BiggerPockets Real Estate Podcast - 145: Creative Investing in an Expensive Market, Seller Financing, and Buying Foreclosures with Grammy-Nominated Jeremy Jones

Episode Date: October 22, 2015

On this episode of The BiggerPockets Podcast, we sit down with an investor who’s also a Grammy-nominated musician! Jeremy Jones has been acquiring rental properties in the Seattle metro area for several years, focusing primarily on multifamily investments and supplying him with a stream of passive income. You’ll love both his tactics and mindset and will walk away from this interview with numerous actionable ideas to help take your business to new heights. Enjoy! In This Episode We Cover: A little bit about Jeremy and how he started How he got into real estate by chance through his music career How to maximize your income by renting by the room His first non owner-occupied rental What you should know about buying foreclosures The BRRRR Strategy and how to use it Advice on having a “long term flip“ A discussion about hard money The importance of having exit strategies in mind ahead of time The topic of refinancing How to develop a criteria for purchasing houses How exactly banks and loans work REO vs. foreclosure auctions How Jeremy uses seller financing Where he buys properties and why he keeps them close to home How he manages his property and finds great contractors And SO much more! Links from the Show Interested in becoming a guest on the BiggerPockets Podcast? Click Here Building a Rental Portfolio Through “Long-Term” Flips RedFin BiggerPockets Forums Books Mentioned in this Show Rich Dad’s CASHFLOW Quadrant by Robert Kiyosaki The Power of Full Engagement by Jim Loehr The Law of Success by Paramahansa Yogananda Tweetable Topics: “If you have comps in mind, you can increase your confidence.” (Tweet This!) Connect with Jeremy Jeremy’s BiggerPockets Profile Jeremy’s Personal Website Jeremy’s Airbnb Property Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 145. You know, people are out there meditating or doing yoga or taking pictures, and I just think this is awesome because I'm paying for my mortgage and I'm bringing them joy as well. 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, Mr. Brandon Turner. What's up, man? How's the road going? The road is going okay. The road is going okay. I got my wedding tomorrow.

You're getting married. Well, not my wedding. Mazel to. Thank you. Thank you. I'm in a wedding tomorrow. Have you learned who the groom is yet? You know, I, I, What's the groom's name, Heather? She doesn't know either.

I don't feel so bad. She's looking at me like... Now, this is her friend, correct? This is our friend. Oh, this is our friend. And yet neither of you knows the husband. We've only met him one time, so I don't feel so bad. But we're trekking across the country to go to this wedding.

We are. She's like one of my best friends. I just... Yet you don't know her husband's name. I'll know it tomorrow or tonight at the rehearsal dinner. What is my wife's name? Julie. Look at that.

I'm pretty good at this. I had to stop and think. As soon as you said, what is my, I'm like, oh, no. I saw a pause. Awesome. Awesome. So you're in Minnesota, right? I am in Minnesota, visiting my family and hanging out to my mom and dad's house,

and their terrible internet speed. It's really atrociously bad. This is actually funny. So I am 30 years old. I lived at home. I left when I was 18. The internet router, like, modem they have is the one that I installed my freshman year of high school is still what they have in the other room right now.

Like Brandon? No wonder that it's not, yeah. Why don't you buy your parents a gift? I might buy them a gift because, yeah, it's pretty shorcious. So anyway. Awesome. Awesome. Hey, still we've got a cool show, man, huh?

Yeah, this is an awesome show. There was a ton of, like, stuff we've never heard before. Like, just ideas and tips and suggestions that we've never heard. And I was blown away. That's phenomenal. Well, let's kind of get through this early talky talk stuff and jump in on it. I'm going to go to the really quick guys. Leave us ratings and reviews.

It's helpful. This is show 145 of the Bigger Pockets podcast. Ratings and reviews help us get the show out there. I want to share a really cool one from somebody called Dave the Wave 10. He says, they could charge thousands for this and you'd still be getting a deal. Josh Brandon and their guests selflessly shared knowledge and experiences from their real estate investing lives in an entertaining fashion. I truly believe that actively listening to this podcast has been more beneficial than college, and it's free. Well, all I did in college was, well, I won't say that.

My mom listening. Thank you guys for arming me with the education and motivation that has helped me start on the path of financial freedom. That's nice. That's a nice for you. Thank you, Dave the Wave. That's a cool name, too. Dave the Wave. Yeah, yeah, yeah.

So, thanks for doing that, guys. Today's quick tip, Brennan? Today's quick tip, quick. Today is Bigger Pockets 11th birthday. Happy birthday. All right. Like my song. Have I told you my birthday, my happy birthday thing that I do every birthday party?

It's always about you, by the way. No, this is great. We're celebrating bigger pockets, and it's like, oh, have I told you about the time when I was? I probably said it before, but I'll say it again because it's so funny. When you're in a group of people and everyone's singing happy birthday, slow down, sing because everyone will follow the loudest voice in the room. subconsciously. So you're like, happy birthday to you. And then by the end, you're like, happy birthday. And everyone's looking around like, what the heck is happening? And nobody knows

what's happening. And it's the funniest thing you'll ever do. So that's my encouragement for you guys today is go sing happy birthday extremely slow. That's really funny. Yeah, it's pretty great. Anyway, happy birthday, Josh, to your 11 year bigger pockets. Yeah, 11 years. So thank you guys. for supporting us over these years and the tens of millions of people who've come through bigger pockets, who've come through our podcast, the site, you name it.

We definitely appreciate it. Yeah. And I personally, I'm honored that you guys spend your time with us and it means a lot to me. So thank you. It's pretty awesome.

However, that was not really much of a quick tip. You got to go and ruin it again, don't you? Really, I was having a moment here. You were having a moment, I ruined it twice. But I have a quick tip today, actually, another, a real quick tip, if you will. The quick tip is we said this a year ago. We're going to say it again. If you have an exceptional, not you, Josh, but if you, like, listener have an exceptional real estate story that you want to share here on the podcast, we actually have a submission page on the podcast that you can

submit your name and we will look at you and decide if we want to have you on the show or not. And actually, Hillary is kind of the person that decides, but Hillary will look at it and decide. So biggerpockets.com slash guest. That's it. Go there. Fill in the information. If you've done, we try to, you know, if you've done at least a dozen deals or so, and, you know, you have a cool story to tell.

We want you to go and fill out the information at biggerpockets.com. So you guessed and we might be in touch with you sometime. That's it. Awesome. Awesome. Cool. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress?

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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 their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with BiggerPockets 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, let's bring in today's guest, Jeremy Jones.

Jeremy is a Grammy nominated musician who's been investing for a number of years and has done a whole load of really cool creative deals. He's got dozens and dozens and dozens of units. I think he's got 70 plus. And his strategy is awesome. He's brilliant. He's got great tips, great advice. And he's just kind of a cool guy. So we're really excited to chat with him.

All right, Jeremy, welcome to the show, man. it's definitely good to have you. Thank you very much. Good to be with you both. Yeah. Yeah. So Jeremy actually has an interesting connection to both Josh and I in that he is a Denverite who then transplanted out to the Washington State area.

So, you know, Josh is in Denver. I'm in Washington State. So we're trying to find out who you're going to pick on on this show. Jeremy, who are you going to make fun of the most? Oh, come on. My allegiance is split 50-50 between you both. Okay. Okay.

So you're going to tell us at the end of the show. Yeah, I'm kind of trying out. I want to see who I gravitate more based on the conversation flow. Okay, good. Smart idea. All right, so, you know, there's a lot to your story, man. There's a whole lot going on, and we're definitely excited to dig in. I think, you know, for me, I formerly was in the entertainment business,

and I always get excited about that kind of stuff. And so you are part of that industry as well. So before we kind of get into your real estate, I'd love to just hear about your music and you've won a Grammy. So, you know, please tell us a little bit about all that excitement. Sure. Well, I studied at Duke University, both music and computer science. So that's my education background.

