Hey welcome back to my podcast. You've heard me talk about before that, i'm an investor in tens and tens and tens of real estate tech companies prop tech companies, other interesting businesses, a wine and tequila asparagus company all kinds of wild stuff. Today, i'm introducing you to a client and a friend who i'm now doing syndication deals with i'm telling you this as a public service announcement to let you know straight up front that i'm super enamored by this guy and thrilled to be his business partner. So listen up, you don't have to invest in the deal, but i always got to be transparent with you so enjoy the show.

So eric welcome to the show man. Thank you excited to be here yeah. So you know you shared the stage a couple times now with us and and i look at the rooms they're packed everybody wants to be a better investor. Everybody wants to to understand how to speak the language of investors, so you can, you know, add that new channel of business or ultimately be a better investor, help people understand your back story, because when they hear that you're 33 years old and you own 700 units They're, like would he buy his first one at two like, like give us a little context backstory before we go into like we have a lot to cover today.

This is going to be one of those ones, you're going to listen to twice and you're, going to take notes so give them give them some context: uh yeah, no backstory. I was in college. I signed up to run a painting business through this company called college. Propaners uh, i had no money to my name and i'm, like you know what i don't know if i have what it takes, but if there's ever a chance to take a chance on myself, yeah uh or a time, it's right now when i'm at nothing.

You know, because i can't go back, you can't lose right exactly. Was it like a franchise? It was. It was a franchise okay. What did it cost uh? So it cost me nothing.

They just gave me 10 grand in debt and they said if you don't pay this back we're going to go after you. I had to sign online that i was i'm like good luck. You know i don't really have any assets, but i'm going to i'm going to try so immediately day, one you're in the hole yeah. They give you keys for a business, they tell you how to run it and they say: go out start knocking on doors, get jobs, hire people paying.

Houses turns out. I made like 25 grand as a 19 year old kid that summer, including paying off your debt or total, including yeah at the end of the year 25 grand in my bank net, all right, congrats yeah, actually you know probably uh. Profit was a little bit more than that, but you know spending it throughout the year, so sure uh yeah, you know profit to me - was cash in my bank at the end of the year. Exactly before or after taxes did anybody teach you about that? One yeah yeah, i learned a lot anyways uh, you know i i was about to spend uh that money.

I started blowing it on dumb things and i went and said hey where i went to my mom. I said: where can i put this money uh, where i i'll protect myself from it and so um she's? Like i see successful people buying real estate, this was 2009, and so i went out. I bought a house. I looked for something that cash flowed just a little bit more than the mortgage uh, and that was the formula it wasn't anything revolutionary at all.

It was like uh wealth preservation was my thought and uh, so i did that three more times and then uh. You know because i i thought the idea was - was cash flow and so i bought properties. I didn't really appreciate - and i just sat on those for a long time, and so it wasn't really until like five years ago. Okay, so hold on, though man you're, 19 years old, you you're in college.

What were you studying uh? I was going to business school okay, so that that gives us a little more context and now you're also a i see as a very competitive guy you're. You run marathons you're super fit married two, you know two beautiful kids like you got the whole package today. Was it were you always this way like buying your first house at 19? Does that i bought my first house at 19, but i was like a high-flying, crazy sales guy yeah, my dad's, like you, need to buy a house i was like. Are you kicking me out he's like yes, right, like that was part of it.

So yeah? You went from one to two to then you said five years ago you started buying a ton but like i want to understand, like what was your psychology back then at 19 or 20. you're running a business you're going to school and you're buying real estate. Like that's nuts yeah yeah, you know i've. Actually, i've never been like the the most talented or the smartest guy like i've.

I've always been like the hardest working though so. Like yeah, i was a guy. I played hockey growing up and uh. You know the coaches.

Would put me on the ice um not when we needed score goal, but when we needed to prevent the other team from scoring, because i would go out there and work so dang hard and i'd like motivate the team to like hey, everyone should skate as fast As eric but again, you know don't pass a puck to me because i'm not going to know what to do with this kind of thing. Right he's just going to hit somebody kind of yeah, yeah, and so that's been. A lot of my life is just like getting out there and just just going for it um and learning along the way, and you know so. I think that leads to also a lot of mistakes, and - and that's how i picked up you know really where, where i am, is, is through a lot of those ups and downs, sure i'm happy to share and i'm excited you got pages.

You got pages of notes here, so let's, let's go back, you were saying, but it was really five years ago. So take us take us back to five years ago. What did you mean by that yeah? So that's when uh i sold my first apartment building and uh really realized as a as a broker or one that you owned uh, one that i owned yeah. So i had bought an apartment building with another guy conrad yeah.

We owned it for a few years and uh we sold it and we made a million bucks on it, and you know we really didn't do that much yeah it was. It was crazy, okay. What was that like uh? It was. It just opened my eyes.

