BiggerPockets Real Estate Podcast - 126: From 0 to 400+ Units Through Value-Add Investing with Brian Murray

Episode Date: June 11, 2015

Building a real estate empire takes time, effort, and significant amounts of capital. However, as our guest today shares with us, it’s not beyond your reach! Learn how Brian Murray built a real estate portfolio to over 400 units using a variety of strategies and intelligent techniques. If you plan on building a large real estate portfolio in your future, this is a CAN’T MISS episode! In This Episode We Cover: How Brian got started with real estate Why he invested in commercial office space The techniques he used to get the place rented What exactly assuming the loan of the seller means A discussion about Capitalization Rates Value added investing How to use the 50% Rule with commercial properties The value of putting money back into the property How he manages his properties and his specific views on it How to find great deals Tips for real estate investors on getting started His biggest success and biggest mistake And SO much more! Links from the Show #AskBP Podcast The One Thing You Need to Achieve Your Biggest Goals [#AskBP] BiggerPockets Podcast BiggerPockets Forums BiggerPockets Podcast show 100 with Josh Dorkin BiggerPockets LinkedIn Profile BiggerPockets Facebook BiggerPockets Twitter Books Mentioned in this Show The Complete Guide to Buying and Selling Apartment Buildings by Steve Berges Rich Dad Poor Dad  by Robert Kiyosaki Don’t Sweat the Small Stuff and It’s All Small Stuff by Richard Carlson Tweetable Topics: “You can’t expect anyone to treat your property as well as you do yourself.” (Tweet This!) “You’re gonna see far better returns if you invest yourself and your time into your properties.” (Tweet This!) “A lot of people they think that a property is not for sale, everything is for sale.” (Tweet This!) “Grit is living life like a marathon, not a sprint.” (Tweet This!) Connect with Brian Brian’s BiggerPockets Profile Brian’s LinkedIn Brian’s Company Website Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast. Show 126. He's got jagged yellow teeth and he's got no shirt on baggy pants and he's got a baseball bat in his hand. And he's like, what the bleep are you doing in here? You know, get the heck out of my apartment. 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 biggerpockets.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. Well, he's not really here. He's not really where he's supposed to be. Frankly, nobody really knows where he is. It's Brandon Turner. What's up?

What's up? Dude, where are you today, man? like, you know, you're supposed to be somewhere, but you're not there. You're like yesterday, you were in New York the day before Washington, and then, you know, Seattle, where are you going to be next? What's going on? What's this thing you're doing? All right. So, let's see. So we started in, uh, we started in Seattle, drove out to Minnesota, up to Michigan, down to Detroit, down to Lime, Ohio. I mean, yeah. I actually saw some $500 houses. It was pretty awesome. I didn't see the dollar ones, but whatever. I deliberately was like,

how am I try to find the worst neighborhoods in all of Detroit? And my wife's like, where are we going? I'm like, oh, I'm just going to go find us a Starbucks. I'm like deliberately trying to find terrible neighborhoods. And then, yeah, and then went over to New York City, did a meet up with a bunch of BP people there. So shout out to everyone who showed up for that. And then down the east coast,

and now I'm over in New Orleans right now, headed back towards your way to Denver. I should be there in a couple days. Awesome. Awesome. Yeah, sounds like it's been a phenomenal trip. and you've got to meet with BP people throughout the country, which is pretty amazing. Yeah, that's been awesome. I mean, just like taking the online world to the offline world and like meeting people

from bigger pockets and going out to coffee and getting drinks and whatever. Like, it's just been a really, really enjoyable time getting to know people from the site. So, yeah, if people aren't actually doing that, if you are only online, I mean, there's 300,000 members, which we just crossed, 300,000 members. Like, there are people in your area in your backyard who hopefully not literally in your backyard, that'd be creepy. But in your, yeah, anyway, go meet with those people. Like, it's amazing, like, the kind of learning and growing you can have when you get out there in the real world and build some relationships. Great advice, great advice. Awesome, man. Awesome. Well, cool. So, you know,

we're on for yet another episode of the Bigger Pocket Podcast. We've got a really, really cool show this week. I'm exceptionally excited about this one. You know, it's not often you kind of, you know, You get a show where somebody's just on and the tips are just nonstop and, you know, the genuine desire to really just share everything is there. And obviously on the Bigger Pockets podcast, we get that with most of our guests. But this one is just really awesome. I really enjoy this. Today we've got Brian Murray. And Brian's a commercial real estate investor.

And there's all sorts of great stuff that we're going to get into. Before we do, let's get to today's quick. Tip. All right. Today's quick tip actually is something we've talked about before in the past, but I want to rehash it here. If you guys are not listening to the Ask BP podcast, you should definitely check that out.

Especially, yeah, the one that I put out today, it's different than every other one. So if you listen to that one, if it's your first one, it's totally different. But I recorded a video actually in the car while driving, something that I learned while in the car, like kind of like a concept that came to me

and totally changed the way I think about real estate and investing. It's basically called like the one thing you need to do. to achieve your wildest goals and dreams. It's really, really cool. I wish somebody would have explained it to me 10 years ago. It would have totally changed how I did everything. So anyway, it's like a 20-minute video slash MP3, you know, if you're listening in the car

or if you want to watch on YouTube. But anyway, you can check that specific episode out at biggerpockets.com slash askbp. Or just go to biggerpockets.com slash ask BP, and it's episode number 39. So yeah, check it out. I think you'll like that one a lot. And it's on YouTube.

It's on, I mean, iTunes. it's on everything. Yeah. Awesome. That's great. That's great. And I've got a really quick, quick tip, which is we've got this great new feature in bigger pockets.

It's this live chat thing. So you could essentially go click on the profile of any of your colleagues and start chatting with them live. If they're on the site, just have a conversation back and forth in real time with the chat. You'll see there's a little thing on the bottom right of your bigger pockets window once you start connecting and this whole chat window pops up. And it's pretty awesome. If you see somebody on the forums that your colleagues with, you'll see like a little green dot,

which means they're online or red dot, which means they're offline. And you can literally just start live chatting with the people that you know and like and are connected to on bigger pockets in real time. So definitely check that out. It's a great feature. People are really starting to love it and use it a lot. 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.

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All right, let's get to this. This is, again, show 126 of the Bigger Pockets podcast. You can check out the show notes at biggerpockets.com slash show 126. That's BiggerPockets.com slash 126. And let's bring on Brian. Brian's, again, great guy. Really excited to have him. So let's do this.

