you have no deals in the first three months and you start to fire on all cylinders. By June of 2022 you decide to get your first investment, which is a BRRRR, it sounds like, or some kind of rehab. How did that go? Was that a whole new set of skills that you had to learn after already being so good at the real estate side, the realty side?

Josh:
Yeah, I mean I had never done any rehabs. I didn’t really know how to price things out very well. One of these contractors that I had been working with for my clients, I was like, “Hey, can you walk this for me? Give me a bid.” He gave me a bid. The numbers made sense. Another thing was I could only get the price where it made sense if the owner was able to sell both of them. So I was able to find another investor to buy the other one at the same time. We lined them both up. I used hard money for mine. They lended up to 90% of the project cost, which is your purchase price plus your rehab, or 70% of the ARV, whichever number is less.

David:
Well, it sounds like we’re already in the deal deep tag, because this is what we’re going to talk about. So let’s go ahead and make this official. At this segment of the show, we dive deep into a particular deal that our guest has done and get the juicy deets. So first question, what kind of property is this, Josh?

Josh:
It’s a duplex, two bedroom units.

David:
Are you sure there are two bedroom units? Do you know what you have? Are you one of those sellers that claims that he’s got more bedrooms than he does?

Josh:
Luckily this time I knew.

David:
All right, we’ll take your word.

Rob:
How’d you find it?

Josh:
It was on the market. It had been on there for a few months. I called the agent and he was like, “The current owner has short-term debt on it. They’re getting ready to call it. He really needs to sell. If you can sell this one and another one, you can get around a 30% discount.” So my job was to try to sell one of them because then my current situation, I was only comfortable with taking down one deal. I didn’t want to start with two $40,000 rehabs.

David:
Okay. How much was this property?

Josh:
It was 85,000. The rehab estimation was right around $30,000 for the one that I took down. The ARV that I had projected based on sales comps was right around 155,000.

Rob:
How’d you negotiate it?

Josh:
I mean, the agent basically told me that, “If you can close quick, if you can not have many contingencies, you can get it at this price.” So then I counted around 10,000 lower and then we met about halfway in the middle and got the deal done.

David:
And how did you end up funding it?

Josh:
I used hard money. I had to put down around 10%, and then I applied my commission because I was representing myself as part of my down payment. So I was only really out of pocket like $10,000.

Rob:
What’d you end up ultimately doing with this property?

Josh:
I renovated it. It took a little bit longer than expected, as probably the vast majority of projects do. I learned a lot. As soon as I was done, I went to the bank, I refinanced it. I got almost all my money back out, and now I run it as a rental.

David:
Okay. So that was the outcome there. Tell me, what lessons did you learn from this deal?

Josh:
I was really scared of debt. I really didn’t have any debt prior to this. I was definitely scared of short-term debt because the hard money is like they’re knocking at your door in six months like, “It’s due.” The property, you either have to pay it off, you have to refinance it, or you have to sell it. So I was definitely intimidated taking on a property that currently wasn’t livable and needed around 30 grand to be livable. Those are the things that I was scared of, but I learned from the investors and mentors around me that you really need to trust your numbers in any instance when evaluating a deal because that’s what you can rely on, especially when you feel uncertain.

Rob:
So Josh, I guess I’m trying to understand because I know you said you used hard money and you were really nervous about, I guess, getting into this property and that you had needed $30,000 of work. But if I’m remembering correctly, were you making $50,000 a month at this point?

Josh:
Yes. Yeah.

Rob:
So what was the real concern here because it seems like you probably could have covered expenses pretty easily?

Josh:
Yeah. I mean, the property was also not in a city that I was living in, so I was mimicking the experience of an out-of-state investor because I bought it sight unseen. I was managing the entire project from remote, so I learned that.

Rob:
How do you feel now though? Looking back, were you like, “Oh, it actually wasn’t that bad,” or do you still have some of those same reservations doing the out-of-state stuff?

Josh:
I mean, after the first one I feel way better. I feel a lot more confident. I can rely on my team. I can rely on the knowledge that I bring to the table by understanding sales comparables and things like that.

David:
I’ve got two questions. One, have you read Long-Distance Real Estate Investing?

Josh:
Yes, I think that was the first book I read.

David:
Okay, good, because that’s the first book I wrote, so we have something in common. Number two, if I were to make a revised version of this book, based on your experience doing this deal out of state, what would you tell me to include in the book?

Josh:
I read it a while ago, so maybe this was in there, but-

David:
Bro, you’re 22 years old, how long ago could be a while?

Josh:
I don’t know, two years, year and a half. I would rely on multiple project managers. That can take the form of an agent just popping in every once in a while. That can be your property manager that is responsible for tenant relations, or that can just be a completely different contractor that comes in with his own third party opinion about how your project’s going.

David:
So you agree that the philosophy of have several people looking over everyone’s work could extend into the actual rehab management? That’s what you’re saying?

Josh:
Yeah.

David:
Okay. Anything else that I should know because I think I will revise this book, The BRRR, but a couple other ones when I get some time. I’m just curious what needs to go in these books to update them?

Josh:
Don’t rely on sales comparables that are old when you’re initially looking at the deal. Because generally, at least in my state, the appraisers are going to look at the most recent sales in the last six months when they’re appraising your property when it’s done. So the one thing that I did at my first deal was I was relying on a deal two doors down that appraised for the price I was going after, but by the time I was done with the rehab, that sales comp was outside the six-month window so they no longer could use it.

Rob:
That’s probably more relevant today, right?

David:
I think so. Yeah. I was just about to say, for the last 10 years, you looked at comps and that was your worst-case scenario. Odds are it was going to be better by the time it was done. The market has turned around. Rates have went from 3% to 7, 8%. Now we’re seeing appraisals come in low very frequently. A house could have sold for 800,000, you list it for 750, the appraisal comes in for 685 or something because rates have gone up so much. So that’s another thing you got to be aware of is prices can go down now that rates have gone up, and that can catch people by surprise. Any other surprises that came up specifically when it came to buying in another state that you just weren’t prepared for?

Josh:
Always estimate a little bit over your initial rehab budget. The first deal I bought, I don’t think the contractor looked up in the attic, but there were live electric wires running on the floor in the attic, which is number one, very dangerous and number two illegal. I had to address that immediately. That bumped my budget around 10%. I think at every project I’ve done since then, there’s always things that pop up. I think a 10% contingency should always be used.

David:
What about picking tenants, what can you tell us about choosing tenants? Looking into tenant history, what are some things you look for?

Josh:
If you’re buying something already tenant occupied, make sure they’re paying, they’re paying on time. You can see the way that they’re living. If you go in there and there’s stuff everywhere and it’s full of the ceiling, you might not always get your rent on time, let alone even get it. You could still make deals work even with a non-paying tenant, depending on how good it is. Just make sure you’re accounting those expenses in your numbers.

David:
Yeah. We briefly mentioned this earlier, and it’s worth repeating, it’s very easy, especially if you’re a new investor, you haven’t done this for a while, to get a lease to see this property’s making $950 a month, to run your numbers based on the lease. You close on the property, you realize the tenant’s eight months behind in rent, hasn’t been paying. The landlord hasn’t wanted to pay for an eviction or can’t afford an eviction, and so they just sold it to you. That’s why we verify that the money’s actually being deposited in the bank, not just what the lease is for. This is really, really, really important when you’re buying off-market properties or deals directly from sellers like you’re saying, because most people, when their property is doing well, they don’t think, “I should sell it.” Unless there’s like serious concerns in the market and people are thinking, “I want to sell before things turn around,” if your property is making money and nothing’s going wrong, you just don’t think about selling it. But when things start breaking, tenants stop paying, it becomes a headache, you try to fix it. When you realize you can’t fix it quickly, you sell, which is often exactly when buyers are getting introduced to that deal.
If you go in as the buyer expecting this is just a regular house on the MLS that a seller is put in pristine shape and they’re trying to get top dollar, you can really get taken advantage of. Do you have any stories you can share of clients you’ve had or situations you’ve had where that’s been the case?