I i started realizing i'm like wow, you know we uh um, we just kind of fixed it up a little bit over time. We didn't really put any more money into it other than the cash it was generating, yeah um and what it did. Is it turned my mind into realizing that this is more than just a cash flow game. You know there's an appreciation game, especially if you play it smart and you're, buying in areas that are going up and you're you're doing the right things yeah, you know and thinking about like who is the next buyer and or thinking about like how is a bank Going to think about the value of this building, and how can you position this building uh to be valuable, a couple years down the road, pull your money out and then go reinvest? You know i started thinking about like doubling time on my money, rather than just like the percent cash on cash returns.

Yes, someone right now is going to slow this guy down man. He is quick right, like you're, dropping all these bombs, so no, i love it. So so five years ago you and conrad - oh, i know and right jt wasn't involved, then so yeah right. So you guys you bought a building how many years before uh three years, so three years later, you sell it pull a million bucks out.

Was that including your deposit, yeah? No, so that was uh. That was profit that was okay, yeah, true million dollar gain right and then did you guys 1031 exchange that into something else uh. Yes, we did okay, so you're sitting there thinking wait a minute. This is real now this is five years ago, you're at that point: you're 26, 27, 28 right, like yeah, you're, young yeah, and and what are you saying to yourself at this point and then we're gon na get into a bunch of the tactics like? What are you saying to yourself like how do i go buy? A thousand of these? How do i go buy 500 of these? How do i go? Do 10 of these deals? What was going on uh yeah? That was uh, we're just like? How can we? How can we keep this moving? You know it.

We realize that there's this space, you know class b apartments where super low vacancy uh super high demand very easy to wrap your mind around a lot of banks, uh love to finance those yeah, so really good lending terms. So uh. We just saw that you know uh, it's a market that people have been in for a long time and it's just tried and true and the formula is just you know it's out there for everyone to to go and to work, and so um really nothing revolutionary And so it's uh we're we're kind of started. Looking at like okay, we own a bunch of duplexes, we own a bunch of smaller stuff.

How can we start selling some of those and using those as chess pieces uh? You know to go after some of these bigger buildings. You know, and - and i i hear that a lot, but you know it's really um, you know it's the whole scale thing and what i found out is that you know owning bigger buildings. It doesn't necessarily mean you get more cash flow. You know per door, yeah uh, it's more just like scalability yeah.

You know you can only control so many things. Well, so you might as well control bigger things well, rather than a bunch of smaller things. Well, uh, and so that uh, you know and again it's you know when you get into commercial buildings, it's valued based on a formula not just waiting for the rest of the market to appreciate right, you have more control over some of those levers, yeah and and Again, realizing uh how much money can be made through appreciation how much faster yeah you know in the span of a couple years, you can pull your money back out rather than you know, just waiting for cash flow over a 10-year time. Right and you know what i'm saying right now to someone who maybe got burned in the the recession sounds very risky, and so what i'm not saying is like avoid cash flow.

You know you don't need something to provide cash flow. The holy trifecta is cash flow, appreciation and taxes and then maybe a trigger whether you exit a refi like like that's what you want correct, but what i, what i am saying is that people put too much weight on on the cash flow on it yeah. They only pay attention to that and they don't pay attention to some of those other factors as much as they should yeah. I mean you met my wife.

She she buys uh a and b product duplexes, mostly very expensive ones. In my opinion, and her whole thing is like the only thing i care about is appreciation because i know where i'm buying yes and they're going up 30. 40 50 a year right, these unbelievable numbers and she breaks even on it. Yeah right she breaks even but but the equity that's gained from these things, it's just monsters.

So again, let's back up um, we want to help people understand how to work with investors. We want to help people become better investors. You have like five pages of notes. Right so so, how do i, as an agent start to work with investors, yeah and - and i think it's important to answer like the - why behind that first too, yeah um? Just because i look back at my career - and you know i got my real estate license because i wanted to have like an in on the market.

I wanted to see deals before they hit the market. This was like 2012 2013 when i was getting in, and i had a few friends that saw me, you know: buy a duplex and they're like eric. Can you help me do that as well? I'm like well, i got this real estate license. So why not yeah, and it was what i realized quickly was um.

I learned a lot more about the market by helping others right because it wasn't just my neck on the line. You know it was my friends and you know, and people who trusted me and so uh when you have to teach something um you you take it a lot more seriously right and so um. You know i i think, and - and i talk about this with my team - so i have this brokerage fulton realty in minnesota and uh all the time. I'm i'm talking to my agents about getting into working with investor clients and how to work with those investor clients and what to say and what's important uh for those clients to hear from you and uh.

So i i just think one of the biggest things that you can do to build your success in your own. Investing career um as an agent is, is one right, build the cash through through some sales through investor clients, they're amazing clients, because they're they're repeat, and when they go to maybe buy uh. You know that million or two million dollar home yeah um. They look to you.

