BiggerPockets Real Estate Podcast - 164: Scaling from 0 to 400+ Deals Through Real Estate Entrepreneurship with Steve Mills

Episode Date: March 3, 2016

What’s it truly take to go from beginner to advanced in real estate? On this episode of the BiggerPockets Podcast, we sit down with Steve Mills, who shares exactly how he was able to overcome a bad first deal, find mentors, work with a partner, and eventually do more than four hundred real estate deals! This show is both highly motivating and informative and will definitely leave you with some great nuggets that you can use in your business to buy more real estate and have more fun doing it! In This Episode We Cover: Where Steve comes from and a discussion about Detroit How he got into real estate The entrepreneurial mindset Why you should educate yourself What his first deal looked like The importance of using bad deals as a learning experience Thoughts on selling via a land contract Why Steve chose wholesaling Details on his first wholesale deals How to negotiate your way to getting deals What you should know about zoning How to understand a lead Functional obsolescence Changing strategies as your business grows A discussion on commercial real estate How to find the confidence to do deals And SO much more! Links from the Show BP Podcast 093: 0 to 400 Deals (in 5 Years!) via Smart Marketing with Erik Stark BiggerPockets Forums Books Mentioned in this Show Think and Grow Rich by Napoleon Hill Rich Dad Poor Dad by Robert Kiyosaki Psycho-Cybernetics by Maxwell Maltz Tweetable Topics: “Real estate allows so much opportunity and growth in life.” (Tweet This!) “Having a group and joining one created a confidence in me.” (Tweet This!) “You can’t go acting broke and talking money.” (Tweet This!) Connect with Steve Steve’s BiggerPockets Profile Steve’s Facebook Steve’s LinkedIn Learn more about your ad choices. Visit megaphone.fm/adchoices

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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, everyone? everybody, this is Josh Dorkin host of the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. What's going on, man? Hey, not much.

I'm finally back home here, away from the terrible air in Denver. You guys have miserable air. You know that? I can't breathe. I can't breathe in one of the cleanest cities in the country. No, it's clean air. It's clean air. It's dry.

It's dry and thin. Oh, yeah. You got to lose some weight, man. You got to get fit. I wouldn't. You're huffing and puffing. I woke up like six in the morning, go down to the gym. I'm like, I can do this.

I can go run on a treadmill and lift some weights. And after like a minute, I was like on the floor like dying. So that's the 50-2-80 for you, man. Yeah, it's better to be back here on the coast at zero, you know, whatever, elevation zero. Hey, thanks for coming, by the way. That was awesome. Yeah, we had a good time.

We had a good party. We had a Josh's 40th birthday party. We did it at this fancy bowling alley. And I bowled against Anson Young. Anson's been on the podcast a couple times, a great guy. and at the end of the game, he beat me by one freaking point. One point at the end. It came down to the final frame.

Yeah, that was. I'm not going to say what that score was. My wife threw a surprise party for me and flew in a bunch of people, a bunch of my old friends into town. It was shocking. I felt like I was on an episode or on the, what's that show, the Hangover. I was like on a real life version of the Hangover. It was like, we were at the Wolfpack and it was amazing. It was a good friend.

They're a little crazy. Yeah, it was great. We had a good time for sure. But yeah, thanks again. And it was fun having Brandon. So we've got a pretty gold shoulder. I need to say something about this. I tell a story.

So we're at this, we decided on Saturday to go indoor rock climbing. That's one of the surprises. Oh, yeah. It was a blast. Yeah, it was a, it was me and Zach, Josh's nephew and a bunch of these guys. And we get there. And, you know, all of us are taking our terms going up,

climbing up this rock wall, like, you know, acting like little girls because I was really scared. And it was, it was frightening to climb up this wall. It was actually pretty funny watching. Yeah, Josh. Mr. Grown men. Josh comes over and in like six seconds climbs the entire wall. They're like,

apparently he's done that before. It made all of us just look like we were like four years old. And awesome. So good job. I didn't know you were a rock climber. Wow. You actually had something nice to say. I know.

I was impressed. And I was also impressed. Remember, I said I would bring the call you out on this. Josh parallel parked a, what, 12 foot car and like a 10 foot spot. I'm pretty sure it was a physical impossibility to do. But you parallel parked a 12 foot car in a 10 foot spot. and it didn't hit anybody. I don't know.

I'm from New York. That's how we do it. Apparently. That's how we do it. Anyway. All right. So we got a great show today, guys. Pretty motivational show, I think.

At the end of the day. You're going to be on fire at the end of this show. You're going to be on fire. This guy's got some energy. We tried to stop them. He would not stop. He would not stop. But before we get into the show, let's get to today's quick tip.

All right, today's quick tip comes from the show itself. And it's a really, really good piece of advice. The tip is this. As you're driving around, keep a notebook with you, keep a pen, notebook, things like that. And as you see four rent signs, jot down that number. Now you know you found a landlord and potential an absentee landlord or just somebody who is done and ready to rent out their place, potentially a tired landlord, and hit him up, reach out to them, say, hey, you know, I found your property. And I'm a investor in the area. I was wondering if you're interested in selling. And that's a source of potential lead. So give it a shot, see how it works. Yeah, Steve mentioned it on the show. And we kind of glossed over it quickly because I wanted to go back to what we never did. But it was just such a good, like obviously simple, awesome tip. And what's that line he said?

It was like, when I see those signs, those are my sellers. And it was just like, what a great way to look at that. And they give you their phone number. So anyway, cool. All right. That's a quick tip. So let's move on. And I think we're ready to get Steven.

You ready, Josh. Awesome. Yeah, guys, really quick. This is show 164, the Bigger Pockets podcast. check out the show notes at biggerpockets.com slash show 164. If you are listening on iTunes, please jump in and leave us ratings and reviews. Afterwards, we really love when you guys leave us your feedback.

You could also do that on Stitcher, SoundCloud, and all the other places that you listen. But that said, let's get into this. Today's guest is Stephen Mills from, uh-oh, Detroit. Oh, yeah. He's from Detroit. And the guys got energy,

so it's about to go down, guys. It's about to go down. But yeah, Steve's been around. He's been in the game for a while. His partner was on the show before we actually previously interviewed Eric Stark. And anyway, a fascinating interview. So let's bring him on. All right, Steve, welcome to the show, man.

It's good to have you. What's up, guys? What's up? Yeah, thanks for finally coming on. We had a lot of tech trouble in getting this episode finally working. He did. That's all right. That's all right.

I think people are going to like this. I think we're ready now. I think we are ready now. So, Steve, why don't we start at the beginning? I mean, tell people a little bit about you. Where'd you come from? Where do you live? What do you do?

I live in a Detroit, Michigan area. I was born and raised here in Detroit, Michigan. Oh, I can't wait to talk about this stuff with Josh, because I actually listened to one of the recordings with the gentleman that you guys spoke with on a call from Michigan, and he lived a little bit of ways out. I live right down the street from the hood. Oh, nice. Right down the street from Detroit.

So what we're going to talk about is a different kind of real estate. But at the same time, I remember you talking about this guy in Michigan and how he's talking about how he doesn't invest down in there. There's going to be topics of things. I'll talk about myself here in a second, but there'll be talks about or what we talk about with Detroit, there's parts of our market where there's multi-million dollar piece of property that you and I can't even get our hands on. So there's a lot of parts of the real estate business I'll go over that are actually not really

glorified in Michigan, but if people knew the areas just outside or inside of the downtown area and how they're exploding right now and the opportunities, Detroit is one of the absolute best markets in the United States. But it is something where I understand where the grant. of the country. We kind of started the Industrial Revolution. I know it's not much, but, you know, but it's something where a lot of people forget about Grandpa, but it is something where I think when we forgot about Grandpa, the values lowered and it really became a good opportunity, because I wouldn't even be on this call with you guys if I probably wasn't from Detroit. So I did make this

for Josh out of that call because I heard him rag on Detroit. But that's for Detroit. So I love my city. Love my city. For those who can't see, he held up a picture. of a I heart Detroit picture he drew just for Josh. Nice. There's a show. One of my favorite shows is called Undatable and it's this show about

these guys in Detroit and it's one of the funniest I think comedies out there and it's all about Detroit and they love it. And I'm really glad to hear that you're telling us how we're going to interview for this interview. True and try to somebody from Detroit just trying to take over

and tell us how things are going to get done. whenever something bad happens out of town, they're like, go about the guy from Detroit, you know? What does stick to the film if anything happens? So tell me, what should my first question be to you,

Steve, because, you know, apparently you're running the show. So, you know, what I'd like to do is take a minute to ask you guys a couple questions. You know, to get back to an all seriousness,

it is something where, you know, I am from the Detroit, Michigan market, but it's, you know, there's suburbs right outside of it. You know,

there's areas that we invest that are in Detroit, but also outside of it. I'm 32 years old. Started the business back in about, about 2007-8 with my business partner, one of my best friends from my childhood, Eric Stark. Which we've had on the show back on episode.