Josh:
Yeah, an off-market deal that I didn’t sell, but it was in my office, but this is a great example. It was a duplex where both tenants were paying $1,100 a month. The rental comps were truly around 900, max 1,000. So it was really high, which should always be a red flag if you’re seeing units renting for way more than what everything else is around it. But when that property closed, when the seller got his key or when the seller’s PM got their keys and they went to the property, both units were vacated. It was vacant, and they both left. That investor, I’m assuming, was running numbers based on 2,200 a month in rent, and they’re not going to be getting that.

David:
That’s a great example. Thank you for sharing that. Let’s get some quick clarity here. This was your first deal. How quickly did the rest of your deals come together after this first one?

Josh:
Yeah, so the next four that I bought were around a month to two months after that. And then ever since then I’ve been picking up about one to three every single month.

David:
Are these you’re finding them the same way that you were finding deals for clients?

Josh:
Yeah, pretty much the same ways, yep.

David:
All right, Josh, looking ahead, what does your plan look like for how you intend to scale your portfolio?

Josh:
I’d like to build more contracting teams so that I can take on more projects at a time. Right now I’m working on 15 units. I’d like to build a 10X to that, rely on more people, W-2 more positions so that I can rely on them more and cut your cost down a little bit. Those are some lessons that I’ve learned from professional property managers.

David:
Now, are you using the BRRRR method on these properties very often?

Josh:
Yes, for sure.

David:
Okay, so with the change in the seasoning period that we’re seeing with a lot of conventional lenders, have you considered how that’s going to affect how quickly you can get capital out and the speed you’ll be able to scale?

Josh:
Definitely. My strategy hasn’t really been affected by that because I actually am not lendable still because I don’t have two years of the same income as a 1099 person. So basically I’m just refinancing out in non-QM products.

David:
That is awesome.

Rob:
Hey, David, you mentioned that there’s a change in the seasoning period. What is that change? I know with the BRRRR you have to have the tenant in there for I think six months. Is that what you mean, now it’s longer than six months?

David:
No, it’s not necessarily the tenant has to be in there, but if you are buying a property that has a loan on it and you want to refinance and pull cash out of the property, you now have to wait 12 months instead of six months if you’re going to use a conventional loan. Now, Josh, mentioned he’s using no-QM, which stands for non-qualified mortgage. This would be DSER products that you’re hearing a lot of people talk about. It’s important also to note that that does not mean subprime crap. These are still 30-year fixed rate loans. It’s not a whole lot different. The rate’s going to be a little bit higher because they’re not going to be basing your ability to repay off of the money you make, they’re going to be basing it off of what the property will produce itself, sort of commercial underwriting guidelines. But many loans are making you wait 12 months before you can take cash out of a property, not six. It sounds like from what you got going on, Josh, this isn’t slowing you down because you’re just making money through commissions as an agent, you’re not going to run out of cash, right?

Josh:
I don’t think so, no.

David:
Yep. I love that multi-pillared approach. When you’re not dependent on just one pillar, these changes don’t throw your game off because you’ve got several different approaches here. What are you thinking, Rob, about moving forward, Josh’s strategy?

Rob:
I think it’s good, man. I mean, you’re picking up a lot, right? I think it would be wise to really settle into it. If you’re at this point where you’re at 10, I would start thinking about… I guess I’m just seeing it in your personal situation. You’re young, you’re hungry, you’re making a ton of money, and you’re doing the right thing, you’re buying property. Instead of just pocketing 100K every month, you’re moving it into real estate funds. But I would say now is a moment to maybe take a step back and start considering your scale approach. How can you stop putting so much time into one to three properties every month? And how can you start maybe focusing on bigger plays that can maybe even effectively lower your tax bill because I know that this is something that you’re probably dealing with for the first time, making a ton of money and having to pay a ton of taxes on it, right?

Josh:
Yes. I jumped on the whole tax situation as early as I could. As an agent, I set up my intake commission through an S-corp versus an individual, so that lowers my tax burden substantially. And then I can also leverage cost segregations as well in the properties that I’m keeping to lower my commissions coming in. I’m trying to utilize as many strategies as I can.

David:
Absolutely.

Rob:
Hey, you don’t hear 22-year-olds talk about cost segregation all that often.

David:
Never heard that come out of a 22-year-old’s mouth, actually, it’s the first time.

Rob:
Seriously, dude, I feel like we got to talk about cost segregations more just on the podcast because it is the real estate cheat code that can save you, I mean in your case, hundreds of thousands of dollars in taxes. So that’s cool, man. I’m really glad to see that you’re saying it. It seems like you’re scaling up according to what you can do. So just think about how you can most effectively use your time, because you got the time and the money right now, now you just got to figure out how to use it the most effectively.

Josh:
True.

David:
Your first goal was to replace your DoorDash income. You’ve done that. What’s your next goal?

Josh:
My next goal, I want to have 100 units by the end of the year.

David:
100 units by the end of the year, that’s all.

Rob:
I mean, it seems like you’re thinking about exactly what I’m talking about, right? One to three properties in a year, that’s going to be 10 to 30 properties. So obviously you’re thinking, “How can I get to 100?” Right? I think it’s so cool, man, that you’re on this podcast. It’s a very inspirational story. You went from being a DoorDash driver to owning a $1.5 million portfolio. And it’s also just so crazy to know that next year your portfolio is going to be wildly different than what we’re talking about today.

Josh:
I think so, yeah.

David:
Congratulations, Josh. This is an awesome story. Thank you for sharing where you’re at. Very inspirational. You haven’t let anything stop you, including your age or how much I think you look like Dave Franco. You’re pushing forward in spite of all of this. You could have taken the Hollywood route. Instead, you took the real estate investing route, so welcome to our side. If people want to find out more about you, where’s the best place that they can find you?

Josh:
Two places. You can follow or message me on Instagram, @JoshJanus, just my name, and then same thing on BiggerPockets, Joshua Janus, I’m on there.

David:
All right. Rob, where can people find out more about you?

Rob:
You can find me over on Rob Belt on YouTube and Instagram and in your heart. Well, that joke won’t land because the other podcast comes out after this one, but-

David:
You will see why I laughed if you listen to a future podcast episode. That will make a lot of sense. This was a callback before it was actually said. This is some tenant type stuff that we’re getting into where we’re manipulating time for you guys on a podcast. You’re going to love it.

Rob:
It’s a call forward.

David:
Yes, a call forward even better. There you go. Josh, it totally makes sense you don’t know what we’re talking about, it will in the future, so just hang with us here. Thanks for being a good sport.
You can find me on social media, @DavidGreene24. Don’t ever send money to me because I’m not asking for your money. There’s a lot of fake accounts out there, so hopefully at one point I’ll be able to get the blue check mark. I heard that Meta is changing it so that you just pay like 15 bucks a month and people can stop getting scammed. It’s about time. You can also find me on YouTube, @DavidGreene24, or go to my website, davidgreene24.com and see what I got going on.
Josh, fantastic job. Very, very, very excited to hear what you’re doing, especially because you’re an agent and you move forward. Check out my books. Let me know what you think about the three books I wrote in the Top Producing Agent series for BiggerPockets. I’d be curious what you think as someone who’s 22 and is already crushing it. Rob, do you have any last words before we get out of here?