They're, like you've done a really good job. Helping us out. Can you help us go buy this other home? Well, absolutely. I specialize you know in investments.

Maybe, but but you know no, no problem. That's that's an easy one for me. Was there a course you took or a training you took that gave you like, there's there's different language when you're dealing with investors than there is like helping tom and kathy ferry, buy a house sure do what i mean like you know, we're talking about cash on Cash returns, we're talking about you know what cap rate and like how did you? How did you get to understand all of that yeah and what advice do you have for the listener yeah, so you know back uh back then, like the the big thing was rich. Dad poor dad it's still very popular, but uh still definitely recommended uh, but bigger pockets wasn't around.

Then that's! That's one of the areas that i would. I would go first uh to find some biggerpockets.com, which i mean all they talk about is buying duplexes and fourplexes, and i saw this kid on watching some interview: the kids like 22 years old, he owns like 500 units. I was like what yeah right, but they, but they unpack how yes yeah so exactly, and i think there's a ton of inspiration and you realize that, like yes, this is possible for anyone to do and there's they lay out uh. You know the strategy to do that so um, you know back to like in working with investor clients.

You know, i think one of the biggest things is like okay. How do you start working with those clients? Where do you go to get them? You know just brainstorming some ideas with you. Go, take a look at you know some of the some of the transactions. If you have duplexes in your market, um call up the agents that are are listed on those transactions and just say: hey, who? Who is the lender? I'm looking for you know a good vendor that understands this and then go ahead.

You know make your list of lenders um and then go to those lenders and be like you know what this is uh. This is something that uh i i've been studying. This is something that i'm very helpful in. I can see around the corner.

I understand you know how to how to make sure that these deals don't fall apart and coach my clients and build those relationships with those lenders that do those types of deals right. Most cities have a rental license database where they have all of the owners. It's public information. Thank you exactly yeah and you can just call the city and say: hey, i'm looking for this database.

I know it's public information. They'll! Send it over to you. You know phone numbers, uh names, emails, um, start calling right those people, but you can also get that's from like uh like uh remind yeah, there's a bunch of like data solutions that you can go in and say. Show me all.

The non-under-occupieds show me all the duplexes that are owned by an llc like there's all kinds of search queries, but i love the fact just going right to the public data source like just give me everything yeah. So you get this giant list. You know there's like 12 million duplexes in the us like it's a it's a big number, but they're they're concentrated right all over the place, but 12 million is a lot of doors yeah. I guess it's technically 24 million doors once you get the list.

What do you do, you see you say, call them, but like hey yeah, what am i saying to them? What am i asking? What am i doing with these people? Yeah yeah? So it's it's really simple. You know you're calling uh on behalf of a buyer, so you don't have have someone who's remotely interested in buying and you're calling. You know wondering if they're looking to sell sometime in the next few years, yeah um, you know i've gotten really smart with it. When i call those people now i'll, actually call and say, look i'm a fellow owner in the neighborhood i'll give them the address of my property, yeah and and i'll just tell them like hey, i'm, i'm gon na look to sell my property.

Are you potentially looking uh to add to your portfolio so then it totally turns off. Are you like antennas? You reverse engineer like you want to buy mine, yeah versus versus yours. You know. Last week i called the guy um, and you know he he was pretty old school mentality and and immediately picked up and i'm like.

Oh, this is going to be a fun conversation and - and that was you know, i'm like hey. I own i'm a fellow owner of yours, i own down the street and that kind of totally you know pressure off, yeah, yep and uh. You know he was uh by the end of the conversation he's like you know. I've had people calling me asking to sell my portfolio for years and i got i got 25 properties all in this area, and you know i just i just hang up the phone and he's like you know, i'm getting to that age where i'm actually thinking.

I probably get better figure out what i want to do, because my my family doesn't want to own these things anymore and i i'm i'm past retirement age, and so you know, if you're just a little bit creative with your conversations, you can disarm someone and uh. You know you can come in and you know you can open up those conversations and really build a relationship and so offering something to them. You know for sale, yeah. Potentially, if you have a couple units, can you really open the door and uh um? So what did they find a potential? And and again you know if you find someone they're like no, i'm not interested in selling, you know.

Are you interested in buying you know? And now you have your buyer list right and you start building that buyer list and you start matching up buyers and sellers um. You know and it's it's okay. I want to back up and say what, if they started first by going onto their facebook or instagram, page or linkedin profile and saying um, i'm studying all of the investment properties in our local area. If you want to know about the deal of the month or the opportunity of the week, you know send your email here and build up a list.

I think most people don't know that they have potential investors that are sitting on the sidelines like a bunch of your friends that have come to you right, then, all of a sudden they go yeah, i'm interested and now suddenly you legitimately have two investors. Five investors. 10, investors 20 investors that you actually know and can say, okay, well tell me what you're looking for? What's your criteria, do you want duplexes multi-family you're looking for you know whatever it is, and now you're like on the phone. The person like i'm representing 20 different investors three want this five want.

