Foreign. So I get out so often how do I invest in real estate and I get asked that question from people that are in other businesses with lots of money that are trying to figure out should I park somebody there but I also get it from brand new agents to people that are just coming into space like how do I get started So so Eric what are all the different ways Kirk What are all the different ways somebody could invest? It's just rapid fire. What are all the different ways I can get involved in real estate investing? Yeah, absolutely. I Mean we were just talking about.

you know, buy a single family home? Uh, you know, refinance that take some money out. Go buy a duplex. You know you can invest in a syndication which means you're part of a larger group of buyers. you know, so some buyer power.

um you can do a small partnership I mean I do a lot of that. you could do other people's money. I mean a lot of times we just go to somebody and say hey I got this great property I found I don't have any money and that's what I did when I was 20 years old and I would go to Uncle Tom and say hey I'll give you a return on your money but I want to buy this property and and you could also argue if I don't want to manage it I can Syndicate I can technically I could buy publicly traded assets like REITs and I'm involved in some form of real estate so there's hard to argue. there's there's a lot of different I can buy Fix and Flip right I can buy, fix and hold right I Could you can buy entitlements I Could find my property entitlement thank you I can find a piece of land and I can develop I could I Could literally take my potentially five or six percent commission and go find an off-barger property and then take my commission and roll it into the deal I think we talked about that a couple years ago this summer.

Yeah, yeah, find some partners and they bring in some and you're You know you're into it for hardly anything because you roll your portion is the six percent commission. Yeah, a lot of different ways. So all right we're in this conversation. But the person watching right now is like, so who are these guys So I'm going to start with the young guy first.

so Kirk um, how long in real estate? Where are you from? How many properties have you acquired or transacted with over the course of your life? um I'm my name's Kurt Kessel I'm from Melbourne Florida I've been in real estate since I was 18 so that would put me at 41 years. Um, bought my first piece of property when I was 15 I had to put up my dad's name um bought a townhouse. Got a great story on that but save it for another day and I collected the rent I used to go on moped and collect the wrench. So I mean it started out, you know, just as one one little townhouse and then by the time I was 25 I had over a million dollars for the property.

Yes, um, but I leveraged myself so there's there's some stories behind that too, and you know Eric we can all talk about those. but literally I've owned everything from shopping centers um I built shopping centers for myself I built a lot of mini warehouse I built condominiums um high rises, high rises, lots of subdivisions I still have sub subdivisions going right now. and my favorite thing right now just because I'm I'm lazy is entitling something. so I take a piece of property, get the entitlements for you know, 60, 70, 80, whatever it is houses and then I go sell to some like Tom that wants to put houses on it or a big home company.

So my job for the listener before I go to Eric The old guy is for you to listen through the lens of. if I could sit down with a couple people that between collectively we're talking you know a thousand plus transactions and Deals if you can just get one or two insights to make you a better investor a more intelligent investor then this was worth all of the time that you put into this podcast. Eric Kim That interesting to hear his story at 15. So tell him who you are, where you're from and give me your backstory on deals and transactions.

Yeah, yeah, you know. First of all, I always joke that I'm actually like 55 I just get good sleep and eat plant-based and so I look like I'm 33. but yes, okay yeah no. So 15 years ago I bought a single family house on a University campus I saved up 20 and uh put about twenty thousand dollars down.

Uh so that turned into another one which turned into a duplex and how old were you? uh I was uh I was 20. so I was I was 19 just turning 20. so yeah I think I was actually 19 still when we close. uh I closed in that first one had my parents I say we? because I had my parents co-sign the loan.

uh because the bank wasn't quite ready to uh yes yeah. a kid that just made a bunch of money painting houses? uh yeah. I got a real say license about 10 years ago and uh so that's where I took the investing. I'm like if I get a license maybe I can watch the market a little more closely and maybe I can have an edge.

Uh, and and take this to the next scale. Um, what ended up happening is that's uh, exactly what happened. but I helped a lot more clients along the way. I got a lot sharper.

uh and then it just scaled up From there it was. It was probably the first, maybe five or six years it was buy one property a year. pretty slow growth and then, uh, probably about six years ago. Five six years ago started buying apartments and realizing the scale and what you can do.

Uh, if you invest in appreciation, not just some of the cash flow investing I was doing with the single family house, the houses and that's where things took off. So today you know you and I are partners with covals. you have lots of other Partnerships about how many units, doors uh do you own now Uh so in all the Partnerships Yeah, yeah, so about 1200. um and there was there was someone that asked that's a big number Yeah, someone asked me a question a couple weeks ago.

they're like Eric how many properties do you own by yourself and I thought about them like well, that's actually an easy question I own my house, I own my cabin and I own my office building. Uh, but other than that and everything is in some sort of partnership where I I bring people in Uh, and early on I used to own everything my myself. It was all about like you know, kind of my own ego of build my own Empire by myself. And one of the things that I want to impress upon people is you don't have to be the superhero.

