BiggerPockets Real Estate Podcast - 123: Overcoming an Ugly Past to Become a Cash Flow King with Justin Escajeda

Episode Date: May 21, 2015

Today’s episode of the BiggerPockets Podcast is different than any other we’ve done, and probably not one to listen to with the kids in the car. Today we’re talking with Justin Escajeda, who overcame a life of crime, drugs, and homelessness to create an impressive real estate business, despite his ugly past. You’ll learn about the process Justin went through to build his empire and discover some unique ideasto help you create additional passive income in your life. Prepare to be shocked, encouraged, and motivated after listening to today’s show. In This Episode We Cover: How Justin got started in real estate investing The hard past he had to overcome His first screening experience with his duplex How he landed his first deal, a duplex in a low income neighborhood How he found his real estate partnership A discussion on seller financing The ins and outs of self storage Some of the downsides of self storage One tip for a storage unit operator Justin’s opinion on mobile homes His plans for the future And SO much more! Links from the Show BiggerPockets Meet The Super Mobile Home Investing and Getting Started With John Fedro Storage Wars BiggerPockets Forums Books Mentioned in this Show Rich Dad Poor Dad by Robert Kiyosaki The Millionaire Next Door by Thomas J. Stanley Tweetable Topics: “The more people you network with, the greater your chance to succeed as a real estate investor.” (Tweet This!) “I try to negotiate with park owners because what’s in their benefit is my benefit too.” (Tweet This!) “It’s very difficult to do things the correct way, by the book.” (Tweet This!) Connect with Justin Justin’s BiggerPockets Profile Justin’s Company Website Justin’s Facebook Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 123. Real estate has really provided me the means for a steady flow of income month after month. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from Bigger Pockets. Pockets.com. Your home for real estate investing online. What's going on, everybody? This is Josh Dorkin host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. What's going on, Brandon? Not much. How are you? I'm good. Doing well, man, enjoying the spring, enjoying the

nice warm weather, though it snowed like two days ago. Then it was 60. You guys had crazy weather, yeah. It's crazy in Colorado. April is very unprecedented. predictable. And you moved? That's a good thing. Something like that. Yes. Relocation. Relocation is always good. Not like moved like physically. Hopefully you move more often than. I was I was relocated by the undercover. Yeah, good.

No, that's exciting. You got a new house and moving up in the world. Look at you. Lancy. No, no. Just, just, you know, just just just moving around. I'm trying to, trying to make room for for the kids and dogs and everything else that comes with that. Yeah. Yeah. Yeah. Yeah. I helped a friend move yesterday. That's always a miserable experience. Wow. Yeah. I tell my friends that I'm not your friend when it comes to moving. I don't move. I don't help people move. And I don't ask people to help me move. So, you know, it's just, there's an understanding. I actually kind of like that because I'm like,

well, I need to like, you know, get some kind of exercise since I sit all day long. So at least when people ask me to move, help them move, I don't know. At least I'm doing something with my life. Here's a quick story. my friend Mr. Brian Volkwise decided one day that we were going to do, you ever see those those obstacle courses for grownups? You know, they have all these cool obstacle courses. They have TV shows about it where you go and you. No idea. You know what I'm talking about.

They have these cool, awkward. It sounds awkward. Yeah, it's fun. You go through mud and like muder runs and that kind of stuff. Okay, yeah, sure. Yeah. So he's like, oh, we're going to do this cool obstacle course. It's a secret.

We're going to go check this out and like, you know, bring towels, bring bathing suit, bring, you know, all this stuff. And I'm like, all right, cool, cool. So, you know, for weeks and weeks, he's hyping me up. He's hyping me up. And the day comes and he's like, all right, you know, he's going to come pick me up. So he picks me up. It's, you know, 6 a.m. And we're driving, and I'm like super excited about this whole thing. And, you know, I'm like, this is kind of a weird place. We're going into like a residential area. This is not really an obstacle towards top of type of neighborhood. And I'm going. I don't say anything. And then we make a turn. And I knew from his GPS that we were getting close. And,

we make a turn and I see a moving truck at the end of the block. Like a rider or Penske or something like that. And I just, I was so pissed. It was an hour and 15, hour and 20 minutes from my house. He kidnapped me to go move a friend of his. So I didn't even know this guy and I was kidnapped to go help this dude move. That's funny. Suffice to say, I was, I was definitely pranked and I was definitely pissed off.

You never moved anybody again. That was pretty much it. Wow. Well, okay. Well, I got pizza out of the deal. You got hosed. So cool. Definitely got hosed.

Anyway, today's show. Let's get out of this. This is a cool show. It's a very unique show. I think people are going to hopefully get a lot out of this one. I did. I mean, I thought it was fascinating. Yeah.

Yeah, I think it was great. Well, before we do, let's get to today's quick tip. All right, guys, quick tip. We send out emails regularly. I think it's every other week about people in your area. and we have this feature on BiggerPockets. It's BiggerPockets.com slash meet. If you are a newer member of our side and have yet to connect with people,

go to the meet page, look at investors in your area and connect with them. Reach out, say, hey, what's up? I'm so-and-so. I'm in your area. This is what I do. Would love to link up. Simple. You just expanded your network.

You just increase the likelihood that you're going to be successful as a real estate investor, period. It's that easy. The more people you connect with, the more people you network with, the greater your chance of success as a real estate investor, I promise it. So go out there, jump on the meat page. And when we send you those emails about people in your area, just reach out to them and say, hey, that's today's quick tip. There you go. Good job. Awesome. Awesome. All right. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time consuming, and expensive. But imagine if real estate

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across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no-brainer. So visit costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value in the best markets across the country, without making real estate your second job?