And my goal... Two very different things, by the way. Yeah, yeah. And the music, it was always a joy for me and something that I gravitated towards and really wanted to do with as much of my time as possible. but when I went to school, I felt really clear I wanted to have some other angle with the computer science. So I've always had other stuff going on, but music's been the common thread. And when I graduated from school, I came out to Seattle and dove into the music scene pretty much full bore.

I'm a drummer, and I play jazz and hip-hop and any other kind of music, soul, world music, percussion groups. And yeah, the Grammy reference, I play in a trio called The Teaching, and we're, composed of upright bass, me on drums, and a keyboard player, and we all sing. And we collaborated with Macklemore and Ryan Lewis on a track called Bomba on their album The Heist. And then the whole album was nominated for album of the year. So we all got Grammy nominations and went and walked the Red Carbett last year. So that was really neat. And it's also opened up a lot of other doors musically since then. And it's been a great year for music and real estate. Fancy. Yeah, that's great. I'm a big fan of Maclemore.

He's one of these guys that, you know, has a positive spin in his music, and I think it's great. And he, well, it's positive. And he kind of stands up for some folks who need to be stood up for. So I, true. Yeah, that's awesome. That's awesome. Well, cool. Congratulations.

And, you know, I hope it expands your musical prowess and power. It's a nice tagline to have for just to say Grammy nominated musicians. and kind of carries with you for the rest of your life. So, yeah, I'm thankful. They should have Grammys for podcasts. We should be like Grammy-nominated podcasters. Yeah, we're going to submit that.

Do you have any ends on the Grammy industry you can get us in? I do, yeah. We could talk about that off the way. Well, that'll happen. Only if this is the Josh Dorkin podcast. I mean, Josh and Brandon, I don't know, man. I don't know. I think we have a shot.

So we're doing it. 2016, we're going for Grammy-nominated podcast. All right. So real estate-wise, what do you do? I mean, how did you get into real estate? How did that become a thing? It started actually related to music because when I moved out to Seattle, I thought, okay, I got to have a place where I can practice my drums 24-7.

So that eliminates apartment condo. And I got a job at Microsoft, which I kept for four years from 2002 to 2006. And so I just bought a house on the strength of my potential W-2 income from Microsoft and a very tiny down payment. And bought a house as close as possible to my office building. And I built out a practice room in the garage where I could practice music. And then I just kind of threw up that I had extra rooms on this classified called Micro News. So it was only Microsoft people. And I got both my rooms rented in about two days.

and then that was about it for real estate for a couple of years. But I bought the house for 240,000. And then a couple years later, I decided to sell it and roll the proceeds into a bigger house. And I sold it at 300,000. And I realized, wow, like I'm getting my mortgage covered by the rent. It went up 60 grand. This is pretty neat. So I'd like to experience more of the power of real estate.

Awesome. Man, awesome. Hey, what did you do at Microsoft? I was a S-Det, which is something. software design engineer and test on the visual studio product. And then after two years, I went into a new role called Program Manager. Nice. Brandon, do you have any idea what the hell he's talking about?

Not a bit, not a bit. Okay. You work at Microsoft. That's cool enough for me. Yeah, yeah. It was a visual studio is a product for people who make software. So it's a little bit esoteric. That's cool.

I know. I'm just, you know, I'm just busting the chops. Well, so you started by renting rooms, which is actually the way my very first house, I rented out the rooms to a couple buddies that I worked with. And, you know, it's a good way to start. I mean, do you recommend that for other people going that same route? People who are listening to the show that might be new, unsure how to get started. Do you think that's a good idea to buy a single family house and rent the rooms out?

And why? You know, if you're willing to have roommates, it's a really powerful way to find out about real estate because you kind of get to develop just the idea of being a landlord. I think a lot about that when it comes to real estate. investing is that there's kind of a consciousness of being an investor, a consciousness of being a landlord. And if you can take a small step in that direction and just build the habit and just kind of feel what it's like to have this thing where like every month it gives you some money. So it's slow, but it's also steady. And you kind of get used to the rhythm of it. I think renting by the room is an

easy way to do it. Of course, you have to share your personal space. So that depends on if you're willing to. But for me, I lived in the dorms at Duke all four years. So, you know, cutting down from like 60 people to three, it wasn't that big a deal. It felt like an upgrade, you know. And then the second house that I got, I bought one that was really suited to rent by the room because it had this huge master bedroom that I could almost turn into a little apartment suite and then rent out the other three rooms and still have my own, you know, private space. So financially speaking, though, I find that the smaller you incrementalize the units, you know,

just like with multifamily, if you divide it up into one bedroom, when it adds up, you tend to make a bigger gross rent. So renting by the room is a great way to chop up a single family home and maximize the overall income. And it doesn't take a lot of skill because you're right on site and you can manage it yourself. And then once you get kind of tired of doing that or get the resources to get out of that, and what I did is I kept it going for about five years. And then I realized I wanted to live on my own and not have room.

roommates and then I moved on to having rentals that I don't live in. Okay. So let's talk about that. What was the first rental or what was the first non-owner-occupied investment property you bought? So after I sold that first rent by the room home and rolled it into the second one, I lived there. And then I moved out and I rented a place for myself just to experience extracting myself out of my rental. So that became my first external rental was basically I just moved out and then rented out the master.

And so I was still doing rent by the room, but I wasn't there anymore. So that helped me to remove myself and experience a little bit of distance from the rental property. And that was in 2007, 2008 that I moved out. And then the market was on a downward trend. And so pretty much I just sat back and did other things, music and teaching yoga. And I had just left Microsoft. So I was kind of starting this new lifestyle of not being an employee. employee and got into that for a while. And I was just kind of watching the market and doing a lot of

reading about real estate. And in 2012, when the market started to tip up, I got into buying foreclosures with my younger brother. And that was how I started with the business that became a successful business that we have now was in August 2012 buying a duplex in a city south of Seattle called Auburn. and it was $117,000 for a foreclosed on duplex, and that was my first rental property that was not rent by the room based. So you've done so far, if the math is right, somewhere around what, 22 deals, is that about right? Yeah, I counted 27, including flips and then rentals.

Okay, so 27 deals. You started with the first few rent by the room, got out, got back in, Let's talk about this transition. So you're now doing this foreclosure. It was a duplex. I'm assuming you did buy and hold. Yeah, it was a buy it on a hard money loan at 12%, get it fixed up, get it rent it out,

and then refinance it into a 30-year fixed. That's what I call the burr strategy, right? Yeah, burr. You did it. It works. I'm pretty much a burr investor using your terminology. I didn't know that term, but that's what you know. I didn't know that term either.

I just made it up last year. Nice, nice. Okay, so you've got the duplex, you bird it, and why would somebody do that? Let's, you know, for a newbie investors, why does that make sense to do? And what kind of timeline are you talking about on the purchase fix-up? I mean, you're not flipping it, but you're kind of flipping the note a little bit, right? Yes. And I wrote a blog post about this idea of long-term flip where once you do the acquisition fix-up, and get it refied. You know, after you hold it for a year or two, your options really open up for selling it and rolling it into something else.