You don't have to do everything. You can find some amazing Partners to bring in that complement the strengths and weaknesses that you have to grow a lot faster which is really what you want. Yeah, right. You want plus one.

Yes, it's four or five in this. Yeah, if they're the same as you, you don't want to bring that partner into the into the group, you want to bring somebody else to bring something else to the table. Yeah Yeah So let's let's just unpack this for a moment. So right now the person listening has a database of past clients.

They've got a sphere of influence. They know people, they're active in the business, they're seeing opportunities. And one of the things I hear all the time is I see the deals I don't have the money, right? So so let's just talk partnership selection, finding the money, do's and don'ts What have you guys learned? We're gonna make this. You know it's a conversation, but I want it to be very educational I Really want this person to understand that they can do it.

So how do I find? Partners How do I find partners with money if I'm the deal flow which was the early days of his career. Yeah and and what I did in my early days I either used um, owner financing which I used a lot of it. It was back in 1981 8283 so the rates were of an 18 that was. You know when we had uh yeah Carter in yeah and so we had yeah back then I know I know.

So back. yeah. So back in um that 82 vintage you we had some Bond mortgages that we could assume. so we typically would try to assume those mortgages.

a lot of the market had gone up. um not a lot, but the rates had gone up a lot. so people were like just take over my mortgage. Yeah so I ended up with 26 houses by the time I was 25 years old.

but they were all leveraged and then and I can if you remember this. They changed to tax Reform act in 1986 and I held up with my fingernail so that was my first. You know, hold on. So the advantage of having partners is if you have somebody with some money that goes in there, you're not leveraged like I was.

so I would I would not advise doing it like I did it Yeah, um just because the level average unless you got a big stomach and I was young and dumb and I didn't know any better. But at my age now I don't want to do that and so the way that Eric's doing it now and the way you're doing it I think it's a great way if you don't have the stomach to do that type of stuff. So how do we? How do we go from having a database of relationships to finding two, three, four? Partners Yeah, what have you guys found that works? So if you control the deal flow and and sometimes we say deal flow and it really, it's just knowing what a deal looks like and being able to communicate, you're going to impact right. Just being able to say like, hey, this is on the MLS and this is a deal and this is why this is a deal That to me is controlling the deal flowing away.

If you do that and you brand yourself as someone who understands, uh, how these properties work and and how deals work. Uh, there's an abundance of Partners out there. And one thing that we talked about early on is, you know, if you're an agent and you have a license and you can earn a commission, Uh, and you can maybe find a property that that might be off Market maybe on Market But and you can add your commission towards your down payment and let's say you're dividing this up between a few. Partners you got three of you and you're all putting six and a half percent in to get to that twenty percent.

Um, you know your portion is covered by your commission. so, uh, almost entirely so. But you could. Also to his point, you could also negotiate it because he's bringing the deal.

So I bring the deal. Let's say Eric brings a deal to me and says hey, I'm gonna throw my commission in but I want 20 of the deal and I'm gonna get paid a 10 management fee I'm gonna manage this property So all of a sudden now we've got a 20 partner and then the other 80 are going to be the other two guys with the with the cash and you could pay cash for the property right? You could leverage a property but let's say Eric couldn't get the financing. he's gonna still get going to get 20 of the deal you and I are going to go to get the loan. So I'm going to go back to the question which was how do I find partners and the answer I'm hearing is Whoever has demand Partners will find me So should I create so many of my clients like and maybe you watching Um, there was a time back in the early 2000s and then certainly through Eight Nine Ten Eleven.

Whether you whether you were had access to REO properties or you just were finding REO properties and literally people would do the deal of the week correct and and what was really fun for the person watching right now consider this. Um if there was an imaginary group of eight of us inside the office and once a week the story is we would get together, we'd all open up our laptops, we would go through the MLS and we would sort of battle out what we thought was the one property that we thought was a deal and then the eight of us. We're just going to notify every single person of our database of this property, why it was deal, what it was about, why we felt it was that way and and many that did that and I watched entire companies Enterprise relationships take that on as once a month. Here's that they became known as a deal flow Channel Yeah, we'll take it one step further and so so then you write the offers.