What was that? It was a while ago. It was a great call. I'm telling you. I listened to the thing multiple times. A lot of good nuggets. You guys put on, you know, again, before we even start, you know, I mentioned it before about Hillary.

You guys have a good crew. You guys work very hard. You're diligent. But the way that I've even listened to your guys as calls, you're very, very informative and the stuff that you guys put out there. Don't even wrong. I know you guys kind of started and you've been in business. us the same amount of time kind of as I have,

but we didn't have lots of guys like you when we first started. Having that ability to have your guys' calls and listening to these and some of the A-class players that I've listened to some calls on recently, it's just beautiful. It really is. So to have that tool out there, you guys are doing a good job. You know,

and I appreciate that. Look at this guy. He's trying to get on our good side. Are we done? That was great. And that's it. Thank you guys. Yeah, Detroit and we're great.

Awesome. Like, I mean, my two favorite things to hear. By the way, real quick, Eric Stark was episode number 93, which people can listen to by going to Bigger Pockets.coms, a show in 93. It was called zero to 400 deals in five years. And he did that with you, correct, Steve? You were the other half of that. Okay, so today we're talking about the other half. Okay, you're a little bit. But you're talking with the other half of that equation, which is kind of a cool follow-up podcast. Yeah. Yeah. Let's get into this. So you talked about Detroit. Yeah.

I mean, I've been ripping on Detroit for a long time. And I do obviously recognize that Detroit is one of the fastest growing cities in the country now. And, you know, lots of good things are finally happening, which is awesome. I'm very excited about that. But tell us, what did you do before real estate? How did you get into real estate? Let's run through that real quick. You know, it was my young 20s. You know, it was kind of like the typical story. I don't want to get too boring by it because I don't have this magnificent story, but it was something where I felt like I was like a lot of the young, you know, late teens, early 20s kind of mentality. I was lost. I was confused. I was going to college, didn't want to go.

I was trying to have a job that I didn't want to be in. I had, you know, friends that I really seemed going in different. What I can say is my life was changing, you know, in finding that lifestyle change, I kind of grew into real estate. I admit it kind of self-found me. If you guys want to know the actual true side of how the real estate business came into my life was through Eric Stark, my business partner. He was one of the very few individuals from our high school that I knew through a mutual friend of ours that had like a business mindset. And him and I just kind of clicked and I was at his home one day and he had a book called Rich Dad Poor Dad. And I was like, what's this book about? And it was just, you know,

and this is a long time ago. Gosh, over, it's been a long time. But reading that book, it was very simplistic. And I understood it. And right then I was like, you know, this real estate thing, I have to understand it more because it wasn't just that I, you know, was going to college, didn't really enjoy it. It wasn't that I wasn't happy. And I was a young person trying to find myself. What I noticed is that word entrepreneurship, entrepreneur, entrepreneur, Robert Kiyosaki, doesn't talk about just being a businessman. He talks about that entrepreneurial mindset. That got me addicted and I started going towards the real estate arena right when I kind of

read that book. So I kind of never finished college. I dropped out. But I never had some great story about, you know, family and business and real estate and this background. It was something that I kind of endeavored. You know, I found it. I literally, I quit my job.

I remember, and I was scared to go home and tell my mom I would go to the library and read book for free all day. You know what I mean? Anything I could do to educate myself, but it wasn't like it was like this big plan. You know what I mean? Got it. Sure. So what did your first deal look like? I mean, how did you first start buying properties? I bought my first property at 23 years old.

I was kind of stumbling around for a long time, you know, trying to get involved in industry. The first thing I did was get licensed. I started really understanding the MLS and understanding properties and values, doing my own diligence, stuff like that. but I did stumble on my first deals from a guy that it was like he changed my life. I believe that every time you guys talk to or you go to a seminar, there's always, you know, the guru and the mentor and the big guy. What I realized though it's in every town you come home to, there's a rock star in the real estate world.

And I mean that, not like the glorified rock, but I mean somebody who's really doing deals that doesn't even have time to go on Facebook. That doesn't even have time to do anything but do deals. They literally live real estate. And this gentleman was in our back in our market, and I heard about him. And so right away when I started getting information from over here, I realized there wasn't a lot of kind of guru individuals in Michigan to learn from. So once I learned outside, I started looking for the people in my market.

And I found this guy, and I tell you, I'm one of the most pleasant, persistent pest you'll ever meet when it came to me starting in business because I was dumb enough to like want it bad, you know what I mean, to the point where I was. I wasn't very rude to people. I wasn't like annoying, but at the same time, people knew I wanted it. And this guy knew I had a genuine interest. When I say you got to be passionate about real estate, a lot of people get in and they get out. They jump in and jump out.

I believe people that walk in tend to walk out of things. And that mindset of like moving too quick, a lot of people can't make in real estate. This guy taught me how to create a value, you know, how to understand real estate, what my first deal is going to look like. And the crazy part is I bought that first deal at 23 and it was an income property that I wanted a wholesale. I just got stuck. I bought, you know, I paid a little too much. I put a little too much into it. I end up hanging onto that property until last year.

I just actually closed it out because years ago I sold it via land contract because I, you know, it was a bad deal. All I can say is my first house. I held it for seven years. My first wholesale. I never even sold for seven years until I got screwed. But I held on. I paid my lender. I would not let go like most people would.

And I held on that damn thing. It appreciated a little bit of value. Our economy came back a little bit and I exited it. You know, I got out of the deal. But it was something that first deal I got in was just a basic bungalow, two bed, one bath on a basement. I paid $32,500. And I, you know, I sold it for $32,500. Seven years later.

That's okay. By the way, that's a Detroit, I mean, it's a really good market. I mean, you see how much money he made in appreciation, folks. I mean, he paid $32.5. He put money into it. He sold it for $32. You know what? I've got, you got to tell me where to find these deals. I'm really excited about this. There's a lot of investors that are getting into the national market and coming into Detroit that really have that mindset. They look at the flip this house and tell it. They're like, it bought for $100. They fixed it up and put $30 into it. So over $150. They made $20,000. Yeah. I'm like, minus cost, agents,

possessions, clothing. Yeah. I'm like, yeah, right? You're negam. that one. So I got to talk a little smack. Sorry, you know, you open the door, but you know, about the $100,000 lots that I build and put a million dollar property. I was talking about. Yeah, yeah. I'm excited. I'm excited to talk about that, actually. I want to go, I want to drill into this, this first deal that you didn't make any money on because this is so common for people. I mean, my first few deals, like, I didn't make a ton of money on. I mean, like, I bought houses to flip. They didn't sell. I started renting them out and kind of. Oh, that happened. go through it. Yeah, yeah, it happens, right? And a lot of people really quickly, a lot of

beginners, like we have a lot of people who've never invested listening to the show, right? A lot of people will do that, lose money or break even or whatever it is, and they're like, screw this. I'm out. I'm out. I'm done. Did you learn something? That's the thing. Like most people, again, they hate, they're like, you know, it's all about money most of the time with people. I learned more, because again, I don't tell many people this because it's a loser deal. Do you know how many successes I have that I can't even tell you guys about how many, and it's not bragging, how many $50,000 paychecks, my partner had cash where we haven't high-fived and felt half. This deal, I learned

everything not to do. When I say I had a thorn in my side for years, I just was not the mentality of, hey, it didn't work out right. Let me just, you know, a lot of people did that. And I learned this for my lender who let me the money. Most of people that threw the keys in the doors and let their homes go during the bad times, the banks are not going to appreciate them in the future. It's the guys that really hang on. I don't care if it's a private lender or it's a bank. If you walk away from real estate, I'm not dogging anyone if they have. I hang on because my name is important.

And that deal around that whole thing, Josh, you can dog on me because this is a bad one. But at the same time, I can everyone run you for making a bad deal, man? Everybody makes bad deal. I made some stupid deals, man. I'm just ripping on Detroit. That's all. That's fun. I don't like doing this because I'm a private person.

But business is very, it's fun, guys. But just let you know, the reason why I decided to hang out of that home is I actually take care of my own father as well. And I moved them into that home. And it was something, I didn't even have my own home for myself. I never even bought my own home yet. Well, I did end up buying that home with my brother for our father, you know, because he, you know. So it was something where we take care of our people. That's cool.

That's cool. And I can barely, barely hear a little emotion in you. I know you're not emotional God, but I could sense it. So that's great. I mean, I stopped Thanksgiving one year. but I told my brother, I'm like, we're going to get through it. Yeah. Well, I mean, the nice, what I find interesting is Brandon was kind of going into, you know,

you went it as a wholesale and you realized that was not the exit. You couldn't use that exit. So you shifted, right? And a lot of beginners can't do that. A lot of new investors don't know what to do. They get trapped. They get lost. I mean, you know, you found a way, you found something to do with that property.