Rob:
Yeah, Josh, you could check out the books that David just talked about, but really the book that you need to be checking out is David’s upcoming book, Scale, which talks about how as a real estate agent you can scale your business. That will be coming out soon.

David:
All right.

Rob:
Promo code for that, we don’t have one. But anyways, check that out.

David:
We’ve got a call forward and a call back all in the same show. Great job, Rob.

Rob:
And we’re back.

David:
All right, Josh, we’re going to let you get out of here. This is David Greene for Rob ‘The Comedian’ Abusolo signing off.

When it comes to business cybersecurity, there’s no such thing as “too small a target.” If your company uses poor cybersecurity practices, leaving sensitive customer or company data at risk, hackers can exploit those vulnerabilities to accomplish their goals—no matter how big or small your company is.

In the same way, however, cybersecurity doesn’t have to require major capital to implement. Below, eight members of Young Entrepreneur Council each share one practical, affordable way a company of any size can protect itself and its data from hackers and phishing attacks, and why these methods are so effective.

1. Set Strong Password Guidelines

A practical defense would be to set strong guidelines when employees are creating passwords. This includes mandating that all personnel use strong, unique passwords for each and every account they access. Password managers are another option for businesses looking to safeguard employee credentials and lessen the likelihood of data loss due to compromised passwords. A company’s data may be protected in large part by training personnel on cybersecurity best practices, such as avoiding questionable emails and websites. – John Hall, Calendar

2. Routinely Update Your Software

Regularly update your software, including operating systems, applications and security software. Software updates often include important security patches that address known vulnerabilities and protect against new threats. By keeping their software up to date, companies can significantly reduce their risk of being targeted by hackers or falling victim to malware and other cyberattacks. Regular software updates can be easily scheduled and automated, and many software vendors provide alerts and reminders to notify users of new updates. Additionally, companies can take advantage of free or low-cost vulnerability scanning tools to identify any potential security issues in their systems and prioritize which software updates to apply first. – Devesh Dwivedi, Devesh Dwivedi

3. Train Employees On Cybersecurity Best Practices

One of the most effective ways to protect against hacking or phishing attacks is to educate employees about how to identify and avoid them. Employees should be taught how to recognize suspicious emails, links and attachments, as well as how to report any suspicious activity. Employees should be taught to understand the benefits of regular software updates, strong passwords and antivirus software. This can be done affordably through regular online training sessions, workshops or courses. By educating all their employees, a company of any size can significantly reduce their chances of falling victim to hackers and phishing attacks. – Eddie Lou, CodaPet

4. Implement Two-Factor Authentication

One of the most affordable ways for a company to protect itself and its data from hackers and phishing attacks is to implement two-factor authentication across the board. This adds an extra layer of security when stakeholders in or outside of the company access needed information and prevents any sort of unauthorized access. This authentication process requires users to enter an additional password or code sent to their personal devices or emails immediately after they attempt to log in. So, even if hackers gain access to users’ login credentials somehow, it’d be difficult for them to bypass the extra layer of security as they’d need the real-time system-generated code to do so. – Stephanie Wells, Formidable Forms

5. Establish Your ‘Normal’

At my company, we have established a communication protocol that’s our “normal.” Anything that is outside of normal is immediately brought to the attention of the entire company. For example, we use Slack all the time to communicate. Once, a phisher contacted an employee instead via email with an email address similar to mine, and so it was immediately suspicious. We talked about this in our company and made everyone aware of such attacks. This simple communication strategy and the openness and willingness to talk about security make a huge difference to us—and it’s free! So, look for simple ways to educate people and communicate in a consistent way so that anything different is caught fast. – Blair Williams, MemberPress

6. Safeguard Cardholder Data

Don’t save credit card information in house. Cardholder data that is stored in a company’s own database is exposed to several internal and external risks, with potentially devastating results. If a company does not safeguard cardholder data, they are at risk of losing customer confidence in addition to creating a slew of legal problems. Instead, save everything in a merchant gateway vault. This way, even your employees don’t have access to the full credit card numbers. They may have access to a security token but not the full card number. Check for updates regularly and always turn on two-step verification for all employee accounts for added security. – Shu Saito, All Filters

7. Schedule Regular Backups

Schedule regular backup and recovery times to ensure that data is fully recoverable in case of an emergency. Hackers are getting increasingly creative by the day when it comes to cyberattacks, inventing ways to bypass defenses like spam filters and infiltrate vulnerabilities. A good idea would be to back up your data in the cloud. Platforms like Google Drive File Stream can help you save files stored on your computers to Google’s cloud backup system. Having an external backup hard drive also allows enough space for these utilities to function correctly. – Brian David Crane, Spread Great Ideas

8. Leverage An Encrypted File-Sharing System

One practical and affordable way business leaders can protect sensitive company data is to use an encrypted file-sharing program. Hackers and phishers will have a much easier time accessing this information if it’s shared through email or text messages. You can reduce the chances of this happening to you by investing in a tool where company data can be safely transferred and stored. Most programs are extremely affordable and can pay for themselves if they prevent just one cyberattack. – Daman Jeet Singh, FunnelKit

Ashley:
This is Real Estate Rookie Episode 275.

Tony:
So you get this first deal, you seem to do really well with it, right? You have this amazing first deal using other people’s capital. How many total investment deals have you done since that first one?

Mike:
So I owned four and I’m under contract on two right now, one of which I have already assigned. I assigned it the same day. I went under contract at 1,236. This was last week. 1,236. At 932 or 925, I assigned it for a $50,000 profit.

Ashley:
My name is Ashley Kehr and I’m here with my co-host Tony Robinson.

Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we give you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today I would love to shout out someone by the username of Mona Cici. Mona left us a five star review on Apple Podcast. She says, “Love it! With an exclamation mark. Thank you for sharing all the great information. The stuff that you share is so down to earth and it makes real estate investing seem achievable. I’m two years into my investment track and I don’t miss an episode.” She just says that she loves if we could do an episode about some spouse works and things like that. But she says, “Thanks again for the amazing podcast.” So Mona, we appreciate you. And for all of our rookies that are listening, if you can, please take the 37 seconds that it takes to leave a review on Apple Podcasts or Spotify. The more reviews we get, the more folks we can reach. And the more folks we reach, the more folks we can help, which is what we love doing here.
But I’m super excited for today’s episode. Honestly, Ash, it’s probably one of my more favorite episodes that we’ve done. I loved Ava Yuergens’. I don’t know which episode she was, but she was such a young hustler. But Mike is like, he is the epitome of what is that saying? It’s like, “I find that the harder I work, the luckier I get.” I don’t know what the exact saying is, but there’s a quote out there about people who work hard tend to get luckier. And Mike is the total epitome of that happening. He’s found private money, he’s found partners, he’s found deals all because of he just happens to be at the right place at the right time, but it’s all because of how hard he’s working to make that thing happen.