So then what you do is you're you know Kurt Kessel says okay I'm going to make an offer on your property and I send out 10 offers a week, then I get the deal that I want and then I go find the investors and so then you post it with your one thousand five thousand twenty thousand people in your twenty and you're and yeah, whatever it is doesn't matter. Yes, you post it on your on your uh you know as an email and say hey, I've got this property Here's the information. If you're interested, call me. The phone will ring off the hook right? Yeah, bring off the hook Tom That's a good point because one thing that I used to do is uh, quite a bit.

It's you know early on in my career is I would find a deal like that and then I would just I would just send it out I would blast it out too, right? You know 30 different people and and you know, keep doing that and you identify uh who are potential Partners yeah do some of that. Um, but so so I think this is like a good place to get started. but I I think some of the things there's probably some people listening to that maybe already have one, two or three properties and it's like okay, how to level up yeah, what what to do I want to go there. but first you do educational events.

Yeah, and that's another way. So you just take a minute before we go to the level up group because because part of that's that event strategy is obviously leveling up as well. Yeah, but just unpack high level. what do you do? How often how many people show up? What's the impact? Yeah, uh.

so we do probably about every other month. Uh, we'll probably get 50 to 60 people. We've had as much as 200 people show up. Uh, and it's real estate investing.

uh. topics. So it's it's education. and so because we in the office done in the office.

Yep, Yep. and so uh, because it's a different speaker every single month. It's fresh, it's new, It's it's something that they haven't heard. and it's it's all focused on giving.

It's like, what do what do people need to hear right now? What will be helpful? What will cause them to bring a friend back? Uh next you know next month or the next one is it Is it scary to um do your first event like that? Yeah yeah yeah. you should get some accountability like some people that just schedule the event to people that market it and get some some of that help. So you just book the date and then you have a few people uh, help you with with coordinating things. so it just does.

And I think my first one Like my very first event I think I had two people show up perfect and we held the event and it was. It was great and but you know so it doesn't always start like something big. Everything starts messy and then you. So here's the thing for the person listening.

Um, who's a tax person in town, who's a real estate attorney in town? a CPA in town. it's a 1031 exchange expert Who's someone that owns apartment buildings. Who's someone that owns multi-family If you just go out to your network and you know five, six, seven people, maybe they're not a professional speaker, but she knows how to do 1031 exchange and she can come up and she can deliver that message. And for a segment of the market, you're speaking to exactly what they want to know.

and I don't care if it's five people in the room, 50 people in the room, 500 people in the room my old client Christina Martinez would put 2500 people in a room now. It started out with like eight at her office and the last one that I went to was 2500 people and it was a real estate Revival she was doing panels of okay so I'm gonna bring up Martha Martha is a single mom. she has four kids she's a nurse Martha how many properties you on I now own 15. right? Like so these are people that she had helped over time and literally people were going to the back of the room and signing up to schedule an appointment to meet with one of her teachers.

So you could you could go that extreme. Yeah right. And this is a woman that you know. this is the woman that bought the land next to her church I Remember donated all the money right? built for the children of San Jose shots Christina Martinez built this and donated the entire thing so like this wasn't this wasn't one of those like TV things like Hey we're in your Marketplace and you should come.

She was. She was the real thing. Just trying to help is kind of the way. I see your heart I see the same thing and I know you resonate the same exact way.

So all right so seminars. so let's just interrupt. So the only thing that we add to what you do is we bring three different properties. so I might bring like a a big partnership where you put a syndication together I might bring printing an entitlement and then I might bring a single family or a duplex or a Triplex.

So I hit all three in the audience. we typically get only 40 to 60 people. They tend to be a lot of the same people and they were starting to bring more and more of their friends. Um, and they're They'll call you and say hey, when is that next event I Want to schedule it right because we bring them three properties and then what? Afterwards they'll come back and say hey, we'd like this indication because we really don't want to mess with any of that stuff.

So you know, can you can You put us down for that and then yeah, so that's all so I Hope for the person listening you haven't like mentally checked out with the thought that oh my goodness, I'm going to be in front of seven people, 80 people and I've got to become a professional. No, you are a trained real estate professional you're talking about. You're a facilitator. Thank you.

Speak to that. Yeah, so you don't have to have the content, you just have to have some questions to pull it out of someone in your network That that's that's all it is. You know for me, what I would do is I would have a speaker come in about four times and then on the maybe the fourth or the fifth time I would be the speaker. Uh, and it's kind of like Gary vaynerchuk give yeah and you make an ask yes and and on that like fourth or fifth event.

Um, there would be a you know, a lot of people that you know coffee meetings for the next two weeks. totally booked. you know, with me and a lot of people from from the team. So you can do that or you could just continually give and the more you give the more the more you're gonna attract.

