BiggerPockets Real Estate Podcast - 167: 0 to 25 Units in Your First Year (Part-Time!) with Kevin Wood

Episode Date: March 24, 2016

People have a lot of excuses about why they aren’t’ investing in real estate. “I work too much.” “I live in an expensive area.” “I don’t know enough.” But on today’s show, we sit down with a BiggerPockets member who is absolutely crushing it — despite a full-time job, living in Silicon Valley, and being brand-new to real estate. You’ll learn how Kevin Wood has managed to go from zero to twenty-five deals in under a year, largely using networking on BiggerPockets to make it happen. You’ll be inspired, motivated, and educated to get off the bench and jump into the game! In This Episode We Cover: How Kevin went from 0 to 25 units in less than a year How to overcome the fear of buying that first deal How BiggerPockets helped Kevin focus on his investing The “condo mistake” Kevin almost made for his first deal How to have a competitive advantage Tips for approaching other investors Why (and how) Kevin bought five houses at once for his first deal The logistics of buying five properties at once as a newbie How to know if you’re buying a good deal or not The benefits of analyzing 100 deals Investing in stocks vs. real estate How to make a good partnership Tips on working with partners — the good, bad, and ugly How to introduce yourself on BiggerPockets How Kevin got a $200,000 discount on his 6-plex The 14-unit turnaround — and the drama associated with it How to work with a designer to get the best look for a unit A discussion on contractors and how to find them How to manage a multifamily complex The caveats associated with big fixer-upper deals Tips on going for package deals The genius negotiating strategy Kevin uses to get incredible deals And SO much more! Links from the Show BiggerPockets is hiring! BiggerPockets’ Twitter Mail BiggerPockets Support Real Estate Deal Analysis and Advice Forum Category BiggerPockets Calculators BiggerPockets Forums BiggerPockets Radio Podcast 003: Getting Started in Real Estate and Raising Money with Brian Burke BP Podcast 076: Growing Your Real Estate Company Into a $30 Million Dollar Business with Brian Burke BP Podcast 152: Building Wealth and Passive Income with Rental Properties with Ben Leybovich, Brian Burke, and Serge Shukhat BiggerPockets Webinar Keyword Alerts Rob Regan’s Website BP Podcast 077: Negotiating Your Way to 1000 Wholetail Real Estate Deals with Michael Quarles Sharon Tzib’s Profile Before and After Images Before After Rehab Books Mentioned in this Show Rich Dad Poor Dad by Robert Kiyosaki Brandon Turner’s The Book on Investing in Real Estate with No (and Low) Money Down Investing in Apartment Buildings by Matthew Martinez The Millionaire Real Estate Investor by Gary Keller The 4-Hour Workweek by Timothy Ferriss The One Thing by Gary Keller and Jay Papasan Tweetable Topics: “Once you have that first deal, you suddenly become more legitimate.” (Tweet This!) “Once the number makes sense, then we do everything we can to find the yes.” (Tweet This!) “Never compromise in your returns.” (Tweet This!) Connect with Kevin Kevin’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 167. We find the no in the numbers, so we're looking for the no, why shouldn't we do this deal? But then once the numbers make sense, once it fits our models, then we do everything we can to find the yes. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on, everybody?

This is Josh Dorkin host to the Bigger Pockets podcast here with my co-host, Mr. Brandon Turner. What's up, man? Hey, not much. I haven't jumped on any plans this week, so I'm still here. That's good. That's good. Yeah, I'm glad to hear it. How are you doing?

Always see your, you know, smiling, beautiful, lovely, handsome. I just would have said smiling. I want to have added any of the other attributes because they're wrong. Well, you know. Okay, good. Thanks. Thanks. Thanks, mom.

All right, how you doing? Now go to your rope. What do you've been up to? I hear you got snow in there, Denver. Yeah, yeah. You guys didn't get the memo about winter being over. I don't know. We got a little snow.