And then you moved on and went on to the next one. And that's what you got to do. I mean, you know, when you go into a deal. You know what I sold it, Josh? I had to sell it via land contract because I couldn't even sell it for cash. Nobody would pay me enough. Can you explain that really quick to people who don't know what a land contracted and it's very Michigan and North Midwest specific? What I did is the deal, you know, I didn't want to just sell it to an investor for cash because I, you know, I'd lose.

You know, I wanted to pay back. My strategy was I wanted the property gone, but I knew I had to take care of my lender. I had a certain amount of money. I had to pay off. So I want to be responsible. So I sold a home on VS seller finance. When I sold it to the individual who bought it from me, they paid me just enough money that I could pay my lender. So it was almost like a sandwich deal.

But, you know, again, it was something where I got kind of stuck. But I create a situation where I could at least, because the good thing about Michigan guys is a lot of these homes have great cash flow. So when the market does reset in some ways, you have that comfort. You know, you have that buffer. So don't get me wrong. I'm blessed to be able to, you know, do okay in business and taking a little bit of loss and at home, I was okay. But being able to have that deal where I sold it that way with the seller finance, it allowed me kind of to put the, you know, the rest of it on someone else.

And then I moved my dad to another home. I actually bought him another home. It's a better. At the same time, you know, I did have to sell that property in another strategy because the mortgage industry is just not the area for it. It's what I call that C kind of neighborhood almost transitioning to the funk. You know what I mean? Yeah, yeah.

So. Hey, Steve, really quickly for the listeners, land contracts, seller financing, stuff like that. We're not going to dig into that on this show for anybody listening. If you guys are interested in learning more about what that is, jump on bigger pockets, do a search on our search bar and you'll be able to find all sorts of information, anything you need to know, or jump on the forums or the blog. So, you know, we've got some other ideas, other things that we really want to cover here with Steve. And so we're going to bypass that for now.

But all right, so you got this deal. You finally got rid of it. You for a while then got into this whole wholesaling game, right? Yep. Okay, so you got into wholesaling. What did that look like? Why did you decide that that was the path that you wanted to take? You know, it was something out of, you know, being resourceful.

That's a word that pops in my head. Resourceful, not resource lists. And being a wholesaler, you know, when someone says, I'm going to lend you 70% of after-repaired value. I'm speaking to the real estate people that understand this language right now. Okay, so I got to buy it at 70,000. 20 grand repairs means I need to get it for 50. But our lender was like, you know, you need some skin in the game, you know, another 10%. So what I realized in Michigan, we had to create more equity to be able to even get the down payment because I didn't have any money. I didn't have any skin in the

game. The only thing I could do was say, you guys want 70% of after repair a bill? I'm about to bring you 40 or 50% because I have to, right? And being resourceful, I realized that wholesaling was this entry level business. And just like you said, Josh, we're not going to talk about seller finance and other things. It's a great tool. And real estate has a lot of different tools that we have in our belt. Rather it's remodeling, whether you're building, whether you're wholesaling, you know, income property, whatever it is, wholesaling was that tool that I could literally, because our first property, I would say Eric and I as business partners was a home in Harrison township where we went to school and everything. It was crazy deal. But that first wholesale deal,

we wouldn't have been able to structure it if we needed a mortgage, if we needed cash, from a lender. If we had all these things that, or if we needed to have these things that we did not have, what we had was gentlemen that gave information via the internet and a couple people in our market that we've seen that were flipping homes. So we put the signs out and we started creating that, that, you know, that momentum. Wholesailing gave us that entry level. It's almost like getting your license as a realtor and kind of filling some leases to get a quick paycheck. It's the same way allows, in my, you know, it's our business model. Every wholesale allows you to look at more deals.

Some people want to be landlords. I say be a wholesaler because you'll wholesale a lot of homes to get the good rentals. If not, you might only be looking at every rental and trying to make it an income property when it's just kind of a dog, you know? Yeah. Can you explain real quick what your wholesaling model looks like? For those people who might not know what that means or understand what you do when you're talking about wholesaling, what does that look like?

What's a typical deal like? What we call is the industry used the word wholesaling, wholesale flip. We call it the and or assigns. Usually it's when I'm flipping paper. For example, if I'm going to buy a property that's worth $100,000 and I can buy it for, say, 55, but I know I have an investor who's the guy that fixes up homes and remodels them, he will buy that home at a certain number. It's almost like McDonald's. I take my orders for my buyers and I say, hey, what do you want? They're like a three-bed, two-bath.

I'm looking for right around this price range so I can put this much into it and sell it for this much. And as a wholesale, you're now going back to the market looking for that kind of property. And when I find that property, anything under his number. So if his strike price is $65,000 for a three-bedroom home, if I find it at 60, I just made five gram. You know, so wholesaling is just, it's kind of the entry level to the business. At the same time, we do take a lot of the equity up front when we pass that deal on, you know.

And I think that's great. I mean, a couple of things I want to touch on real quick. One, you mentioned that it's a tool. A wholesaling is a tool in your tool belt. That's one thing I talk about a lot in the book on investing in real estate with no and money down. I use that analogy all the time about like the more techniques you have in your toolbox, the greater projects you can take on. Right. So like I love that you mentioned that. I think that's fantastic. We call them silos. Like in our business, we have the wholesale. We have the rehab. We have

the income. We have the build. And I believe the evolution of a wholesaler, if that's something, is you mature as an investor. So in the beginning, I don't want to cut you off. But, you know, it's going back to what Josh was talking about. Sometimes when folks look at Detroit, they look at it as a low-end, you know, kind of market, but we have some really hot environments that we work in the areas that we live and things like that, where the properties we do purchase have a high-end potential to them. So, for example, we might just look at a $100,000 lot that we can look at. Normally that wholesaler that sees a house on a, you know, 50-foot lot by 120 feet deep in Royal Oak, he might see as a quick flip to make $10,000. We got a variance through the city,

rezone that property because we understand zoning, because we understand more of our tools in our belt and we smashed that property and built over a million dollar structure on a wholesale deal we would normally flip say i gave that over to air he does a lot of the wholesales for us he would rifle that thing and make us 25 to 50 000 on assignment wholesaling it that's a good paycheck i would never knock anybody who be like you know you just wholesale the house and made that you could have made this but what i what people don't understand we never built tons of homes before i simply went through the motions as a wholesaler but realized over my time that i'm a shirt, but I realized that, hey, as a wholesaler, there's also a bigger back end to this.

So if I can work with the other guys and being a wholesaler is cool. But when you talk, Brandon, about like, you know, in the beginning, entrepreneurship, that word's important to me. What I normally see is the builders are over here, the flippers are over here, the real estate professionals, the finance guys, they're all off in their own areas. We're like Eagles, right? Eagles flock alone. But what's crazy is the entrepreneur, the guy I like being.

He kind of flies under the radar. He's like that sniper with the 223 rifle. He comes in an environment, look for what he wants, and he gets it. You know, that's how we buy our properties. We use a lot of direct mail and stuff like that. But also, as an entrepreneur, we create the bankers, the builders, the, we bring these people around into a group. And bringing those people into a group allowed us to take a wholesale deal and pull it into something bigger. That's why I love being a wholesaler is because you can look at property, walk around it.

But also, I love being a real estate entrepreneur because you can take that wholesale deal and really get the fruits of the back end. It's harder. Don't get wrong. It break your back at times. But at the same time, wholesaling, without me being a wholesaler, I don't think I'd ever be able to look at something for development, for income potential, whatever. It's because I arm myself as a wholesaler. I started learning that this is a dud. This is a good one. You know what I mean? It's somewhere I, you know, I kind of just progressed, if you will. Hey, Steve. So, I mean, at the end of the day, though, you don't need to be a wholesaler to be that entrepreneur. I mean, the key to it all, if you really want to break it down is you know how to. to find good deals. I mean, that's the essence, right? So once you know how to find good deals, now you've got all these tools that you can use to your disposal, correct? Yes, but also, lead generation is huge. We are absolutely, lead generation is number one. You've got to have product. But over time, you know, again, I always tell people to go out and look at your competition first, really go out and study them, go try to work with them, act like a buyer. Sometimes we pose it as a buyer

to certain kind of deals we look at, whatever it is, you know. But when you see, see that your competition, and I'm not knocking the industry, because I love real estate, but it's, you know, it's like right up there with drug dealers at times. Like, you look at realtors and flippers, they have a bad name. Yep. But what I noticed when you... Hold on, hold on, hold on. Drug dealers have a bad name for a reason.

Real estate investors have a bad name because, like, the 1% of the 1% of the 1% of jerks that are screwing people. I agree. But you know how media is. Media takes that 1%. you know how it. And they, so they go crazy. What I realize, where are we going with that? Good Lord, what did you take me with that?

I don't know where you're going. I was talking about just finding deals, but we can move on. Negotiations, what I was saying. You have to be that person once the phone rings or that call comes in or that referral comes in. You've got to be that person. So again, it's, you know, it's having that personality, it's having the willingness to really ask questions. I know a lot of investors, guys, I'm sure you know where they're talking on the phone with somebody. and a person calls me like, you know, I live, you know, in a certain part, you know, out of area, for example.