So so there is an important distinction. If you're thinking about doing an event like this, it is not a sales pitch, it is a give give 100 give give and those that are interested are going to come to you and say can I schedule a meeting I'd like to learn more. All right, let's transition. let's talk to the person that has three or four properties they are I don't want to say a control frequent like that.

You know that like I'm gonna control my own Empire How does that? Uh, how does that individual or family scale up? Where do they? Where do they go from Three Doors Four Doors Five Doors to ten fifty a hundred? Yeah. So go ahead. Yeah. So there's there's a couple of things that I like one concept that I think people should start thinking about more in real estate and that's like payback time.

so you know when they're investing and they're buying something, how quick can they get their investment back out of the property? and and a lot of times it's through a maybe it's a refinance You you raise the rents, you refinance it so it's more valuable. You pull your money back out and then you know, rinse and repeat. uh. and so as you're as you're scaling I think that concept becomes, uh, much more important because that's that's how you grow, uh, a lot faster.

and you know there's there's two ways to do that. one the first way. Like I said, raise the rents, pull the money back out. Or kind of like what current was talking about with Creative financing.

can you lower your down payment? Can you get in the properties for Less Because if you can get in for Less your payback time on your investment is is less because it's it's that much that smaller. And so you know it's all about risk, cycling cash and reusing that as fast as you can and finding markets that are are growing faster. And that doesn't mean necessarily investing in other parts of the country. But take a look at your local market.

There are sub-markets that just grow a lot faster than others, and there are certain classes of properties and ages of properties that grow faster than others. Okay, let's stop there for a second. I know you have more insight on this. I do I'm like how should how should So so this Savvy person watching right now is now saying how do I look at my MLS to figure that out like I know if I'm sitting in Dallas the smart money the smartest people I know right now in Dallas the smartest and the wealthiest people I know are buying as much of South Dallas as they can get their hands on because North Dallas is now Oklahoma Yeah West is only going to go so far right before we're in just a oil wells right? East you only got a two hour drive and then you're in Louisiana and I've already driven that route and I've seen the expansion.

East so North is covered West is I Would say there's there's expansion opportunity, but South Dallas South Dallas is the 20-year play now. I'm not asking you to go look at South Dallas I'm letting you know that multiple billionaires that I know are trying to buy up all South Dallas Now what insights that they have? What are they looking at I Don't think I Don't think any one of these families are just Geniuses and if you're looking at some data, so what data should we be looking at? Yeah, so I I Pay attention to where is the population moving. Uh, right now there's there's some trends that came out I think Florida was actually number one, Texas was number two and it's all it. It's all in the major metros in Texas So so and why is that important? Because if if people are moving in there construction cannot keep up and if construction cannot keep up uh what's gonna happen.

It's supply and demand and rents are going to go up. and if rents are going up then the value of your building is going up and the faster your building is going up the the faster you're de-risking yourself. So you're putting money in and your risk is going away like that because your building is shooting up in price. So where the population is moving um is important because Census Bureau data is it Trucking data is it reading USA Today that says the top 25 You mean like yeah it goes yeah it's not watching.

Okay so everyone says they know their market and then I say so where are you buying and they're like well I don't know I'm still oh my God yeah yeah I mean I know my market I'm not I'm not because I'm not razzing the person that might be that help them. You got to look at the areas like like we look at areas that are shorter supply and demand. So like we have a beach side we call the beach side but you know once you go over the causeway it's everything on the beach side. they're not making that anymore.

so if you can buy something in most of those houses that are over there or 40 50 60 years old, so they're a challenge, they need to be redone, but like to. Eric's point, if you can buy those properties, you can fix them up. You can usually get a really good value, especially on the ones that need a lot of fix up. If you've if you've got a handyman or you're handy, you can fix them up.

If you get owner financing, you can sometimes get the owners to defer the payments for six months. You know, we just did a commercial property. We defer the payments for a year. We didn't add it to the back end or anything, We just deferred the payments for a year.

The meantime, we're collecting rents on part of the property and then you go and fix the property up. And that's the whole reason we got those payments deferred. What? What Eric didn't mention is when you refinance those properties, that money is tax deferred, right? So if you go, you buy a hundred thousand dollar property and in five years it's worth 200 and you decide hey, I've only got a 50 000 mortgage and I'm gonna pull out only 50. That was always my role.

I Never pulled out more than 50, but you could probably pull out 70 on a refi that that money is tax deferred until you sell it. If you don't sell it in this lifetime, you get an adjusted basis I Mean you talk to your tax person, but it's It's pretty attractive. It's pretty attractive to be able to do that right. So let's talk about do we answer your we really didn't answer your question about about how you picked the area because well you said look for So if I'm looking inside my MLS what am I going to do I'm going to say okay so where do homes come on the market very rarely and when they do, they sell with multiple offers.