All right, Brian, welcome to the show, man. It's good to have you here. Finally. All right. Thanks, Josh. Thanks, Brandon. Glad to be here. Third times the charm, huh? Yeah, let's do this. Yeah, cool. Let's get into this thing, man. Tell us about yourself. What are you doing real estate? Yeah, my name's Brian Murray. I own a company called Washington Street Properties that I started back in 2007. And I primarily invest in commercial and multifamily. Definitely more of a focus on multifamily right now. So mostly value at investment. Nice. So I want to know more about the value ad. But first, how did you get into this? I mean, what was your beginning into real estate? Sure. I bought my first investment property back in 2007. And, you know, in terms of how I got to that point, I'd always had an interest in real estate. And I'd had some luck with my primary residence. I'd moved a lot, done some transactions that went pretty well. I always like to fix up my properties. And a couple

years prior to my first commercial investment, I had a change in careers. I went from the, stepped off the corporate track and took a little bit of time off and started to teach. And I was teaching as a professor at the local college and got excited about what I saw and the opportunities and thought that real estate would be a good fit. Thought it might be a chance to supplement my income a little bit. And I started to look around and I looked at commercial multifamily and eventually came across a 50,000 square foot office building, which was, probably a little more than I intended to bite off at that point in time. But the more I looked into it, the more interested I got.

And it was a property I eventually put under contract. And it was a long, drawn out process. I put it under contract in September 2006. And I ended up closing in May or June the following year. Nice. So what were you teaching, by the way? I teach business. I was teaching marketing.

entrepreneurship. Okay, right on. And so you basically decide, okay, you know, real estate might be the way to go. Yeah. And instead of going out and buying a house or, you know, buying a duplex or just, you know, you decided to buy 50,000 square foot office space, which is, I mean, not the typical path of the average BP member. Why commercial and why office? You know, I think just having dealt with my single family residence and I had done a little bit of leasing when I moved at one point in time. And I just, I said, if I'm going to invest into real estate and I'm going to do this, I felt like buying that larger property would give me a better return. And a lot of the, and I still today, I feel like a lot of the basic principles behind it are exactly the same.

So I just started to read a lot of books. I started to talk to a lot of people. and I did a lot of learning along the way. But I also did a lot of careful research, and the more I looked at this property, the more excited I got. And it was a property that had been on the market for a few years, and the price had just kept dropping. It was the last property,

and the company that owned it was from outside the area. They had originally held an entire portfolio in upstate New York, which is where I live. and this was their last property that they hadn't been able to sell, and it was losing money for them hand over fist. Sounds like a great property to buy, doesn't it? Yeah. I mean, a few years is, you know, somebody in residential here is that they're going to lose their mind. Why would a property take a few years to sell? I mean, obviously, price has something to do with it, but was there something else going on? Yeah, I think the number one thing

was that it was actually losing money for them and nobody wanted to touch it. So they kept dropping the price. But, you know, I walked through and I was amazed at the things I saw right out of the gate. It was a architecturally, it was a beautiful property. It was well located. It had a huge parking lot in a downtown area where there was very little parking. Yet there was trash everywhere. There was signs all over the place that it wasn't being taken care of. And from talking to local realtors. They refused to show space there because they didn't think they were going to get paid. Oh, wow. It wasn't being well taken care of. And when I first, when I first entered negotiations, and it was late summer, I'd go there and days where it was really hot outside and all the windows

would be wide open. Air conditioning would be cranking. And I looked down through the line items in the expenses and I'd see utilities right up there. I'd see labor right at the top. And, And I got to meet the maintenance guy. He was sort of hard to find, but I tracked him down. And he was in his wood shop on the property, refinishing furniture. Nice. And with his Playboy pinups on the wall. And, you know, I'd ask him about all that trash outside.

And, you know, he didn't want to be bothered. So you kept him on a professional. He's your long-term employee. Yeah. He almost made it through the first day. Oh, almost. So these, all this bad stuff. I mean, you talked about being excited.

I did. Every time I saw something that was mismanaged, I get more and more excited. And it's the same today. You know, in the wintertime, it was the exact same thing. I got to figure out that when the wintertime came, he would crank up this massive boiler, turn it on high. And the way the temperature got controlled was to, each tenant was supposed to open their windows and adjust the temperature of course.

And, you know, in the springtime, turn the boiler off and you turn the AC on and then everybody does the same thing. Wow. My gosh. So, you know, I had a lot of people try to talk me out of doing it. And I'm not going to say there wasn't some concern and some fear because I'm really trying to figure everything out. But I went down through that expense line and I got pretty excited that I could make that property cash flow positive on the first day. And, you know, and on that first day, I had that maintenance guy. I walked me over to the thermostat and I said, I need you to show me how to. program this. He told me it was locked and he didn't know how to unlock it. And that was pretty much the end of him. I called the manufacturer of the thermostat. They told me how to unlock it. I programmed it so that it would be actually run off of the thermostat and would have just turned down on weekends

and evenings. And I cut the utility bill in half in the first year. Wow. And I dropped the expenses by $40,000 a year by letting him go. So letting him go and the thermostat. I mean, I'm guessing the utilities alone probably brought it close to break even, yeah? Yeah, I actually letting him go on day one got me able to cover the bills. And I knew that was going to happen. And everything after that was on the plus side. I as soon as it went as soon as actually it was reported in the papers that I purchased the property I calls coming in because people were interested in space there they just the prior owner hadn't taken care of it and once people knew it was under local ownership they had an interest and I started to the the property was about half full when I bought it and within a year I had it full that's awesome that's awesome what size town are you is this in is this a big area or a small one like city was it's pretty small water town we actually

a year or two ago became a metropolitan statistical area. You have to hit 50,000. So I think the city itself is probably a little over 30, but with the surrounding areas, it's about a 50,000, you know, population metropolitan area. Oh, don't. It is. It is. But, you know, there's huge advantages to doing business here. You know, I don't have to face the competition that I would face if I moved into a larger metropolitan area. So I can get properties with superior returns. that I might not be able to find in a more competitive place. Makes sense. In my town, obviously, the town I live in has like 3,500 people,

and then my county has, you know, 50 or 60,000. But the little town I live in, you know, if a person buys a commercial building downtown, some of them have been empty for 10 years, you know, with four rent signs in the window. And that is my fear of why I don't want to buy commercial in my area, at least, because I'm worried about it sitting there forever. So how did you overcome that fear of not being able to get it rented?

I think one of the biggest, ways was just by looking carefully at the competition. You know, I had to, and the way I financed this actually is I assumed the seller's mortgage. And in order to do that, I had to write a business plan for the bank and convince them that I could turn this property around. And as part of that process, I went out, looked at all the competition, knew what they were charging, and knew how this property compared. And I felt pretty confident that I could compete. and fill it with tenants. That's fascinating.

Do you have to put a down payment? First of all, can you explain what that means to assume the loan? And then did you have to put a down payment as well? So, yeah, to assume the loan, actually the seller, it was pretty interesting because initially I really thought this property would be beyond my reach. But that didn't determine from digging into it and looking around. And in the course of negotiations, you know, I think they were asking around $1.3 to $1.4 million at the time.

and, you know, I had negotiated down to around maybe 1.1, somewhere in that range. And in the course of that, I learned a little bit about the seller's situation and the seller's financing. And that's actually a tip that I would share with your listeners is the more you can learn about the financing of the seller, the more that opens up opportunities for you to explore ways to finance yourself, or to understand the seller's motivations. And what I found out was that the seller had an ugly mortgage, a mortgage that the seller would incur about a $250,000 penalty for paying off early. And they had priced that in because they knew they needed that.