That's exactly what rent to retirement does. They're a full service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of our downpour. payment back at closing, plus interest rates as low as 3.75%. They've partnered with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit BiggerPockets.com slash retirement to learn more. All right, guys. So today's show, like we said, is a little bit different, but certainly interesting. Our guest, Justin Escaheda, Justin is a real estate investor out of the Pittsburgh area. And Justin, he's had a life that hasn't been so easy. He's made some choices and decisions that probably weren't the best. And for, I believe he says, 20 years was doing things like drugs and other bad things. And went down to, you know, he was homeless, right? I mean, I believe walking down the train tracks with a bag of all his

belongings. That was his life. Today he's he's got rental property, storage units, mobile homes. He's looking to get into mobile home parks. I mean, he's doing really well, turned his life around. It's fascinating. Definitely an interesting story. So stay tuned. And hear how if Justin can do this, you too can. You have no excuse to say, I can't do it. There's no way I could be successful if Justin was able to do that. And, you know, very inspiring, very inspiring. And we're really happy to have the opportunity to share this with you guys. So with that, let's bring him on. Justin, welcome to the show. It's good to have you here. Thank you. Thank you for having me. This is awesome. Yeah. Yeah. So, so this show is a little bit different. I know very, in that I know very little about

you. Usually I do quite a bit of research up front, but this time I know very little. I had Hillary do a lot of the research just because I'm lazy. Brandon was being lazy. I've been lazy. So I kind of wanted to try it out. Like, what if I know nothing hardly about the guest? Like, let's see where the conversation goes. It's kind of my thought process. At least that's how I justify my laziness. So, uh, what do you take us from the beginning? Who are you? Where'd you come from? How'd you started with real estate? Yeah. Um, names Justin. Um, from Pittsburgh, Pennsylvania. Um, actually, I think I might be your first guest from Pittsburgh to tell you the truth. I always listen, I always listened to your shows and I never had, there's never anyone from Pittsburgh. But, um,

but, um, but yeah, man, I, I, but nobody. really likes Pittsburgh. Even from people from Pittsburgh, don't know. That's why we're also miserable. But, yeah, I don't know. I got started in real estate. I'd have to say about seven years ago. However, my story kind of starts off prior to that.

Always been an entrepreneur, always. I'd say since the fifth grade. But, you know, real estate was always attractive to me because, You know, I fell into the stereotype of seeing landlords and all they did was pick up rent, you know? And I was like, oh, man, that's awesome. That's all we do. Yeah, you know, we're like Scrooge McDuck. We go home and we swim in our gold vault of gold coins.

Yeah. Yeah. But needless to say, I found out that was very false, very untrue. That it is. But yeah, I always started a lot of little businesses. Also, like, unlike a lot of your guests, most of them were cash under the table. Nobody's listening. Only 50,000 people and probably the IRS.

Well, hey, you know what, man. Like you said, you know, Brandon wants to learn more about me. And, you know, if something I could say can inspire someone or help someone, you know, get them out of the rut they're in, I'm all for it, you know. Try to give back as much as I can. But yeah, like I said, I've always been into the quick dollar, any means necessary, any means possible. And real estate seemed to be a more legitimate one at the time when I first got into being a landlord. And, you know, I was just like, you know what? I'm going to get a bunch of properties.

I'm going to get 600 properties. I'm just going to walk around like Joe Pesci in the super. and I'm not going to do anything to any of my units. And, you know, I love the super. I love that movie. I've not seen that one. Oh, you should. You are the super, my friend.

It is about the slum ditty dumb lord. And it is the slum lord of slumlords. Yeah, it's a real cheesy. I'll look at Netflix for that one. Late 80s, early 90s movie. Nice. Yes, yes. But it's good.

You'd like it. Believe me. But yeah. Like I said, and I'm still an entrepreneur and I have still, you know, started a few businesses, legitimate businesses now. However, you know, real estate has really provided me the means for a steady flow of income month after month, you know, to help, you know, fund other projects to make my businesses grow better. So I got to ask just because I'm sure people are wondering this too.

You didn't like rob banks or something, right? Okay, okay, to make it sure. No, no, I mean, anything from, you know, bootlegs, cigarettes, selling drugs. Wow, so you came of a rough background. Yeah, I mean, you know, but I came from the suburbs. Don't think I can. You know what I mean? I was just naturally attracted to that lifestyle for some reason, even at a young age.

But, yeah, I mean, I just grew up with that mentality, and I, you know what, the people, I was naturally attracted to the bad kids to the, you know, I mean, and that gravitated into, you know, a lot of nasty stuff, a lot of nasty stuff that I had to get over. But I don't know, man. I mean, talking probably like 15 to 20 years of just doing dirt, sorry, doing illegal things. And, you know, finally, in the last seven years, I've been legitimate, and it's been very difficult, very difficult to do things the correct way by the book. You know. So how did you do,

I mean, how did you, how did you, how did you come to that realization that you need to like, you know, stop living that lifestyle.

Yeah, I became, um, you know, like I said, I, uh, I became addicted to drugs and,

uh, my life was going down the toilet. I was homeless. No money. You know, all relationships totally shot. Drug of choice was heroin. So on a side note there,

I will say that, living in that, lifestyle for so long, it actually has given me a great grasp on interviewing tenants. You know what I mean? Just things along that way. How to look out for what I used to be, right? Yeah. Wait, wait, what did you say? How to look out for guys who do what you used to do. Actually, the very first, the very first woman I ever showed an apartment to, my first duplex. I showed her an apartment. She's walking around. She's like, oh, yeah, this looks really nice. And, of course, it was my first one.

So I decked it out. And, you know, crown molding, trim. A lot of the things that I probably don't do now. But I just went above and beyond. She's walking around. She's like, can I use your bathroom? I said, yeah, no problem, you know. She's in the bathroom for like 10 minutes.