And my mother just passed away and I have this home I have to deal with. And they're like, well, how many bedrooms and baths? They completely miss what we called, what we were taught by our mentor is that off road ramp. The off road ramp is she's from out of town. She's dealing with the death. You're going to jump in the fact that it's a three-bed, two bath. You know what I mean? A lot of people in real estate, they don't see that it's still a human business.

Right. So a lot of the stuff that Eric and I've done over the years is really understood negotiations. Lee generation is huge. But if that leak comes in and you suck, I'm not trying to knock anybody, you'll be the guy that we used to be. You'll see a lot of people cast into checks on deals that you kind of started.

You know what I mean? You gave to sell the idea to sell. That's a great point. I think on some of my favorite shows, we've kind of gone deeper into that topic of, you know, this is a people business. You have to, you know, hey, my mom died and, you know, I'm out of town.

Okay, well, it's not, do you, is it a three or four bedroom? It's, you know, I'm really sorry to hear about your mom. And, you know, obviously you're dealing with issues and, you know, how can we be of help to you, yada, yada, yada. But, all right, so, you know, at the end of the day, though, the tools, you've got these exit strategies you learn. And now, now you've got multiple options with what you can do. You are an entrepreneur because you are not just, you're not just a wholesaler. You're not just a flipper.

You're not just the buy and hold guy. You've got lots of opportunities. So I really love that. really quickly I want to jump back to that property you were talking about the rezoned. You talked about some kind of million dollar deal. I'd love to hear about that. And then after that, I want to start transitioning to some of the stuff you're doing now, some of the bigger projects that you guys have been working on.

We found that really interesting and think people love to hear more about it. So that house, I think it was a house. You said you rezoned it and then we're able to net like a million. No, no, not a mill. Not a mill. Okay. Okay, tell us about it. I'll be getting a lot of phone calls.

What it was is, you know, again, it's understanding dirt. And I tell people that. You guys, you know, over the years, what I learned is the properties I owned and flipped, I should have kept every one of the damn things. I've done me wrong. Eric and I, the only fights we have is like, he wants to sell it. I want to keep it, you know. But at the same time, when I look back over time, when I met my mentor years back,

he taught us zoning. And when I went back to the same communities, I've driven, I've wholesaled, I flipped, I've turned so many properties over the years where I just did not have the right glasses on. I was driving with my wholesale glasses. I didn't realize that that single family home was on a four unit site, that that single family home that that little gal owned for 50 years was on a site that's for multifamily. Or it could be something that's residential eight. You can get eight properties per the net acre, understanding that a property that you're, you just bought was an acre, you have a buildable potential there.

So what I did is I had this, you know, there's a lot of people that call us to be negotiators for them. They call us and say, hey, I got a deal. I'm trying to work on it. Can you help me? And this was an individual that we wholesale a couple properties to a young builder. He's about 29 years old. Kid just got married, done about 20-something deals in the high-end markets in the past couple years.

It does very well. Good kid. He bought one of his first deals off of us in the area to build from us. And he started calling me with Lee. And what we've done over time is a lot of people I have for rent signs and things like that, you know, people just drive by them. Those are my sellers. You know, when I see a for lease sign, that's my way of saying, hey, can I talk to you about selling? You know? And that's exactly what I did is I called this sign because I noticed that the phone number was from out of area. I look at this little property is a 900 square foot, you know, no swearing, but crappy little duplex. I have a contractor mouth.

But same time as a crappy little duplex, right? It was that functionally obsolete property set way back on the properties. It didn't belong there. It was close to downtown. Beautiful condos next door. There's some crappy homes around it, but it's in a development community that's on the rise. It's in Royal Oak, Michigan. But when I looked at this lead,

the owners, they owned it for 40 years. It's the 70s. First thing I do, I don't walk into a situation, not knowing who my seller is. I know the public records. I know when they bought it.

They have a mortgage. All the basic information. We're not just walking in. Do you get that online? Do you actually go to the court? Yeah. Yeah. We get all that's available usually online,

if not, CoreLogic, you know, places like that. And we also have our license as agents, so allows us to look at that. But having the access to information, I found out the things I need to know that it was a, you know, out-of-area owner that they owned it since the 70s. I knew I was meeting with a couple that I love meeting with the older folks that want to pass that the time. It's not that they need cash.

It's not that they're, you know, distressed. It's not, it's that they're at a position in life where they want to step down from the repairs. Because when I talk to the husband, he wanted out. When I talked to the wife, she was the firecracker. I mean, she was tough. one. But anyways, the gentleman called me to negotiate this with. He said, hey, I have a good deal for you guys. So I went inside there and once I started to discover that it had a great buildable potential, you know, it wasn't something where Eric and I were walking around like a wholesale flip.

What we decided to do is just bringing a quick lender real fast, close on the deal. So we can walk around it, I call it. So we can close and just think. And what we noticed is that little duplex was on a normal lot for a single family home, right? That single family home, builders would smash that little duplex and they'd build about a 3,500 square of a home and they'd sell it for about 5,600,000, um, in that part of town it'd say it's no, probably not that big about 26, 27 aren't square feet. I apologize. But they would put a home on there and have a nice size lot. What we try to do is bring our properties to the highest and best use.

It's something where we try to take a property if it has, you know, a crappy little home on it, but it deserves to have a larger home on it. It's going to be that larger home, rather we do it or another builder. This home, though, was a, a, you know, a. duplex that was close to town that had condominiums around it as well as single family homes. So we knew looking at the area, there was what we called mixed use and learning what mixed use was going to the city, understanding your codes. It's so important to understand codes and go into your city and understand the zoning.

But learning that it had a mixed use that we could put a multifamily on there. We could either do one of two things, build a mansion, like a 7,500 square foot house. If you wanted to maximize your, you know, you're allowed to maximize your loss. instead we wanted to build two multifamily condominiums that were you know they sold over a million dollars but they have below great parking so when you pulled up to the structure you kind of drove down into your parking structure it's kind of cool but again you know it was that single family or small duplex that we looked at as a wholesaler and when we came across that deal we decided to close on it because we did have that builder who was my buddy you know he bought a couple homes from us we started having a relationship talking about you know wanting to partner up and he knew what we could can build there as well as I did. So we decided to hang that up as a wholesale, buy the home, close on it with quick cash with a private lender, and then raise the money for the development. And we had to go through a variance process, which took about three to six months. We had to mail all the neighbors. We had to go knock on some doors. We had to be professional. We had to get

a nice big blueprints because I tell you guys when you develop property or I don't care if you're flipping homes. Go to Kinkos. They love me up there. I blow these little cardboard things up by three feet. I have beautiful presentations. That's one thing that we really pride ourselves on. And having that deal in the form of a big development, it changed it from that wholesale. It allowed us to put up, like I said, two condominiums that actually were the highest price per square foot. Condominium was like in that area right there in Royal Oak. So it's kind of cool. The first property that we built multifamily right there in that town was from normally a crappy little wholesale, but it ended up being, you know, selling for about a million

50 those units. So it was kind of a cool transaction. All right. So really quick. Because you could talk, man. I love it. Passion. I can go crazy. I tell you, it drives me nuts at times. I get lost. Look at me. All right. Stop, stop, stop, stop. What did you pay? You paid 100 grand and you sold it for a million 50 after you and what it cost you to do the turnover, the build and everything else.

We usually build for about a buck and a quarter, a square foot. on that one we went over because we built underground. So it was about a buck 40 a square foot. That project was with land acquisition, I don't like giving too much of my numbers guys, but at the same time, land acquisition, everything, we're about three quarters of a mill, you know?

Okay, okay. Controlling your cost as a builder is very important. For example, I love my taste. At the same time, I took taste from a very high-end neighborhood and brought it to this neighborhood, which is still a quality environment, where I look Michigan.

But I'm talking, when I wanted my witch's peaks on my roof, I mean, if you've seen my style, it's very traditional. It was really cool. It was contemporary and traditional mix. But at the same time, all those things, my roof peaks, 12,500 extra with my architect. Little things like that that I learn now that I can go back, I could have saved $75,000 and made even more money on this project. But it was something where we were going to kind of prove a statement.

There was nothing in the town in any way comparable to us. If you looked in the MLS and said, what can I count my property to? We were like this until we sold it. And we actually sold them for about 100 grand light. on each unit. So that brings up my follow-up, which was functional obsolescence and variance process. You mentioned both of those earlier. What is functional obsolescence?

I mean, did you actually build in functional obsolescence on these projects, potentially, with the widow speak that doesn't fit into the neighborhood? Yeah. You know, again, as a licensed realtor, we have just basic, you know, language, if you will, and as real estate profession have the same thing. And functionally obsolete is any neighborhood you drive in where you're seeing those, you know, World War II, post-World War II homes, the 1950, 60 kind of brick ranches in our environment I'm talking about.