And when I started digging into it, I asked them, I said, well, is there any way that you could assume this mortgage? And they were like, yeah, but you'd have to go through this lengthy, rigorous process. you'd have to pay for these reports to be done and, you know, an appraisal and a phase one environmental and all these steps. And you wouldn't know until the end unless if the bank is going to approve you or not. And I decided to give it a try. I decided to go for it and I said, listen, if I get this, if I can get the bank to let me take over your mortgage and they approved that, then I want the price knocked down by what I saved you. And they agreed to that.

And they also agreed. I looked around and I said, hey, it's pretty clear this place hasn't been taken care of. And under the terms of their mortgage, they had a reserve in place that the bank had required, that they built up over time, which is designed the bank to ensure that you're setting side money to make repairs. And I said, I want the balance of your reserve account. And they agreed to that as well. So by the time I assumed the mortgage and got a credit for their reserve account, I did have to come up with some money out of pocket, but not a lot. So I bought the property, but the cash, you know, in order to purchase this million dollar property, I ended up putting in less than $100,000. Wow, wow, wow.

Hey, Brian, so you talked about all the paperwork and things you had to do. What did that cost, the environmental and everything else? Right. We're looking at probably around $20,000. Okay. So you had $20,000 into that. And then you had the rest was down payment, basically, 80 grand plus or minus. Right. Got it. So you've got this, the seller, you know, they've got a need. They've got this 250 in reserves they're supposed to maintain. They couldn't maintain it. And so you talked them down and said basically, if I can save you, I mean, if they were going to sell it. they'd have that 250 prepay. Was that what it was? Exactly.

Okay. So you basically, were they, did they give you that 250 credit or did they give you less than the 250? You said, you know, I'm going to save you to, you know, if you sell it, you know, right now it's going to cost you 250. I want 200 as a credit. It was a little bit less. Okay. I made sure we both benefited and that way they came out a little bit ahead and I came out a lot ahead. Awesome.

Awesome. Well, sounds like a great negotiation. So you've got this property. You come in, day one, you fire the guy, you figure out the heat and everything else. And how did you get the building back into shape? Did you hire a new maintenance guy to take over? Or did you do the work yourself? Did it myself.

I would, you know, one of the benefits of having a teaching schedule, it's a little forgiving, right? So I purchased the property right around when school let out. So for that initial period of time, I could work full time. on the real estate. And I just, you know, I did it about, I did it one suite at a time, one room at a time where I'd go out and find that tenant. And each, each time I identified a tenant, it was a separate project where I would fix the space up to meet their requirements. And just little at a time, turned everything around. And it was noticeable. Everybody, because it's a smaller community, just by going out front, cleaning up the trash, doing the landscaping.

I was in there first thing in the morning before anybody else was there. I would walk the entire property, pick up every little piece of trash, right down to cigarette butts. And I made sure that people could see that it was under new ownership and it was going to be taken care of professionally. And almost all my tenants came from word to mouth. Nice. Nice. Before we get into, I know we want to talk about the management of it. What kind of returns were you looking for and are you getting them? And then I'm going to kind of also ask about the numbers if you're willing to show them on this property.

Well, I generally, you know, that first property was a greater risk than I'm normally willing to take at this point. Like I really want strong cash flow. And even with this property not being cash flow positive, before I agreed to move forward, I knew that I had to identify a way to make sure it was cash flow positive. out of the gate. I like to have capitalization rates. I know some of your prior guests have talked about that, but that's basically your return, not including your mortgage payment, once you subtract your expenses out from that rental income. I like to have a capitalization rate, ideally of 10% or higher, although I have paid as low as nine when I've identified opportunities to dramatically improve a property right after closing. This property, it did. It did. It did. It,

go up in value right away. I own it today. I now have my company's headquarters office located in that property. And so I haven't sold it. I have refinanced it. And, you know, that's, that's, I'm a buy and hold investor. And that's part of how I finance my, my other deals is I refinance properties that I improve the value on. Gotcha. So what are gross rents on that property? Gross rents are around $700,000, which is over twice what they were when I bought it. With 100% occupancy or somewhere there about? Yeah, it's not 100% right now, but it's in the 90s. All right, so we'll do the math.

What's this property worth today then? Not sure. Substantially more than I paid for it. How's that? I mean, if you're out of 10 cap, it's worth what? Yeah. it's probably in around $3 million. Well, that's great.

That's great. I love that. That's the power of that value add investing stuff. You mentioned that earlier and I said I wanted to come back to it. So the idea of when you can improve the income on a property or decrease the expenses or both, you add value to those commercial properties. So can we talk about that a little bit? Is that what value that investing is?

Is that what you mean by that? It is. Value ed has two sides, right? So the great thing about commercial properties and multifamily properties is that you have a very clear way to calculate what it's worth. You don't have to necessarily rely on comps or things like that. When you can boost the income from the property, then you improve the value of that property. So you have two sides to that equation. You have income and you have expenses.

And so what you want to do is as much as possible, identify ways to boost that income. income or lower those expenses before you pull the trigger on the property. That said, you shouldn't count on that and you shouldn't pay for that. And if a seller says, hey, you know, and this is a really common one, I'm, you know, I've got below market rents. You can just bump your rents up, right? You should pay more for this property. My answer is, go ahead and bump them up and come back and talk to me when you get it done. Buyer shouldn't pay for what's not there. And that said, you value a property based on what's there. but if you're a value at investor, you identify ways that after the transaction, you can go in and make those changes. And sometimes they require a lot of hard work. There's oftentimes a reason

why somebody hasn't done it. And the best investment opportunities that I found are usually from out-of-town investors, right? You can see a property isn't well taken care of. You have absentee landlord. And so when I look at a property, I'm looking for things like on the, on the income side, maybe the rents aren't where they should be for the marketplace. Maybe it's not being taken care of very well. Maybe it doesn't show very well. Maybe it could command rents if somebody just took care of it. And on the expense side, a lot of times you can find, you see waste. You see that it's not being taken care of. Well, you know that right away, you can step in and unlock the thermostat and, you know, program it so that it turns down at night. That was a tough one. Yeah, it was

really tough. You know, you know, and it's funny because people think, oh, just because you're buying a large commercial property, everything has to be, you know, all complicated. But it really doesn't. You know, I didn't, you know, when I walked into the utility room at that property, it might as well have been the inside of a spaceship for all I was concerned. I mean, I was looking around. I didn't know what any of it was. It was really impressive looking. But I do know that when it's really, really, really cold out and really, really hot out, the windows shouldn't be open. Come on, Captain, obvious. So that's what I'm looking for. And as a value-ad investor, once you can step in, and I try to mitigate my risk by buying properties that are cash flowing, but then have that upside. And I have been, as my portfolio has grown, I've stepped out there and been taking bigger and bigger risks in terms of of tackling properties that do need a lot of work. Gotcha, gotcha. And we'll chat about that in a minute.