Yeah the other, the other thing you're looking for is a cash flow too. You're gonna have to look at the cash flow because in a perfect world it may not be the perfect area. but it's got a great cash flow and or you look at an area that's been really beat up hard that you think like our downtown area hasn't really had a facelift in 40 years. It's now got new hotels, new new shopping centers going in.

Anything in our little downtown area is a buy now. I Mean you could have bought when I started buying they were in the 20s and 30 000. That's what you paid for a house today. The same little houses are worth 350.

and they're They're 1940s, 50s, 60s. I Mean you could tear them down if you want. but I mean they are in the heart of the downtown. Yeah, wait to get the insurance on it.

You'll be scared to death. That's the other thing. so there's a lot of different. Yeah, a lot of different keysights on just knowing your local.

the market. Yeah, so a lot of times what? I've seen and in my local market there's there's an investor. We had a great conversation about this. Sometimes there's like what's called a glitch in the he calls it a glitch in The Matrix right? Uh, where it's we call it glitch in the market where there is a, uh, a price difference.

Uh, between uh, two markets where, uh, it seems like the value to get. You know to buy a house, one of the cheaper houses, and to put the money in to get it up to this value is significantly more than what it would be just to buy that house. You know that that's kind of already done, you know? And so if you have a lot of people that are shopping for these lower end properties and they need to put money and they're going to fix them up. and you know that when they put the money in, their value is going to be here.

Just skip these lower end ones. Buy something that's a little bit nicer that's already done, and you're gonna see your value shoot right up without doing anything to it. Yeah, you know, in the span of like a year, a couple those work right? Yeah, right? I mean that's what's so much fun about real estate. Is it just a it's a forever game and you can just there's just opportunities in Pockets everywhere.

How much time do you guys spend today and then I'm going to transition to something entirely different. How much time do you guys spend the day just looking for opportunities? Uh, so it's myself and there's probably two other guys that that are, uh, shopping around and so between the three of us. Um, I mean it's it's a couple hours a week. It's not like substantial, but we also, uh, we spend a lot of time developing relationships with brokers who are passing along myself who are passing along opportunities.

So it's not just us, but you know our Outreach and being very specific of what we're looking for. Um, so even though maybe it doesn't sound like a ton of time us just hunting around, um, we've built a system to help us Channel and find Opportunities Yeah, I spend I spend any minimum an hour two hours a day. I Just got four properties sent to me since we got in your room here. so I got four properties to look at.

They're all big, you know, industrial type properties so they take some time to look at, but I'll look at them if they pass my muster. I'll pass them to another guy on the team and say hey, dig this apart, look at the number, see what I'm missing but I like it uses I like the location sometimes I like the numbers but I like the location so if the numbers are really good it might get my attention. Um you know out of the four I looked at today I like a one a lot which was the and they're Brokers that are all sending this stuff to me. So I've developed a relationship that they're like hey, I don't want the commission you send me the deal I'll buy the deal, you'll represent me and you'll represent the seller on this too.

You'll be a transaction broker and I'll buy the property. but I'm looking I'm looking for great properties. Um, they all know what I'm looking for and if I don't buy them then I sell them to one of my investors. So I mean the reality is is the numbers pretty good I probably won't buy it.

if the money number's really good then I will buy it. Um, but my investors, they're happy with an eight or ten percent return. So I think the message for The Listener is that you know you guys are actively spending time in the market talking to people looking at deals. What I would advise you to consider is this: go into your MLS Let's just say you're in the US and you have access to like a remind R-e-m-i-n-e and you literally say um, give me every uh, every person in my area that owns more than five doors under an LLC or a personal name and all of a sudden reminds gonna say here they are Yeah right They take your entire geography and they say here they are and and what if you just said I'm going to take this pocket community that pocket Community this pod Community Because what do we know we know somewhere in the range of about 22 million properties are owned by investors today in the US of the hundred and now 38 million Properties or I think it's now 139 million.