Ashley:
I think something that I realized from that was that these were all in scenarios where he was working. It wasn’t like, “Oh, we love meetups. We love networking events too.” Those are great and you’re going to make connections that way. But it wasn’t any of those scenarios. It was all him taking action and working on his business when these things happened. So I think it’s really awesome to listen to those things too. And Ava’s episode was episode 271. So if you guys missed it, you can go back.
So before we bring Mike on, I just want to highlight too that one of the great things about this episode is the private money and the OPM, using other people’s money and how Mike unintentionally got somebody to offer to be his private moneylender. So listen to what he did to provide value to this person without even thinking that this person would offer him money in the end.
Well, let’s give you the official welcome to the show, Mike.

Tony:
Yeah. Welcome to the Real Estate Rookie Podcast, brother.

Mike:
Thank you so much. I’m truly honored.

Ashley:
Well, we’re so glad to have you here. Can you tell us just a little bit of your backstory and who you are?

Mike:
I am from Clayton, North Carolina, little town outside of Raleigh. I recently made the transition down to Myrtle Beach, South Carolina. I started in my investing journey in 2020.

Tony:
It’s a great time to start.

Ashley:
Yeah. And what made you start then? What was that kind of moment that happened for you?

Mike:
I’m not sure if it was an epiphany or kind of like a come to Jesus talk with myself, but I hit that crossroad where I was like, “Okay, I can keep going down this path that I’ve been on and I’m going to get the same results, or I can change the game up and see if I can better my life.” I was not somebody who was big into finances. I honestly was a day by day type of guy, like paycheck to paycheck, I’ll figure it out eventually. And then 2020 happened.
I think I can accredit a lot of it to a good buddy of mine, Caleb Kennedy. He was the first person that I ever had a finance talk with. He made being frugal look cool. Instead of going out and on the weekends and stuff, he’s like, “Mike, nah.” He showed me, I believe it was his Robinhood account, and it had a very significant amount of money in there. I knew at the time we made about the exact same money a year and my account didn’t look anything like his. So I was like, “Man, how’d you do that?” He’s like, “I’m cheap. I don’t spend money.”

Tony:
Yeah. Mike, I love that story because you said he made being frugal look cool. And that is such an antithesis to what society kind of promotes. Me and a friend were talking the other day, and it’s like there’s so many people on social media who have these big followings. A big part of the reason that they’re followings are so big is because they’re posting wads of cash, and, “I got this and I got that,” and that’s just not my personality. I’m not a flashy person like that, but that’s what a lot of people were drawn to for whatever reason.
But I think if we can all do a better job of normalizing frugality and making that the cool thing, and exactly what you said where it wasn’t necessarily the car that he was driving. It wasn’t necessarily him going out on the weekends, all these crazy things. What really impressed you the most about him was his Robinhood account. And imagine if all of us had to walk around with our net worth or our Robinhood account numbers floating on top of our head and people seeing that as opposed to the clothes we wear or the cars that we drive or the neighborhoods that we live in.

Mike:
100%. I mean, it was a game changer for me because I was one of those people. I drove a BMW. It was literally paycheck to paycheck. I never thought about my retirement. I never thought about, “Hey, if I have kids, it’s going to cost 2,000, 3,000, $4,000 a month. I’m not saving 2,000, 3,000, $4,000 a month. So what am I going to do?” And so that was in February of 2020, I was like, “Well, I’m going to be cheap.” And I eliminated as many bills as possible. I started tracking every single penny that I spent.

Ashley:
How were you tracking that mic? Were you using Excel, an app or something like that?

Mike:
The good old-fashioned way, pen and paper.

Ashley:
Yeah?

Tony:
No way.

Mike:
Yes, sir. Yep, I have books now. So I literally just started writing down everything that I spent. Each month I would try and improve it, “Okay. I spent this much on gas. I spent this much on food. Let’s see if I can knock a little bit of this off.” And at the time, I was still body building, so my food was very basic. So I’d go and try and find the cheapest chicken, I’d try and find the cheapest rice, I’d buy it in bulk. 20, 40 pound bags of rice. I cut vegetables out. I was like, “Man, I just need protein and carbs and fats. Sorry, the greens ain’t working no more” and just made it as cheap as possible and I started paying off debt, because I did have some credit card debt.
I had that car, which I ended up selling, getting rid of when the economy went crazy and used car values went up. I didn’t have to pay anything to get out of it because at the time, I think I owed 26,000, 27,000 on a car, which was, now I look back, I’m like, “Jesus, Mike, if you just had the money you spent back then, you’d never have to work a day in your life.”
So that was at February. I did not own… I’d never even thought about buying a house. As bad as this seems, I didn’t think I’d ever be able to because I didn’t keep up with my credit. I used to be ashamed of all this. But now I look back and I’m proud of it because it led me to where I am today.

Tony:
And Mike, just really quick. I don’t think you should ever be ashamed of that, right? It’s like every person has a backstory. None of us would be who we are today without that backstory. So there is a high possibility that you wouldn’t be on this podcast with us right now having this conversation if it wasn’t for those decisions that you made and what you feel were mistakes if those mistakes didn’t happen. So I think there’s always a lesson to be learned. But one thing I just want to ask before we keep moving. So you went on this journey to radically reduce your monthly spend. You don’t have to tell us the exact numbers, but just were you able to cut it in half? Was it like a 25% decrease? How much were you able to bring down your expenses over that timeframe?

Mike:
Probably little over $2,500 a month.

Tony:
Wow.

Mike:
Yeah, that’s what I was able to save per month after. So I reduced it by $2,500 a month.

Tony:
Let me ask another question. Ash, I want to ask this to you, and then Mike, we can go to you afterwards, but there’s always this debate in the world of personal finance. You hear someone like Grant Cardone who says, “Don’t worry about saving money, just worry about exploding your income.” And then there are people like Dave Ramsey on the opposite and the spectrum who say, “Stop buying that $5 coffee every day.” Where do you fall, Ash? Where do you think is the right balance to strike between those two extremes?

Ashley:
I think it’s more of the mindset for that $5 coffee. It’s not the $5 coffee that’s going to make you save money and build wealth and have that financial freedom or to pay off debt. That’s not going to make a huge impact on your debt. But it’s that mindset that you’re willing to be frugal, that you’re willing to give up things, and giving up that $5 coffee will make you realize other things that you’re able to give up to save money.
And as far as the exploding your income part of it, when I was paying off my personal debt, which was student loans and farm equipment basically, and a line of credit on my house, what we did was invest in rental properties and use the cash flow. And for years, my cash flow just went to paying off of that, and I never took any money out of the rental properties. So I think that there is that other huge debate as to, “Do you pay off your debt first and then invest? Or do you invest simultaneously? How does that work?” So I think it’s very different for every person, but that’s what worked for me, is using other people’s money to buy the properties and just using the cash flow to pay off debt.

Tony:
Mike, what about for you? You went on this radical journey to reduce your expenses. Did you also focus on… I mean, obviously you did, right? That’s why you’re on the podcast. But how did you make the transition from saving everything to now pouring that into building your income?