I just want to kind of go back, you know, on the value stuff that we were talking about. I had asked you gross rents. So, you know, you can't actually calculate the value based on gross rents. You have to calculate it based on the income. But we didn't kind of go there. But it's basically you're multiplying your NOI times your cap. So, you know, assuming you're, you're, you're, running about a 50% expense ratio on this property then, yeah?

Yeah, something like that. Okay, right on. Which is interesting because we talk about the 50% rule on bigger pockets, and there's people who freak out and say, no, 50% doesn't make sense. Well, I think it's a pretty safe bet, and I think it does apply even across commercial where I think you'll see 50 to 60% plus even on lots of properties. Would you say that the bulk of the commercial property, that you're working on are in that range? I think 50% is a good number. I think there's a lot of

variables. In the commercial side, a lot of times you see things structured differently. So, for example, if you have what investors call a triple net property where all of the expenses get passed on to the tenant, then your expenses as the landlord can be substantially lower. But it really depends on the property. And I think 50% is a good number when it gets drops, below that. You'll often find that maybe the owner isn't spending money on things they should be. And if it gets too much higher than that, there might be places to save. In my portfolio, we do run higher than that. We do it intentionally. We have a very firm commitment. I'm religious about investing almost all of my income back into my properties in my portfolio. And that's kind of ironic

since I first got into this to maybe get a little extra cash flow. But when I actually took the leap and took my savings and put it into this property, I just couldn't bring myself to pull money out because I knew that if this was going to be successful, every dollar I put back in would improve the likelihood and the performance. And it's something I've followed to this day. I invest the vast majority back in. If you actually see. sit down and run numbers and calculate what your return can be if you continue to plow money

back into your portfolio, you'll realize it's how costly it is to pull money out. And I understand people have a lot of different motivations for investing in real estate, but people should never forget that because of the leverage that you have in real estate and compound interest that you having you can achieve in real estate by investing back in long term when you take a dollar out now you may be taking you know 50 dollars away from yourself five years down the road yep hey brian i know brandon i just have a really really quick follow up on that and that is how do where does that money go so i mean at at some point this building's been improved you know the tenants have a great place offices offices that they want uh how do you keep plowing money back into the building where does it actually go

So the money goes a couple of different places, but one of the large ones is it grows the portfolio, right? So at some point, you do reach a point where you get diminishing returns by plowing that money back into the same property. But if we go back to that first property that I bought, you know, I at different points went back in there. I converted two old locker rooms into offices. I converted cold storage into Class A office space. I found ways and continue to find ways to improve the property and get decent returns by putting money back in. But at the same time, that's how I pay for my next deal, right? So that money I can step in, get a property appraised again and refinance it and pull some cash out and make that next investment.

Right on. Yeah, I love it. Well, to go back to what you were saying about the exponential growth, right, about sinking your money back in. So when I was 27, you know, I quit my job because I was like, oh, I have enough money. I don't need to work anymore because I had just, I mean, I wasn't rich, but I had income coming in from the cash flow from the properties and I could just kind of maintain them myself. And it was fine, and never had to work again. And it took me like, I don't know, a few weeks, maybe, maybe a month or whatever, where I started doing the numbers and realized if that's what I did for the rest of my life,

I would never build any greater wealth or at least very, very slowly because all of the profit was just going into my pocket and paying my, you know, utility bill and more than that. You know, like, I wasn't like, I wasn't taking that and put plowing it back in. And so that's when I kind of said, okay, well, this is stupid to live off my cash flow all the time. You know, especially being a young person with the cash flow, I didn't, I wasn't needing to sit and retire and watch soaps all day. So that's when I decided, yeah, I'm not going to live off my cash flow anymore. And I switched my strategy up a little bit to say, okay, I'm going to plow everything that I get either into improvement properties, paying off mortgages or buy new properties, one of the three. Yeah. Yeah, absolutely. You know, I, I, um, I kept my day job for the first seven years of investing. And by that point, I had a lot of properties. And it consumed a lot of time. And I just held off as long as I could because I knew that if I wanted to continue to grow, it was going to pay me back later.

And like I said, everyone's investing in real estate for different reasons. But if you can be okay with that delayed gratification and really be disciplined, about investing back in, it puts you at a tremendous advantage over other investors because the truth of the matter is the vast majority of people investing in real estate do not invest back in. And it gives me a huge competitive advantage over, say, an institutional investor. Because when they raise money to do a deal, they're counting on pulling cash out and paying people back right away. And that money, if they were to turn around instead, invest that,

back in, that can grow and achieve returns that are far superior than when you're siphoning off cash. I love that, man. That's great. What a great philosophy. Really, really good. Well, so let's shift over to management. Are you managing yourself? Do you have in-house management? You were doing your own maintenance back in the day. Tell us about the management side of the picture. Yeah, so it was interesting because as one of the criteria to assume that initial mortgage, the bank came back and said, you don't have any experience. We require you to outsource management. And I had a lot of trouble finding qualified management. And in the end, I found a firm, but I ended up doing almost all of it myself. And it was because I cared too much. Like I couldn't, they, they, no one looks at your bills and no one negotiates. deals the way you would if it's your property. And as soon as I could, I initially, I renegotiated the deal with the management firm.

I said, listen, I'm doing it all anyway. You're just here for the bank's purposes. And I renegotiated it down. And as soon as I could, I switched completely over to self-management. And that's what we've done ever since. And I just don't think that you can expect anyone to treat your property as well as you do yourself. And I find it all fascinating because coming out of the business world into real estate and I still think it was a kind of a benefit in disguise that I really knew didn't know what the

heck I was doing. Because what I did know is I did know how to run a business. And I knew about customers. I knew about customer service. I knew about having a product that people wanted. and, you know, it's fascinating to me how many people. And you can invest in real estate as passive income. It can be a great tool for that. But it's just fascinating that in real estate, people think that you can, it's so broadly acceptable to outsource management. And it's really a business.

If you're doing what I'm doing or what a lot of people in real estate investment are doing, you are running a business and you don't see people who own flower shops outsourcing to flower shop management companies. You know, you don't see salons outsourcing to salon management companies. And yet, if you look at, you know, in my eyes, some of the people with the greatest experience in this area are franchisers. And if you look at the requirements that franchisers have, very few of them will allow absentee ownership. And there's a reason for that. It's because based on seeing thousands of investors, they know that there's a much higher likelihood of failure if the owner is not present. And you're going to see better returns, far better returns, if you invest yourself in your time

into your properties and you take care of them as your own. It's super hard to find people that have the pride and to just do things the way you would do them yourselves. So for that reason, I'm not a big fan of it. I understand why people do it and I respect why people do it. But people have to understand that when you outsource management, you have to accept that you're going to get a lower return. You're not going to get the level of management that you yourself might provide. And you're also siphoning off more cash and sending it to the management firm.