Yep. And I'm going, you know, maybe, you know, maybe she had to get number two, whatever. But then I started hearing profuse vomiting. profuse vomit and she threw up all over the toilet, all over the floor, everything. And all she did was close the door. So I didn't know this until after the fact. I was like, are you all right? She's like, yeah, I was coming down with a bug.

But then I happened to see her arms. She had track marks all up her arms, you know. So I was like, you know, I'll be in touch. Yeah. And I wasn't in touch. But I did have to clean up all her vomit all over the bathroom. Oh, man. Oh, man.

Actually, I could write a whole book on weird stuff like that. But, you know. Someday, someday. Okay. So you're doing all this stuff. Seven years ago, something happens. Yeah, I got clean. So you got clean.

Presumably, I mean, it sounds like you were broke. You know, you had nothing going on. How the hell do you go from a broke ex-drug user slash whatever the heck you were doing that I probably don't want to know, criminal, to become, you know, a legitimate real estate investor and turn your entire existence around. I guess I was, you know, like I said, I got clean and went to rehab the halfway houses. The whole did everything that was suggested and, you know, just came to the realization that I was living a terrible life and everything that I had previously known was wrong, you know, the way I thought. And I just built off of that. You know, I somewhat got my credit back in order.

and I was living in this duplex. And the lady who was living in the duplex, she offered to sell me it. You know, and the other side of the house was, the other side of the duplex was totally trashed. And, you know, she's trying to sell me it. And that kind of got my, you know, kind of got my wheels spinning about it. And a long story short, you know, three months later, I bought another duplex. You didn't buy the one that she offered you, but it made me. you think about it.

No, no. I was so scratched. Absolutely. And she wanted way too much. Even with zero real estate background at the time, I knew that was like, I don't think this is right. Yeah. Yeah.

So tell us about that first deal, that first duplex. Where'd you find it? How did you finance it? The first deal I got was in a low-income neighborhood. I got an FHA loan for it and realized I didn't want to live in it after I bought it. you know, just because the neighborhood was terrible. And I ended up calling FHA, you know what I mean? And I'm like, hey, I don't want to live here, you know?

They're like, well, you can't rent out both sides. I was like, okay, I won't. So I did it anyways, and then I felt bad about it. And then I was getting nervous. I was like, oh, man, what's going to happen? But then at the same time, I was like, they're still getting their money. Who cares, you know? So, you know, I refine it.

I've, you know, got out of that. And that duplex is actually, I bought that for $40,000. And that was just straight dumb luck because that area is actually totally filled with all these shalers and frackers and pipelaners. So there's actually in that low-income area of Pennsylvania, because it's like a, so right outside of. Pittsburgh. But, I mean, there's zero rentals. You can rent a $400 apartment for, you know, $900 a month. And, yeah, so actually, I do very well on that one. I strictly just kind of rent to the guys who are working on the pipelines and stuff. And they're never there. They work like 20 hours a day. They come there and sleep for four hours. And, you know, their company pays the one unit's 900 I get. And

the other unit's $9.50. So, I mean, what did you pay for the property? 40,000. Holy smokes. Yeah, yeah. Love shot, right? That's, yeah, that's serious right there. Serious dumb luck. That's, that's, you know.

Wow. We'll take it. And, you know, on the FHA thing, obviously to everybody listening, you want to follow the roles and not, you know, not just say, I'm going to run out both sides and not live there.

That's not a good idea. I don't do stuff like that. Not that I'm giving legal advice here at all, but what I've heard is that you have to have the intent of living there. If something drastically changes after you buy it, I'm not saying, I'm, I mean, hear me out here. I'm not saying you should deceive that FHA. I'm just saying, like, they're not going to put a gun to your head if six months after you move into an FHA thing. They're not going to sue you if you have to move because you got married or because, you know, the neighborhood was bad or somebody

broke into your house or whatever. I mean, it's not like they're going to sue you if you move out for legitimate reasons, but you have the intent of living there. Yeah, that sounds a lot like the rationalization and justification I was doing. I couldn't. All right. Yeah, you're right. All right. So we've got this first property. You're feeling it. You're making, I don't want to do the math in my head.

I can't really think right now. But you're making lots of percents on this thing and you're into it. So how does that next deal come together? What does it look like? And how do you, you know, where does your learning process go? I didn't do a whole lot. of learning after that first deal. I was just kind of like, this is awesome.

This is so easy, you know. And I looked in that neighborhood after that, and I bought two houses side by side from each other, two single families. They were dirt cheap, $2,500. I ended up getting them both for it because the lady just couldn't hold on. This wasn't Detroit. This is Pittsburgh.

No, this is Pittsburgh, yeah. Pittsburgh, the new Detroit. Yeah. And that's not a compliment. This is just so everyone knows that wasn't a compliment. But yeah, I bought those and I ended up sitting on them forever, not doing anything with them. And I ended up doing some other deals at the time with some partners. Two partners of mine, we bought some apartments, and then we started a self-storage business.

So that kind of took up a lot of my time. And with those two houses, I ended up just getting rid of them with seller finance. Okay. So maybe. To another investor. Sure. Why don't you explain what that exactly means for those people who have no idea what that means to get rid of them with seller finance? Okay.