So it doesn't mean when you buy something and do this method that you have to keep it forever, but by holding it a little bit longer, the flip is a little bit more advantageous because you have some time to get it in better shape and build up potentially some equity or market appreciation before you sell it. To answer your question, the reason that I think that's a really powerful method is because this huge built-in disc when you buy something that's just not in good shape to start with, because most people are trying to buy something that's ready to go in good shape. You can either jump in and live in it

or just start renting it out right away. And then the people that are willing to do the work for something like a foreclosed property, there's no way that you can finance it with a 30-year fixed out of the gate. So you chop out all the competition on the property that would be paying market price and financing it long term. And you're only dealing with people that have access to short-term financing, which it's not necessarily hard to get, but it just indicates a willingness and some savvy to participate that way. And so like this duplex, I think we had run the numbers and we thought it would be worth around 200K or so when it was fixed up and that we might need $25,000 to get it fixed up. So getting it at $1.17, just doing the math. And then there's going to be

beyond the fix up, there's some holding costs and some interest. But once you do the math, you realize if you're willing to have kind of a delta of about three to five months to just get it in shape and get things dialed in, then there's this chunk of equity that's disproportionately high that you generate just through kind of going through that process. And a big part of it is just the willingness to just perform a set of tasks over kind of a patient. I think of it as like it's a long term because three to five months can feel like a long time, but it's also pretty short because once it's done, then it's locked in and it's good to but you've got this built-in nest of maybe 40 or 50k of equity.

Love that explanation. Yeah, that was great. Maybe, can we take it down a little bit more like, I want to talk about some of the terms you used in there just for people that might be completely lost at this moment. First of all, hard money. What are we talking about when you said hard money you used to buy the property? Yeah, so hard money for me refers to a high interest loan

that is based primarily on the strength of the asset and not so much on a deep dig into your personal, financial life like you would have to do for a 30 year fixed. So the hard money lender that I use, they're basically just coming up with a value that they think the property is worth. And then they'll say, well, I'll loan you this much on it. The one that I was working with would actually loan up to 100% of the purchase price, knowing that you were going to have to fund your own rehab and the additional value there. And they split it into an 80% and a 20%. But basically, I could go to the auction and they would supply the cashier's checks to buy a property outwe.

right. But the trick is the term is five months long. So basically you got five months to get out of it. And after the fifth month, you either have to purchase an extension and you're kind of at their mercy at that point or double to 24%. So you really, in order to do that method, you have to feel really comfortable that you're going to successfully exit the deal. And the way that I conceived of that is to feel like, okay, I have a good idea that I could refinance it. And that's where my partner, my brother came in because he has a real job and earns W2 income as an engineer. So he would be the point person for getting a pre-approval with a mortgage company and getting the refinance to go through. And then our backup would be to run the numbers of what it would be to flip it.

So if it's done and the refinance isn't going well, which we've never failed on a refinance, but it's nice to feel that you could just put it on the market and recover if you had to before it balloons from 12. to 24% interest. So you've got those exit strategies in mind ahead of time. You're planning for all the possibilities and you're not just sitting there and saying, oh, well, I'm, you know, we're going to burr this thing. And if it doesn't work out, oh, we're in deep trouble. I mean, you know what's going to happen if it doesn't work out. Yeah, I would usually think, okay, I want to refinance it, but if I need to sell it, I can sell it and then even have maybe a couple other ideas of things to do, like being able to hand it over to another investor. I like to

have a few things in mind when I get a property. And if a property meets my criteria to buy it, it's usually because it's got built in equity and cash flow, which means you can get out of it through refinance or through selling it. So you've got five months. I mean, that's not a lot of time. And in there, you really need to go ahead and make that decision way before month five on what you're going to do. So walk us through the timeline, if you don't mind on one of these deals. At what point, you know, are you, okay, well, if we don't hit this, we're going to put it on the market to flip or kind of think that through. Yeah, so my brother, Nick and I, we would sit on the computer and do something like this, like a Skype or a phone call the night before the auction. So the auctions would happen every Friday, these foreclosure auctions.

So Thursday night, I would go to the investor meeting of this company that investigates foreclosed properties and just go to this Thursday. night meeting where we'd walk through all the properties and then I'd come home and we'd sit there and just walk through them and see which ones we want to bid on. And we would already decide whether it's a flip or a hold. And our hard money company actually required 20% down for something you intended to flip and you could do up to 100% for something you intended to keep. And you didn't have to stick with that, but it was intended that you would specify your choice. So in every case, we were able to execute our first choice of exit strategy. But the five months can be pretty tight if it's not vacant. If it's vacant, pretty much we could buy it and just start working on it. And then,

you know, within a month or six weeks or whatever, we're ready to rent it. And then as soon as it's rented and there's tenants in there, we would consider it to be a completed upgrade and then we would seek a refinance. But if there's tenants in there that aren't paying or a tenant that's on the way out, but we want to give them some time to get out. And that's one thing. We try to be firm in situations like that where someone's not paying, but also to have an element of kindness and communication

where we understand we're kind of throwing a sledgehammer in their lifestyle, even if they're just living in their freebie for a while and say, hey, you know, it's June 10th, can you be out at the end of July? And so give them a nice runway or something like that. But then that means that our whole schedule is pushed back quite a bit. thankfully we've been able to purchase extensions on our hard money loans when we've needed to so that five months has really come up quick a few times and we've purchased extensions we've got a few we've got probably half of them in under five months and half of them we've had to extend a month or two or three what does that look like the extension the purchase of an extension what does that mean you know I'm doing one right now where it was a five month loan and the loan principal is 173,000 and I requested a three months extension at one point, which means I basically just had to pay them $1,700. And then it continues for three more months at the 12% without ballooning.

Yeah. So this is something that I've been, because I do almost everything I do as a birth strategy. I buy a lot and I, you know, with private money or hard money or whatever. I've been running to this problem a lot lately and I want to know if you're seeing it too, is the bank that I go to refinance the property to get the new loan. Those banks are requiring a year of seasoning, which means, means that they don't want to touch it if it's been sold or refinance in the past year.

Yes, I definitely have ran into that. And I've found two banks here in Seattle area, Guild Mortgage and Calibur mortgage. I use Guild Mortgage. Okay. Yeah. So that's all. We've used either Guild or Calibur or we've used a couple of other, we've used Pacific Crest Savings Bank for commercial properties.

And we're going to do our next one with Coastal Community Bank. Okay. So, and then the commercial refinances have, they're a little bit more looking at the asset and don't have as many rules to do with seasoning and things like that. So we found a lot more flexibility. And of course, with that, they are not giving a 30-year fixed. It's a five-year fixed period. And it's a higher interest rate.

But generally, we're making more spread on the fiveplexes and up. And so it works out either way. And we're just happy to get financing on anything, almost any way that we can. So the commercial has been a good option as well. Yeah, that can definitely be a good avenue. I've had to do that a couple times as well. The commercial definitely works. You know, just to elaborate a little bit more on some of the dangers of Burr,

because, you know, obviously we talk about how cool it is. It really works really well when it works. You know, and you mentioned it yourselves, like if you run into that problem of what are you going to do if it doesn't refinance? So like what? Another problem that you can do is what if you go to get the new loan and they say, you know, well, let me ask you this question. How much will they give you? You know, the one you said earlier, you bought it, you know, it was worth $200,000 that duplex.

Well, the bank won't give you $200,000, though. They'll give you a percentage of that. And so, right. Right. So do you remember what you got ended up getting on that one? Good question. I think we've been getting 75% loan to value on residential and 70% on commercial. Okay, yeah.