This two want this yeah. Do you think yeah crazy with that strategy? You know there's a there's an agent in my market, uh sam steadman, he's a re max guy younger guy, and he does exactly that all the time him and his team yeah and uh. It's just like they'll they'll, say: hey. Here's a great deal.

Anyone looking for a deal like this or anything else shoot us a message and you just see the messages pile up for sure yeah, for everybody wants access to deals right and people are busy, like you know, like i'm busy right. I want to know, but i'm not scanning, like the mls or like loop net every day like it's just it's just not what i'm doing i'm waiting for someone to call and say got a deal yeah. So so one is call the owner because you're an owner, yeah and that's a brilliant strategy, even if it's a single-family residence or duplex or whatever you own. The other one is build your list of potential investors that you already have in your database, because then you can call those owners and say i'm representing a bunch of people.

Are you interested that's better than just have you had any thoughts of selling or you know, yada yada yada yeah? Is there a third strategy when you're breaking into the marketplace to get in with those investors uh well kind of like what i was saying just with the lenders? You know, i think, there's a lot of yeah a lot of angles. You know figure out like who are the guys that are consistently in those deals, but you know like in in minneapolis, and i don't know uh you know in whoever whoever you are wherever you're listening. If you have some networking groups uh, you know we. We host events and there's a lot of events uh, and so i think just you know what kind of events so we're clear on what you're talking about uh so just real estate investing events yeah.

So you know look for one with a good speaker with someone who knows what they're doing um and uh you know. I think just going to those and and networking uh with buyers is a great way, uh to start meeting people right and again. If you have a couple properties and you can go into one of those events and you can share um, you know you have something to offer uh. I that's very powerful and i think you'll do very very well.

So i was with uh andy dane carter. Uh a couple days ago on a podcast and he talked about um kind of his summer strategy. He said i know the 12 000 investors in my marketplace: yeah. 12.

000.. That's a like! That's a big number and he's like and i'm marketing to them every month, meaning like they own a duplex, a triplexa, maybe a an old sfr that he thinks he can like create greater yield from if he bought it and fixed and flipped or whatever tore it Down and he's like i'm marking them every single month, do you think, do you think for the person listening right now that once i've talked to a couple lenders - and i got a context for like how the bank views an investment deal versus just buying a house? Yeah, right and and i've maybe identified a couple - people that are my own investors potentially right in my own database and i'm making some phone calls from other owners. Do you think they go that extra step? Have you done something like that where you're like? I know who owns all the investment properties in minnesota, i'm going to market to them, yeah yeah, and if so, what do you market yeah? So we've done exactly that: we've uh what we did for quite a while um is, we would write uh. We would write letters uh to the the sellers and we'd have someone hand address all the letters uh, so they'd be opened up and yeah it's the whole.

I have a buyer campaign, you know for your duplex yeah um. We would send them to multi-family owners we'd segment, the list, people that own at least two or more yeah. So you know to try to segment out some of the owner-occupied ones, because maybe they're a little less motivated yeah. They live there, yeah uh and we had.

We had a ton of success with that. You know that would uh. You know we would say they're looking for a property in your in your specific neighborhood and there's a lot of templates out there for that so yeah. So i think i think that's well and then you know we would also invite these people to our events.

So we would have talk about the events yeah, so uh gosh, one of our our first events. We had this uh, this guy come in and um. He had figured out how to get to 400 units uh by 40., and so we just said you know, learn how to get to 400 units by 40. yeah.

We put it out there on facebook, we advertised it. I think we put you know a hundred dollars behind the advertising right. We we sold tickets through eventbrite, really yeah, okay um. Why did you, why did you make them pay versus just show up so very, very cheap yeah five dollars, ten dollars whatever it is.

Just just commitment, yeah, um, okay, yep and uh we had like 200 people show up. It was incredible! Okay, when you were doing that like every time, i've said to people hey, you should throw like a client appreciation party. They all say the same thing. Oh man! No one's going to show up all right, i'm going to tell them i'll.

Do this mega open house, you taught me i'm going to have sushi and all this stuff and no one's going to show up yeah. They always show up yeah. Were you a little nervous with 400 people showing up or 200 people showing up like we like, walk us through that uh yeah yeah? We were yeah. I was very nervous.

I was like holy cow. This is, this is very real, so uh it was like all hands on deck, but you know we. What we did is we. I think we opened it up to 50 people at first and then we sold out that and then we opened it up to a hundred, and so that was kind of the strategy.

So we'd keep like selling out and then opening up more tickets. And so it would look like the event was sold out and people would send us messages like hey. Can we yeah you know, and so we would advertise it like three weeks before, and so you know you would see how many people had rsvp'd already, and so it was kind of one of those things where you know once we got rolling with it uh. You know the momentum just kind of kept carrying it and so walk us through if there was four or three phases of the event like there's the there's the meet and greet registration process, there's the opening of the event there's the middle of the event.