But then you see that frame house that's like set back 30 feet further and it's just not conforming with the neighborhood. They usually call that functional obsolescence, homes that are almost 100 years old falling down, dilapidated, things like that. So that functional obsolete, it's something once I've seen that, I'm like, in this town, it's high end town. We had beautiful income properties around there. In this town, who the hell is going to rent a little 450 square foot, one bedroom, one bath. That's called functional office lessons. Don't even wrong. There's somebody for that seat.

I wasn't willing to deal with that person. We wanted a different caliber individual, you know. What is, and what's the variance process? A variance process is, for example, when you have a property where say, you know, and I'm going to talk about our part of town, a minimal lot, for example, that you build a home, a 2,500 square foot home on, is about 50 feet. So say you come across in a neighborhood, a house that has the garage on the second lot. It's a double lot. So it's 100 feet, or let's just say even 90. You know, we get those approved all the time. But anyways, a variance is something where when I look at that home on a double lot, and for example, in certain parts of town, the whole street has to have a percentage of homes that are on individual lots. So that

means my double lot can now be subdivided. It can be divided now. The variance is a process you have to go through at the city level to go in front of the zoning board of an administrative board. You have to go in front of them and talk about the deal, the ZBA, and you have to have all your stuff together. But at the same time, it allows you to go in front of them and take this single family home that's on a double lot and divide it. And now you have two homes that you can build on there. So again, that's another strategy. As a wholesaler, we go into communities that are hot parts of town where builders are,

and we look for those double lots because we want to split them. Once you split them, for example, the home, there's a home that we had on a double lot. It was worth about 120,000. We bought it for, I think, 90 something. We wanted to make more. We wanted to make 175 on it because we knew it was a double lot. No one wanted it until we split it. Once we split it that wholesale deal, we made $85 grand on it.

We hold up to our buddy, our own buddy. I mean, you know. Did you tear the house down or all you did was split it and then sold it as? Well, that home, some of them, you can only, some of them you have to split it. or you can just split the property. That exact one had a garage on the second lot. We had to smash the garage. Okay.

So they did make a smash the garage. Going through that process, they approved the split of the lot. Now we had to apply for a demo permit and remove that garage. Now we had a saleable property with two separate parcel IDs, two tax IDs and we could sell two different deals. That's cool. So, I mean,

if I could sum up everything we've talked about today so far, and now we're not done yet, I want to go into the bigger stuff. But if I get some of everything, like, yeah, there's like, you know, I always say there's certain, there's two types of people. out there. There's people who are like, I can'ters and people, there's the how can I? Can Iers, if you

will. So like, there's people are just like, I can't, I can't do something. And the same thing, right, a flipper looks at a house and says that I can't flip this house because ABC, great. And a wholesaler is I can't wholesale this house and a landlord's I can't buy this house because of whatever. But everything about you tells me that you are the guy that every single property, you're like, how can I make a buck on this house? We're bringing it out. Yeah, how can I make this work? I love that. I love that. Right. I mean, you get all these leads coming in and most people are thrown away all their leads because they just don't think. It doesn't fit my little. It's not a square peg in a square hole or whatever. Like, can I tell you though? Please. Again, what I notice is the maturity, the evolution of the wholesale or the investor. What I notice is most people, I talk to some investors and I'm like, you know, what's your market? And they'll be like, you know, Metro Detroit. Don't get wrong. We have Penn MDs. Our company, Metro Detroit has a name in it. But if I wanted to be an investor in Metro Detroit, you know, you know, You know, we have done that. We've done deals all over.

But to put yourself in that broad of a market, you're killing yourself. And what I realize is people, they could live a better lifestyle. I've listened to, you know, call it you guys that works. Like I live and none against him because he had a great call. He's from Michigan. He's like, I got 10 rentals and I live on the same street as my tenants. That would drive me crazy. It would drive me crazy.

I would not want to be in the same environment. Like my buddy one day, I'm like, let's build this neighborhood and build a big home in the back and keep it. He's like, no, we live on this part of town. We build over here. And what I mean by that is real estate allows you to have territories. So what I've always noticed is when I went into a territory and I flipped a home, for example, my personal home guys, this is a seminar that you don't have to pay for. This is free.

I bought a home in Birmingham, Michigan, a community that's excellent in Michigan. I always wanted to live there. Beautiful home, right? Market started changing increased. I'm like, wow, my home, I can flip it and make 70,000. I've moved about seven times and eight years, guys. I buy and I flip. Yeah, same here.

Whatever. Now I'm in a great community. and a lake front of home, you know, building it's where I'm at. But anyways, you know, that deal I flipped it, made $70 grand. The builder I flipped it to made a quarter million selling it and built it home for $850,000. My personal home, I'm the real estate guy. I'm the real estate guy. I said, this can't happen to the real estate guys.

You can't be the real estate guy going out here doing these things. And you just got your butt kicked on your personal home because you're moving too fast in life. You know what I mean? That's funny. Wow. Well, at least you made something on it, right? Yeah, I went back and I drive by that house because I'm doing a project down the street and a couple of them. And I'm like, man, because again, there was exceptional value there.

But this is a crazy part. And it's almost like that first deal I bought to flip and I never did. I held it. Right when I sold my home, we got the million dollar project that we built. That's when we got the deal. I started learning like really going crazy about development after. And then we started buying other stuff. But it was like once I closed on it, I was ready to build.

I could have, you know, I could have did it. That's funny. Okay. You can cry over. While you're crying, let's shift, let's shift gears and talk about, I mean, like, maybe I can ask you this before we move on. How many total deals do you think you've done? If you had to estimate total things you've done in the past, you know, several years.

It's roughly about 400, I would say plus minus 400 deals. Wow, that's crazy. That's awesome. 400 plus or minus 400. So you either did zero or 800. No, 400 plus or minus. It's right in between there. I'm telling you, Josh, I'm not the guy that would ever be like, you know, I'm like,

brass tax. Like, you know, most of the time, like, if we're taking a loss, I'm telling you. I'm just busting your boss. So you started wholesaling, when it did some, I know you did some rehabs as well, right? And then, and then I heard you moved into commercial properties as well. And I want to touch on that before we get out of here. So why did you transition to that? What does that, I mean, what does that, what does that look like in your business? What did you buy? And why did you get into that? Again, going back to the evolution of a wholesaler, how many deals do you pass on that you don't even know what the potential is because you don't do it because some people are like, I'm only this niche.

Don't even wrong. We are focused. You have to focus. I don't in any way, say, blow yourself out and go in every direction. But what I will say is there's deals that I passed on where I didn't have to pay for those seminars, almost like my personal home. I looked at it and seen somebody make, you know, six figures on something where I just didn't do anything.

You know what I mean? And when you see that happen, I started realizing in the commercial world, I wanted my own building. I wanted to become my own best tenant. This way my mentor told you. He's like, you guys are real estate guys. You need a headquarters. So learning that I wanted my own environment, my own building, I started looking at the commercial arena. But at the same time, over years, guys, when you're flipping tons of homes and you're building these connections and dealing with people on a regular basis, you have leads that come to you. And this is why I grill people that we talk to and we coach at times because they're like, you know, I'm having

trouble with this deal and this guy, you know, and the way I hear them talk about. it, I can tell the guy has more real estate. They might be looking at this one crappy little deal that he's trying to sell and they're ruining the opportunity. This guy owns another 200 properties, that he owns apartment buildings, that he owns commercial properties, all these other things. This little guy is actually a whale, we call them. He has a lot of real estate. Yeah. And when I realized over time that commercial leads kept coming in, but I understood it. I started learning my own friends were developers. You know, I had people that were buying things that I've seen making, here's the difference, guys, between development, wholesaling and rehab.

Rehab and wholesale. I love it. Fun stuff. Cash. Quick. Pays for Friday. Development Real estate, you can accelerate decades of wealth up front. In another example, is term key. You can also buy commercial property like we have, fix it up, put some tenants in there. And instead of holding on to it for a decade like a landlord or 20 years, we flip it and make a big chunk. That's almost a decade worth of cash flow. So we do both. But at the same time, that commercial market, the reason why we came into it, again, was that evolution and I wanted my own office. And we started getting these leads from people that said, you know, here's a great deal. But we, and it bothered me because some of these people would send us quality deals.

These are quality individuals. Once you get in real estate, you realize there's tears for people. Some people deal in low-end funk. There's people that deal with just quality housing and other things. This guy kept bringing me deals and I kept flipping them. And I kept telling him, I want my own building to keep. So after a few, he's like, you know, you just flip everything. and I didn't like how that sounded.

I mean it, guys, here we are the guys, and don't be wrong, we're talking about how we've done 400 plus deals. It's not something we put on flags anymore. When I first got an industry, I admit when we did our first 100 deals and 200, like we were going, and I kind of, I didn't, you know, I feel like I know who I am a little bit more now. We're a little bit braggadocious back then. I didn't like it. I was trying to be somebody I fully wasn't, you know what I mean? But at the same time, I still wanted to let people know that I love what I do. You know what I mean?