So the cool thing is, like, for that property, if our purchase price is $117 and we spend $30,000 on it, and it appraises that $200K, if we, we can get 75% loan to value. We can borrow 150K on it, which completely wipes out the hard money loan. So that's how we've tended to do it is where, because there's so much built-in equity, by the time we get it appraised,

taking that percentage, 75% of the appraised value is still greater than what we owe on the hard money loan. Yeah. And then we may be out of pocket on the renovations. Yep. Yeah. So, I mean, it really just comes down to really knowing your numbers, your after repair value.

What's it going to appraise for at the end of the day? You really got to dial that in really well. Because if you, I mean, if that property would have appraised for 130, I mean, then you're looking at a 70% value or 75 on 130, and you're not even getting 100,000 at that point. I don't think or whatever works out to that. You need to come up with cash to cancel. Yeah, now you've got to come up with cash to pay off the hard main lender,

and that really sucks. So you really have to just be confident in that and watch the seasoning thing. Make sure you understand that. There are hard money lenders that will go one year or even, I know some that will go two years. But, you know, whatever. Those are things to just be cautious of if you're going to get an emperor. And I think a way, you know, my brother Nick is really good at kind of just walking through the worst case scenarios.

Okay, so what happens if this thing appraises at 1.30 and we'll say, okay, then we'd either have to say come in with 20 grand to close it. Do we have 20 grand? And then if we do, we say, okay, we can cover that. But I think another way that's really, really powerful is just going. I use the Redfin website and I just look for comps in the area using map nearby homes. and I just make sure there's a couple comps that I'm basically saying, you know, this is the comp. Like this is the same kind of deal. It's nearby.

It's sold for 180 or 190. So why would ours appraise at 130? Like you could still have unexpected appraisals, but if you have some comps in mind, you can increase your confidence. And also, I think a way to hedge against those kind of problem scenarios is to have, like, right now we've got 14 buildings and we have three hard money loans. So we have enough of our stuff, you know, on long-term financing, and we have only three hard money loans. So we could afford for basically all three to go sour and still cover ourselves either by extensions or by selling a property and covering the losses.

But I wouldn't want to have 14 properties and eight hard money loans. Yeah. I want to have like basically three max, and we're about to get out of all three of them. So we'll be at zero. Nice. Right on. Cool. Hey, I want to go back.

You mentioned this foreclosure. So I think you had said that you picked it up at auction. Is that right? Okay, cool. So let's kind of dig in a little bit on foreclosure auctions because buying a foreclosure at an auction is very different than just buying an REO property, correct? It is. Okay, so really quickly, just for the listeners, what's the advantage of an REO over a foreclosure auction?

What's the advantage of a foreclosure auction over an REO? So what I've experienced was an REO property. refers to a bank-owned property, which is available on the market and can be seen on the MLS. So it may have the common factor that it may be pretty beat up and need a bunch of work. And in fact, we have done at least one REO and maybe a couple. In fact, the company that would research our foreclosure properties in preparation for the auction, they would sometimes put some REO properties in the packet that they would present to investors just so you could kind of see those as well. Because it's a similar kind of deal. But the foreclosure,

closure auction, it has a little extra spice to it just because there's no chance really to see the property ahead of time. It's just, you know, there's a certain element of creativity of like, you can look at pictures of it, you can drive by it. If it's vacant, you wouldn't really know for sure if it's vacant, but, you know, I heard on a previous podcast that Brandon likes to peek in the windows. So there's people that do that. You got a reputation there, people. I know, I do. Well, you know, I couldn't help but think when you said that is like I have done that before where I drove by a property that was going to be going to auction and the neighbors just out there watching this parade of people driving by and you know

sometimes someone will just realize it's vacant and find a you know an open patio door and then you got people peeking in the door and so it can be kind of an interesting dynamic but other times it's clear that people are living there and you're not going to see what's inside you have no idea what the what the scope of repairs is so you have to come up with a common sense and have a big enough buffer to be able to encompass those unknowns. But the benefit that comes with that is just the potential for getting huge discounts based on just interesting dynamics. And I'll give you one interesting dynamic at the foreclosure auction.

So in the Snohomish County, which is north of the Seattle area, the auction where I've done the most purchasing, the dynamic at the auction is there'll be multiple trustees, which are the companies that are hired to conduct the auction and sell the property on behalf of the bank. So there'd be like four trustees out there. And a trustee is basically just a person that's just standing there saying, this property is going to be auctioned.

It's at this address. Who wants to bid? And then they look at the checks to make sure that you've got cashier's checks that if you won the auction, you could actually pay for it. So sometimes there'd be all four would be auctioning properties simultaneously. And so sometimes there would just be a dynamic where one of the lesser trustees that doesn't have a lot of properties just calls a property. and their main obligation is just to say it out loud,

but they don't have to make sure everybody heard them. So one of the properties that I got, it was a condo that I was really interested in, and basically there was a lady there that had driven up from Portland, and she was acting as the trustee, and she very mildly just indicated that this property was about to be sold, and the hard money lender that I was working with, they bring checks made out specifically to all the different trustees

or banks that are doing the sales. nobody else had checks made out to this specific one. Just bring a check, a generic check and they want to fill in the name, or they'll bring a check made out to themselves that they want to sign over, but not all the trustees would take that. So I ended up getting this condo at a huge discount for a dollar over the minimum bid. It didn't bid up at all. And it was really just due to this kind of weird dynamic of just checks

and simultaneous properties. And so that's what's interesting about the foreclosure auction is that you can get disproportionate discounts based on the dynamic and the fact that it's, you know, someone else may have wanted the condo, but they bought a property 10 minutes ago and now they're done. They're going home because they were only going to get one property that day. Whereas the REO properties on the market, it's just a wider umbrella of people that are looking at it.

And on the REOs, I mean, one of the biggest advantages that the liens are all wiped out, right? So how do you investigate an auction property for liens or do you just not worry about it? The company that I was buying foreclosures through called Vestis, they would perform a title search of all the properties. And in fact, that was one of the benefits of working with them because there's a price to pull the title report on a property. And since they're pulling all the title reports, I could access that information. And they would ensure that they wouldn't recommend that you bid on anything that didn't have a potentially clean title.

The caveat there would be that the utility companies would often place a lien, the water, sewer companies or there could be, there could be some other taxes, like an IRS lien that would sit there for a while and then go away. And, you know, so I pretty much would just do the best I could with the information that was available and also just kind of be ready that there could be some unknowns. And thankfully, with all the foreclosures I bought, they all worked out well. I think every property, every deal that I've done out of those 27 was successful. And one of them was a negative 4,000 for me. it was a flip that had an extraordinarily weird low appraisal and then had to kick the can out and sell it later. But every other property worked well.

So even though I have contingencies for disaster, the disaster hasn't really happened, but challenges have happened on every property. So every property you purchased has been a foreclosure? No. Oh, okay. That was kind of the first wave of purchasing. but at the end of 2013, the amount of inventory started to dry up and there just weren't any multifamilies available at the auction. And there were big hedge funds come in and just basically like they'd come a day and purchase like 90% of the property. So instead of having all the

investors there basically like get one zero to two and go home, every, you know, everyone would be maybe fighting for just the scraps and a larger company would outbid everybody and get a whole bunch of properties. So at that point, we shifted into buying undervalued multifamilys on the open market or through word of mouth and using seller financing and getting discounts. We've still done hard money where you go and the property's on the open market and by using hard money, you can do a cash offer and not have to worry about appraisals and all that stuff and still do the BRR strategy. But instead of doing it the foreclosure, you're doing it on the open market, but it's the same kind of deal and your cash offer and lack of contingency on financing can earn you a discount

similar to what you'd get at the foreclosure auction as well. Nice. Cool. So you just mentioned seller financing. I'd love to touch on that. What do you mean about that? What is that and how have you done that? Cellar financing is the niche that my brother and I really focused on after the foreclosure started to dry up a little bit. And what that is is we would find, well, on the MLS, there's a financing field where it will actually tell you what the seller is willing to accept for financing. Like it will usually say cash out conventional, but sometimes it will say owner financing. And the meaning of that is that instead of finding a bank that will loan you the money for the property, the person that owns the property is becoming the bank and they're loaning you the money.