There's the close the event and then there's the after event: follow-up. If i were to kind of look at, even even if it was a one-hour deal, walk us through each part of that yeah. So we would have a couple. People like checking everyone in and then uh we'd, give them like a fulton pen and a notepad yeah to take notes.

Yeah, you know something fun uh. We would hire a bartender to come in and serve some drinks, so we'd have an intentional. So it was a morning function, uh, yeah, exactly yes, uh and uh, and and what we'd do is you know, we'd have some good food we'd have some good drinks? We'd have like a half hour of of networking. We'd, have people put a name tag on and like what part of the city that they lived in so there's like an instant kind of icebreaker type of thing, so people could go around meet each other uh and then um.

You know we would we'd bring in a speaker, so that way, you know we could draw people in rather than just like some, like salesy topic like learn how to do this, like no like learn the story of this person yeah, you know and something kind of Catchy and then at the end, we'd have have q a and what we would do is we'd. Do we'd bring in like three speakers so once a month and then on the the fourth month. Um, i would be the speaker and so what what ended up happening is we'd build all this like loyalty, trust it was like give give give, and then, when i was a speaker is more, it was more like hey. This is what we're doing time for the app that was the ask yeah, you know, if you want to, you, know, learn more about getting into investing like my team is here, everyone raise your hand like come talk to us, come find us and like we will We'll help you get started and we got a ton of clients - oh my god, yeah okay.

So so i i it's interesting because when you said you know alcohol and food, i thought that would be at the end. You're like no i'm gon na liquor. Him up give him some food, then i'm gon na educate him yeah, and i love the fact that you played the long game that that it was just give give give give give give give give yeah hear all these other people's stories. And then we we listen to the story and we're like i can.

I can see myself and eric. I can see myself and katie like if she can do it. I can do it and then so you would do three of those in a month or you do like once a month yeah like one month, so you go three months where the room's getting bigger, were they getting smaller? Were they getting more refined? So when you? Finally, did the ask like yeah: how did that work out? Yeah yeah? No, they were just getting bigger um, you know and every event was kind of building. You know we were at the time we were renting space and we worked so we were capped yeah like a couple hundred people, so we we actually did eventually have to cap the events yeah um, but yeah it was.

It was fantastic, and, and again it was one of those like culture building things like for my team uh. It was a way for us to get out there. Everyone on my team and start talking about investment properties, um, you know, and it was a way for us to align ourselves with some people that are doing some pretty cool things in our marketplace too. Uh so - and you know it was, it was just giving back and there was there's a lot of other agents that came to our events and actually imagine someone like the best agents on my team.

Now i actually met that from our events. That really came. They were just more investor minded exactly yeah and they saw like look. They didn't have to do.

You know anything to come to the events like it was. It was all give and uh. You know everyone that came where they would register on eventbrite, so we had their emails and we had their content yeah yeah, so we weren't like trying to get contact info as they're walking in or anything and if they weren't registered we'd make them register on an Ipad um, you know, so we knew everyone that was there too. So when you did the the final you know they're not the final, because you obviously could do to do these.

But when you did the the ask um, did you also tell your story and then do the ask yeah, yeah, yeah, yeah and and really you know it like uh i've added a ton of properties in the last couple years. So i'm thinking like this is all pre-covered. When we did all of this, and you know i was building and i had a pretty interesting story of how i was building um but uh. You know it wasn't, wasn't the coolest story out there at least to me.

It wasn't yeah, you know, but you lived closer yeah. The rest of us are like how'd, you get to 700 years, yeah you're, 33 years old, like how'd. You do that. So so you you tell some stories kind of case study.

You know like yeah before and after this is what i look for. This is how we look. You know, like you're, probably doing some educational work like that yeah and then i would actually like take people through like hey. This is my next move.

This is what i'm thinking about like i'm looking at like these two commercial buildings. These are my options like hey room like what do you think i should do right? These are the pros and cons, and then you know i would have people it'd be kind of interactive a little bit and then i would walk them through, like my logic like this is why i'm actually going after this deal and yeah. You know so. Like case studies and yeah uh that that worked, super well and we'd have people that stick around would wrap up.

Our events and and people would just stick around and hang out and network and yeah and people just kept coming back and they would bring friends and - and i you know it was because, like they kept coming back, that i thought we were probably doing something right. Yeah um, i think, of uh, laura mcguire, who might be listening to this from southern california, is one of our team, uh team clients and she actually took a bunch of team bleeders through this, where she's like okay, this is the first one i bought and here's. Why i bought it? It was a c minus set of units and da da da da. She goes.