Yeah, I love that. I fully agree. What does management even look like right now for you? You know, like, I mean, what does it look like to manage that property, the one that we're talking about? Then we'll move on and talk about your other properties, but what does that even look like to manage that property now that it's full, when you're not fixing toilets and things anymore, I would assume, or are you? No, I've got 11 employees. Five of them are on the maintenance side of the house. Two of them are on leasing, and, you know, the rest are different administrative functions.

but we manage, you know, in addition, we've been more focused over the last couple of years on multifamily, I'd say over the last three years. That's been our primary focus. We've got about 400 units that we manage. Wow. And we do, you know, that's commercial is about probably 40 to 45% of our portfolio right now. And we manage all of it with the staff of 11. Wow. Okay. So you kind of transition to the large multifamily? Is that what, you know, like big apartment complexes, I'm assuming? Yeah, I mean, we have a handful of smaller ones, but, you know, most of them are, you know, anywhere from, from 20 to 70 some odd units. And we do have one HUD property. And that has some, it's a multi-site property. That's the only property we have that we outsource management,

because the knowledge and specialization for HUD is something that we decided we just weren't keeping in-house. But we work really closely with them and, you know, keep an eye on what's going on there as well. Wow, that's fantastic. Okay, so let's dive into that a little bit on those properties. I mean, how did you, first of all, how do you find them? I mean, how are you financing them? Are they all your own money? Are you raising money?

I mean, how does your business work now? Okay. In terms of finding them, we've got a great relationship with area brokers. We've worked hard to get a good reputation with them. We pay them well, value broker services. I've found that it's a strategic advantage to me to not be a broker. I like to go directly to the selling brokers. And I've found that they are highly motivated to strike a deal with you when they get to

keep the entire commission. So, you know, I think that once you gain some experience, that you can do that. And I find that as soon as I tell a broker that I am not a broker, that I'm an investor, that I'm a buyer, they treat me in a different way and they're more responsive and they fight harder to make a deal. And so by allowing them to get that extra money, I get better deals. But that said, that's a tip that goes to anybody. whether you're residential or commercial. Sometimes, I mean, sometimes maybe you want to have your own agent. I mean, I have my own agent, but sometimes it can be extremely beneficial to just work with

a selling agent because of that double commission kind of thing that, you know, they're making twice as much money. They're twice as, you know, motivated to sell to you. Yeah, absolutely. And so I get some of my tenants and some of my properties through brokers, but actually more of them, I get on my own. So, of course, I monitor all the typical ways that people get properties. I watch for new listings.

I, you know, I sign up for alerts, et cetera, et cetera. But what I do that I think might be a little bit different is I am constantly looking for properties that I would want to own. And I don't care if they're for sale or not. As soon as I identify a property that I want to own, I find out who the owner is and I contact them and I introduce myself and I let them know that I have an interest and if they ever reach a point that they're willing to sell, I'd like to talk to them. And I've gotten a lot of properties that way and it's a great way to get that perfect property. And a lot of people,

they think that a property is not for sale. Everything's for sale. And very few people are upset to have someone come up and say, hey, I like your property. If you're ever interested in selling, you know, I'd be interested. Most people are or warm and receptive. to that. Take it as a compliment. I mean, they take it as, hey, I've got something that you're interested in. Especially in the commercial field because, you know, they're all investors. It's business. Yeah, it's business. There's a number for everyone. I mean, I can't go buy the guy's house across the street necessarily because there's no number. I mean, there may be a number, but, you know, he's not motivated. But investors are generally willing to sell. And so, yeah,

people that are listening to this, if you are trying to buy a multifamily of any kind or commercial, it's all for sale. Like, just look at how it. Well, it takes the emotion. Well, it takes the emotion out of the picture is the nice thing, right? Yeah. Yeah, find the property that's in the best location, find the property that, you know, and look for those signs that maybe it isn't being taken care of. You see that upside, you know, and reach out to it, whoever's, you know, whoever the owner is. Yeah. Same thing with tenants. You can, you don't have to wait for someone who's looking for a house or an office or a retail space. Go to the tenant that you think would be perfect

and say, you know, how would you like to come live here? How would you like to move your office here? Yeah. I once wrote a real estate book. I don't remember what book it was now, but the guy talked about how he would put on overalls or like a work jump suit, like he's a maintenance guy, and he would go to large apartment complexes

and ask tenants, things like, I heard there's a problem around here I'm supposed to be looking at. Do you know where that's at? And then just depends on what the issue is, you know, like, oh, yeah, the thing's broken over there and that thing sucks over there and that, and they'd think he's a maintenance guy. and he would find out all the problems.

And then he could go and make an offer based on, hey, I know this is wrong, this is wrong. Brilliant. What a great idea. I haven't broken out the overalls yet, but maybe I will. Yeah, you might have to after that one. That's a great tip, Brandon. Yeah, yeah, there you go. Cool.

So in terms of you asked how I finance them, I mean, the majority of the deal is the cornerstone is bank financing. But I work really hard to try to make sure I'm putting in as little cash as I can. lots of different ways you can go about doing that. You know, working with the bank is, it could be, it can be difficult or it can be great. You know, and after I assumed that first mortgage, I spent the next two years trying to get mortgages, trying to refinance a property, and I got nothing but knows. And eventually, my second property, I had, I actually got that through owner financing and still didn't, still wasn't able to get a bank to work with me.

it wasn't until my third property that I actually got a bank to say yes. And once I had the first bank say yes, it became easier to get the other ones to say yes. And I've got a great, and now I have a great working relationship with a local bank. And it's great to work with them. But if you want to maximize your returns, you need to look for ways to reduce the amount of cash you're putting in. And you need to be careful about that. You know, remember, I'm a value-ed investor. So I've usually identified a handful of ways to improve value right after closing and keep my equity where it needs to be and not overextend myself.

But that's another advantage of commercial and the multifamily projects is that it's more accepted or expected or even customary that they may extend a piece of owner financing. And a lot of times it's hard to find somebody who would say, well, yeah, I'll finance the whole thing because not a lot of people own. a property outright. But when they're trying to sell and you're prepared to secure 75% bank financing and you ask them to carry 5% or 10% or even 15, a lot of times people will be much more receptive to that. And so even if I don't lead with that in a negotiation, I'll often counter with that. So maybe I lead with a more aggressive price and they counter. And when I come up, I say, okay, I'll come up, but maybe you carry a note back for 5% or 10%. So there's, you know, and the other thing that I do is I try to be creative.

I try to understand their financing. Like I've done multiple deals where I've gotten a credit back because they are carrying a reserve account or for deferred maintenance. And timing can be important on a commercial or a multifamily deal in terms of what time of the month you're closing the deal. And so, for example, if you can close, say, on the fourth or the fifth of the month, standard terms of an agreement would give you a credit at closing for the balance of that month's rent. And if it's a commercial deal, you don't need to keep the deposits separate.