It's been dry here for a while, so it's kind of nice. I hope to potentially hit the slopes again soon. It was getting pretty barren up there. But, yeah, things are good, man. Work is good. You know, we've got some cool things. coming soon and I think we'll talk about it a little bit at the end of the show. Exciting stuff in the works. But yeah, BiggerPockets is going great. We're mid-hiring. And again,

we'll talk about that at the end of the show. But if you are looking for a job, BiggerPockets.com slash jobs. We are looking for some folks in Denver. Especially web developers. Web developers, product managers, all sorts of other stuff. But yeah, so things are great. things are great. Let's start getting this thing going, though. Enough of this jibba jabbo. Okay. Let's do our quick tip. Really? That was the most annoying sound in the world. That was pretty terrible. All right, guys, today's quick tip is BiggerPockets just introduced a pretty cool feature just to help everybody out.

And the feature is we are on, if you go on the forums and you're looking at an abbreviation that you don't understand. It's a pretty good chance. If you hover your mouse over the abbreviation, you will get a description of what that stands for, potentially a definition if need be, and potentially links to other content when available. So it's pretty cool. Definitely will help the new investor out who may not know what people are talking about when they talk about ROI or, you know, CCR and all sorts of other things that make no sense to them. So definitely check that out. And if you do come across something that there is not an abbreviation for, let us know. And we'll I'll let in for you. There you go. You can do that by tweeting us at BiggerPockets or send an email to support at

biggerpockets.com. Yeah. There you go. I have an uncomfortable question for you. If your rent collection drop to 80% next month, how long would your cash flow hold up? What about 70% for the next three months? Would your cash reserves cover it? I talk all the time about scenario planning. Smart investors don't just model the upside. They also pressure test the downside. This is even more important in a down market. And that's why I like Stessa's stress test report. It lets you model different rent collection scenarios, adjust expense assumptions, and instantly compare the results to your real bank balances.

It's one of 12 professional grade reports inside Stessa Pro. Try it for yourself. Visit stessa.com slash mkTG slash bigger pockets and get six months of Stessa Pro for free because it's better to discover your risk in a report than in a recession. Managing properties can feel like a full. on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident.

One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently. Without, the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like same-day ACH, international wires, card or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each

property to keep everything organized. Ready to simplify your workflow, book your free demo at Bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets. Here's the thing about traveling. If you buy food at the airport, a burrito, salad, bag of peanuts, you start wondering if you should have opened a savings account for snacks. So wouldn't it be great if you could actually earn money while you're traveling? Well, you can. Airbnb has something called the co-host network.

While you're away, you can hire a vetted local co-host with hosting experience to help take care of things, communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories. Your home might be worth more than you think. Find out how much at Airbnb.com slash host. So with that, let's, should we introduce our guest? We ready for that? You want to do it? Yeah, today's guest, this guy has been at this for just about a year. And in that time has really come a long way. What do we at? 25, 25 units. And it works a full-time job. And it's a demanding job. It's not a 30-hour-week thing. This is not bigger pockets.

So we're going to find out it is not bigger pockets, and we'll talk about that at the end of the show. But, yeah, I mean, you know, a lot of people complain and say, hey, I can never do real estate because I work, you know, a full-time job. Well, this guy's doing it. Find out how he's doing it by listening up. And there's a whole ton of really cool tidbits in here, even if you have been in the game a little bit. He's been doing some multi-deals, package deals, which are fascinating. he's got this pretty, pretty amazing negotiation technique. Yeah.

That seems to work wonders. And he lives in the most expensive, one of the most expensive areas in the country. Well, you can't invest in real estate then. You can't. Yeah, I got all those excuses. I work a full-time job. I live in an expensive area. I don't know enough.

Can't be done. This guy shows you how it can be done. So listen up. Let's do it. All right. Well, today's guest is Kevin Wood. And let's bring Kevin in. All right, Kevin.