Mike:
Well, I knew real estate was the way out. It was about that time in… Actually, it hadn’t gotten till the end of the year because I set a goal that February, I said, “By the end of this year, I’m going to buy a house.” So I was eliminating debt, improving my credit score, saving money. I paid off all those credit cards, paid off a ton of debt. And December 30th of 2020 is when I closed on my first ever house. I utilized the first time homeowner’s loan. So 0% down, just paid closing costs. And I already had that mindset of, “Okay, what am I going to do with this property to make me money?” I’d heard of flipping houses. I have friends that had rental properties and stuff, but I still hadn’t started digging into it.
But the house was built in 1998. It was outdated. So I was like, “Look, I know I can add some value to this. I could do new floors, new paint, new everything, and it’ll make it worth more property.” And the neighborhood that it’s in is immaculate. Golf course neighborhood. When I was growing up, I called it the rich kid neighborhood. So I was proud of that. I knew I was going to do something with it after, but it was during that process that I started learning about real estate. When I was closing on that house, I stumbled upon BiggerPockets and I was like, “Oh, financial freedom.” Because I started saving money and everything, paying off debt, but I’d never heard the term financial freedom before and the thought of something else paying for my bills, it just resonated. I was like, “Okay.” I took every bit of energy that I had that I was putting into bodybuilding and focused it on real estate.
It was a complete… “Well, see you later. I’m going down this path now.” Because I’m the type that if I like something, I want to learn as much as I can about it. I just obsess about it. I just started learning so much. And I knew right then, I was like, “Okay, this is what I want to do. This is how I want to get to that place in life. I want to buy real estate.” So 2020 got closed of my house December 30th. 2021 starts, and that is when I was like, I still didn’t know a lot about real estate. I didn’t know about private money. I didn’t know how to structure deals, do creative finance, wholesaling, any of that stuff yet. So that’s when I was like, “All right, how can I save more money faster?” And I stumbled upon the vending machines. I was looking at different asset classes. I looked at ATMs, vending machines, online businesses. Vending machines stuck out because of the cash-on-cash return.
I met a guy. So I bought my first location at a car dealership from a friend of mine. It made like 300, $400 a month, and I paid $4,200 for it. So about a 10% return on your money. So I’d do that for three months or so. But these were really old machines and they couldn’t utilize credit card readers. So I flipped those, ended up selling that location for $5,000. Took that 5,000, I was like, “Okay, I’m going to buy a couple more machines, but cheaper.” And so I ended up meeting this guy, older guy that lived in town, and that was what he did full time. He had 110 machines running at the time. He was making really good money off of it. And he’s like, “Mike, I got one location that does $800 a day.”

Tony:
What?

Ashley:
Wow.

Mike:
And I was like, “What? $800 a day for a vending machine.” So I check out this setup. This was incredible. He found a farm that was 15 miles away from anything, no gas stations, anything like that. So all the farm hands that would get shipped in there to work on the farm, they lived off the vending machines. I think he had six or seven out there.

Ashley:
Wow, that’s so interesting. Yeah, I’ve thought about vending machines. You see people post about them on social media. It might be a great thing for my kids to get involved with, but that’s what I’ve always struggled with is finding the location of the vending machine. So I love this strategy that you’ve got your first property and then you’re also looking for other ways to supplement your income. Were you working at this time and did you have a W2? What were you doing besides the body building>

Mike:
Yes, ma’am. I was working full time. So I’ve been in the pharmaceutical industry since 2014. I was a, what’s called quality investigator, but basically it’s a glorified technical rider. When they had any systemic issues or product issues, I had to justify to the FDA that we had our standards in place, that our SOPs were good and that it would not affect the product in any way. So I’ve been doing that since 2014. And then, yeah, on top of that, I was coaching wrestling too. So I was investing, coaching, body building, doing all this stuff at once.

Ashley:
Let me ask you this question because this is out of my own curiosity, because I think sometimes people struggle to make this connection. So I want to ask you, are there skills that you acquired from your W2 job that translated over to real estate, that you think because… The word that stuck out to me was SOPs. That can really help you in your real estate business, is creating those standard operating procedures, building those systems and processes. So did something like that or other things from your pharmaceutical job, which you would not think has anything to do with real estate, were there some things, some tasks that you would do or skills that you had learned that have helped you with your real estate business?

Mike:
Oh, 100%. Besides the standard operating procedures, I think it was the way that I had to write and talk throughout my drafts that transferred over to how I talk to people like sellers when I’m trying to buy a property. And then I systemize how I go after these properties also. And the structure, I think the structure of it all, I’m very quality mindset. So my business is run that way. I want to be able to provide the best. And then pharma, you have to do the same thing. You have to provide… Everything has to be identical. So I try and emulate that with my business. So it transferred very well.

Ashley:
I want everyone listening now that maybe thinks that their job doing whatever won’t translate to real estate in any reason, look at Mike as an example. He took his pharmaceutical job and has taken skills from that for his real estate. So just take the time after this episode to write down maybe three things that you do now in your day job that can help you with real estate investing. One of those things might even be that it’s just a W2 that can help you get that first loan, that first mortgage. So Mike, you had mentioned that you did a first time home buyer loan. Can you maybe talk about that a little bit? We hear a lot about an FHA loan where it’s three and a half percent down. What was kind of different about your loan that you did 0% down?

Mike:
It was 0% down, and they just offered a… I think you had to pay a prince or a mortgage insurance on it. So every month is like 80, $90 extra a month. But if you can compare it, yeah, long term it might be a little bit more expensive, but instead of putting that three and a half percent down or 10% or 20% down for a conventional loan, that saved me a ton of capital up front. And I used whatever I had left to buy vending machines to create more capital.

Tony:
Yeah, Mike, you’ve done a great job of, and this is what we’re talking about, of kind of attacking it from both sides where you went after this kind of debt reduction journey to kind of bring down and save more money, but then you also focus on, “Okay, how can I create more income?” So you got the first property, you got into it for a relatively small amount, then you go into the vending machine business. So just for clarity’s sake, Mike, that first property, since it was owner-occupied, were you able to generate revenue from that property or was that one just as your own primary residence?

Mike:
That was my primary residence. I had thought about doing some house hacking and renting it out, but I was like, “I don’t know.” I was making pretty decent money. At the time I was in a relationship, so she was living there also and we didn’t want roommates.

Tony:
Yeah, no, totally understand. Yeah, I got a wife and kids too. I don’t know if I want roommates either. So at what point did you say, “Okay, let’s get that first investment property,” and what did that journey look like?

Mike:
So 2021 was basically my education year. I don’t know, I might have had a little bit of analysis paralysis, but I wanted to learn as much as possible. And I knew getting into it, I was going to hire a coach that I was going to spend the money to find somebody that’s been in the game and kind of get underneath their wing and learn as much as possible so I don’t make a ton of mistakes. And I was watching the podcast. It was a 45-minute drive to work for me one way. So in the mornings I would watch the BiggerPockets podcast, and then I stumbled upon the Rookie Podcast and it changed my life completely. So that was an hour and a half I was spending a day educating myself.
One of the podcasts, a guy by the name of Pace Morby was on there and he spoke to me. I knew right then I wanted to hire him as a coach and get into his mentoring program, and I did. So that was on November 14th that I heard the podcast because I listened to it that morning. I listened to it all the way home that afternoon. And then two days later I joined up on his SubTo community. That really skyrocketed my education. I felt confident in my skills from everything I learned in there. So that was November of 2021. Well, April. So at that point I started telling people, “Okay, I’m getting into the real estate game.” I’d got my real estate license during that time because I thought that that would help me find investments and stuff, which is a completely different game that I have now realized.
I just started having the conversations. Everybody I knew that had rental properties, I was blowing them up. “Okay, how’d you find this? How did you finance it? How do you find off market deals? How do you tell how much equity’s in the property? What’s an ARV? What’s a comp?” I’m trying to learn as much as possible in talking to these people that have already done it.
I think it was April 15th. April 16th, I get a text. It’s from my buddy Seth Brown, “Hey, check this out” with an address. And I look at it and it’s a little duplex built in the 1960s. I was like, “Okay, what’s up?” He goes, “I think this lady might sell.” I was like, “Well, ask her if I can call her.” That was on a Wednesday. Picked up the phone, called her, she said she was willing to sell. I said, “Okay, Friday, I’m going to come check out the property. If it’s indecent shape, I would love to buy it from you. We could discuss the price.” She goes, “Yeah, that’s fine.” So that Friday I drive to Lexington. It’s about two hours away from where I was living, and I picked up my first property.