So basically, I was going on, you know, all the, I was going to local Ria meetings. I was going on the Facebook blogging, real estate sites in Pittsburgh. I was just saying, hey, you want to be a landlord? you know, I'll let you walk into this for five grand, you know, you fix them up, pay me, you know, actually I structured it pretty sweet. I said, you don't have to pay me anything for six months. And then after six months, you start paying me $300 a month, you know, but I needed a down payment. Sure. So, I mean, it worked out, you know, and that's a nice, in my opinion, if you want to be a landlord and you want to,

and you're starting off and you want to do the work, I mean, that's pretty, I don't know, I thought that was a pretty gravy deal. Yeah. I'm actually, I'm a huge fan of seller financing from both angles, selling as a seller financed and buying seller finance. You know, because if you're just starting out, you don't have a lot of experience,

don't have a lot of money, something like that, like an investor who wants to sell you a property with seller financing. That's how I bought my 24 unit was with seller financing. And they didn't need a large down payment. They just needed a little one. And then they just needed, you know, they carried the financing.

So I paid them every month instead of a bank. And it worked out great. I mean, they aren't real. I mean, they're not everywhere. They're not like the simple deals. Just go get off the MLS. but if you can find him, it's a great win-win for both parties if you structure it, right? Oh, for sure.

Hey, really quick, on that $2,500, you said nobody had to pay anything for six months. You paid $2,500 for the two properties. Was there a down payment on that or now? Three grand. So $3,000, you don't pay me $1 for six months, and six months later, you owe me $300 a month. Got it. So then they can go in, do the work, fix it up, rent it out. Five years or 10 years on the note?

No. No, what did I do? I think it was, it ended up being like four and a half years what it came down to. Yeah. Okay. Cool. So you went to that and then you said you got into self-storage. Yeah, yeah.

I want to talk about that because we've never done a show on self-storage. And I know you do a little bit of that one. Yeah, for sure. Yeah, I mean, first of all, again, basic question. For those people, don't even know what we're talking about. What do you mean self-storage? Self-storage, aka mini-storage, you know, the, I think the most, recognizable thing if you ever seen the storage wars on TV. Yep. I like the show, actually.

Yeah, the roll-up doors, you know, a bunch of units. Yep. Yep. Okay, cool. So you bought a complex of them, I'm assuming, like a bunch of them? No, actually, what I did was, actually me and two, my two partners of mine, we bought an old building. We bought an old building for $20,000. dollars right on a main drag in a pretty populated area of Pittsburgh and we gutted it totally gutted it everything from the Joyce's to the concrete in the basement just everything and then we just installed units you know so how many units did you get in there uh what did we get in there 35 I think wow yeah 20,000 how much should it cost to rehab the property 60 grand so you're at 80 grand you got 35 units and what it what is

What's the average rent per unit? $125.25. $125. And we're at about 80% right now. What standard is that about 75, 80, 90% full? Yeah, yeah. Well, I mean, if you talk to the storage gurus, they say you should never be 100% full,

but only because you're supposed to be increasing your prices every month, or every year, I'm sorry. However, I don't know, I'd rather just be 100% full. Sure. You said they're averaging 120 a month? $125 a month. Okay, so 125 times, let's say 35. Is that what you said 35?

Yeah, 4,375 and then take 80% of that. You have $3,500 a month in income on an $80,000 investment. That is a 4% deal. And that's, and I'll tell you what, what's great about that is I meet the tenants once. Yep. And get zero phone calls ever. Yeah.

Because the way we made it was we don't have like a person at the front gate or anything. You know, we just have an electronic key code access. You know, we have 24-hour surveillance. Everything's motion sensitive. They come and go as they please. And, you know, we never have to bother with them. That's awesome. What do you do when somebody wants to run a unit if you don't have somebody working?

That's the one. We have the phone numbers everywhere down there. And they just call for appointment only. Got it. That's the one time we meet them. Got it. I go. That's it.

That's beautiful. So I go, I rent, I've got a unit, I pay you guys, and hopefully I'm following your terms of use and not doing bad things in there. Presumably there are people doing bad things in there because that's kind of what people like to do in those types of places. Sometimes, or so I hear. Brandon. He's all read.

I don't know why. He's all red. I'm not embarrassed about it. I don't even know what they are. No, I've rented it. I mean, I've rented. a few times like from moves and things like that. So tell us about like, you know, what is the eviction rate like for that type of property?

What is the process like? You know, give us more information. It's actually pretty much in your favor as the owner. And I will say this. I'm a big fan of Storage Wars, the television show. And I always said, oh, it's going to be so cool. And we have our first storage auction. and we did have our first storage auction actually last summer.

Two 10 by 10s, packed full, all kinds of cool stuff, you know. I was like, man, are we going to make some money here, you know? And truth be told, the people on that show weren't at our storage auction. So we ended up getting $10 a piece per unit. Wow. Really? And what do you think the units were worth? I'm just curious.

I mean, I don't know. I mean, maybe a hundred bucks to be concerned. But regardless, I don't know. I guess I was just filled with years of watching that show. I watched this one goes for two grand. So is that the process? If you evict, you have to auction off the. Yeah, actually, what you have to do, you have to send, at least in our county, you have to send three certified letters within, within, within, it's 15 days late, then they have to send your first certified letter, and if they're another five days late, it's two more within 10 days. It's kind of confusing, but you have to have, they're all certified, and then what you do is you send on your third certified letter, say, you know, we're going to be putting this up for public auction. And they have 20 days from then to come and pay or claim it.

Now, 10 days before the actual auction, You actually have to put, and I always thought this is weird, you actually have to put their name and their size of their units and where obviously the auction is going to be in the paper. So, like, yeah, you know what I mean? So everyone knows up there. Yeah, like that's a little weird. Yeah. Oh, I should mention this. Another awesome thing, too.

After that second certified letter, we put a lock on their unit. Oh, really? So they can't come back without paying you. They can't. Interesting. So, so, I mean, I store. Cell storage seems really ideal. I mean, it really seems much, you don't have to deal with tenants, really. You don't have to deal with toilets. You don't have to do with any of that stuff. What is a downside? I mean, why isn't everybody in this industry? The one downside, well, I'll tell you two downsides and one from personal experience. When you start a new facility, and I suppose this is with any business that's in a brick and mortar area, people don't, you're not established. You know what I mean? We really didn't start getting a whole lot of tenants right off the bat. You know, I mean, I think we had like two tenants. for the first like six months, you know, while being open.