Welcome to the show, man. That's good to have you here. Thanks. Yeah, this should be fun today. We're going to talk about getting started investing in real estate. Correct me if I'm wrong here, but you're pretty new at this real estate game, right? Exactly, yeah. This is my 12-month anniversary for my first post on Bigger Pockets.

That's awesome. You didn't own anything. Today is. Yeah, I did not own anything prior to April, May of this year. And Bigger Pockets was where I asked about my first deal. Cool. And that was a year ago today. Well, not today, but this month.

Okay, so a year ago this month, you posted on bigger pockets, and you've gone 12 months, and you've done nothing, right? That's why we've got you on the show. Yeah, so we've actually grown from zero to 25 units. That's awesome. That's all right. And not only that, hold on, because we're going to dig in deeper. We are. You work at the Big G, right?

You work over at Google. I do, yeah. I'm in the tech field from Houston, Texas, ended up moving to the Bay Area to take a job and have a business partner that I work with in Houston. And the two of us have kind of grown this business on the side. So you're not buying property where you are in Mountain View. You're buying property down in Houston, right? No, I can't even afford property for myself here.

Houses within my area are $1.3, $1.5 million. and our real estate portfolio is probably just now above that. So here's what I want to point out here. I talk to people all the time who live in San Francisco or live in L.A. or live in New York City and they say, I've been trying to invest for years, but it's just so expensive here, I can't do it. And they'll go their whole life without doing it. So I love the fact that you live in the most expensive area in the U.S. probably.

I don't know if there's any area more expensive than where you are right now. And yet you're still making it in a year. You've gotten 25 units. So there are ways to do it, right? you have to maybe look outside your area. They're going to Detroit. You can go over to Detroit and pick up everything. Okay, so let's dive into that, actually, how that happened.

We'll start at the beginning of your story. What made you, first of all, get into real estate? Like, get the idea that you might want to invest. Yeah, so it actually probably, my business partner, his name's Matt. He's probably relevant to the story in that I've known him for about 16 years. And he was in the Navy for six years. And during that time, we were just always chatting about. about we're going to always start a business

or we're going to invest together, we're going to do some sort of activity together. And so we just kept reading a bunch of different books and came across real estate books, the whole rich dad, poor dad thing, as well as other popular books. And probably during that time he was in the Navy, each of us read about 25 books on real estate.

So we did a lot of reading, a lot of education. And then bigger, pockets was something I found online. And what I liked so much about the website, it was very actionable. And unlike the books, I found people that were like me because I think the books are very directed towards people that have one formula that they've always followed. That's their full career. And Bigger Pockets really kind of showed me all the different angles that people invest in real estate. And it gave us some directed paths to focus on. And our first deal ended up being an investor that was looking to do a flip, not through Bigger Pockets, but he was looking

to do a flip into a multifamily. And so we offered on five of his eight properties for sale. Really? Well, so before that, I want to go before that, because I know you mentioned earlier, you said your first deal, you asked some advice on the Bigger Pockets forums about a condo or something, right? Yes. What was that story about? I wonder, because you didn't end up buying that, I think. Yes. So we asked about a condo. The deal didn't look great on paper. But we were new. We hadn't run a bunch of deals. And so I wanted to ask some bigger pockets members. And like most condo deals that come up on bigger pockets, there was a lot of trepidation, I guess, around the HOA fees. And people recommended that we didn't purchase the property. And it was actually from the same investor that ended up selling us the five houses. This was kind of his entry deal. So he was trying to unload the properties that no one wanted, basically. And then once we said no, he was like, well, I have these other properties. if you guys are interested as well. That's great.

Well, that's the power of chatting with folks. Really quickly, you talked about, you asked people about the deal. For those people who are listening, we have a forum on Bigger Pockets, a discussion area called Ask About a Real Estate deal. So you literally can go in there, put in the numbers, tell people, hey, this is what I got and ask them what they think. It's a great way to get feedback, particularly for new investors. So if you ever are trying to get advice on a deal and you're unsure of something, put it out there and ask and see what your peers have to say.