Tony:
So Mike, we got to pause here, man, because there’s a lot of good things that we got to dive into. So first, I don’t even know if you realized this, but one of the things you said really stuck out to me is that you started telling everyone around you that you were a real estate investor. You didn’t have any deals yet, right? You hadn’t closed in anything, but you started to identify as a real estate investor. I think that mental switch is one of the most important things that our rookie audience can kind of take away from what you just said, is that until you adopt the mindset, until you adopt the identity that you are a real estate investor, it’s hard to really step into those shoes. And lo and behold, Mike, as soon as you made that mental transition to say, “All right, I am a real estate investor,” now you’ve got your friends reaching out to you saying, “Oh wait, Mike’s looking for deals. Let me share this to Mike.” That one little interaction leads to your first deal.
So again, if there’s one piece of advice for our rookie audience, it’s even if you don’t have that first deal, share with everyone you know that you are a real estate investor now, that you are looking for deals, that you are looking to invest. Because you never know who they may know and you don’t know who the people that they know who they know. So there’s this large community that you end up tying yourself into. So tell us about that first deal, Mike. I don’t want to brush past this. Were you able to use creative financing to secure that deal? Was it something else? Walk us through how you kind of funded and put that deal together.

Mike:
So I got extremely lucky because this was a home run. I’m talking Mark McGuire 1998 home run. Out the park, okay? So I go talk to the lady. Super sweet, it was great. I cut to the chase, I said, “Ma’am, how much would you like for this property? What do you think is a fair price for this property?” She goes, “Mike, I’d take 60,000.” She paid 30,000 for it 20 years ago.
But I guess we got to backtrack for a second. The reason he called me, my buddy Seth who is my business partner on that deal, he works for a company that they go in and fix foundations, crawlspaces and foundations. So he was there giving her a quote on how much it would cost to get the foundation because it was sagging a little bit, it needed a decent amount of work. And she’s like, “I don’t have that kind of money for that.” And he goes, “Well, I know somebody that might buy this as is.” And he sends me the text, we go from there. So I ended up getting it under contract for 65,000 because I purchased an easement to the right of the property that she also owned.
We put $17,000 into the foundation, which we were able to finance out over a year because he worked for the company. So we didn’t have to come out of pocket with that. We also put $5,200 into just update in one of the units. Painting it, fixing some of the minor stuff in there. We split that 50/50. Everything on this property we split 50/50. And then I went about finding the money to pay for it because I wanted to do a BRRRR on the property.
So me talking to everybody about I’m a real estate investor even though I hadn’t done a deal, a friend of mine’s dad reached out to me one day. He’s extremely successful. He’s now a mentor to me. Extremely successful. Owns, I think he’s right at 30 doors. So he’s the guy I see myself wanting to emulate. He calls me out of the blue one Saturday, “Hey, Mike, meet me at this coffee shop.” I was like, “Yes, sir.” I show up and he goes, “Look, look man, I’ve seen what you’ve been doing.” He goes, “I’m going to loan you $100,000.” He’s like, “You’re going to pay me 6% and use that to get started.” So it was awesome. That was a game changer for me.

Ashley:
Was this a handshake deal? Did you guys actually put together a loan agreement or anything like that? Maybe give us an insight of to that conversation of talking about doing the lending? Were there certain requirements he had or was this the easiest thing you’ve ever done?

Mike:
No, it was really easy. He already had paperwork drawn up for it. So he wanted 6% on it. And then it was just, I think I put him in first position on the note so that in case something happened and I wasn’t able to get the money out, then I wanted to back him because he’s a friend also. He wasn’t just a private moneylender. But it was extremely easy. It kind of came out of left field and-

Tony:
Hold on, Mike. I want to give you a little bit more credit because maybe that conversation was easy, but everything up until that point wasn’t, right? I just don’t want our rookie audience to get stuck on the fact and say, “Oh, well Mike had a friend who gave him $100,000. He’s special.” But no, it’s like everything you did to get you to that point is the hard work that most people aren’t willing to do, right? This person saw you hustling to reduce your expenses. This person saw you hustling to build relationships. This person saw you find a really great deal, which takes hard work and work out the numbers so that it’s a home run. So there’s a lot that goes into, so I don’t want you to shortchange yourself there.

Mike:
Yeah. There was a lot that happened up to that point also. When I was getting my real estate license, I called him out of the blue and I was like, “Hey, do you mind if we meet for lunch?”
“Yep.” We meet. And I was like, “I want to do business with you. Any way that I can help market you, I’m going to do it. Teach me what you need to teach me. Every deal that I get from my real estate license, you’re my mortgage guy.” Because that’s what he does, is mortgages. We had a lot of conversations in between those points. I also went out and found deals for him. So I would shoot him a deal, “Hey, what do you think about this?”
“It’s not for me,” but then, well a couple of them are ones he wanted to pick up. So I provided value to his life.

Ashley:
That right there, that was before he offered you the money, correct? Yeah? So that is such a great key element to our listeners and just showing how you went and you provided value first. It wasn’t you asking for money for him to lend to. You taking those steps led up to that moment where he came to you to lend you money. I think that’s a very important to mention and just a awesome strategy to make a connection with someone and to make it genuine. You honestly wanted to provide value to him by sending him deals, doing moans with him, things like that. I think that’s probably a big reason as to why he did want to lend to you.

Mike:
I agree. And he knew I respected him a lot. Like I said, he is a mentor to me. He’s just somebody that I want to be like. Every time I saw him, I was asking him questions, “Okay, how does this happen? How do I do this?” He’s just taught me a lot. That day he really skyrocketed my real estate career.

Tony:
Isn’t it crazy how one conversation can have that impact and kind of change everything? I want to go back to the deal, Mike, because… This is something I’ve never really thought about doing Ash, I don’t know if you have, but you guys found this deal because the current owner didn’t have the capital, didn’t have the know-how to solve the foundation issues. And to them it was easier to just give the property away as opposed to them doing it themselves. It’s like Ash, I wonder what if we just started a campaign where we just looked for all the houses across America that have foundation issues. How many off-market great deals do you think we could find if we were able to go to a seller and say, “Hey, don’t worry about fixing the foundation. We’re going to buy it from you as is.” You could probably get a ton of off market deals that way.

Mike:
Oh, definitely. See, we didn’t have to pay full price either because he worked for the company. So we got it at about 50% of what is the quote to the general public. So that saved us a ton. So right now that’s $17,000, 65,000 purchase price, and then 5,000 in minor stuff. So ARV on that property, 140,000. So at 70%, that’s 98,000. I hit a full BRRRR, 100% clean BRRRR.

Ashley:
Awesome.

Mike:
So that’s what we did. I went and I borrowed the purchase price from my investor friend. I paid him 6% up upfront. Even though it was an annual 6%, I was like, “Nope, I want you to have this up upfront.”

Ashley:
So you prepaid him for a year of interest?