But, I mean, what are you going to do? Yeah. But then, you know, through advertising and just people driving by, you know, a huge sign, you know, we started filling up, you know. I suppose the other downside would be, you know, you can't charge a whole lot of this, you know. So you're not made, I don't know. I mean, obviously a lot of them at $100 for instance, you know, you're making a lot. But it's just, and they're popping up everywhere, too. I mean, everywhere you go, there's storage units, you know, out in the country, in the city.

I see them everywhere, and you know what? The size of the units are getting cheaper and cheaper and cheaper. Competition is actually, in my opinion, getting a lot, you know, more fierce here. And I've heard that from other people with self-storage, as they say, it's very much like it runs in kind of boom-bust cycles a lot like real estate does, but it can get very severe because there'll be like 10 years of overbuilding in one area. You know, like, it's like there's not enough storage. And so then a bunch of people start building. And it takes a few years to build them and get them all rented out. And then all of a sudden there's way too much.

And so supply and demand kicks in and the prices drop and there's, you know, 80% vacancy everywhere. And then, you know, then that lasts for 10 years. And then back to the other way. And it's just this big curve that I've heard can happen in areas. And obviously, there's ways to overcome that, you know, advertising and being better than the rest and, you know, being smarter than the next guy can help with that. But yeah, that's just what I've heard. But again, I've never got to do it. One tip, I will say this.

If you are a storage unit operator, I would highly, highly suggest getting the bank account information for automatic withdrawal from your tenants. Because it seems like your self-storage bill is kind of put on the wayside a little bit, much more so than rent or your electric bill. Even when you send them a bill, it's just slow pain, you know. Do you have a lot of issues with people paying late and stuff? Is that like a constant startle to chase rent? Yeah, it's on, I don't want to, no more than my, you know, apartment and, you know, house tenants. Well, it's the same people. Yeah, basically.

It's actually true. Yeah. It's the same people. Yeah. So do you, do you just have that one self-storage or have you gone and picked up other ones or built other ones? We picked up another one this past fall. And it actually has a lot of, it's another kind of conformed commercial building. The units were actually already in them. So we inherited a bunch of tenants and we bought that.

However, it also has office space connected to it too. So it was actually a nice buy. So you're a residential landlord. You're also a commercial landlord now and a self-storage guy. That's pretty cool. I mean, like, it's kind of a very, what do you call that? Diversified. Yeah, that's cool.

How many units are in that next building? 17. 17 storage. and then what about office space? Then it has like, I forget the square footage. I'd say, you know, we're rehabbing it right now. So it's not currently being rented the office space. But I always thought like it would be nice for like a dentistry pack or something like that.

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and get a $100 Amazon gift card. That's bill.com slash bigger pockets. So, all right, did anything come between, you know, after the self-storage and then this next self-storage slash office, were there other properties that you had picked up? You know what? Actually, the last year and a half, I've been focusing a lot on mobile homes, picking mobile homes up, you know.

So why? Yeah, my mobile homes? Because you can just get them for next to nothing, you know. Well, tell us about that. People, in my opinion, I've come across people, they change, you know, they'll change. You know, they'll change their mobile home and they can't move them because, as you may or may not know, I know you had that mobile home park guy, what was that four or five episodes ago, I think. Yeah, I think it was Jefferson. Lily, right? Yeah, yeah.

Well, you know what, it costs, you know, anywhere from two, three grand to move one. So people don't want to move one, especially if they're paying for a new house. And basically, they just want to get out of it. So, I mean, a lot of times you can just negotiate getting the title for nothing. How do you find them? First of all, how many have you got now? What's your total number of mobile homes? 19.

Ooh. Yeah. Now, do these, are you buying the homes in a single park? Are you buying the homes on their own land? What exactly? Mostly in parks. Mostly in parks. And I try to negotiate with the park owners.

You know what I mean? Because what's in their benefit is going to be in my benefit too. Got it. So you'll go and you'll pick up, you may own one home in this park, five in this park, three in another park. Yep, got it, got it, got it. And how are you finding them? Craig's List or, you know, word of mouth in the park itself, you know what I mean?

Tenants talk, that's all they do is talk. Sure. And they just call you up. And I put it, I've put a couple of times the, you know, I will buy your mobile home sign. I had two of those. And, you know, just mostly word of mouth. I will say that. So you've got these parks for close to nothing, it sounds like.

What do you rent a park? Not a park. What do you rent a mobile home out for? I actually only rent to them and I do $300 a month. What do you do with the rest of them? Yeah, the other ones I sell on terms. Okay. So it's kind of like that same strategy you did with the first $2,500 houses.

Yeah. When you said those two houses, I thought of like the mobile home thing. And we talked about that with John Fedgero back on, I don't remember which episode that was. But there was a while back. Man, we got so many episodes now. I can't keep them straight. But yeah, with John Fedger, we talked about that same strategy. You buy them probably for cash, if you can, and then just turn on a sell them on contract

and make that good return on your investment. And for those people who don't know what the hell that means, what does that mean? I mean, so you are, you're the banker again, right? Essentially, yeah. However, as you, as you know, and you guys have talked about a lot before, you know, the Safe Act and the Dodd-Frank Act and, you know, I don't know, at least they're a little scary to me. So I went ahead and got a mortgage loan originator

to make up all my notes. You know what I mean? So everything's legitimate and I'm not just conjuring them up on my PC and saying, you know, you know what I mean this? So can you explain that? I mean, what was that

process like? What do they do? What do you do? The tenants? The tenant buyers? No, no. Well, no, I'm talking between you and the originator. Well, he just, he does everything. His contract was, because I originally got one from my old lawyer, and it was basically a rent-to-own contract,

which I don't know how updated it was. And then when I saw his, it was a lot more in detail, and I guess it is, what's the word I'm looking for? Well, it's Dodd-Frank friendlies, pretty much. You know what I mean? It's, you know, that's what I'm paying for, so I'm legit, you know? And for those people who don't know, like, Dodd-Frank was a, like, what, a legislation that came out a few years ago from Dodd and Frank, who led it up, I guess. And Barney, Barney Frank and Chris Todd.