And the mechanics are really similar, but it requires that that person either owns the property outright or that you're going to give enough of a down payment to wipe out whatever they owe on it so that they have the right to carry that seller financing. And then of course, they have to be willing to do it. And then it's a different dynamic because they become kind of like a partner. Like if someone sells and cashes out, they're kind of out of the picture and it's your property. But if someone seller finances you, they want to make sure you're going to take care of the property, make your payments, successfully refi at the end of the seller financing and that kind of thing. So some of the properties will say owner financing, and the reason that someone would want to do that is because they might say, hey, rather than get a big chunk of $300,000 and pay taxes on it, I will spread this out by offering financing at 6%, and I'll earn 6% on my 300 grand, and I'll spread it out, make the tax burden a little bit less.

And some people would rather have a stream of income than a big chunk and feel like they're earning money on their money. So some people want to do it, but most of the cases where we've got seller financing, we would come in with an offer on a house that isn't offering seller financing, but maybe it's been sitting, or I shouldn't say house, they say multifamily or apartment. And maybe it's been sitting for a little while, or maybe we find out that they don't have debt on the property. And then we'll show them that, hey, if you give us three or five years seller financing, in that three years, you're going to earn X interest. And during that time, we're going to make all these improvements and then we're going to refinance out. and pay you or extend with you if you want, but we'll show them the gross proceeds. So we'll say, hey, our offer is $875,000 for this eight unit apartment building. But if you finance us for three years, you're actually going to make $955,000 when it's all

said and done. So sometimes they'll look at that $9.55 and say, hey, that's better than what, you know, somebody else is offering. That's a fantastic tip right there. Yeah, you explain to them. Like, you know, I talk about seller financing a lot because I'm a huge fan of it and I've used it as well. It's how I bought my 24 unit. I birded my 24 unit with seller financing to begin with. And it was great. But I never thought. I don't know why it never occurred to me to explain to the

seller that number. Because you know, like when I get a mortgage, I see that number. And it's like, you know, I'm getting a mortgage right now for like 100,000. And it's like, you'll pay 285,000. I'm like, whatever. You know, it's whatever. Yeah. Explaining that to a seller. Yeah. Brilliant. Tip of the day. Yeah. That's unbelievable. And what we'll do is we'll say, so there may be someone else like the last, apartment building that we did this way was an eight unit apartment building and there i knew that there was another cash offer at 800k so they could just get totally out of the deal 800k we offered 875 plus we asked for some seller financing but the the sellers were living in one of the eight units and they were about 90 years old

and they had owned it since the mid 60s when they bought it and they had let all the other units become vacant and so it wasn't optimized immediately but we said hey if you can give us you know a few years to get in, get all of it rented out, cleaned up, we're going to raise the value of this and the refi is going to be a piece of cake. And in the meantime, you're going to make some money. And so when we showed us that, showed them that number that was in the higher 900s compared to that 800, even though that one was cash, they were willing to work with us. And I also met them in person and that helped as well because they could put a face to the offer. Which is another awesome tip when you're buying property from people. If it's not like a bank, yeah, go meet them in person, get them to like you.

Don't be weird about it, but just build relationships. This stuff is a relationship game. And so many people just want to sit in their little cubicles or little bedrooms and go send out letters. But at the end of the day, if you're willing to hustle and go talk to those people, you can pull off some amazing stuff. So I love that. I mean, I love your strategy. If you're doing that, the seller financing, is that still what you're doing today? I mean, is seller financing still your main thing?

I know you're still doing hard money, you said. What's kind of your main thing today? The last few deals were, so this year, we've purchased an eight unit apartment with seller. financing another eight unit department with seller financing a commercial building with seller financing and then a fiveplex that was undervalued as a value ad investment buying it on a hard money loan fixing it up refying and then one short sale that we purchased with hard money and that one was pretty cool it was it was listed as a triplex but it was actually a house and a duplex on two separate parcels tied together with one mortgage so we bought it but through the person

we leaned each property separately and so we're flipping one and keeping the duplex and so we end up after flipping the house the duplex has very little debt left on it that's great and so you know they're all a little bit different but the theme i think is you know find a creative way to finance it and find something that has it's really undervalued but the reason it's undervalued is because it needs someone to come in and improve it and strategize so most of the properties that we've bought, they kind of have this six to 12 month timeline from initially purchasing it to when it's like fully healthy. So we have to have some patience there. But then once that year is up or the six months is up and it's locked, then it's like it's a really good contributing member to

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Awesome, man. Awesome. So where are you focusing? Are you focusing solely, you know, close to home, everything local? are you buying anything at a distance? What's your farming strategy? Close to home. I started with, I was living in Linwood, which is about 20 minutes north of Seattle. I've since moved to Edmonds. I'm now about 30 minutes north of Seattle. And the first one I got was in Auburn, like about 30 minutes south of Seattle. So it was a huge drive, but at the time, I was just really excited to get a property and the deals were pretty ripe out there. after two deals in Auburn and one in South Seattle down by the airport, I made the choice that just for my quality of life,

I'm just going to buy stuff that's close by, especially not have to go south through downtown because it could take a whole afternoon just to go see if the yard got mode. And I like to have that option. Even though I don't visit my properties every day or every week, I like to have the option. And what happened is the first few properties I got with the King County auction, which is Seattle and the nearby Seattle.

and Snohomish is this area north of Seattle. That condo that I told you I got for a dollar over the bid that was a sweet deal, that was the first time I went to the Snohomish County auction. And I just said, you know, let me just do this. I like the dynamic here. There's less investors. There's more deals. And it's all north.

So the traffic isn't as bad going south to Seattle. And then the property manager that I hired, my leasing agent lives in downtown Everett, which is another town just north of Edmonds where I live. And so basically we just start. to buy in properties in Everett because it's like it's close to me, my property manager lives there, and I can keep an eye on it. And it gives me a lot of peace of mind to know that all the properties are within striking distance and I can really get tuned in. And I've heard you guys talk about investing in your backyard and niches. And I believe that's been invaluable because all the

properties I see, it's like I see the address and I know what street it's on. It's like, okay, that's three blocks north of that other one I looked at. And there's just a certain context that I can put to it really quickly. I know my property manager can meet me there in five minutes. He can go do showings really quickly. And then my brother, who lives in Denver, he can do kind of the side unseen stuff. He does the spreadsheet and runs the numbers and figures out our cash and cash return and does the worst case scenario stuff. And I kind of try to pick up the intangibles, looking at the property and thinking about some of those things that can only be observed when you're nearby. So that's kind of our balance. But to answer your question,

only stuff nearby. Right on. That's a good answer. You know what I love about that is, you know, I'm obviously in the western Washington area, and I live about two and a half, probably two hours south of Seattle. And when I talk about my numbers, whether it's here on BP or on one of the webinars or on the podcast, I say things like, you know, I just put an offer on a house for $75,000 and people are like, you know, that's crazy. I live in Seattle and you can never find properties up here. I can't invest in real estate in Seattle. I love that you are investing in real estate in that market. I mean, granted, you're a little bit north, but like you're making it happen. And people are complaining they can't do it.