This is my first baby and she literally had a map, not a map, but like a big visual of like here's, the first one, here's the second one and she got to like the the 16th building that she had acquired yeah and she's like uh. Do you remember that i look at brian who's off camera here, like she literally walked through case study examples of this one was this part of town. I was a little bit nervous about this, but you know like the people were wonderful and i fixed it up and here's how i did it. Everyone sat there in the room just going okay.

This is not that complicated yeah. It's it's set. An intention know why you want to do it, learn some of the language and then go roll up your sleeves and go look at deals. Yes, right like she was going from.

You know southern california to tennessee to buy all these deals and she's bought a ton like i want to say it's like 16, 16 or 17 buildings. Remember that presentation like it was over the top okay we've, given them a ton of value on for the listener of things that they can do right to become better yeah. Let's talk about actually being an investor sure right, let's get into your mind, like you know, tell them about the houston property or the deal you're just down in austin looking at or the last deal that you did that maybe had some hair on it like educate Me as an investor, yeah yeah, so uh, you know. One of the important important points i wanted to make was like how i learned that i'm not just a cash flow investor, and so i think i want to talk about like one of the mistakes that i made yeah, please and that was uh buying a portfolio Of 16 properties in cleveland and um, nothing.

Sorry, sorry cleveland nothing wrong with cleveland yeah, but you know my motivation was it had like the best price to rent ratio in the country, meaning you could buy them for cheap we'd, buy these properties for, like 30 grand a piece, um and you'd rent them out For like seven 800 bucks uh, which is an incredible math - and it's like you can't lose, you know you own this for a couple years and you'll be able to buy another one um, but the problem is uh. You know in the sub market of cleveland uh declining population, so people remember right out, and that is a problem, because that uh really hits your vacancy and vacancy is the most expensive thing in real estate and even um. You know we own these properties, uh uh, free and clear, so myself and another guy um, but we couldn't make money uh even yeah, because you know we'd have vacancies or people weren't paying rent and you have eviction costs and then you'd have turn costs and then You'd have release costs and then entire insurance and all of those things and so um. You know i was going after them purely because of cash flow and the cash flow looked incredible without considering at all what the appreciation might be and so owning them.

For three years, not really making money and and really you know, we could have been successful, but it would have taken a lot of time and effort that i just wasn't willing to put in yeah and so uh. Realizing that you can really you know and again, you know after flipping some apartment buildings, realizing the potential of appreciation and some of those levers, those forced appreciation, um. I realized that there's a lot more money on the table there. You know we got out of that.

That portfolio pretty much sold it for what we bought it for yeah um, but one of the most important lessons net probably lost because of the you know: correct lack of rents right, but in and out yeah correct. You know, but again, i'm very thankful for that, because sure there's so many things that it taught me, and so you know that's where i i've come to the realization that you know really like pay attention to the trends pay attention to where people are moving, because Right where people are moving, housing is scarce when housing is scarce like this is more basic supply and demand uh. You know people like to throw in all these extra. You know uh factors but yeah.

You know at the end of the day, uh it's more supply and demand. You know, there's not enough. Housing rent is going to go up right when rent goes up. Your value goes up uh when rent goes up.

Your cash flow goes up, so even if you're buying in an area that is very hot uh, you know the logic of like. Oh, i can't buy there because it's hot right now and everyone thinks about it. You know it is just a way to sit on the sidelines forever, yeah you know, and so for for me i think one of the most important things like you know, conrad my business partner kind of my main guy that i've been investing with for years. We talk about is if the deal makes sense uh if it cash flows, and it hits the numbers that we need to, and it's in an area that we think is appreciating, we buy it and we don't get too concerned about what the previous owner bought it.

For three years ago, and how much money that they're making right, we don't get too concerned about, you know the guy that bought a deal uh. You know on the other side of the street, for maybe ten thousand dollars less per door, yeah good for him. He got a great deal. You know we're getting a good deal too, especially if you look two three years from now of where things are heading in this market.

That's the thing like um talking with andy yesterday i said you know my mentor. His boss, um, bought a building in los angeles, called one santa monica place, and it was like a 350 million dollar deal. The guy was 70 when he bought it yeah right and my mentor is like you're out of your mind. This is crazy.

Why are you doing this and he said hey in 20 years? This is gon na, be a deal yeah. No five years later it was worth more than what he paid for it yeah right 20 years later, and it's not even about the 20-year mark. Yet it's it's probably gone up twice in terms of value, just because it's in the heart of los angeles, you know right off the 405 freeway as you enter: beverly hills, yeah, right, location, location, location. Yes, so so you say: if the math is right and we think it's in the path of progress or we think we're gon na get appreciation, then we buy it because we're gon na make money, whether it's right now in the next three years, tell us the Mistakes to avoid right, you started going.

They were like avoid the you know: hey if the markets go in the wrong direction direction, but what other mistakes have you found that people make when they're buying their first duplex fourplex aplex 20 plex 100 plex yeah. Give us like rattle off a bunch of them like what are all the things that they need to be paying attention to yeah. So you know we bought a building in dallas and we told the owner uh that hey. We need the occupancy to be at 94.