So whereas in an apartment or in a residential transaction, you actually have to take those security deposits and you can't touch. them, you put them in separate accounts. If you do a commercial deal, and sometimes between the pro-rated rent and the security deposits, you might get 5% of your deal covered at closing out of prorated rent and security deposits, and that can save you a lot of cash. Yeah. That's a great tip. I love that. I've never actually done, I haven't done much of that. I was here about that, but I've never done a deal big enough. I thought it was really important to do. I mean, I guess maybe on the 24 unit, I did a little bit. But yeah, when you schedule the days correctly, you can get credited back and yeah, some cool stuff there.

Anything, anything you can carve out, if you look through the terms of a closing and if you can, if there's any pieces of it that you can, as part of your negotiation, place onto the seller, you know, cash is precious. Just like you, just by, like by not pulling that cash out, you know, you improve your long-term return. The same thing goes at closing. So it's not just in an ongoing, you know, managing that property and that cash flow. It also is at the initial transaction. You want to minimize that cash. But like I said, you got to be really careful. You don't, you don't want to leverage yourself to a point that you dig yourself a hole. And so I'm trying to be as careful as I can to make sure that I've got something tangible that I've identified

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relatively new at this space and is looking to get commercial financing? What steps should they take to make sure their ducks are in a row? I mean, obviously, you tried to do that and couldn't get typical financing, you said in the early deals. Now that you've learned the ropes a little bit better, you know, what can you do to be more successful or what could you have potentially done? Yeah, that's a, that's a really hard question. I mean, for me, you know, I'm a huge reader. I'm, you know, I listen to podcasts. I listen to bigger pockets. I love it. You know, I, I like to learn and I like to devour as much information as I can. And I, that's probably my number one tip is learn because you need to be able to speak the language and do your homework. So a lot of it

you can do on your own and you can get out there and talk to people, find somebody who's done what you want to do. I didn't have that luxury. And, you know, I think that I really wish I had been able to find somebody who had been through what I've been through back then. I think it would have helped a lot. So I'd say take advantage. Most people who've had some success in real estate are willing to help if somebody reaches out. Gotcha. Cool. Yeah, perfect. All right, man. So, biggest mistakes.

One or two. Like, you know, what did you really screw up, man? Wow. It's a long list, actually. We got a lot of learning as I know. But, you know, I had two projects in a row last year that the first, one just really pushed the boundaries of adding value. And, you know, the second one, I sort of assumed it would play out like the first one, and it didn't. So, you know, I'll start with the first one,

because I like that one better, because that one actually worked out. So let's, let's tell the good story first before we tell the one that's, you know, depressing. So we had a property. I guess This was about 18 months ago, came up for foreclosure auction locally. And it was a six-story apartment building. And right adjacent to a couple of my other properties, right on the edge of a nice part of town. But this had been completely let go. Drug activity openly, taking place in the hallways, lights all smashed out. Scary, scary place.

My staff was actually, they were forbidden from going in there alone. But we saw all the potential. So we ended up going to the auction. We were the only ones that showed up. And we got the property. Was there a reserve on this one, by the way? Yeah, we got it right at the bare minimum. I think we literally bid $1 over the bank's reserve.

So I think we were going up in $1 increments until the bank represents. until the bank representative said just like, oh, no, just here it is. So anyhow, we have the closing and we're all a little nervous, and my staff was just pleading, please, let's outsource the management on this one. You know, this is going to be scary. And I'm like, no, no, it's going to be fine, you know, nothing to worry about. We can do this. It's, you know, look at it's beautiful architecture. You know, everything's, it's going to be good.

We just need to clean it out. So we go through closing and on that very first day, my property manager gets a call. In less than an hour after closing, we got our first call from a tenant. And the center of this apartment building had an atrium that was five stories tall up to these windows skylights up at the top. And right in the middle of it was an exposed elevator to go up through the floors. and the call came in, the complaint, the tenant said, there's somebody standing on the fifth floor at the railing, and they're urinating down on the top of the elevator.

And there was a vent, an open vent in the top of the elevator. There are people in the elevator. So right then I was like, oh, my God, what have I gotten? Oh, yeah. I was like, what exactly do we do in this situation again? Oh, yeah, we haven't encountered that before. You know, so, you know, that was that was the first afternoon. The next morning, I went in to tour the vacant units.

And I get it, we start to hear just blood-curdling screams from the floor above us, a woman screaming, help, help, at the top of her lungs. So I race up the stairs and there's an apartment with a door wide open. And there's a guy standing there, this wiry, skinny guy, and he's got jagged yellow teeth, and he's got no shirt on, baggy pants, and he's got a baseball bat in his hand. And he's like, what the bleep are you doing in here? You know, get the heck out of my apartment. And meanwhile, the woman who was screaming for help had stopped. And my property manager called 911, and I stayed in the doorway until the police showed.

up. So I go back downstairs. Police come down about five or ten minutes later and they're like, yeah, his obese wife had fallen in the tub and got stuck and couldn't get out. So she started screaming for help to get out of the tub. And I was like, that's not what I expected. So anyway, same day we had a drug raid cleaned it out. So that's the kind of place we bought. And what we did is we went in. We put lights up everywhere.

We put surveillance cameras all over the place. We put a key fob lock system on the front door with security cameras facing both ways, tractor activity. We actually took our management offices, moved. them into a vacant ground floor space and stayed in there while we refurbished each unit one at a time and dealt with the tenants. And after six months of stories like the ones I just shared and all kinds of crazy stuff that I probably never needed to see or, you know, learn about, we turn the whole place around and it's beautiful. It's beautiful. So what percentage of the tenants did you end up

evicting? Because, I mean, you would need to kick a whole lot of. Probably 75%. Okay. Yeah. There were still a handful of really good tenants who were just so grateful that we came in and did what we did. They were living in fear, but it was their home, and they lived there for a long time, and they stayed. They were paying rent. And we, you know, that's the other thing that was fantastic about this project is we actually had significant rental income coming in the entire time that was helping to fund all the improvements that we made. And the project was just a huge success.

Really quickly, how much did you need to rely on the authorities to help you? Because I would think a project like that, I mean, surely there's going to be a lot of situations where, you know, there's Hisha Chi-Seds, there's verifications of who people are and the drug dealing. And I'm sure, you know, day one is, hey, officers, I'm the owner, we're going to try and clean this up, but we need your help. Yeah, we actually went into the police station. and met with some folks there before we closed on the property and said, hey, this is what we're doing. We're going to need your help. And they were great.

But surprisingly, even though things started off really scary and exciting, once the cameras went up and the lights went up everywhere and we were there on site, a lot of the worst tenants left on their own. They didn't like the idea of the cameras, all the stuff we were putting in. and made it not a good place for them to live anymore. And so a lot of the problems just went away on their own. We had some really bad tenants that we had some trouble getting rid of, and it wasn't pleasant experience.