I mean, how many units do you have now? A 65 total. Yeah, that's awesome. Congratulations. And you know, I think any kind of niche you can get into, I mean, you can get into Seattle if you find a way to finance it and find a way to do the deal. Well, I just found that a little bit further out, there's this kind of sweet spot where the rental demand is still high, so you can rent them out really easily.

And in fact, there's more people that rent in some of these, like in Everett, there's more home ownership in Seattle, Redmond Bellevue. So there's kind of a sweet spot where there's still demand. but there's more deals to be had, less competition. And the way I see it, there may be less of the really snowballing market appreciation that might happen in the really concentrated areas, but it's easier to get into the deal. And there is still market appreciation.

It's just spread out a little bit because you're further out of town. Yeah, right on. Hey, really quick, you had mentioned the property manager. Are they doing everything? Do they have control of all those units? Or are they just kind of doing the leasing side? What is it that they do? They are available to do everything, but I manage all the maintenance myself.

I have a contractor, and this has been one of the biggest blessings in my recent real estate history, a musician that I work with and went on a tour with last year. On the tour, you know, shared with me that he was really developing his contractor skills and he was getting the contractor business. You know, and then this year I ended up starting to give some work to him, and he has turned out to be an incredible contractor, very timely, work, good communication. And so basically he's doing all of my repairs, fix up the whole contracting side,

which as many investors have experienced, can be a really difficult thing to get stable people that communicate well. And you can go through contractors, you know, every month or two if you don't land on a long-term stable contractor. So our contractor, he does all the maintenance. So it comes through our property manager. But then when I get the notification from our system, I just forwarded over to him. and our leasing agent also communicates well with our contractor.

So sometimes he'll just call him up directly and say, hey, we need this at the unit. We need this at the unit. So we have a little team where it's like the leasing agent, and he's backed by some other help within the property management company, but it's mostly my leasing agent, my contractor, and that's kind of the three-pronged. And then me and my brother manage the property management and manage the contractor.

Okay, really quick on the contractor. Yeah. You know, obviously we all complain about dealing with contractors. it's tough. You know, you found somebody that you really like. How do you keep them? You know, I mean, is it you're just lucky because you found a great contractor and once it happens, you know, keeping them as easy? Or is it, I mean, is there some special skill? Because I know I'm not alone and never, ever, ever being able to find good contractors that I love. I mean, I found like a handyman. The guy was great. He was reasonable. I worked with him for a couple of years.

then off the deep end, right? And so it seems like that happens or you just have bad experiences overall. What tips do you have in helping me and everyone else here? You know, I, on one hand, there is a certain element of good fortune there because I wouldn't have predicted that it would have gone as well as it has these last few months. But one of the things that I think helps if you do find a good contractor, there's this other side of the coin, which is that for the contractor, if they're running a crew and keeping people employed, they want to have a steady stream of work, and they want to know that they have a steady stream of money coming in.

And so one thing that my contractor, Eric, has shared with me, is that when he does a one-off job for someone besides me, there's this whole phase of communicating about the job and coming up with a bid, and then when the work is done, when is he going to get paid, and people don't want to pay sales tax, and they come and look at the job, and they're not pleased with how it was done.

Whereas with me, he knows. knows that we can handle our communication in a very streamlined way. He trusts me that I'm not going to nitpick him. I trust him that he's going to do a good job. And we pay out the invoices that he gives us as quickly as possible because we know that he needs to pay his guys and we don't delay on things. And we both use common sense when it comes to any kind of, quote, disputes. We haven't really had disputes, but just discussions about how to deal with unknowns and stuff. And so he pointed out to me a cool thing, which is that it's an advantage for him to work with me because he doesn't have to waste time justifying what he did and going back and fixing stuff that was really done the right way,

but there was a miscommunication or me nitpicking on price. Because I always think, you know, I'm not really trying to get the price down. I want him to be flourishing. So I want to pay him enough that he can flourish. Of course, I want to get a good rate, but I also want to make sure that the people that are the lifeblood of my business can flourish. So I really don't try to push the price down. And sometimes, and part of that's because he's already reasonable, and it's not. necessary but you know sometimes there's something where maybe I could try to

lobby for some money to be taken off and I just say hey don't worry about it you know you're doing great work for us and we're just gonna pay this and other times he makes a little maybe a some kind of miscommunication or something comes up and he says hey you know I did I did 15 hours of work over there but I think we should have caught it the first time we were there and I'm not going to invoice you for that so you know it's a relationship I think good communication and and respect you know I I always see them as the kind of contractors and everybody that I work with, they're a human being that is trying to have a good

life and do good things. I mean, it's not like investors should be flourishing and everybody else shouldn't. So I really try to think, like, I want everybody around me to flourish. And I think people feel that and appreciate it and want to work together more. Right on. Yeah, that's awesome. Well, cool. Before we get to the fire round, I wanted to ask you about, you mentioned earlier before we started recording that you bought a new house and that you're doing some Airbnb. I just want to know, what is that about? I thought that was kind of a cool wrap around from how you kind of started with the house hacking and you're kind of ending with it. Can you guys tell us about that? Oh yeah. Absolutely. Absolutely. Well, when I did the rent by the room, it was just so cool to be like owning my

own home and just having the mortgage paid for because most people, their biggest bill, they own a house and they have to pay their mortgage payment. But I had gotten to the point where lifestyle-wise, I didn't want to be sharing my personal space with a conveyor belt of renters and roommates. So the same concept, though, can be leveraged if you rent a space that's a separate dwelling on the same property. And so my goal that I set kind of earlier this, earlier in this year, or even last year, I was looking at properties on the coast between Seattle and Everett. So this north Puget Sound area looking out onto the Puget Sound over to the Olympic Mountains. And it's a little bit of a dream, but I figured, you know, if I just look at every property that comes up, it can kind of get my

thinking going about how I could afford one and how I could get one. So this house that I moved into popped up and it was really intriguing because it had a main house and then it had a guest house. And I started looking at like Airbnb because like the more you chop down the units of rental, for example, if you rent by the room instead of renting the whole house, you might be able to rent four rooms at 650 bucks each instead of a whole house at 2000. Same with, you know, the concept of why multifamily tends to gross more income than a single family house. And you can apply the same thing to renting. If you rent on a monthly lease, If you rent on a daily rate, the amount tends to be more if you're willing to do the turnover

and do the work to keep it full and so on. So I kind of looked at the Airbnb or VRBO model of, well, hey, what if I take this guest house? And instead of having a roommate, I just rent it as a nightly rental. And I kind of ran the numbers based on some other comparable properties. And the way I ran it out is that the amount that I was paying to live at my previous house, which I was renting there, even though I own all these. rental property. I was renting my own house and didn't own my own house. And I was wanting to

move in and buy somewhere. But once you get into the idea of cash flow, it's like, yeah, but do I want to be paying, you know, three, four grand for a mortgage payment? So the fact that it had the guest house and I could make two to three grand a month meant that the leftover mortgage was basically similar to what I was paying to rent my other house. And so I moved in. I got the financing together, which was a herculean effort in itself. And now that I'm here, I moved in on August 14th. It took me a few weeks to get it all dialed in the guest house. And I started running it on September 12th.

And now it's October 8th. And I've made about 2,500 of Airbnb income and got like super host status on there. And people are loving it. So it's just been awesome. That's cool. And I get so much joy out of sharing the space. I'm not sharing my home. They're on the property and they look at the views.