Also, you know, quick plug on the calculators, biggerpockets.com slash calc. We built a calculator suite so that you can go in, plug in all the numbers and, you know, find out if it actually is a good deal. But, yeah, so, you know, you're talking about this condo deal. The condo deal, the numbers don't work. You know, the BP folks told you guys to kind of stay away. you stayed in touch with the guy. How did that kind of happen? I mean, did you just, you know, did you say, hey, no thanks. I'm not interested. And that was the end of it. And he followed up. Or, you know, were you guys continuing just the conversation? Because that's a really important

transition, I think. And it doesn't necessarily always happen. And I think in a lot of cases, it could happen if the investor knows how to approach it. Yeah. And I think this goes back to Brandon's always talking about competitive advantage and what exists for you. And Matt's mom actually had worked with a guy who was friends with the original investor. And so it was a friend of a friend, basically is how we got in touch with him. And the way I think people should approach other investors is try to offer value. And so we said, hey, we're trying to get into real estate. You know, we really admire what you've done, your friends with such and such. And we just want to know more about real estate, asking questions, being curious and saying, hey, if you ever need help with

anything, run numbers, anything like that, feel free to reach out to us. And by offering that value, even though we ended up not doing any work for him, he felt comfortable reaching out to us and wanted to help us. And so we just kept up that relationship. We'd ask him questions like, hey, we're looking in this area. What do you think about this deal? And then he, he's, had the apartment complex he wanted to buy and then that's when he reached out and said, well, I'm now going to unload these eight properties. Would you like to purchase them? And we negotiated on those properties for over a month. It was about a four to five week negotiation back and forth. Yeah, so let's talk about it. I mean, you said it was five of eight properties that he was selling.

You guys picked up. So was it five properties or five units? I just want to clarify. Yeah. So this is five single families. We, we, we, now invest exclusively in multifamilies, but we started out with single families. And the original, I think the homes were valued at roughly by our estimates, 400,000. He wanted 390,000. And we ended up agreeing to 376,000 on the properties. And the way I negotiated the deal was sort of interesting. what happened was he offered the five and we said if you give us a deal we'll offer on all eight and he said okay that's fine we gave him a very low offer and then we've done this a few more times is when someone says no or box at your deal you then ask them to individually value the

the pieces within the real estate deal and then we pulled out the three that we didn't we thought were way overpriced and now our five that are left are at a very very good deal so we ran cash flow numbers on all eight properties and pulled out the three with the worst cash flows. And now we have a really good deal. So that's a pretty good negotiating tactic. That was awesome. Yeah. Yeah, that's great. So you ended up at 376. You picked up five properties. I mean, you're a new investor. What the hell are you doing buying

five properties for? So what was that like? I think a lot of people are afraid to go in and buy one. And surely there was some fear on your side and buying almost. one, but you went ahead anyway with the five. So can you talk a little bit about that? Yeah. So we felt like buying more than one, we could treat it almost like a multifamily, and that's sort of what we did, and that we looked really hard at the cash flows. We wanted to ensure we are a cash flowing property. And I think something to tell new investors, if they do own one house, is you can do everything right and value everything right. And you can potentially have a house that will lose you money. if I look at the five properties we've purchased, if we had purchased one of those properties,

we would be down about $10,000 right now in cash flow. But together, I think we're almost completely cash flow positive, including closing cost, which is pretty good for us. So I think we've only basically paid out of pocket about $14,000 now on those properties. So that's that's pretty good. How did you finance them? Not including equity. Yeah. Sure.