It's a hard thing to transition, you know? but it really allowed me to have a different mindset. And I tell you, it changed everything. That model really changes everything when you look at the commercial arena. Because, for example, in our commercial building, we have a 6,000 square foot building that in one of the units, the smallest unit is my unit. The one littlest one in the corner. That's all I wanted. But we bought this building and it needed 200,000 in rehab.

We didn't have the money. What I love about commercial guys, and again, this is something I've learned from my own buddies and friends. and I ask questions to professionals. That's the cool thing about real estate. You can ask questions and people will tell you. I had this beautiful asset on Woodward Avenue, but I had a crappy building that was in bad shape. And I didn't know anything about commercial.

But I was talking to my buddy who owns a lot of commercial real estate. He's one of my best friends, and he's third generation. His family really taught him well, and he understands real estate like a Maverick, and I mean it. And I'm just talking about how messed up my building is. Here I am with like the wholesale flipper mindset and I'm trying to like fix my place up. He's like, Steve, you're on Woodward Avenue.

It's one of the best streets in Michigan. Put out a sign. Instead of trying to get 2,500 rent a month, go down to like 1,800. And I promise you, someone's going to come in and spend six figures on this unit. And I'm telling you, you know, just like he said, I lowered the rent drastically to a point where I knew it was still safe, but I would track the right tenant that would come inside. And she spent $125,000 building out that unit into her facility. Oh, wow.

So what I love about commercial. is you can attract different quality people and they if you get the right kind of deal remember resourcefulness we always get deals that are you know we have to get good deals we have to but having that deal allowed us to attract somebody to come in that had the money and now I have a 10 year lease that's accelerated with this one tenant and they're in my retail space and they built it out we have pizzerias that do that like it's kind of cool when you find that little model you can have crappy commercial buildings but if they're in good locations you can to track the right tenant, create a good opportunity because you're not starving for rent.

Most people, they want to be that guy who's charging 28 for 2,500 a month lease. Yeah. I'd rather be that guy at the 22-ish. Yeah, I mean, like you're kind of under that market. I enjoyed that and it allows to track the right type of person. Again, commercial real estate, it seems to have a little bit more professionalism. At the same time, you're still dealing with a lot of crap. I tell you bureaucracy, but it is the paychecks are a little bit different.

Yeah. So when you talk about commercial, what are we talking about? I mean, you mentioned... Mix shoes. Mixed shoes buildings, picture office space up top, that little retail tanning salon down below, the hair salon, you know, or the apartments up top. Again, it's that mixed shoes or it's that retail space, you know. So again, it's kind of that downtown kind of vibe, but we're not in the inner city of Detroit.

We're more toward the Royal Oak and the World War I quarter area. Sure. And now, when I think of commercial, you know, when people ask me if I want to get into it and stuff, and I like the idea, but what scares me, you know, it scares a lot of people is the vacancy times that a property sits empty. Do you advise new people should stay away from commercial to they have a good number of assets underneath them and good financial reserves?

Or do you think it's something that anybody can kind of jump into slowly? You know, I'm the guy that goes in. You know, it's something where it's just how I am. But at the same time, I'll just give you a real-life example. Is one of our commercial buildings, we have a tenant that pays $4,000 a month. It's a beauty salon. She pays $4,000 a month.

You know, that's $4,000 a month. That's a lot of rent. One side is a pizzeria doing their buildout where we weren't getting any income yet. They're doing their build out. Well, we had issues with that tenant. I don't want to go too much on it. It's running a live call. But anyways, the other tenant for the $4,000 didn't pay for a couple months because her father, it's a whole situation.

He lives over in Hong Kong. It's kind of crazy. We have an awesome tenant. They make great income, but we couldn't find out who the hell our tenant was. They passed it around to their family members. Like, every year, this business will be owned by someone else. I don't want to go crazy. But anyways,

We went vacant for two months, or it didn't go vacant for two months. She didn't pay us for two months. Yeah. $8,000, Brandon. You know, like when you look at a property, luckily we have excellent equity. We own it ourselves. Luckily, we've fixed it. We've done a lot of things that allowed us to be at that point where that $4,000,

we still made, you know, our, we can pair of taxes. It didn't hurt us. But if you're the average person, like I told my partner, imagine in 2006 owning 10, 20, 30, buildings like this and half your 10 you know what I mean the in two months to lose $8,000 it's not a ton of money but eight grand to the average person in two months it could break them yeah that could not only ruin their year of cash flow most people that I know to start getting like in an income properties they're not that well off and I do agree with you that you should have that stability at the same time if you have that thing where you just want to do it you're going to do it but man I will say that

when it comes a commercial, there's a same way as a resourceful wholesaler to really get that exceptional deal. There's ways to do commercial real estate where you are okay doing it. If you're a landlord and you own property, you can own commercial. At the same time, that's the lesson I learned is, God forbid Eric, if you and I were the guys that were leveraged at 80, 90 percent that our payment on this place was five grand a month and we were in leasing it for six, we would be in trouble. Yeah, I mean? And that was a wake-up call. You know, so again, commercial is that thing, that animal that you've got to be careful with. For decades, real estate has been a cornerstone of the world's largest portfolios.

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Yeah. Lots of great information, lots of great tips. My last question before we move on to the fire round is this. You've obviously scaled as an entrepreneur. You started, you know, the wholesale that last. lasted forever. You moved on to more wholesales and flips and development and now commercial. You know, you've

grown. Your company's grown. You guys have grown as business folks, as real estate folks. What kind of advice would you give to somebody who's maybe... Oh, there you go. Yeah, nice. Congratulations. Yeah, puberty is awesome. So

what kind of advice would you give Brandon needs them? Which would give to the guy who's either just getting started or somebody who's been doing it for a little bit. They've got a couple deals going, you know, but they, like, their intent is not just to have one or two properties on the side. They want to be that entrepreneur. They want to scale. What would you tell them? Strategy. Focus on strategy. What I mean by that is as investors, as flippers, as wholesalers,

as entrepreneurs and real estate, we get a call. We up. We're gone, right? That's what I was taught. I'm a mentor in the beginning. When the phone rings, you have, you go, right? What I learned was not only after my business partners started having a family, after I wanted to have a family, after evolving in life, having businesses running around the country, doing a lot of things that took away from the day to day working in real estate, right? I noticed that with me, I had that mindset that I wanted to scale and grow some kind of business. But when I got inside the real estate business, I didn't have a group that I could kind of be associated with. So the first thing I did is I wanted to be part of a group. I wanted to find people that, you know, that, that we're doing the same thing I wanted to do that were also successful. At the same time, I, again, I, it was like this evolution type thing.

I go back to that word, I use it a lot because I feel like you grow as a real estate entrepreneur and coming into this business and finding groups and associations. It allowed me as a new person to really go in a direction and get, you know, it kind of sounds cheesy, but like seeds playing in my head. Where I'm from, guys, there wasn't many people that were doing these exceptional things. Don't get wrong, there's a lot of wealth in Michigan. There's a lot of great things in Michigan. They're all over the country. But what I mean is I'm talking about the entrepreneurial mindset that lonely feeling of isolation

we have at times because we're working so many freaking deals at times where we're willing to sacrifice and give all these things in our lives that most people do not understand. They really don't. They think it's somewhere they can check in and do a little bit. I can't relate to that person because I really wanted it. And going into real estate, I realized that that word real estate itself allows for so much opportunity and growth in life. And that really came from me by being a part of the association.

So having a group and joining group, it created this confidence in me. And I don't know. And again, I don't want to take it too far. But confidence to the world is sexy. To me, though, inside, once I started feeling confident because I was getting knowledgeable,

I was gaining like what I thought wisdom, you know, things like that where I'm making things happen. I enjoyed that. So if you have that like thing inside of you and you want to get inside real estate or you whatever niche it is in real estate, if you just have that knowledge and hunger for more, it'll feed you seeds. It really will. You'll talk to someone like guys like you and you'll be like, you know, I read a good book. I write that book down. I go read it. That's just what I do.

When you say you see me take a deal and kind of look at it in all ways, I believe the right kind of entrepreneurs, they have that vision. and most people they can't see past that. And when you can step into something and say, wow, I can see an end result. And again, I'm going to swear one time because I have to say this, Josh. But sometimes as an entrepreneur, you'll wake up every day and eat shit. And I mean this, guys, where you won't even tell your girl,

you might not tell your assistance. You might not tell everybody around you that relies and counts on you because people are relying on you. You got to be willing to eat shit every day and know that you're going to achieve that goal. And it's hard to do that time. Yeah. Yeah, I mean?

So it's lasting long, I swear. But at the same time, it is, it is something where you have to be dedicated. And it's hard for me to talk with somebody because within a couple minutes, I can tell if somebody is, ah, or they're like, you know, this is me. And I can say that real estate is, you know, it's what I enjoy and what I love, but it brought out a confidence in identity. And if you want an identity, whether you're young or old, I believe become an entrepreneur, you will quickly feel like, you know, or find out who you are, you know.