Mike:
Yes, ma’am. Yep.

Ashley:
Wow, interesting. I don’t think we’ve had anyone talk about that just to make it more secure or more advantageous than saying, “I’ll make the payments to you,” it’s kind of we always talk about how to sweeten the deal with a seller to get them to accept your offer, but that’s a different unique strategy with a private moneylender too.

Tony:
Was it prepaid interest, Mike, or was it points that you paid up upfront? Was it separate from your ongoing interest payments or was it actually just the interest and you said, “Here it is upfront”?

Mike:
Just the interest here upfront, yeah. I wanted to provide value to him up front too and show, “Hey, I’m here to do good business. I want all of us to win.” And that’s how I am with all of my private moneylenders now. I was able to get one private moneylender literally off of Snapchat. He was a friend of mine. I posted one of the deals and he’s like, “Are you doing that now?” I was like, “Yeah.” He’s like, “Man, I’ve got a ton of cash that I need to invest. Let me know if you have any deals.” Two days later I give him a call, “Hey, I got a deal.” He sends me a check for $90,000 right after.

Ashley:
That’s it. I’m downloading Snapchat.

Tony:
Yeah. That’s where all the private moneylenders are hanging out. I’ve been on the wrong platform this whole time.

Mike:
Yep. I gave him a good deal.

Ashley:
I’m deleting Instagram. I’m going to Snapchat.

Mike:
And I gave him a great deal. I gave him 40% of our net profit on that deal.

Ashley:
Wow.

Mike:
So it was like a one-month turnaround. I think he’s going to make like $8,500 or something like that for a one-month turnaround. So where are you going to find something paying that well?

Ashley:
Mike, I want to talk about the rehab, about doing the rehab on these properties. Did you have any experience in construction at all? Maybe talk us through what you do for rehabs. Are you hiring general contractors? Are you using friends? Are you doing some of the work yourself? You just said you did turned over a house in one month, that’s pretty efficient. So what are some of the things that you’re doing for rehabs?

Mike:
It depends on the property. So that was the only one we’ve had foundation issues with and that’s how we got in the door there. I have made some mistakes along this journey. I’ll be the first to say it.

Ashley:
So have we all, especially with rehabs.

Mike:
Very expensive. Very expensive mistakes. I made the mistake of thinking just because someone was a friend, that they would do good business. I had a couple GCs that I at the time considered friends and they came in, did horrible work, and it set me backwards a lot. I think if you’re going to do it, you have to keep friendships and business completely separate and you have to treat them… For me, it’s been hard to find very reliable GCs. I don’t know how you guys’ markets are, but where I’m at is just nobody takes pride in that work anymore, I feel like. And they can charge top dollar and I’ll pay top dollar. I want quality work. That’s my mindset. I want my properties to look incredible because they will never look like something I wouldn’t live in. And I expect that from anyone that works with me to give 100%. I’ve had a couple situations where it cost me a lot of money. They came in. I paid up front. That’s something I’ll never do again for general contractors. Twice I paid up front and they disappeared.

Tony:
Yeah, that’s unfortunate. We talk about this all the time. It’s like the entrepreneur in me wants to start a GC company that focuses on real estate investors. Literally, if I’m just the one GC that picks up the phone when the client calls, I’ll already be in the top 1% of the 1% of all general contracting companies.

Mike:
Amen.

Tony:
Mike, so you get this first deal, you seem to do really well with it, right? You have this amazing first deal using other people’s capital. It seems like now you’re kind of building a relationship with private moneylenders. So if we can just pause really quickly, how many deals have you done since that? You did the primary residence in 2020, then you did the first duplex. How many total investment deals have you done since that first one?

Mike:
So I owned four and I’m under contract on two right now. One of which I have already assigned. I assigned it the same day. I went under contract at 1,236.This was last week, 1236 at 932 or 925, I assigned it for $50,000 profit.

Ashley:
That’s amazing.

Mike:
Thank you.

Tony:
Yeah. So your wholesaling now as well then, Mike. So you’re finding deals for yourself, but you’re wholesaling. So of those four deals that you’ve kept so far, two of those I know you used private capital to fund. What about the other two? How did you fund those two?

Mike:
Private money. Yeah, so the two I have under contract right now, we’re just going to turn and BRRRR. We’re just going to wholesale those out because we’ll make a good chunk of change like that one $50,000 profit. The other one’s not as lucrative. It’s only like 10,000. But we’re trying to stack it up right now because we don’t want to continue to have to go out to private moneylenders. We feel like in the next six months to a year, we’re going to just stick in the wholesale realm and then maybe do a couple flips, then next year get into a little more flips because we want to transition away from single family homes and duplexes and stuff. We want to get into the storage facility asset class. I personally want to buy a couple oceanfront condos for Airbnb for my own portfolio, but right now it’s just about stacking up capital. I made the decision this past week that I was going into investing full time, so I’ve left my W2.

Tony:
Congratulations, man.

Mike:
Thank you.

Tony:
We got to get like a little bell that we can ring for our guests when they quit their job. You got that on the soundboard?

Ashley:
I have my little soundboard. I don’t know what any of the buttons are, so this is going to be a surprise as to what sound it makes.

Mike:
[inaudible 00:38:29] it.

Ashley:
Hand clap. There we go.

Tony:
There we go.

Mike:
I act like I’m super happy, but guys, I’m so scared. This is the first time since I was like 16 about having a full-time job, you know?

Tony:
Yeah, it definitely is a scary moment, right? Ash and I have both gone through that transition of the last couple of years. And it definitely is, I think, a scary moment. But once you realize that you’re able to provide for yourself and provide for your family with your own… Not your own two hands, but it’s like with your own work, it’s almost this relieving sense because now you’re not tied to what someone else thinks of your value, right?

Mike:
Exactly.

Tony:
Now you’re not tied to what someone else wants to pay you. The upper limit of what you’re able to earn is squarely on Mike’s shoulders, or it’s on Tony’s shoulders, or it’s on Ashley’s shoulders and it’s not on XYZ corporation for them to say, “I feel like Mike is worth this much money. I feel like Ashley’s worth this much money.” Or, “Tony, you’re going to get this much more money.” It’s 100% on you. So there is this fear, Mike. But dude, once you kind of break through that fear, it’s almost this liberating feeling because you realize you’re in control.

Mike:
I can’t wait. I mean, I just recently moved down here to the beach too, and this is something I’ve wanted my entire life. Since I was a kid, I was like, “I have to live at the beach.” And then back in December I was like, “You know what? I had a talk with a friend of mine, very successful.” He reminds me a lot of you guys how positive and just uplifting type guys, the ones that you just want to be around all the time. Well, we had a talk and he’s like, “Mike, I see where you’re going. I know you want more in life. You got to get away. You have to just go somewhere, start over and just focus on this new life.” So back in December I made the jump and it’s just been incredible since. I’ve met some absolutely fantastic people here that are super successful in the real estate world and they’ve taught me so much.
I’m like Luke Rotvold off the phones now. That guy is an animal, so I’m just chasing him so hard right now. This is coming from a guy that I used to hate cold calling with a passion. Now I blast it few hours a day just going. And it’s from being around people that I’ve seen utilize that that are… My good friends, Kevin and Lance down here, Lance is over a hundred deals a year. So that’s something that I want in my life. I want those kind of numbers. It’s just building that confidence. When you’ve got the right circle, they’ll help you build that confidence.