So we did traditional financing on those properties. That probably looking back isn't something that I would recommend when you're buying five because what they ended up doing is running five separate loans and we paid closing costs five different times. I don't think they would have had to do that, but we ended up dealing with folks that only sold single family residence houses one at a time. And so they didn't know how to package the deal together. I think you have to individually separate them out for Fannie Mae, but I think you can group some aspects of the deal that lower the price. And so I think if we would have potentially found a bank that would work with us,

we could have maybe done a commercial deal or done a deal with the credit union or something like that. Yeah, you might have, but I don't know if you would have gotten. Did you got a 30-year fixed on those? Like 30-year-fist mortgage? Yeah, we would have got 20 year probably. Yeah, so I was thinking, I don't think you'd get the 30-year fix. And I mean, if you would have been like everyone else, I mean, like me and everyone else who buy, like, you buy one house, you buy another, you buy another, over the course of several years, you're going to pay five sets of closing costs. You just did it all at once.

So it's not like you wasted money at all. You just put it all together and maybe you could have saved a little bit. But I guess that's a lesson for people listening is if you're going to buy a bunch of the time, maybe shop around a little bit and find out. Great advice. And definitely, there's a big difference talking to banks and saying I've never purchase. just a property versus I own five houses, even if it's only been two or three months. We learned that a few months later when we got our first multifamily. So even just talking about that. I mean, what kind of difference does it make? What's the treatment? I mean, I think you can go on

the bigger pockets for them as well. And it's a similar thing where you'll see a lot of people talk about getting into real estate investing. And you see that they haven't learned the lessons or done the research yet and a lot of those people fall away and and you don't hear from them again. Yeah. And then when you have a person that says, hey, I've purchased my first property. I'm doing that deal. That person always sticks around. And I think for the banks, it's the same way is, okay, this guy is committed to this model. They're committed to real estate and they're investing in the marketplace. And so they have a plan that they've executed on. It's, you know, being in the bear, it's like the startup community.

It's like, what have you actually built so far? And at least in our experience, the banks responded a lot more favorably to us once we actually had some properties with our LLC and things like that. Yeah. I mean, I think that's just fantastic advice. Anyways, across the board is like, get out there and just get your first deal.

Like, you know, I'm not suggesting people should go out and get a bad deal at all. But like when I look on my past, my first flip ever, like it didn't work out. I didn't sell it. I turned it into a rental property. My tenant burned it down last summer, you know, half a bit down. And like, I'll never probably make money on that deal.

At the end of the day, I'll probably never make money. I'll probably sell it here soon and break even on it. And like I was telling a friend this last night and he said, well, you do regret buying it? And I said, not even a bit, you know, because it made me say, okay, I'm in this game. I'm committed. I'm doing this. So again, don't go out and buy a bad deal. But what you said there was just right on is like once you have that first deal, you

suddenly become more legitimate and you're committed. Your feet are to the fire at that point. You're legit because you got a deal. And the Brian Burke podcast, actually, that what you're saying there, that reminds me a lot of what he said, which is you've got to just get started at some point. And we kind of have a saying that we use amongst ourselves,

which is we find the no in the numbers. So we're looking for the no, why shouldn't we do this deal? But then once the numbers make sense, once it fits our models, then we do everything we can to find the yes. So you need to, like you said, you run the numbers. You may run into a bad deal. Like I said, one of our houses was going to, is a cash loser as of right now.

But all the numbers fit. And so now we need to define the yes to make that deal happen. And that's kind of how we operate. You have to put your feet to the fire at some point and execute. That's awesome. That's awesome. And Brandon is feverously writing up notes. The Brian Burke episodes were show number three,

show number 76 and show 152 where it was Brian, Serge, and Ben. So you can get to those at biggerpockets.com slash show 3, biggerpockets.com slash show 76 and biggerpockets.com slash show 152. I love that saying. Find the know and the numbers and when it makes sense, do everything that you can to find yes. You know, you've done the math. You know, this is a deal, right?

So now what do I actually have to do to get this thing to happen? That's pretty much what you're saying, correct? And it's the scariest thing in the world. Because I was a person that came into real estate, you know, saving my money all these years. I'm in my early 30s now. And so I'm selling stocks, a relatively safe investment vehicle, and going into real estate. And it's extremely terrifying because you know once you cross that line, it's on. Like, you have to manage properties.