And people are out there meditating or doing yoga or taking pictures and I just think this is awesome because I'm paying for my mortgage and I'm bringing them joy as well. Yeah, I love it. Yeah, it's cool. I've been thinking that same concept or, you know, we talked about this, I don't know, I talked about it on the podcast like a year ago and I haven't done anything for it. But I want to do that in Hawaii. I want to buy a house with a guest house. And maybe I'll start in the guest house. I'll live in the little one and rent the big one and then eventually maybe switch it up. And yeah, I love that idea. So anyway, cool. Yeah. Speaking of, you know, exit strategies, I mean, that's another thing. I thought if I'm moving here, if I have ever a little bit underwater,

I'm moving over to the guest house and I'm renting out the whole house. And I always love having those little backup. Yep, me too. It's a great idea. I love it. I love it. No, this has been awesome. But we're not quite done.

We're going to move this part of the show over to the world famous fire round, which is sponsored by, you know, the average mile IQ user logs $535 in drives per month. So if you're one of the 60 million Americans who drives for work and you aren't using Mile IQ, then you are losing money fast. Mile IQ automatically tracks and logs your mind. miles making sure that every dollar is accounted for leaving you to focus on what's important. So try Mile IQ for free today by texting Pockets to 31996. Again, that's pockets to 3196. And of course, standard messages and data rates apply. So yeah, check it out.

I know that for me that is really important because obviously I'm driving around to all my rental properties and all that. And I hate keeping track of that with a pencil and paper. So yeah, it's pretty cool to be able to do it on an app. I love it. With that, let's get to the show. It's time for the fire round. All right, the fire round. These questions come direct from the BiggerPockets forums,

which people can get to, of course, at biggerpockets.com slash forums. And you probably should be jumping in there, people. Come on, let's get in there. All right, question number one. So this one starts with, the first question was actually a similar to the rent-by-room kind of topic.

So where's the best place to post your ad for a rent-by-the-room? And I'll add if you don't work at Microsoft. Where's the best place to advertise to get a roommate? I've done Craigslist alone. That's been my full method. Okay. Quick and easy.

Right on. All right. Question two, what would you consider to be the first move towards buying a multi-family property? So if you've never bought a multi, only bought single families, before you got into that multi-space,

what would you do first? The first thing I would probably do is, and this is one of your tips from the 22 and a half tips podcast that I listen to is to ask your agent to set up a search criteria for all the multifamily properties that are on the market in the area that you're interested in. So you're going to get an email that shows all the properties in your criteria. So we have it set up. It's like anything that's we're excluding duplexes right now and we're looking at fourplex and up and we're going like looking at between 300,000 and two million. So every property that comes on the market,

I see it. And a person that wants to get started, could start with from zero to 200,000, just look at every property that comes on the market. And it starts to get your mind, get the juices going. You start to see it, okay, that's how much that was. And the way that I did this is I went to the foreclosure auction a bunch of times before I ever bought anything, but I made my own bid sheet on Thursday night. And then I went there and I pretended, okay, if I was investing today with real money, would I have gotten that house? How much did it go for? And a couple of times, it's like, well, I was going to bid 180 and it went for 170. That means I would have got that maybe, you know? And people can do the same thing. You basically

run your numbers. And I know you guys talk about that as well. It's like just run the numbers on what you think it would rent for and what you would pay for it and then see if it goes to somebody else, see what it went for. That's a good step. Of course, there's all sorts of other things to do with financing and all the other plans of how to get it. But I think just looking at what's there is a great first step. I love that. Love it. That was also a cool tip. I never heard like anybody say that before that they went to a foreclosure auction with kind of their bid sheet as just a practice. I think that's like gamifying it, right? Yeah, yeah.

I used to do it with stocks. I used to like, you know, play stocks. Sox. No, stocks, like stock market. Oh, stocks. Yeah, come on. I used to like, you know, make believe. Like, okay, I pretended I bought it for this much.

And then I realized I did not like stocks, which is why I got in real estate. We should create the fantasy foreclosure. Fantasy foreclosure. Yeah, that's what I was doing. Someone said, oh, yeah, so which ones are you going for? Said, oh, nothing. I'm just practicing. That's awesome.

I love it. I love it. All right. Well, speaking of foreclosures, the question is I'm driving around looking at property. I found a property. It looks like a foreclosure. How do I find out who owns the property? Do I contact them directly to make an offer?

What do I do with that property that looks like a foreclosure? Okay. So meaning they're driving around and it just looks like it's... Vacant or, yeah. Vagent or the shovel. Yeah, stuff on the windows. You know, you see those obvious signs of, you know, legal proceedings going on. So...

If there was a for sale sign out, then you could simply just look on MLS through your agent or Redfin. If you're not an agent, I'm not an agent. So I always, any property I look, I just type it into Redfin. And then I go to, and then I go to the county. So Snowhomish County, I'll go to snowcoe. org slash prop search and just type in the address. And then I'll just see what information I can learn there about it. And you can, you can figure out the way that I've generally figured out if thing is on the foreclosure track is that company that I was working with Vestis through their website, they record all the properties, they have a list of all the properties that are going to foreclosure. So I might search for it there if I thought it was a foreclosure.

If it was already an REO, a bank owned, then it would be on the MLS listed as a foreclosure. And if it was still owned by someone and just kind of junky, but not really on the foreclosure track, you know, that might be the case as well. So, but I just, you know, I think just looking it up on MLS or Redfin and then looking it up on the county and learning how to decipher all the information that you find there. It's just amazing how much you can learn just by learning some tips and tricks on deciphering public information. And then anytime you want to go a step further, you can always call a title company and just ask them to run a title report on that property. Awesome. That's great. All right. Next question. Why don't you like Christian Leitner?

Okay. That's funny that you asked that because when I was at Duke playing drums in the jazz program. Christian Leitner used to come back and visit and he plays guitar. And he would call the jazz director and say, hey, do you have anyone that will come and play with you? And so I played music, you know, just jamming with Christian Leitner. And he was nice guy. So your question was, why don't you like Christian Layton?

I was just, yeah. It's a void question because I do like Christian Leitner. I met him and he was a nice guy. You know, it's just people, they're so mean to that guy. I don't get it. He was great. It was great. I saw the ESPN thing. It was fascinating. But anyway, the real question is not about Christian Leitner. It is, can you get a bank loan to buy a foreclosure home from auction? So, you know, if you're going to buy a property at auction, can you get a bank loan to purchase that property?

No, not in my experience. You need to show up with cashier's checks made out to the trustee. and so that's basically a cash purchase. And there are lenders that are set up to do that, but generally the term bank refers to lenders that are going to do a longer process of vetting out that asset. So you need to find a hard money or private lender or have your own calf. By the way, is that that train that you told me?

Oh, there it is. Really, nice. So while I'm meditating in your guest house when I rent it out next month, I'm going to have to hear the car, go train, go by? I'm pleased to say that you're planning to come visit me. I'm so excited. I heard

they heard the other part of the question, but the answer is yes. You could your train by? That's cool. Hey, well, that must be a very scenic train route. Must be. Yeah. It's, I mean, if you want to have a coastal property here, you've got to be by the train because it runs all the way up the coast from Seattle.

There you go. That's all right. Cool. All right. Moving over to the World Famous. Famous for. All right. These questions come. every single week, that's the same questions. You've heard them before. You know what's coming.

Number one, what is your favorite real estate related book? Okay, my favorite real estate related book, I'm going to say Cashflow Quadrant by Robert Kiyosaki. And the reason is when I had quit my job at Microsoft, the concept of the quadrants, the E quadrant for employee, S quadrant for self-employed, I kind of thought I had already achieved this kind of freedom because I had left Microsoft and I was yoga teacher, musician,

and had one rental property. But when I looked at that other side of the quadrant that he explains in the book, the B business and I investor, there's this whole switch to the idea of passive income. And so I realized I wanted to keep my self-employed lifestyle of like doing things that I'm passionate about, but I wanted to learn how to be an investor and earn passive income. And that book and that concept helped to inspire me to do that. Right on.