Ashley:
Mike, I want to ask, what are some of the steps that you did to decide that now was the right time to quit your job? Is there anything that you have to prepare for now as to, like the first thing I always think of is health insurance. What are people going to do for health insurance? So can you talk us through some of the things that made you decide now is the time to quit?

Mike:
I think that deal I did last week. It was literally a nine-hour deal. I got it under contract. Nine hours later I [inaudible 00:41:41] it for 50,000 profit. I was like, “Mike, if you were able to do this 40, 50, 60 hours a week, there’s no telling how much you can make.” I loved what I did. I worked for some good people, but it wasn’t my passion. I just don’t want to be 65 years old and look back and go, “Man, I wish I’d have just chased, give everything I could to real estate, to something I was passionate about.” But with health insurance and stuff, I’ve got a good amount of money saved up now. So I guess I’m going to have to find a good policy to jump on. I haven’t really thought about it yet.

Tony:
Now you’re scared of it, right?

Mike:
Yeah, no.

Tony:
Mike, I wanted take us to our Rookie Request line, but before we do, I just wanted to ask one final question about the private money piece. I guess two questions. First, what kind of rates are you offering to your private moneylenders today and has that shifted as the inflation has played an impact and the feds been raising interest rates? Have you seen your private moneylenders asking for higher rates? And then the second question is, what documents do you typically use to formalize that relationship?

Mike:
So we actually had a lawyer draft up something for the loan and all the money. One of our deals, we didn’t have any paperwork at all. It was just purely a handshake. But I try and pay them as well as I possibly can because I want to establish the trust, the loyalty and show like, “Hey, Mike knows what he is talking about. He just gave me a 15% return on my money in 60 days.” We do something where we’ll guarantee six months. So okay, say we got the money loan for 10% on $100,000 or whatever the amount is. We’ll go, “Even if we turn this around in two to three months, you’re getting paid for six months no matter what.” So it’s beneficial to them. And it just all really depends on the deal, I feel like. My private money guys have not tried to stiff me or tried to go higher on the rates. I think they see that I’m going to pay them well.
So there’s enough food on this table for everybody to eat and I want to make sure my guys are taken care of because then if I need something I’m taken care of. So we’ve got really lucky with that. We got one private moneylender through another friend. It was all because my business partner, Josh Cotton, was sitting at a coffee shop on his lunch break cold calling, okay? This lady walks up to him and goes, “Sir, are you a wholesaler or an investor?” He goes, “Yes ma’am, I am.” She goes, “That’s funny because my husband does the exact same thing every night. You guys should meet.” Well, we meet and just hit it off. It was awesome.

Tony:
Mike, your story is so crazy, man. It’s like there’s all these kind of serendipitous moments where it’s literally the byproduct of you guys working hard. Who goes on their lunch break to cold call? It’s a very special type of person that does that, but that single action kind of creates this domino effect. It’s the wildest thing, man. So if there’s one thing that I would want the rookie audience to take away from your episode, Mike, it’s that if you work hard enough, good things tend to happen. And you’ve proven that just over and over and over again, man. So I want to take us to the rookie request line here. So for all of our rookies that are listening, you guys can always phone in your question, just give us a call at 888-5-ROOKIE. If your questions are good enough, we might just use it on the show. So Mike, are you ready for today’s question?

Mike:
Yes sir.

Tony:
All right. So today’s question comes from Andrew and his question is, “My name’s Andrew. I’m calling from New Jersey. The question I have for you all basically is how you differentiate your entities? I work with two partners and we have one specific entity that is carry almost everything. Everything is under one entity when investing people’s money, private moneylenders, or investing in off-market properties. I’m wanting to know if you guys differentiate those. Do you have two different types of entities? How do you handle that? Hope to your answers. Thank you so much for taking my call.” So I guess the basic premise of that question is Mike, so you have properties that you’re holding, you have your wholesaling arm, you have partnerships. How are you structuring between your entity, your partner’s entities, and then the different activities in your business?

Mike:
I set them up in different LLCs. Every one of them is in a different LLCs. So I’ve got the property with Seth that’s in one LLC. I’ve got our actual business that’s an LLC. And then I’ve got what we hold because I’ve got properties with Josh, my one business partner, then with Seth. So we have different LLCs for that too. I just separate everything completely. And then with my own personal portfolio that will go into its own LLC.

Tony:
Ash, it look pretty similar for you too, right?

Ashley:
Yeah. Each partner has a different LLC, each business has a different LLC. The development in the rehab has its own business, even though it works on the properties that are owned in one of the rental LLCs.

Mike:
It keeps the numbers easier I feel like.

Tony:
Oh, totally. We separate all of our active income from our passive incomes. All of our rentals are in one set of LLCs. All of our active income from our flips and our events and our coaching program and all the other active things that we do is in a separate LLC. So yeah, it can get pretty crazy with the entity stuff. So Andrew from New Jersey, if I had one piece of advice to you, I would go talk to a good CPA and go talk to a good attorney in your estate and kind of give them the layout and the breakdown of your business and the different things that you do. They should be able to help you set things up in the right way.

Ashley:
And I would get them, if you can, on the same call too.

Tony:
Totally.

Ashley:
That’s the best, yeah. Okay. So Mike, we are moving on to our Rookie Exam. The first question is, what is one actionable thing rookie should do after listening to this episode?

Mike:
Go out and talk about it. Have those conversations. Tell your friends, tell your family, “I want to get into this, I want to become a real estate investor.” And then the next thing is hire a coach. Save yourself a ton of time and hire a coach. There’s always going to be somebody that’s better than you at everything in life no matter what. So why waste the time making all of these mistakes when you can just go hire a coach and eliminate it?

Tony:
Question number two, Mike, what’s one tool, software, app or system that you use in your business?

Mike:
Mojo Dialer. That is my bread and butter.

Tony:
I love Mojo. Can you explain what Mojo is, Mike, for folks that aren’t familiar with that software?

Mike:
It’s the system that you use to cold call. I’ve got a triple line dialer on there, so I’m able to call three numbers at once. And then if one picks up, that hangs up the other two. Just so you can get as many calls in as possible.

Tony:
Yeah, Mojo’s fantastic. I was trying to set up a wholesaling arm early last year, so we had Mojo for a little while. Yeah, the way that you’re able to run through all those numbers in a relatively quick period of time is pretty crazy.

Ashley:
Okay. Our last question for the Rookie exam is, where do you plan on being in five years?

Mike:
I want to be on the beach all day long, relaxing, letting my passive income pay for everything. My goal is to personally at 40, I want to say I’m getting up, I’m going to work because I want to, not because I have to.

Ashley:
I think that right there is something that will resonate with a lot of people. And that really does change your life. There’s the fire community where it’s Financial Independence Retire Early, but when most people get to that point, they don’t actually want to retire because they want to work at some passion project or keep working at something that excites them and fills them with joy and passions.
Okay. Well Mike, thank you so much for coming on with us. Can you let everyone know where they can reach out to you and find some more information about you?

Mike:
Yeah, so we have a small Instagram page called Valiant Acquisitions LLC. And then I have my personal page, it’s larson910 on Instagram.

Ashley:
Okay, cool. Well we really appreciate you coming on sharing all of your information. Definitely added a lot of value, so we appreciate it. Thank you, Mike.

Mike:
Thank you, guys. This means a lot to me.

Ashley:
I’m Ashley, @wealthfromrentals. He’s Tony, @tonyjrobinson and we will be back on Saturday with the Rookie Reply.

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