For us to close on the loan that we're getting - and it was at, like you know, 80 something, and so he just he just filled it up. You know it took no security deposits. Whoever came in first yeah, we, we inherited uh, some really tough people and again, that is, that is very expensive, so uh understanding, like the quality of the tenants that you're buying right off the bat um you know, is important and you know do they have uh Security deposits right right, uh, you know had they been screened, you know. So what are you actually inheriting is one of those things that i think not a lot of people look into yeah.

How do you do that? How do you do that? Uh? Well, just kind of like i said you know, look at uh. You know pay close attention if they're a new tenant like pay close attention, like did, did they pay the first month rent and when did they pay the first month, rent uh, you know, and and what is their security deposit? How does that compare to the you know the rest of them? What about like credit checks and all that kind of stuff, uh yeah, so understand, making sure that they went through the proper checks? You know and did they hold the same standards? And you know for the people that they filled it for especially if you know you're, in a situation like that um, you know. I think another thing that, like we've avoided, is uh, so we're investing in the houston market. You know we bought two buildings in conroe, texas and uh.

We were looking at two other deals there, but you know one of them was right on the this railroad and barbed wire right alongside the building and just a really uh kind of industrial, not so nice area. So, just because an area is growing really fast, like the houston market, and especially a sub market like conroe, doesn't mean that you're buying a building in a desirable area in that location. You know, and tenants may not want to necessarily rent there so really focusing in on that hyper local. Just like you were talking about with that that sounded santa monica deal.

You know because of its location, specifically where it is, there's a lot of value. You know. So don't just take that broad brush approach and then you know i i also i made the mistake. I invested in uh a syndication probably like six years ago.

Uh it was a guy. It was his first deal. He had never really done real estate, but he came from this real estate, family and and his his dad had a big name in real estate like the pedigree, but he didn't have the personal experience. Yeah yeah he was, he was kind of a goofball.

You know and and when he walked in the room, and i could tell he hadn't showered in two weeks that should have been first trigger. You know, but i'm like i'm like this is really maybe he's a savant yeah yeah exactly you know, but but uh you know, and so i even think about like how and because i've talked i'm invested in that and only you know, 30 grand um so not Losing my retirement - and i have a few other friends that had invested in that and uh told me about it, and so i got into it is this new development and in a good area uh, but it just hasn't really turned out it. You know good area good building, but the wrong operator right and uh. You know how could we have known um, you know what the right operator is, and so we've had a lot of those discussions.

It's like how do you vet it out? Well, first of all, like him running it without having the experience, you know just trusting the family name was not the right approach, and then you know really, i think about it like if i'm going to invest in someone syndication. I want to know like how much of your own money are you putting into it right and then, who are the other investors you're bringing along you know? Are they family their friends like you know and calling some of those people and understanding like okay um? You know like who are you? How much are you putting into this? You know, what's your connection um, you know so kind of vetting out uh, some of that and we got brought into the deal late in the game, so they had fundraise money they had built. It, but they were, you know they needed to fundraise more. We that should have been a red flag of like.

Why do you need to raise more money when it's already built like what right? What is going on? Yeah yeah, you know so again you look back. Yeah 2020 vision, but yeah um, you know so i don't know hopping around to a couple different yeah different things. But what about um like tell us about a building that you bought that afterwards you're like whoops? Okay, you know, maybe maybe you didn't do enough due diligence. Maybe you didn't, you know, walk the property enough.

Maybe it was just too. You know like look too good to be true, and then you found out that it wasn't you ever. You had one of those. Yet uh yeah yeah there was there was definitely um uh.

There was one building where you know we we bought it and there were no uh. You know there's 24 units and there's no water shutoffs to any of the units. So you know you had to turn off the entire building uh. If you wanted to change out one sink, you know or you know so it just it's just like slightly inconvenient yeah, yeah yeah, you know.

So that's like one of the simple things it's like we're! Writing something now like. Does it have water shutoffs to each of the units right? You know right so just uh, maybe some some things like that or you know there was a time where we had a um. This is kind of a funny story. Now it wasn't so funny at the time uh we had inherited this, this uh property manager, it really it was.

It was a caretaker and there was uh there was this complaint of you know, someone was smelling weed down the hallway and it stunk really really bad and they're like it's coming from this unit, and you know we send someone over there. You know the caretaker to check it out and she's like no, it's not coming from that unit. It's definitely not and we're like we're pretty sure we get like five complaints that it's that door and after like three times we sent someone else and they're like yeah. It's definitely that unit, but you know that's the caretakers uh dealer, so you know so we give him a pass yeah, and so it's just like you know, reading between the lines a little bit you know and it's just like okay.