Yeah. So, like, it basically limits the amount that real estate investors can do seller financing to a degree. It says, like, you can only do so many. And before you do that, you have to do this and you have to follow these 50 rules. And the way around it, of course, is what you said is to use a loan originator or a mortgage originator or whatever. So you're still the owner of the, you're the lender of record, but you don't. don't do any of the paperwork. I mean, at the end of the day, they're the originator, you're the lender, and... Yeah. Okay. Yeah, because I think that... I think some of the rules were like, you could only do three in your name or any kind of entity per 12-month period.

And I don't know. There was a... There was, I mean, I've never read it. I don't know anybody who has read it or actually... Guess why? Dodd and Frank probably didn't read it either. Well, actually, there's some people I've noticed. I've read on the bigger pocket site, you know, there's some pretty in-depth, uh, heated debates about it, actually. Uh, I've totally stayed out of them. Yeah. Um, you know, I just, I just read, you know, but, uh, there, there are some experts on the, on the, on your site, though, for sure. Yeah. Yeah. Yeah. I've gotten lost in reading those, like, you know, because eventually these get so, like, like, I don't know, I read them and then I'm just like, I have no idea anymore. This is so over my head. I need a lawyer. Yeah. Yeah. Yeah. It's just easier to pay a lawyer. Yeah. Yeah. I'm just going to pay someone else to do this.

the right way for me. That's smart. So, Justin, so you've got these mobile homes and I understand you are looking to get into parks now. Yeah. Yeah. Yeah. Absolutely. However, I've been looking for a park for the last like seven or eight months. Truth be told,

they're not very easy to buy. I was actually, there's so many factors with, especially with the infrastructure, zoning. And what terrifies me the most about it is, and usually I'm not the type to over-analyze things. So I'm not afraid to pull the trigger on them.

But the last one I almost bought, it had a septic system. And that just, it just terrified me, you know. You don't want a puddle of poop on the property? Well, it wasn't so much that. It's when I called the county percolation departments. They told me right off the bat, they said, we don't have to come out there, but we know it's not working correctly. And then they also said, it's probably going to cost you about this much to fix it.

So I couldn't afford it. You know what I mean? I mean, you're looking at like, you know, $60,000 right out of pocket because, you know, they're going to come down there right after you buy it. I was just like, forget it, you know. Makes sense. Makes sense. But regardless, I mean, especially dealing with some of these old mom and pops owners who, you know, they've or these kids that have inherited the parks or the parks have been in their family for so long. You know, I'll ask for a rent roll and it's like, oh, he's paying $150.

he's paying too. I don't know what he's paying. You know what I mean? A lot, that's very common. That's funny. Or they're just making it up, like straight up lying. Yeah. You know, I wonder, going back to your discussion earlier on how you created a self-storage

out of commercial property, I wonder if it wouldn't be easier to try to, you know, yeah, it was empty for a while, but I wonder if it wouldn't be easier to try to do the same thing with mobile home, like buy land, zone it for mobile home or whatever. I don't know. I've heard that's very difficult to rezone from mobile home parks. Oh, really? Yeah. I have no idea of it. At least in my area. I don't know, you know, about anywhere else. Well, cool. Gotcha. Gotcha. I guess where do you see kind of a wrapping up question? Where do you see yourself going in the future? I mean, like, what's your plan? Just more mobile home parks or just continue doing what you're already doing?

You know what? Well, right now, I'm currently in negotiations for like this three storefront here in Pittsburgh with two apartments above it. I really like the, I really like the multi-families, particularly with. I like the commercials with some apartments above it. You know, I really like that. I do not see myself buying any more single families. I'm not saying, I don't have anything against them, but I just don't, I don't know. They don't. You hate them. They say them.

Yeah, basically, I don't want to say it, but yeah, they've had experiences with them, you know. And I should imagine, you know, I also have a masonry restoration company. So that's my kind of main thing. thing that I deal with on a day-to-day basis, you know, and I hope to grow that the best that I can, you know. Gotcha. Gotcha. Awesome.

Well, hey, why don't we move on to the section of the show we call the Fire Round? It's time for the Fire Round. All right. The Fire Round, these questions come straight to you from the Bigger Pockets forums, which I know you occasionally hang out in. Justin, so you maybe have seen these before. So number one, somebody said this. want to eventually invest in commercial real estate, like 30 plus unit apartments or mixed use,

maybe office buildings, but I do not know where to start. Would it be a good idea for me to start by contacting an agent? Should that be my first step? I mean, I don't know. I mean, I've bought one through an agent. I bought another one, you know, just through the owner. I think you're going to get a whole lot more flexibility through the owner, maybe something more creative or a seller finance, which is always very appealing to me. However, I feel like at least the agents that I've dealt with, you know, when I've asked about things like that, they, you know, they automatically shut it on. I don't know.

I mean, the two properties, the two commercial properties that I purchased were sitting vacant for so long and I had been looking at them. So I knew that there wasn't a whole lot of interest in them. So at least there was a little bit of leverage. Actually, I got one. The one of them was we offered a $4.3.3. thousand like three years ago. They said, no, we went, I think they were asking 65.