So so 22 million properties around by we know that 20 are owned by Blackstone and all the you know the big monster you know funds that went up but 80 of them are Mom and Pop that own 10 or 10 or less doors and I would argue for what better demographic farming for you can I tell you what to say when you call them please oh no no no don't tell us let's not have that on the show Eric Let's say yes please So I I'll I'll sit down and do this every once in a while with you know people on my team and and calling just last week I uh I Called the guy and so many times we call and we say Hey You know we're looking to to buy a place or we're an agent that's you know looking for Sellers and representative buyer. Yes yeah yeah yeah well uh if you own one property uh I will challenge you. You are always a seller at a certain price, you are a seller, so why not approach a conversation is hey, I'm I'm a real estate agent but I'm also a seller in your area and uh, you know before I take my property to the market you know or whatever you're going to eventually do with that property, are are you a buyer you know? Flip the script and ask them if they're looking to add to their portfolio Leo You know, give them a compliment of I'm not looking to just sell to anyone I'm looking to sell to someone who's qualified who has identified themselves in the past of owning investment property in this area. It just takes their guard down, opens up a different conversation, and most of the time what ends up happening is no, I'm not a buyer, but actually I'm probably going to be a seller pretty soon.

Yeah, right, they switched on you right? Yeah, don't just switch your hat right away and jump in and be like, okay, let me help you get the kill yeah and ask for sex immediately. Yeah, this is a mistake that so many people made like actually have a conversation. It allows you to build a relationship yeah and understand. you know where they are and ask them if they're going to do a 1031 to try to understand some motivations and timeline and throw out some questions like that and it just opens up the door, don't you think it's different to calling as an investor? Yes, right? Totally one investor to another? Yes.

I'm a licensed real estate professional at Banana Um I'm just calling about right? And would you be interested? and I see I notice you own a collection of properties I love that. Yeah you finding out that when you call these people a lot of them are aging out and they're saying we're selling because we just we don't want to manage this property anymore. Yeah, they own It Free and Clear into would you consider holding a mortgage rather than just putting the money in the bank and getting no percent interest. And I would tell you that last week there's a guy I spoke to.

he's like you know I'm in my late 70s and not only am I going to sell that property that you know that you mentioned that I own in the area but I got three others and uh I I got to figure out a plan of what to do with them pretty soon. Yeah, so if you can show them how they can get the income that comes in every single month now all of a sudden you owner financing with no Bank involved and then you can structure that anyone. You can structure it a low interest rate. as it goes up, you get structured straight amortization.

You can straighten, do it with a balloon. The sky's the limits. his happy place. Well I Get so excited because all they do is say hey, like you said, we're aging out.

We think we want to sell. Hey, would you want to hold some financing? No, No, no. Then by the time you're done talking to them the advantages of holding financing, they're like yeah, I'd love to hold it. Yeah, that's a great idea, right? You may not have to pay all the capital.

Yeah, you just explain this and it's an advantages right? It's an Arbitrage You: You're hey, you're You're collecting the rent. Now you're making the payment. You're making the difference. Now you're gonna get a payment every month.

And guess what? It doesn't matter when the toilet backs up, it doesn't matter if you have a tenant problem, the check's coming right? So okay, so let's play a game. Um, so let's just say I Bought a 10 Plex and just for fun. The 10 Plex is a bunch of two bedroom two bath with backyards surrounded by high rises by the way. Cool.

So so I Guess it's actually a real life Example: You own this property? Yes, yes, but I said tents. it's a nine Flex Um, they're just TV Context: They're popcorn ceilings. Yeah Carpet? you guys with me on this? Sure. but they have a backyard in.

87 percent of the people that live in this community own a dog. So big advantage to the little backyards? Yeah, right. Courtney Yes, right. Dogs cats, lizards in your house.

uh miles. So so as people are. How do I make that property better? How do I How do I amplify the value of that property? Yeah, Popcorn ceilings, carpet built in like the mid 80s in a beautiful part of town? I mean a mega hotel going next week? You know, you know that, you know. So so I'm giving this as an example because I want the person to hear yeah, how your mind works in terms of what we're going to do with this property to improve the value.

Yeah, so this is frustrating. But I'll answer your question with the question. uh, what are the things that tenants would pay more for? You know what? would they agree to pay more in rent? Like Yes. I would love to pay more in rent if you do this to my property.

you know, and you think about some of the maybe the others around. So you mentioned, like the popcorn ceiling. you know, maybe they don't know that they would pay more, but maybe, um, you know, maybe some of those little aesthetic touches do go a long way. Maybe there's some new vinyl floor? yeah, maybe something like that.

Some backsplash? Yeah. and it's a new little countertop because the kitchen's going to be small, right? Maybe a couple new appliances. Just so here's what you think. There's new stoves, old oven, new oven.

That sounds expensive. Facebook Marketplace And get this stuff. A Lot of times and redo these units. Pretty inexpensive.

Yeah, so you take one unit, you make it really nice. You just do stainless steel, granite, marble. All these things. Uh, you raise the rent.