We evicted a lot of tenants, but the worst of it was probably in the shock, both on our part and for the tenants of those first week or two. Nice. Good job Joe Peshy. And you just said, you know, you just said a minute ago that, you know, it was a success. At the end, you could, you define it as a success. Do you mind like, you don't have to share numbers necessarily if you don't want to, but like, you know, how worth it? I mean, was it worth it all that trouble and all that hassle? Like, did you get a, I mean, do you have massive equity in it now today? Or is it achieving a ton of cash flow? Yeah, both. I mean, we have a ton of equity. We've got fantastic cash flow. But, you know, it's not all about the money, too. I mean, it's, it's rewarding, you know, helps keep you motivated to be able to go in and turn a property like that around. It's fun. I mean, maybe not so at the time, sometimes, but, you know, it gives you good stories to tell. And it's, but it's, you know, it's rewarding to go in and do something like that. And as part of why we, you know, not just myself, but, um, the people on my team who actually do most of the work, they can take a lot of pride. You know, they hold their heads high and walk around and they're glad to be associated with

a project like that because everybody knows, you know, that place was, you know, just not a safe place. And it's it's some place that people would really like to live now. Yeah. Hey, Brian, you had a bad story. That was the good story, right? So really quickly, let's get the bad story. I'm sorry to call it. Let's just fly through it. And then we're going to start moving on the next part of the show. Yeah, so I was hoping you forget about that. I don't forget.

But yeah, so basically similar situation, smaller project, but in this situation, we made decision to completely empty the property of the tenants because it was a smaller project and things said that were pretty far gone. So we got rid of the tenants. But when we got in there and we started to turn the units, we started to uncover problems with the infrastructure of the building. Started off with electrical, proceeded to plumbing. And once we started to dig behind the walls,

we found all kinds of structural issues. And, you know, the budget that we had set and the plans that we had sat to turn that property around were, you know, they were gone quickly. And it was another property that we purchased at foreclosure. So it had a lot of similarities. And I think coming off of a project that was so successful,

on the heels of that. We just assumed that we could do the same thing. And we took a risk. And that project is still ongoing. But it's definitely not going to be anywhere near as successful as the first one. And we learned a lot of hard lessons on that. Is there a way you could have avoided those problems? Is there anything you could have done or not really because it was at a foreclosure auction? It's tough. I mean, it's hard to say, you know, you don't want to second guess yourself. But I think you got to, my advice would be to go into a foreclosure situation where you have limited access to a property. And you pretty much have to assume the worst. And fortunately, my company's at a point right now where we can sustain a mistake like that.

If it had been my first property or even one of my first five or six, it might have been my last. Yeah. Gotcha. Well, thanks for sharing that. I mean, I think that's really, really helpful for people. So, all right. So the last question I kind of have today is, you know, where do you see your business going in the future? What is next for Brian Murray? Well, so far, we've been pretty concentrated geographically in our projects. You know, when I've taken a time to speak with people who've done what I'm doing and, you know, have larger real estate portfolios, they look at what my properties look like and say, hey, you're taking on a lot of risk being. so concentrated geographically. And that's the downside of my hands-on management approach. I want to be there. And as a result, all of our properties to this point have been ones that I can drive to

and keep an eye on and be actively involved in. But there's a risk with that. So if there's a downturn in the local economy or something happens, you know, I'd be well served to start looking to expand geographically. And I think in 2016, you know, and moving forward, we're going to be looking into other areas. right on I like it Cool All right cool

Let's move on To the world famous It's time for the fire round All right These questions come direct from Bigger Pocket's members In the Bigger Pocket's forums And you can get there

Not you Well you and everyone listening At Biggerpockets.com Slash forums So number one question Well the first question anyway How can I tell if there's a demand For rentals in a given area

Well you know part of what I recommend is having some close familiarity with where you invest. And I know not everybody on your show has sort of been a proponent of that, but particularly as a new real estate investor, I really recommend, again, that you invest somewhere that you know the area well. And you can invest as far away as you want, but your risks are going to be higher because there's more unknown. And so familiarity with that local market, I mean, there's really no substitute for that.

So if you live in an area, you should know enough people and have a finger on the pulse of what's going on and know, you know, you can, you should have an idea what the demand is. Right on. I agree with you completely. Yeah. So. Yeah, Josh, in your story back on podcast like Show 100, Josh, you talked a lot about like that, you know, the disaster properties you had. And you weren't local. Do you think there was would have been, it would have turned out differently had you been local?

Oh yeah, thousand percent, thousand percent. You know, investing in your backyard, you can go, you can walk the property, you can drive the property, you can see what's going on. If you have to get on an airplane and, you know, and jump through hoops to go and see your property, you know, it impedes your ability to quickly, you know, scout it, to scan it, to see what's going on, to see the neighborhood changes that you would normally see. I mean, Brandon, you own the town of Montessano, Washington, right? So, I mean, as mayor, of Montessana. By the way, I dubbed the new mayor of Montesana. Mayor Ken wouldn't be real happy. No, Mayor Ken. Doing his website for him. Well, there you go.

Well, Mayor Ken, listen. Now, you know, you can, you know the neighbor. You see the changes. You see what's going on. You know, boots on the ground, as everybody likes to say, I mean, it's so important. If you can't be there, you need somebody that you can absolutely trust

implicitly to be there to be your eyes and ears. So yeah, I mean, you know, you've got to, you got to be there. You know, new investors, any new investors that are listening, I know that there's a lot of, what's the word I'm looking for here. It's easy to say, hey, there's no properties right where I live. You know, I'm going to go invest, you know, thousands of miles away in Detroit. I wouldn't have said that, but, you know, definitely wouldn't have been my first choice. in these other towns, and I'm going to use a management company, but that's fine. But you've got to still know the town. You've got to know enough to know if the management company is giving you the up and up or if

they're full of it. You know, you've got to understand what you're dealing with or you can find yourself in trouble. So, yeah, I mean, I really, I think that's probably the best advice anyone can give is know the area very well. And that's why we talk about all the time on the show, you know, you don't have to invest thousands of miles away. There's not a single city in the United States where you cannot find deals within an hour, two hours away. There's not a single one. So the need to go across the

country just isn't there. But anyway, enough about me and my rant. Let's get back to Mr. Murray here and ask him this next question, which is one of the first questions to ask when speaking to a realtor or seller about a buy and hold property? I think the first thing you want to do is try to understand them and what are their priorities and what are they looking to achieve from this. Why are they selling? I think that's the first step and that helps you to establish a rapport and get an understanding a situation.

And then that sets you up to start to probe in areas that are interesting to you. So put yourself second for a few minutes and then you can ask about income expenses, things like that. I think another thing to do is to be careful to when you value a property to make sure you're using actuals. And so you don't want to just take verbals. You want to try to avoid pro formas which are the future projections for earnings. And as much as possible, get a current rent roll, current information. on rental income and get actual expenses for at least the prior year, if not the prior two or three years.

Great advice. Love it. Love it. All right. Next question. I've got a real estate license, 10 grand, and good credit. And I want to invest. How should I get started?