And then, you know, this past fall, it was still for sale. We offered 40,000. They were like, all right. So, you know what I mean? I don't know. But it's something I drove past all the time. Sure. Yeah.

That's funny. That's great. And I like that you said that you drove past it. I mean, that's a great way to find properties is, you know, where you go, where you live, where you work, where you drive around, you know, keep an eye out. And it's a great, great way to find opportunities. Well, you know, something. Another good thing about, you know, like, commercial.

property is something that I do a lot. I always advertise to other businesses for ad space, particularly like on the side of our buildings. We'll put up, you know, vinyl signs with their businesses on, you know, for like $7,500 a month. And, you know, it's just another way to create a couple extra bucks for, you know, every month, you know? Nice. And do you need permits for that? If it's a billboard, if it's protruding from the wall, but not if it's actually like a vinyl tapconed right into the wall you don't hear. And of course, obviously you want to check your local on that. But one of my local, like kind of like my mentor, a good friend of mine out here, he's got a property out on like the main drag of just like this beach town area anyway. So, but, you know,

a lot of traffic goes on this road. So anyway, he sold just a sign like four by four posts, vinyl side. I got permission from the city and everything. Like they didn't care. And he sells it for $2.50 a month or something like that. Just on the front lawn of a rental property. And the like it's a huge lawn. So it's not like in the tenant's way. But it pays for all his lawn mowing and it's for him going out there and face for a lot of his maintenance and stuff. Just sticking a sign up for some local like fishing company. Yeah.

Yeah. Anyway, yeah. There's cool ways you can make a lot of extra money in real estate just if you get creative and think about it. So yeah. All right. Moving on. All right. Next question.

Where do you find listings of self storage locations you can purchase? So is there a place to find self storage units or is there like a website where you can buy them? what? I did a lot of, I did a lot of calling places, kind of like older, you know, obviously, I'm not going to call Guardian Storage or any of the super big names, but like, you know, you see those old ones all over the place. I've been there for years, and it looks like they have zero upkeep. And I just straight up call and ask if they're looking to sell and if they're not to, you know, write my number. I'll go in and leave my card and, you know. Yeah. That's cool. I mean, it's the same way with any real estate. I mean,

That's what's cool about self-storage. It's just a business like real estate. It's part of the real estate business. So he's the same strategy that work for rental properties, work for that. So very cool. Yeah, yeah. Oh, my turn. Yes.

Just waiting. I was like, come on, Josh. Ask the question. All right. Let's see. And now you've done a little bit of wholesaling, right? We didn't talk about that today, but you've done a little wholesaling, right? Yeah, yeah.

I did three deals total. Okay. And then I was one of those people that they talk about, unlike the, you know, people who don't stick with it. I didn't step with it. Yeah. I just, it was, it really is a time-consuming thing. You know, people who think it's a quick buck, man. Those wholesalers work hard.

And it's a lot of work. And you know what? I just, I had other things going on that I put on a higher priority list than that, you know. Yeah. So I can't just like say, hey, I'm going to be a wholesaler like blink and have deals and make money on it? I mean, because that's what they tell you. Yeah, yeah. Well, if they did, I'd still be, I'd be a wholesaler.

I wouldn't do anything else. There you go. I know very, very, very few people who are full-time, full-time wholesalers. I know very, very few. Yeah, I think I have two. The ones who are tend to move on to rehabbing anyway eventually and then landlording because if you're really good at wholesaling, then you can just get the deals for yourself. A lot of times, like, it's kind of a quick.

But anyway, the question was, in the forums, was for the fire round here, can you wholesale a mobile home the same as a regular property? Do you know that? Yeah, I'm sure you can. However, and wholesalers have approached me, but, you know, like, and they say what they're, and basically it's a finder's fee, what they're asking for, and it's just not worth it to me to, you know, go on with the deal. I mean, I got to put a certain amount, I don't know, I've done enough of them now to know

how much it's going to cost me and what I like out of it. And, you know, if they're going to ask for, you know, $500,000 for the finder's fees, just, you know, keep it. I'm not going to pay it, you know. There you go. There you go. All right. Last question. For mobile homes, is the maintenance more or less are the same as would be, say, a typical property, typical home?

No. No way. You can rehab a mobile home for definitely under $5,000, you know, top to bottom. I know I do. So, it's a way, well. It's what you put into it, too. Because I've seen people put granite countertops in mobile homes. I mean, you can do whatever you want.

But the expectation is probably not quite as high with the mobile homes. They don't expect granite usually in a mobile. No, they don't. All right, all right, moving on. Let's wrap this thing up with the world famous. Famous for. All right, the famous for these questions, we ask everyone every show. And we have for 118 shows or whatever it is we're at now.

I don't know where probably much further than that because this is being recorded early. But anyway, so number, Number one, what is your favorite real estate related book? Rich Dad, Four, Dad. I knew you're going to say that. Yeah, yeah. Well, it's, you know what, it's by default because it's really the only real estate book ever read, so. Okay. Well, there you go. There you go. All right, business book. Is there any kind of business book that kind of, or, you know, anything that you're reading or read or for business? Millionaire next door. Blue my mind. I love that book. I think It's so informative and, you know, it had actually changed.

It definitely changed the way I lived. You know what I mean? I really started to try to live below my means and just to the point where I try to buy three-year-old cars now. You know what I mean? So it's an awesome book. Great reading. Nice. Nice.

Awesome. Cool. And what about hobbies? What do you do for fun? I like to just hang out with my kids. I'm a cross-country dad. So I help them. You know, a lot of runs.

running also vaping too i don't know if you guys ever uh you know vaping is i don't know that is e-cigarette you know like the big cloud i know it's like kind of corny but it's like my one vice and it's like my friends build them and they got me into it so now it's like you know see who can build the biggest or blow the biggest cloud and i go to the i didn't even know that was i probably spend way too much money on it but it's it's just like something i do it's funny i actually haven't been it's right here i haven't been blowing on it this whole time but you know so well yeah i did We'll wrap it up so you can make a cloud. Do they have like competitions for that?