Well, we like that character taker, but now you got ta go and now that person has to go - and you know so it's just some of those like funny things that are yeah really not so funny. But you know you just got ta um kind of use. Some common sense and yeah and read between the lines a little bit yeah, but you only get common sense after you've made the wrong, like, i think, about the first uh, the second investment property, my wife and i bought together. We bought it in 08 in an area that had expanded dramatically like in a condo conversion yeah and we're like okay, we're getting it for a really good deal.

We thought yeah, but by the time we closed it was worth less a year later. It was worth dramatically less and then the tenant left - and we just were like. Oh man like that, was just such a mistake. We thought sometimes we think price is the only determining factor of a good deal and we missed all the things like where it was located.

It was a condo conversion, not saying all kind of conversions are bad but like in that area, they did so many of them it just it was. It was just a mistake: yeah, you know we lost everything on it, not not our entire network. Just we lost a deal right yeah so, like i think you you sometimes have to make those mistakes, like you mentioned earlier, like starting your first business in in college yeah like well. I have nothing so you know if i lose a little like who cares, because i don't have anything yes, a lot of the people.

Listening have more yes right, they've been making a ton of money, they've been, you know a great client of ours, or maybe just someone, that's just listening this, and maybe they're 25 and they've made a fortunate crypto and they're like yeah. I probably need to like diversify a little bit and get into some real estate, so they don't want to make those mistakes yeah so you've, given him a bunch of the mistakes, talk about how to do it right, flip it yeah yeah so in, and that is Like why i love real estate, when i was talking about like losing and going nowhere like that, starting a painting business starting in debt like very risky thing and even like my worst real estate, deal uh. You know what i was talking about with cleveland. I pretty much just stayed neutral and to me like that was a loss, but that's yeah, also because it's time and money yeah right so yeah the beauty of real estate.

I i think about it. You know i've read some books on like like old money like how does like money last for for hundreds of years. You know like what is the investing philosophy that someone that needs to keep their money for 200 years. How is that different from someone who's? Just planning for their own retirement yeah, and how does that look, and it usually looks like a lot of real estate.

I was just thinking all of europe yeah like if you go to europe like a buddy of mine, rented a chateau in lake uh lake lugano and the family owns like three houses on this street. These giant like 10 000 square foot, magnificent old. You know grand properties looking down at the lake and they're like well, you can lease the property, but the minimum lease they would do is 10 years. Yeah.

Think about that you're leasing, a house and the minimum we do is 10 years and the three or four houses that they owned had been in. The house have been in the family for like 125 years, yeah like it's, it's like the third generation now is taking the lease on these deals. They owe nothing on them, so i hear that i think, but how does that translate to the person listening right now? That may be thinking about a three to five year deal yeah with their own, their own personal finances yeah. So you know, i i think uh.

The important thing is, you know you start small i've. I've met so many people that are like you know what i i want to get into this and i just want to go big right away. I just want to save up, i want to buy an apartment, building and - and i i think, um uh - i think going after that - yourself is kind of a mistake, because the peop, the people that buy apartment buildings - it's because they started with duplexes and they've 1031 Into those they don't save monopoly yeah, it kind of like i said nobody saves up the money to buy an apartment building. They they trade up.

To. Do that say that again say that it's a very important distinction yeah, nobody, nobody saves the down payment to buy an apartment. Building right just doesn't happen they they, they trade up, yeah um, you know, or they pool together within yeah, syndication right. Something like that.

So so yeah, i think, did you guys hear that i'm looking at like right a couple, my my teammates over here like hello, right, yeah yeah, so you know a couple ways to start there. You could also, you know, invest uh in a syndication um, but one of the problems and i've invested in a lot there's a lot where it's like you know, give us your money, we'll give you a return, and you know it's kind of like put your money Into this black box and it spits out um - and you know that i think could be okay, it spits out spits out cash, it spits out cash yeah and you get a tax deduction yeah and hopefully, if they refi, you get a trigger and you get appreciation. So yeah, yes, it it is good, but like we're talking about learning right and we're talking about like getting that experience, yeah and uh, you don't get to get into the weeds and get get educated from that person they're. Just like here's, your money, here's your return! Yeah and that's great and for a lot of people uh, that's exactly what they need.

You know they need a good tax benefit and that's what they should do right um. But i you know: if we're talking to people that you know again, they built some money. They can't lose, but they you know, i think people need some experience and need some confidence. So if you're going to do that route, you know make sure you're working with a syndicator or someone that has an experience of being able to teach.

You being you know, has the time the capacity and right to bring you along the journey a little bit, because there are definitely people that have that heart right and can and can do that um. But again you know, i think it's, it's start small buy a duplex, you know, buy a four plex right, uh and then think about your doubling time. Think about like what do you mean doubling time? A doubling time is, is when can you take that property and double it make it turn it into two? So essentially pull your down payment out of it and buy another one yeah right and a lot of times.