Cool. Cool. What about business books? What's your favorite business book? Okay, I'm going to mention two business books that have been really inspiring to me. In fact, I have them sitting here. So if people watch the video, I'll just hold it up. This is the power of full engagement.

This is a book that I read while I was at Microsoft. It says, Managing Energy, Not Time, is the key to high performance and personal renewal. And I think a lot of people, they try to manage their time to put maximum time towards something. But that book kind of says, you could actually get more done in a half hour. if your mind is crystal clear and you're refreshed and you're inspired, then maybe two hours if you're a little bit irritated or low energy. And so that concept was really powerful for me, and it really helped lead me to getting into yoga and meditating

and things I figured if I can increase the caliber of my mind and my concentration, then I can leverage my time more. And the other one is this book, The Law of Success, and it's by Paramhanci Yoga Nanda. It's this little booklet. I pick it up all the time. just read a few paragraphs and it really inspires me to cultivate a mindset and a consciousness of success and little tips and tricks and ways of thinking, especially thinking positively all

the time and being thankful for the successes that you've had as a way to roll into the next round of successes as opposed to focusing on the things that you don't like and feeling your energy diminished by worst case scenarios and fears and things. right on. I don't think we've ever had that one recommended before. I don't think either of those books. Those are both new. That's good. Oh, good. There you go. There you go. Awesome. Awesome. All right, cool. So lastly, hobbies. There's yoga. There's program. I mean, you're like the jack of all trades here. But what do you do for fun? I have to say programming has kind of fallen off the map as something I do for fun. I kind of satisfied that during my four years at Microsoft. But I'm a musician. I love music, drumming. I like to spend time doing meditation. and chanting. I play an instrument

called harmonium. That's a drone instrument and I do devotional chanting with that. I like to get out in nature, hiking in the last six weeks since I've just look out the window or sit on the deck and watch the birds and relax that way. I like doing recreational sports. I've been playing some

tennis lately and getting into that and also attending Seahawks games. That's a regional specific thing that I like to do. Go hawks. Hey, do you have like a video of you playing this harmonium.

I do. Yeah, can you send us a link so that we can share it with people? That seems like something that would be fantastic, fascinating to see. Absolutely, absolutely. I thought you would have asked for a drumming video, so that's an interesting request. Yeah, how would you like me to follow up with that? Well, we've all just to shoot it to me or Hillary,

and we'll put it up on the show notes page. I mean, we've all seen somebody drum. I've never seen somebody like chant to the harmonium. I've never even seen this harmonium. It sounds like a fantasy instrument, so I'm excited to see it. You're kind of testing to see if I'm just holding up a wall or if you're poking if there's anything behind it. Poking the bear!

Okay, I'd love to provide you a video of me. No, I think it would be cool. Thanks for asking. I would actually like to see it. So, yeah, please do. Yeah, that'd be awesome. Cool. All right.

My final question of the day. Jeremy, what do you believe sets apart the successful investors from those who give up fail or never get started. Okay. I'm going to start by mentioning that, you know, in your question that you said, successful investor, when I think about success, I think about not just having purchased properties and being, doing well financially, but being all around success in the sense that you're happy, you're at peace, you're contributing in the world to others and those kind of things.

So the word that comes to mind for me is balance to be a successful investor. to be balanced because if you're if you only know how to put all your time into real estate activities, you may have a lot of properties, but you may also lose sight of the fact that the reason you probably got into real estate was because you enjoyed actually living life and you thought that it could help you to fund your life. So I think successful investor would imply balance. Of course, I agree with some of the other answers that people have given about you got to take action and persevere. And I agree with that to get started. But I think the, I think the idea of balance and I also like this concept of dynamic will which means that you have a goal you

have an idea and you dynamically revolve your willpower around that goal over and over and it turns into intuition where you can perceive things almost automatically and quickly so after you've done it a bunch of times you can almost you know when you meet people and you see properties you can perceive a lot deeper because you've been using your will around this goal and this idea of being an investor over and over and over and it gives you a deeper perception into things. Awesome. You're a deep insightful guy, man. Not bad for a guy from Duke. Oh, thank you, brother. Yeah, it's funny. I've got, we've got somebody who works here, Alice, and she went to UNC. Oh, cool. Yeah, I'm going to force her to listen to your show and she's not going to be happy. Well, UNC is a beautiful campus as well. They're like

eight miles apart and Duke is absolutely gorgeous. And UNC. is absolutely gorgeous. So I think she did well to go there too. But they're big, big old rivals for those. Big rivals on the court. Yeah, it's like after every game while I was there, like if Duke won, someone from Chapel Hill would come over and vandalize something on the Duke campus, you know, there was always this dynamic. That was probably Allison. Yeah. So if you could ask her, does she have anything? We've been looking for the person. Awesome, man. All right, before we let you go, where can people find out more about you? Okay, so my website is Jeremy Jones Music.com. Of course, I'm on bigger pockets, so you can shoot me a note there. And I also want to

invite anybody who would like to pay me a visit, look for my Airbnb, overlooking the Puget Sound in North Edmonds, and come book it and we'll talk some real estate while you're here if you want to visit the area and have a great experience. I might take you up on that, but will you play drums with me if I do? I will play drums with you. And I should definitely give a little discounted rate to any bigger pocket friends too. And a big discounted rate to VPs at bigger pockets. There you go. There you go. I'm not going to specify how much it's going to be. The VP of BP. We're hanging out sometime. We're doing it.

Awesome, Jeremy. Well, listen, man, thank you so much for coming on board. There were like a handful of things that were completely awesome. We had not heard before. And that's why we keep doing this and keep interviewing and talking to people. It's amazing. You know, the guys who think they know it all, They don't know anything because, you know, the little bits of wisdom that one creative individual can come up with completely change your business. And that's why this is so much fun to do and it's so much fun to talk to folks. So thanks for being on the show. We really appreciate it.

Thanks for those kind words. And I really am thankful for what you guys do. And I appreciate everything that you bring to the bigger pockets community and your podcast, particularly the way that you interview guests and your whole style. I really appreciate and admire it. Well, thank you. We'll see you around the side. Okay. Be well.

Bye. All right, guys, that was Jeremy Jones here in the Bigger Pockets podcast. If you did not walk away from that show taking something away, you were not listening. It was awesome. I would agree. And I was going to say, what I just took away, Greg. That's his name. That's his name.

Greg is the groom-to-be, the wedding. Oh, Greg. Greg is his name. My wife just whispered it to me. said, Greg. Thanks, Heather. Yeah, go Jessica and Greg. Thank you, Heather.

Congratulations, Greg and Jessica. Congratulations, guys. Now that we know who you are, you know, we won't look foolish when we walk up to you and have to stand next to you in the wedding. There you go. But in reality, yeah, today's show, it was great. There were so many things that I just want, like, we'll definitely apply to my business right away. And I think hopefully the listeners you guys will as well. So, cool.

Yeah, don't just listen. Take action, guys. listening to these shows and making things happen is what it's all about. So that's it. Listen, thanks, Brandon. Have a good trip. Enjoy your parents. Enjoy the wedding.

Let me know how Greg is. I'll let you know how Greg is. And we'll see you soon. Guys, show 145 on the Bigger Pockets podcast. You can check out the show notes at biggerpockets.com slash show 145. If you're not a member of our site yet, jump in, create an account today, biggerpockets.com. and we'll look forward to talking to you next time on the Bigger Pockets podcast.

I'm Josh Dorkin. Sign in on. 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.

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