That's what I wanted to. They do. They do. I wouldn't do that, but they do actually. Wow. That's awesome. All right. Last question then.

What do you believe sets apart successful real estate investors from those who fail, never get started, or give up? I think people who think they don't deserve it, you know. I truly believe that I deserve success. I deserve, you know, basically be, you know, wealthy. and I'm going to work for it. You know, every day if I have to, weekends, holidays, whatever, you know.

At night, you know, I feel guilty watching TV at night sometimes. You know, it's just stuff you can be doing. Yep. Me too. Hey, Justin, I've got a last question, not part of the famous four here. You've got a, I mean, you know, you've got a very distinct story than that of a lot of the other people

that we've had on the show. So, you know, you know your story, but I mean, you started, you did a lot of bad stuff, it sounds like, before and have had this full turnaround. And that's amazing and to be applauded for sure. So, you know, for those people who might be just down on their luck or might be making bad decisions who, you know, might be listening and saying, hey, you know what, this sounds real cool, but I don't know how the hell to get anywhere. I mean, you know, what would you tell those people who are just in a bad place or they don't have a lot of money or they're working a crap job or whatever it is? Like a crap, like, no offense. Well, I won't, I won't mention any franchises by names. But, you know, they're working a $8 an hour job. And, you know, they're looking and dreaming and saying, man, I want to do this. What would you tell them? What advice would you give that person to kind of get the ball moving? Keep the goal in mind, the end goal in mind, you know. Never, never be satisfied. Feelings pass, man.

They're just feelings, you know. They pass. If you were walking down the railroad tracks or the garbage bag full clothes like me and you're not at that point, then you have a huge leg up on than I did so. Yeah. But what, and that's amazing. So what first steps? actual attainable, you know, actions would you give to them beyond mindset?

Like, how do I, hey, I want to buy my first house. I want to buy this. I want to do this. I want to flip. I want to wholesale. I want to buy self-storage. I want to do anything. I want to get into real estate.

What would you tell me to do? Actually, you guys were just talking about this. Physically write it down. I don't know what happens when you actually physically take the pen to paper. but physically write down your goals. And I don't know. Just make, just do it. You know what I mean?

Just start doing one thing at a time, you know? Inches every day, a little bit more, a little bit more, you know? Yeah, right on. Cool, man. Hey, where can people find out more about you? Bigger pockets, man. You know? And, you know, Bay Masonry Restoration.com.

Facebook, you know. Contact me for whatever, you know. message me or if you just want to talk, not just about real estate. I don't care, you know. Right on, right on, right on. All right, Justin. It has. We definitely appreciate it.

It's a pretty cool story. And congrats on your personal turnaround. Congrats on the ongoing success. And we hope, we hope, obviously, that it continues going forward and, you know, rock on, man. Yeah, thanks, man. Thanks for having me. It was awesome. Awesome.

For sure, for sure. A pleasure. Well, thank you. Justin, thanks so much. Hey, thanks, guys. I'll see you. All right, guys. Good show, good show.

Thanks again to Justin. Again, really fascinating. You know, really happy to hear. Yeah, it's hard. You know, you hear about a guy who's just, you know, made some really bad decisions, and you want to go out and you want to judge them. And that's kind of a natural thing that people do.

Yeah. During the show, I actually looked over. I was curious about, what was the number of people, like, in America who are addicted to drugs or alcohol. And it's like, I think we said 11% of Americans are addicted. And then out of those 11% only 11% of them ever get treatment for it. You know, like, I just thought that was like fascinating. In thinking 50,000 people listen to our show, you know, if those numbers were the same,

you know, there's a good chance that there's 5,000 people listening right now to the show who are struggling with that kind of stuff. And if you are. Yeah. You know, reach out and get some help. Yeah. Because I mean like there's a light. I was going to say like there's definitely light at the end of that tunnel and like just

and story kind of shows that that there's ways out of that lifestyle. You don't have to be stuck in that and just wallowing in that mud forever. And I just think, yeah, his stories is really inspiring kind of showing that that's possible.

Says the preacher. There you go. There you go. Alcoholics Anonymous. You know, there's Narcanon. There's all sorts of organizations. Definitely encourage, if you're fighting or facing any of that,

that you look into these organizations or if you know somebody who is, you know, help them out. But yeah, anyway, So it's cool to see a guy like Justin who was able to work through it and, you know, who really reached the bottom and now is starting to do really well. And, you know, we're proud to hear the story and we're proud to share it with you guys. And so hopefully if it inspires one person to, you know, step up and make moves, you know, even if you're not, you know, addicted or having other issues, we definitely encourage, you know, you to get inspired. We encourage inspire. inspiration. Very good. Take action. And last day I'll say, just leave a comment for Justin and the show notes if you haven't done that already. So you can probably get those at biggerpockets.com. So I show 123. And so just go ahead and leave a message there. Just ask questions, leave comment,

encouragement, whatever you can do. I think I know I guess really appreciate that. So awesome. Awesome. Cool. All right. Let's get out of here. Well, thanks guys for listening. This is Bigger Pockets. Podcast. You know, if you're, if you're not yet a member of our site, jump on. BiggerPockets.com. Get involved. get active, make moves, and take a little baby steps every day. If you're getting started, that's the way to make moves. So I'm Josh Dorkin. Signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing, without all the height, you're in the right place. Be sure to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand-new construction homes, 10% below market value, in the best markets across the country, without making real estate your second job?

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