Uh, and then when you raise a rent, you go back to all your other tenants when their leases come up and you basically say look, this is market rate for a nice unit. uh, would you? uh, would you let us renovate and we can, we can put you in there or better yet, uh, we won't do this. but we know that market is here. We'll cut you a deal and we'll raise your rent a little bit.

But it's it's not. It's not up here and so they feel like you know they're getting a deal because they're getting yeah and a slight Improvement a slight increase versus a bigger increase. Yes, So like what we do and and Tom on a lot of videos Yeah, the video like on a lot of our investors. This is yes.

Yeah, There's some simple things that you can do in a very short amount of time. So like appliances that does not. That's not a major renovation. You know, putting in a backsplash is half a day's worth of work putting in a counter.

They just swapped that out the same day. So you start doing just some things like that. Maybe some lighting which are just swapped out. It's not a major inconvenience to their life to do some of these upgrades, but you know in our apartment buildings we'll do these things like 191 units down in Houston We'll we'll do this for under two grand a unit.

Swap out the lights, the counters, backsplash, appliances uh and uh well not the appliances. Yeah the appliances are an extra uh 1500. but we'll we'll do counters and and backsplash and lighting. and uh will increase the rent by about 2 800 a year.

And that's the what's the increase of the value of the property. So I think 191 units. yeah do that over a couple years and this this is so yeah when I was talking about payback time in real estate if if something pays itself back in under 15 years, that's a good deal when you consider leverage like you do that deal Now we talked about this is a two thousand dollar investment. it gets you 2 800.

the payback time is like nine ten months. So not only is that a good deal, that's an incredible deal. So if we talk about the what it adds to the P L so what this does to the property uh it actually with like a we talk in terms of cap rate in commercial real estate. So in this market it's about a five and a half percent cap rate.

So you you multiply that out and it's about fifty thousand dollars of value to the building just by adding two grand of investment. Uh, so that's not time if you do that deal. it's how many times can you do that deal right? You know, invest a dollar, get 25 back? Yeah, Yeah, Well in the Long play on something like that is, if it's in like like we're you're not at Unitar, you can. just an excellent area.

You would just keep fixing them up. and every 10 years you pull money out and go buy more. And yet every 10 years you pull money out and go buy more. So the reality is, you're taking that money that the tenants have put in there.

You're refinancing it sixty percent, fifty percent. whatever whatever you want, pulling the money out and putting in something else, and you continue to leverage yourself and buy. So I Bring this up. not as an example of what Cap and I are what we're doing, but it's so often.

I see when I walk through units I look and I'm just like why did the owner not ever fix this thing up and I think for the like the phone calls you're making when you're going into those properties you need to be I would imagine as I walk in I think to myself, two, three, four, five grand I'm gonna improve the rents I'm gonna improve the quality of the experience of the tenant. yeah I'm Gonna Make You Know low flow you're gonna have like all the all The things you can do and all of a sudden now it's a it's a better property. it's a green property. like like I'm gonna but a lot of people I I Don't know, maybe maybe just some of the properties I'm going to say I'm just not seeing that.

Yeah, like like Eric said if you tell them hey we if you if you want, we'll totally renovate the property or we'll just do a little renovation right? If you do a little renovation and you charge them a fair a fair bump in the rent, they'll stay in there so they're paying you the rent the whole time, which is wonderful because the unit's not empty for 30 days so you'll redo the kitchen while they're in there. Very inconvenient for a week. Big deal, maybe a couple days right? But all of a sudden your rent just bumped up by 5, 10, 15, 20 because you did a little bit of a facelift to it. Yeah, why people don't do that? Tom I Don't know, it doesn't matter.

Yeah, they just they get intimidated. They get advice from the wrong people. You know they get advice from the contractor who's saying, you know, let's let's replace the block walls in the basement. You know, instead of right? Like they just don't know what really adds value.

They don't think like an investor needs to think what will tenants pay more for? So a lot of times it's some of those little Cosmetics But then there are people that get too tripped up on like just the interior stuff. uh and they forget to take a step back and they're like okay, does the exterior You know you also have to have a nice enough exterior where it's all consistent and it tells the same story. So don't just do those things right. if on the outside it looks like a pig.

so they drive by and they keep driving by. Well I mean I mean I Don't know, not not in every such a getting rid of grass and doing Pebbles and like there's just so many all just some of those things that just modernize the property or again we can talk for days on this. Let's just let's end with biggest mistakes to avoid over Leverage So what's the right amount? money down on a deal today? Um, deal is just not a not a like I Got a bargain? It's just it just depends if you're buying a house, one house or two houses it's 20. If you're buying multiple units you know you're buying 191 units.