You have to deal with tenants. you have to fix the property. And it's funny, and I'm sure all real estate investors say this, looking back now, all of those activities are very not a big deal to me. Like, you know, buying your first property is so scary. Buying your second is nothing. Yeah. And, you know, I thought it was interesting.

You said leaving stocks a, quote, relatively safe investment vehicle. I mean, you know, it's a vehicle that you have zero control over. Exactly. the purchase, right? And so once you own it, you can't affect it at all. And that's why real estate's so cool, because you know, you can get in, you can actually affect the value by taking action and by doing certain things, you know, fixing up the place, landscaping, making sure, you know, things, making sure you actually buy it at discount, things like that. But, you know, it is certainly a more active endeavor than buying stocks. But you hear that a lot. And the media

really, I think, does a crappy job of pushing that worldview that stocks are a safe vehicle and real estate's not. Well, you know, hey, you know, China does something or, you know, or something happens in Iran or, you know, Putin does something. And suddenly the market tanks, You just lost money because there's something that's thousands and thousands of miles away. Your local market in real estate isn't going to react like that. Ultimately, it could over time, but you know, you're not going to see, you know, 3%, 5%, 12%, 15% drops in minutes. You know, that takes a really long time.

And so, you know, hopefully everybody listening gets that. Those people who are on the fence, I mean, that's why real estate is so exciting and so sexy. Yeah, yeah, definitely. And I think that it definitely is important to diversify. So from someone that's, I'm a finance and accounting guy. So I love the number side of it. And if you look at wealthy individuals and almost all of them have a portion of their portfolio that's allocated to real estate and you're going to get way more bang for your buck and finding your own deals and adding value than say investing in a real estate trust. or something like that. And so I think it's something that everyone should explore. And I think you can look at bigger pockets and find someone that's in a similar situation to you that's made at work. And find a way of investing in this asset class that makes sense based on your story. Yeah, that makes sense.

I want to ask about, you said earlier, like, that's the scariest thing to buy that first deal. So I had dinner with a friend last night and him and his wife, and they're buying their very first deal, well, they're wholesaling their very first deal. just got under contract. And his wife asked me, and I thought it was a great question. She says, like, how do you know you're making the right decision, the right choice? She implied, like, they were nervous, like, that they're, that they are wasting their time and, like, all this stuff they've learned and now putting into practice. And they're scared of death. So how did you overcome that?

Do you have any advice for people listening? Yeah, so I made kind of, because I'm not in my market, this will I kind of also be talking to people that aren't in their market. But what I did is I subscribe to the Houston Business Journal. I still subscribe to it. And I read it every single day. And it tells me what new businesses are going up in my neighborhood. I know, for example, the city that I grew up in, I called some friends and was like, hey, you're getting an HUB in this part of town in the next three months.

And they're like, whoa, I didn't, HB is a big grocery store chain. They're like, well, I didn't know that. And so there's these business journals that I subscribe to. So I get all my information there. And then something you talk about in the webinars that I do as well is I crunched probably 25 deals in the zip codes that we purchased in prior to making my first purchase. And so if you have looked at 30 properties in the zip code of the property that you're purchasing, you know if that's a good deal or not. So I don't know. One of the webinars you said for someone to get started, look at 80 deals.

and I bet there's not one person that has done that, that has purchased property that made a bad decision because by going through that process, you will be able to identify good deals. Yeah. That's great, great feedback, by the way. That's awesome. And I love that you've listened to the webinar,

and it's true. That's why we do the webinars. That's why we're selling this stuff and, I mean, quote, selling it. You know, the idea of do the work, get to know the market. And I love the advice of getting those, the local business journals and reading those constantly because that'll tell you exactly what's happening in that area. And you know, listen, hey, if they're building a new rail line along this path, you know, obviously there's going to be a station here.