Give it a me. Well, you know, I think a lot of that depends on what your goals are. But I do think that people are too quick to count out. out commercial. I think the obvious answer, the quick answering most people give is to look at a residential rental property, but I do think people should be open to commercial. I think it depends on what markets you're in. It depends on how actively you want to be involved. There's so many specifics, you know, that would go along with that. But I think the sky's the limit. Don't limit yourself. Go out there, you know, do your homework and figure out what's going to work for you.

Right on. Right on. Right on. Our last question is, will the real estate market collapse in 2015? I actually read a really interesting article on Zero Hedge that they were just talking about. You know, it's just getting real frothy. And I agreed with much of what he was talking about. Just curious what your take is. You know, for people who watch prices nationwide, in particularly in the multifamily sector, Prices are really, really high right now. People are paying quite a premium on income capitalization rates. People are willing to accept very low capitalization rates right now.

Historic lows. And I'm not sure that that's sustainable. It's caused my last project because I couldn't find a reasonable return. We actually went out and bought a motel. or a hotel that was in financial distress and converted it to apartments. Oh, wow. Because we could get a better price and get the returns that we have to achieve. And so we've been trying to be creative and looking to do things like that.

But it's becoming a challenge. And it's, you know, some of it will have to do with interest rates as lending rates get higher. And most people think that they will continue to rise. You're going to need higher returns to pay. your mortgages. And so when you demand higher returns and investors demand higher returns

then the asking prices need to drop. So my belief is that the current levels are probably not sustainable, but I don't necessarily believe that there's going to be some precipitous crash. So I say go forward with caution, but I'm still

an optimistic investor. Right on. Right on. And let me just ask really quickly. So you bought this motel. Did you have like a giant black light as you went through it? It, you know, it was another turnaround project. And it's gone pretty well. We converted it into 48 studio apartments.

And, you know, we just finished the renovations earlier this month. And we've got 20 of them leased up. And so we're focused on that right now. But I was an interesting project. And, you know, I think you'll see other investors try to do, you know, things like that if prices don't start to come down on on the multifamily. Right on. That's smart. I love that. I love that. Yeah, great idea. So cool. All right, well, let's move on and cover the world famous. Famous for. All right, these questions,

we ask every guest, every week, and I know you listen to our show, so you know what's coming. Number one, what is your favorite real estate related book? Okay, so I have a lot of trouble with this question. I'll just tell you guys, I read tons and tons of books, and I haven't ever read a book that I don't disagree with some of the stuff and agree with other stuff. So tough to pick one out, but I decided I would go with the complete guide to buying and selling apartment buildings by Steve Burgess. So I personally found this to be a very helpful resource as I learned about multifamilies, which has been my focus more so over the last few years. And actually the fundamentals behind multifamily, exactly the same as commercial.

So you can read books on one and learn a lot about the other. I have two copies of that book because I like it so much. All right. Yeah, I love my book. Why do we need two copies? I don't know. I found them two on my bookshelf. I'm going to read version too tonight.

Just in case you lose the first one. Exactly. They're actually different covers. I must have bought them at different times and then like not wrong. Because I remember reading when I read through the, like I bought the new book. And I was going to like, man, this sounds so. familiar. I feel like I've read this before and found the second copy. So clearly I had. Anyway, cool. Good. Right on. Our favorite business book?

I'm a huge rich dad, poor dad fan, but I'm not going to, I'm not going to go with that because, you know, everybody, everybody has that. So I'm going to go with, don't sweat the small stuff and it's all small stuff. Richard Carlson. Love that book, man. Great book. Great book to put by your nightstand. It's a toilet book. Flip open and read a few pages every day. You know, help keep you looking at things straight.

Yeah, that is a really good book. Brandon, you should probably read it. I probably should. I will. I will. All right. That was great. All right.

What about hobbies? What do you do for fun? Love my real estate. It's fun. You know, it's fun. It's fun. It's real estate. But, yeah, no, I'm a big, I'm a big distance.

runner. So, you know, how far do you run? Like, my wife and I run marathons. So we try to try to do at least one a year and maybe throw up a few half marathons in there. But it's a great way to, you know, healthy outlet, get some good exercise, clear your head. No triathlons? You don't, you don't do that? I mean, I mean, it seems kind of weak just to do a marathon. No, I'm, I float like a rock. So I can't, I can't swim. And, but yeah, the running's fun. It's easier. Can't fall off anything. There you go.

It's good. All right. My last question for the day. What do you believe sets apart successful real estate investors from those who give up, fail, or never get started? Okay.

So for this one, best answer that I've heard is I'm going to steal it from somebody named Angela Lee Duckworth. And she's a psychology professor at the University of Pennsylvania and she actually dedicates herself to studying success and what makes people successful. And she went out and did all these complicated studies that I'm not smart enough to understand. And she came back, she looked at corporate salespeople, West Point cadets, school children, everybody.

And she came back and found out that the single most important factor in determining success was grit. So my answer is grit. And she defines grit as grit is passion and perseverance for very long-term goals. Grit is having stamina. Grit is sticking with your future day in, day out, not just for the week, not just for the month, but for years and for working really hard to make that future a reality. Grit is living life like it's a marathon, not a sprint. I love that. And I agree, a thousand percent.

Love it. Love it, man. All right, let's let's let you go. Where can people find out more about you? You know, you can reach me on bigger pockets. I'm also active on LinkedIn, and so you can reach me through either of those. My company's website is Washingtonstreetproperties.com. It's all spelled out Washingtonstreetproperties.com. And so you can either reach me through any of those forums. Awesome. Awesome. Brian, listen, man, you know, for the listeners, again, this is our third

attempted during this show. The first one, we had some bad internet on one side, the second we had it on another. And alas, you know, we had some issues today, but phenomenal show. Absolutely phenomenal. One of my favorites by far, and I'm not just saying that because I got you on here. I really, really loved it. Lots of great tips. So thank you. Thank you so much for coming on. We really do appreciate it. Oh, thank you guys so much. Like I said, I'm a huge fan, and it was an honor to be here today. Awesome. Thanks, right. Thanks, Ryan. I'm sure. Okay. Thanks, thanks. guys, take care. All right, guys, that was Brian Murray

on the Bigger Pockets podcast. Wow. Good stuff, man. I mean, seriously, like, loving, loving the stories. Yeah, I love that apartment complex stuff and, like, the idea of value at investing, all that stuff. I mean, that's where I want to head someday, and I think you're the same way.

Like, that's where we want to, yeah, like, someday I see myself doing, you know, 100, 2, 300, 400 unit properties in a very similar manner. So it's fun to be able to learn directly from Brian on that. Absolutely. Absolutely. Yeah. So thanks a lot, Brian. Definitely appreciate it. All right, guys, well, listen, thanks again for checking us out. Again, this is BiggerPockets podcast show 126. So you can check out the show notes at biggerpockets.com slash show 126. You guys, if you are not active in bigger pockets and you are not engaged in our community, you are seriously missing out.

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We'll see you next week. 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. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new

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