Yeah, I agree. Well, just to piggyback on that real quick before you, we wrap it up and go to the fire round. I mean, I think what you were saying about having a group or having people you can rely on, people that you can, you know, whether that's a local mastermind group that you kind of put together with friends of yours or, you know, fellow investors or, I mean, honestly, whether it's just the bigger pockets forums, jumping on there. That's how I did most of my, like, that group for me, like when I was starting, like, I went on the forums. I was like, hey, guys, you know, I'm trying to put together this deal. I'm trying to buy this apartment complex. I'm trying

to do this and this. And just getting that feedback from other people. You know, people ask me all the time. It's energy. It is. It's energy. It's like you're excited. Other people. excited, you work together, you figure this stuff out because, I mean, yeah, like, you don't, I don't, I don't, people ask me questions all the time. Like, Brandon, what would you do here? And I'm like, you know, they can email me if they want to, but I tell everyone the same thing. I don't know. Go ask the forums where you're going to get 10 people, 15 people answering you, not just me and my one opinion. So anyway, I love that you said that. I think that's great. And Josh, which is, by the way, the difference between bigger pockets and the gurus. The gurus know

the answer. Yeah, there's one guy that will tell you. There's no answer. There's no answer. And I tell you, though, there's lots of paths. You're right about that. that's right Josh like because again you I don't knock the guru industry I'm a product of that environment I learned a lot from that but what most people they get they get lost in this facade they get lost in this this fake world that it's you brand and that's going to give me a product that's going to make me it's me it's me and I'm telling you I've had some humble lonely you know emotional days where I'm like Steve it's you buddy you know I mean and to really grow up and like look yourself in the mirror I don't care how old you are there I know a lot of 50 year old 12 year olds

It's looking at yourself in the mirror and really saying that, man, I, you know what I mean? And having that confidence, I tell you, it changes things. It really, it identifies who you are. I love that. It's not some guru. It's, it's you that's going to make you successful. I love it. And don't get me wrong.

Without having information like you guys put out there and things that gurus have, I would not have learned it. But I realized when I had something and I brought it home, I clashed at times. I'm like, okay. And I got so frustrated, I would like, I turned like a little hissy fit. But what I realized, I thought. throw away the bad stuff. And I would only have out of that, maybe that product or that program or seminar, one little nugget. And nowadays, I don't care if I spend 10,000, since November,

we spend over 25,000 just on our education. That's what we do every year. One nugget's all I look for. Because when it comes to real estate, it's, you know, it's not bolts and buckets. We're dealing with hundreds of thousands of dollars. That one idea can really take it to the bank. Yeah, I love it. Education's huge, huge. Cool. I love it. Let's move on to the fire round. It's time for the fire round. All right. World famous fire round. Steve, these questions come direct out of the Bigger Pockets forums.

We just talked about that group of people around you. And this is real people asking these questions in the Bigger Pockets forums looking for help. So we're going to make you help them. You ready? All right. I'm right. Number one, where do you find leads and how do you get in contact with the owner? That's a big question.

And how do I get in contact with the owner? Well, I will always tell people right away, we're not going to McDonald's looking for a hard money lender. We're not going to, you know, what I mean by that is we're going to an environment where we know somebody has something that we want. So, for example, if I'm mailing to an environment, direct mail, and I'm mailing to a neighborhood, I don't want to blanket to anybody. That's like going to McDonald's asking for hard money lender. Most people look at you and be like, who the hell? You know what I mean? But when I go into an area and I know that I'm looking for vacant housing, non-owner occupied,

I'm looking at the lower one-third tax assess value. This is huge what I learned from my mentor. We're buying the Chevys in the Cadillac neighborhoods. We're not looking to be the Cadillac in any Chevy neighborhood. You know what I mean? So it's basic knowledge of going into an environment and saying, okay, this is an environment I want to be in. You can drop me off in any part of the country.

And this is what I learned. This is the education guys. The stuff you talk about, we all know, is I know. is I know how to create territories. And be able to go in that environment, I know that I can create a list of non-owner-occupied, you know, either homes I have high equity or free or clear, that we bought pre-bubble,

they bought pre-bubble. Things like that, very basic. The difference is when we mail, we mail a very simple either letter or postcard, but it's me they get a lot of the times. You know what I mean? When they call, they're getting me on the phone. And I know that can be.

I bought a lot of real estate. I can make them feel good. You know, so if you're going into an environment, I want to talk to a seller, be knowledgeable about that area. Because if I get on the phone with you, and I'm just telling you guys, it's like a girl dating a guy. She can sense when he's insecure. I'm telling you guys, you might not want to admit it, but she knows. So what you got to do is you really have to understand how you are as an investor coming across.

You don't want to answer the phone and, you know, sounds scared. I do calls with people at times and I want to help and train them. But, you know, the other day someone was on the phone with a cell and you're like, well, I pretty much flip homes. and I looked at that person, I couldn't have laughing. I'm like, you pretty much flip homes. You know, you're telling us a person. But anyway, we go to a very basic community that we want to invest in. We're looking for that.

Like I said, the lower one-third. We're looking for the Chevys in the Cadillac neighborhood, something that needs some repairs. And we're looking for that non-owner-occupied person. We simply send them a direct mail piece. And then we kind of engage in an action like that. We might, you know, do the whole community around there. But if I'm going for that one person, also, and we'll say there's a big help. Once we get our list guys, we segment it to,

people that own multiple properties. When somebody owns two or three, fine, one category. But when they own two or three, then multi-family, they go in a different category. Or they own two or three, but then we realize they want 100 houses. That's a very different person. So before I send that letter, I'm just telling you guys, we study. We don't have a giant list. We're not mailing to millions and thousands of people. We have a very select, fine, targeted seven territory area. And we hit them usually, you know, in January and June. We own two titans a year and seven different territories and we go, you know, but we know our area. So again, you can talk to all the sellers you want.

If they call you, you don't know what the hell street they live on, you're going to sound like an idiot. You really are. You're not going to, you know, the best things I can ever say is I've talked to, you know, this woman down, for example, is Brandon. Yeah, I'm giving you a call today. You know, I hear that you're interested in selling your property and I just bought it home from Josh down the street. Josh said that you're thinking of, you know what I mean, having that referral, but also, I mean it, like actually being able to do it. Being able to say that live saying, you know what, Josh? Brandon gave me your referral said you were a great guy to talk to about possibly selling.

I mean, I just recently purchased property. Would you like to have that discussion? It's as simple as that. But I tell you, most people, they get so lost in the deal. They forget about being human. Talk to people. Just talk. I think that's, I think that's, yeah, I think that's solid. People get so scared and they get afraid of what they're doing. And I mean, it's really not anything different. You're just talking to people. I love it. Yeah. Yeah. All right. So to sum up everything into two words, direct mail marketing or three words, direct mail marketing. That's how you get leads. That's your main. That's your main avenue?

I will say the best deals I'm getting right now are from referral because I've been in business so long. So there's been 20 mailers to one person that's finally calling us. When I say that, guys, I can play my voice from right now. I get calls to this day. It says you mailed me a letter six years ago. I started years ago. Doesn't mean I stopped. Cool.

All right. Josh, next question. And we're going to take the rest of these a little more quickly because we're definitely way out of time here. How do you know the value of a commercial property? You really don't because you've got to understand. And, you know, it's not like an after repaired value. You got to understand price per square foot. You got to understand the leasing side of it.

You got to understand the difference between commercial pricing for electrical is a lot different than single family residential. So when it comes to pricing commercial, it's slower. It's a little bit of a, there's environmentals could go into it. You know, I mean, there's a lot of things that go into the value of it, the income approach to it. So one thing I would say, if you're getting into commercial, like the way I was taught, you're looking at a, you know, a five unit strip, whatever, you know, make sure

you like break even off only leasing two of them. You could be almost, you know, you can have three out of the five vacant and you're still making your payment. So again, when it comes to commercial, we still applied our single family mindsets. We're like, hey, you know, it needs 30 grand. Well, let's put 50. You know what I mean? We're really going above and beyond. But at the same time, I'll tell you, the way that you learn value, Josh, is you make freaking bad mistakes.

You spend a lot of money. That's one way. You know, you go to the bank and say, I got this great asset. They're like, it's not even close. that. You're like, I got on my cash. Question number three.

We'll let you keep making the mistakes and we'll hopefully have our We'll learn from you. I tell you. I tell you. Someone's got to do it. All right. Number three. Should I,

and I think you're, I think I know the answer to this because you do it. But I think should I flip commercial properties? I think you flip anything. You know, if something we're having a buy, sell model, it keeps the light bills on.

You know what I mean? But also it allows you a a name, a brand, a position in a market, whatever it is. But yeah, I feel like everything you buy is the way I was taught. I'm not loaded, guys. If I was loaded, I would be like, I'm buying and a holding. That's just, that's where I'm going in my life. I will be a buyer and that's it.