You want to make sure that the market takes a little bit of dump you have covet and they don't have to pay their rent that you can pay the rents you can pay the mortgages. so um most of the stuff I buy. My goal is to get it, keep it at 50 loan to value. um, and when it gets 50, then I refinance it.

usually to 75 80 and then like all my shopping centers, they pay off in seven or ten years I can refinance them. My goal is to now buy properties with two options. One you either buy it to sell it, flip it. it's a flip within 24 months or the other one is to hold it until death.

Do us part? Yeah, and I just keep refinancing and just. but they're all in great areas. The areas are key if you're going to keep them. so 20 plus percent down ease.

Absolutely yeah. don't don't do, don't do less I mean because you could get 100 financing I've done that a lot but it'll clobber you if the market changes, it'll for you. yeah. I Like that man's safe.

What do you think? Yeah, yeah. I I I I Absolutely agree with you. I'd have some points that I would say to that, but just to contrast things or give a different perspective. Uh, if you're looking at investing with someone or like maybe a syndication or something you know you first look at the the person, the group that's sponsoring it.

um then you're gonna look at generally I would say the area. Then you're going to look at the building and and so you know if you're investing with someone, um, invest with with someone that that that has more than you do. you know that that has more resources that has more experience that you can learn from that you can level up. Uh, you know, so don't don't just go and invest with someone that maybe just just has money but they they can't really contribute anything else you know? So if you're if you're getting started like be thoughtful about who you're partnering with so you can grow faster.

So then into a relationship? yeah for sure. and then you know the the second mistake is yeah, don't buy in an area where people are moving out. Uh, you know I've lost big investing in a few cities that are declining in population and I'll never do that again. So um, you know and to your point, if it sounds too good to be true, it is for sure I've seen it.

Yeah, I mean make sure that the people you're the group you're investing, you know the partners, You know, the people that are running it. Um, and you're comfortable. I I Can't tell you the deals that have been brought to me that they sent oh my gosh, I got to do this deal and they all belly up. Yeah yeah yeah yeah we were chatting earlier in the Green Room like oh it's an unbelievable deal.

Well would you put money in and the guy's like why how unbelievable is a deal right? But if they go yeah of course I would partner with you on this then you're like okay, cool, you're like putting your money I really appreciate like he has been knowledgeable like one of my closest friends for a long time but he's been like a mentor and I've watched him call and think about this deal. what do you think and you know you're now in that same category for me of like now we're doing these big monster deals like what are you doing what's behind the scenes help me understand like I I think we just got to be in that growth mindset. not in that well I I was burned once I was bit by a dog once or I'm afraid but instead like lean into others like that's I mean this is probably the most relaxed podcast I've ever done, but it's also one of the ones that like I wish I like I Typically I'm taking notes right? because you he talks about a minute and has like a wealth of knowledge. you got the same you talk a little slower.

thank you So I hope for the person getting excited well and you have a lot to contribute. um and he hated him by the way share where he makes his real money but I'm going to save that for another podcast. so as we rap if they if they want to ask you guys questions can they reach out to you absolutely Where do they? Where do they find you? Absolutely website just just text me. The best way is to text me three, two, One Five Four four Yeah.

Send me a text and I will respond. Yeah? Kurt Kessel All right. Yeah. I Got a question probably on Instagram is just at Eric Eikov Uh, spell it.

Uh, so it's just my first name Eric and then last name E-i-c-k-h-o-f Um, there wasn't pretty fast. There was an impersonator. Yeah, yeah, it has a period between the Eric and the icon, so don't follow that one. Yes, it has good advice because it's copied all of my stuff.

but it's it's not me. So I Do Not support cryptocurrency investing. No, it's not that. I don't support it.

It's just I don't know anything about it. Yeah, like it's very trying to sell me cryptocurrency under any circumstances. Okay, so thank you guys. Um and I'm sure you get a lot of people are going to reach out.

This is very valuable. I mean we kind of went low to Advanced right? So thank you guys. We should talk to him about off camera where he makes his real money. Save that for another show.

So share this with a friend or two that might need to get this message. Share it with a friend. You know what you should do. Share that a 19 year old and a 15 year old because hearing those two stories.

I Bought my first property at 19. So I'm I'm kind of in that same vein, but you guys like clobbered me with how much you guys are doing. I'm just so impressed by both of you. Um, maybe sharing it with them and having them just spark a little imagination of what's possible, right? Like real estate's pretty rad, right? And if a young person gets it and a mature person gets it and an old person gets it, and an older person's possible, Exactly All right.

So thank you guys so much, thank you so much for watching this and we'll look forward to seeing you on the next show. Foreign.