But other people have to sell to buy. So when you're going in that avenue, my mindset is how can I always be the flipper first? Because I can get out. How can I wholesale? How can I remodel it, fix it up, resell? Or can I hang on to it forever? If I can't do those three things, I'm really walk around that deal slow. because again, guys, we're in a up market right now.

A lot of people buying deals, I question them. I really analyze them. I'm like, you know, we have one hiccup, buddy, you know. Yeah, yeah. That's great. That's great. Awesome. All right.

Final question of the fire round. I want to get into wholesaling, but I have no money whatsoever. How do I find deals? You have no money, but you have what other people don't have that have a lot of money. You have time. You have something that most people don't realize they have between their two years is a brain and knowledge. You have value. So one thing I learned is when I didn't have money, even when I have, I know people with a lot of money that don't know how to invest. They don't

know what to do with their money. I don't suggest you invest in real estate. If you have a lot of money and don't know what to do. Yeah, I agree. You know what I mean? So it's having that mindset, if you don't have any money at all, become knowledgeable. Because I'll tell you, we did not have any money. When I say it's a true, you know, story of we're broke. It's something where you have to be confident. You can't go around people acting broke, talk. money. And I'm not trying to like, you know, pull outside of, you know, it's just, it's an environment. And I understood that money had a certain kind of vibe to it. It had a certain way of talking. So when you started learning the language, when you start as a wholesaler speaking money,

people that have money will fund you. But you have time and you have value to provide. If you can provide those two things, the money is going to come. Because again, guys, you know it. Your successes are not successes because you had the money. It's what you did. You, you know, killed yourself fun the way to get in that paycheck. It's so true. And I think like I think newbies often forget that. Like you can replace the need for cash with knowledge, with hustle, with drive, with, you know, all that stuff. And so, yeah. Can I give a small example? Sure. I own a piece of land. Bought it for about a buck and a half. It's worth about a million, right? It's probably worth even more. That's a big equity swing, right? Right. I didn't have the cash that day, right? I didn't have the cash to

buy that piece of land. This is what I had. I had knowledge that I knew if I partnered with a good builder, a developer that would wait long term with me because it's a commercial property. It's going to be storage facilities, chase Manhattan bank, other things on there. I knew that if I got the deal, I had the gold. But I didn't have the money, so I didn't have the gold. I had like part of it. You know what I did as a wholesaler, I retained a portion of the deal, one third of it. And I brought in somebody else who funded it 100%.

So I'm in this deal, zero. But I control a piece of land that has a very large buildable back. And I'm talking as is it can be sold for almost a million. probably more, but the building back at is $5, $7 million on it on a piece of land that we got for a very aggressive price. But as a wholesaler, I remember talking to my partner about this. I'm like, what do you want to do? Because we had a lot of deals going on. I didn't walk around it.

But when I went to the property, still have it to this day. And I look at it. I'm like, man, that value as a developer, I knew I could bring in somebody that's seen a value, but I could retain a portion of it. So as a wholesale, I tell you cannot have any money, but find deals and say, I'll take 3%. having three percent eventually you own enough of those you're going to have a hundred or something yeah i mean i love that i love that well cool well cool i love that answer i love all those you're definitely a knowledgeable guy and it definitely shows through so uh let's wrap up this knowledge fest today with our world famous famous

all right these questions are asked of every single guest and so we're going to throw them at you right now number one steve what is your favorite real estate related book my favorite real estate book. You know, again, it goes back to how I started because of simplicity of it. Einstein, if you can't explain it to like a six-year-old, you don't know it enough, is rich dad, poor dad. That book by Robert Kiyosaki, I know it might even be a little cliche nowadays, but I tell you, if you're an investor or you're, I don't care who you are, you can learn how to be a better man from that. But I mean that, like a better person. And it's not about just the money. That book, if you want to learn real estate fine, but it will set you on a path. Everything

it says read start reading it everything it says go you know i mean you follow those books yeah so rich dad poor dad yep i love it number two favorite business book um again i like strategy but strategy is what i do so again it could be a little cliche it's a book i have right here on my desk it's been here for 10 years i bought it for 95 cents think and grow rich um very it let your mind go to places you know i like psychosiberatics books like that where it kind of you know challenges your brain, but the business side, you know, they're all the basic books. You guys try to talk about them and everyone has them. That's good.

All right, man. Outside of real estate, you're a busy man. What do you do for fun? You know, I love traveling. I come to and from Florida. I live on a lake over here in Michigan, so I have a boat that's right on the water in the back of my house. I love boating, you know, things like that. So I live a pretty simple lifestyle. I eat, breathe, you know, real estate, I absolutely love it. I'm a dealmaker to what I love doing. But I love going around the country, you know, seeing my friends. Eric lives down in South Florida. So we're starting up that environment down there.

I got best friends down there. My brother lives there. So I love being back and forth from Florida. You know, I got a place down there as well. So it's fun. I love Florida. I love to buy property there someday. That's one of my goals in life. It's a good environment.

That's a place you buy. You know, you see these people down there. They paid 50 grand as worth $7.50. You're like, all they did right in your life was one thing, bought home. Exactly. I just, I like that idea of buying. Yep. Yep, exactly.

All right, my final question of the day. Steve, what do you believe sets apart the successful real estate investors out there from those who give up, they fail, or they never get started? Gosh, man. Again, because I've learned from so many guys in that word, I don't want it to sound cliche, but it's that persistence. And I'm telling you, if you don't, you know, another book is the alchemist. If you understand that book, you read it enough to understand. Persistence is like a, it's like this thing. Like, someone can just tell you no.

and it bothers you, but you will not think of it as a no. Like you're like this different person. And I noticed that entrepreneurs, the ones that I attract to, they have that persistent personality. It's very, it's almost like, you know, we're going to make it work rather, you know, someone says or not at the same time, we don't defy laws and things like that. But persistence allows you to have just that will, man. I don't know. It's not, it's a word of pops in my head is persistent.

man. Fantastic. Perfect. Fantastic. All right, Steve, before I let you go, where can people find out more about you? Where can they connect with you? I'm always around on Facebook. Facebook.com forward slash the Steve Mills. So they can look me up on there. I'm very easy to find. They can even call me on my direct cell. If you guys want me to give it out, I do it all the time. I probably wouldn't do that. That's a bad idea. Well, that's how you get a hold of me. I'm a dealmaker and I talk people face to face and I love it. But at the same time, if you want to find me on Facebook, I'm usually found on their LinkedIn.

and stuff like that. And we'll put a link in the show notes as well. Okay. Cool. And you can find those show notes at biggerpockets.com slash show 164, BiggerPockets.com slash show 164. Steve, thanks so much for coming on. It was great talking to you.

You guys, they're awesome. Take it easy. Take care, bud. Take care. Bye. All right, guys, that was Steve Mills. Big thanks to Steve for coming in and for blowing our brains up with lots of energy. He surely has, I think, I've done a great job of.

explaining the difference I'd say between like a real estate entrepreneur and a flipper or a landlord. I mean, somebody who kind of goes across all boundaries, right? And it's creative and always constantly thinking about how to how to do things instead of, you know, well, this is all I do. It's, oh, well, here's an opportunity. What can I do with it? Yeah, that's really about what he does. It's about building opportunity and everything. You're looking for opportunity and everything you have, everything that comes to you. I just trying to figure out that, becoming a person who says, how can I not, I can't? And yeah, I loved it. It was awesome.

It was great. It was great. Awesome, man. Well, you're off soon, huh? Where are you headed? Heading to Kauaii. Oh, fancy. In the great state of Hawaii.

So that 10 times fast. Yeah. Yeah. And that's all right. No, yeah, we're going on a little vacation. Going to go stay at a nice hotel and doing our last vacation before the baby comes. This is the, uh, three baby vacation. Awesome.

Enjoy it, man. Thanks. It should be fun. Enjoy it. Well, guys, thank you so much for listening. Uh, if you want a great community, Steve, talked about, you know, having people that you can talk to, jump on bigger pockets, jump on the forums, biggerpockets.com slash forums. It's an amazing place where you can interact with

experience people, novices, people of all levels of all niches, of all strategies, and talk shop and get advice and find help and get in there. I mean, I can't, I can't say enough times how important it is as a resource for folks to help them out because there's, you know, there's, there's no one place where no one person can give you all the answers, no matter what they claim or, you know, what some guru says. They're not the only source of answers. You know, getting diverse answers is probably a better way to come to conclusions for yourself than just saying, oh yeah, my mentor or Brandon Turner or Josh said, do this. Don't listen to me. Don't listen of Brandon, listen to the community because the community as a whole with varying opinions

and ideas is going to get your brain turning and give you ideas that may be a little different and may actually end up working out better for you. So check it out, jump on the forums. Otherwise, that's it, guys. We'll talk to you next week. I'm Josh Dorkin. Sign it all. 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. 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 episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave, Meyer. The show is produced by Ian K. Copywriting is by Calicoe Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included involves risk. So use your best judgment and consult with qualified advisors before investing. You should

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