There's going to be an effect on property values. If there's a new great grocery store that's coming in, you know, that's going to change thing. So, yeah, great, great advice. Yeah, I love that. And to go back to the analyzing deals thing, and this is what I say in case people have not been to a bigger pockets webinar, which you guys should come. I do one every single week, biggerpockets.com slash webinar, sign up and we've analyzed deals together and fun stuff like that. So, but one thing I mentioned a lot is this idea that if you analyze, I challenge people, analyze three deals every single day. And I say that because if you analyze three deals every day, after a

month, you've analyzed roughly 100 deals. After, like, I like to ask that retort. question. Like, after analyzing a hundred deals, do you think you'll be better or worse at analyzing deals and recognizing a good deal after a hundred deals or after 80 deals like that? Like, of course you would be. And so, like, even if you don't want to invest now, start analyzing deals today. Even if you don't plan to invest until next summer, just start analyzing now because the more you analyze deals, the better you're going to get at recognizing the good ones. And I love Kevin that you said that. So thank you. And what's important too is somebody listens to Brandon. I know. A good deal in Brandon's market. A good deal. A good deal. A good

in my market is not a good deal in your market. You have to have to have analyzed your market, your deals to know what a good deal is. So that's so important. You can't watch a Brandon's webinar, see him do a deal in his neighborhood and say, okay, this cap rate, this return rate, this, you know, this is what I should expect in my market. That is not true at all. Yep. And there are challenges in your local market that do not exist in my market do not exist in Brandon's market. Yeah. That's why I have people ask me like, you know, I mean, I don't hate it because I like the question.

Oh, angry. Angry. Well, they ask me, well, is, you know, what return on investment should I get or what cap rate should I look for? I'm like, I don't know. Like, it's going to be totally like, depending on you, you're the situation. I'm the guy. You have to know these things. I'm like, I don't. And or people email me sometimes deals and they're like, what do you think of this deal? And I'm like, I don't know your area. Like, I wish I could dive into every deal. People send me. Like, I just, I don't know the area. I don't know where the things are moving, where industry is going up, where it's going

down. We're, yeah, I don't know it. So anyway, I love, anyway, great stuff. To go on further along that, you know, in terms of just knowing your market, I think one of the things that newbies fail to do is go and look at properties. You know, they're nervous. They don't want to go and do it. I say you've got to look at every property in the area.

Anytime something goes on sale, if you're new, you need to go and check it out. You need to see every property for sale. That also teaches you how to evaluate what a good deal, what a bad deal is. what the market wants in a property, you know, maybe the B class properties look, you know, one way. And you were thinking, hey, I'm going to go and put granite and all this stuff. And that's not what the area is, you know, saying that you should be putting in there. So you've got to know, not just the numbers, but you also have to know level of finish, all sorts of other stuff. And so as a new investor, just make sure you know your area. Your area is what matters most.

Yeah, and that's where my partner, Matt, comes in. He's the one in Houston. I'm in Mountain View, California, and so he's the one who's looking at the properties. If you're like me and not able to look at every single property, I obviously have my partner that I take a lot of pictures. And then I'll look at other properties by looking at other real estate listings and look at properties there. Yeah. Yeah. Yeah. So true. Well, let's talk about the partnership thing a little bit since you brought that up. Like other people who are thinking about working with a partner, like what do you recommend? Do you recommend that? Do you think that you got lucky? You think that's a good idea? So if you are involved in real estate, you have a team around you. You are working with partners, whether you like it or not, if you want to be successful in this business. That said, being a 50-50 partner with someone, you have to have a lot of trust there. And I almost want to say you have to have had some disagreements with this person in the past and understood that, I understand how this person works. I understand them at their worst and we're okay with each other. We know how to deal with each other. It's hard for me to say just meet someone and then immediately go into a partnership with them because I knew my business partner for 16 years. That said, I guarantee you within your network of people you have a pretty decent relationship with. There's someone that probably is interested in real estate or some aspect of the business that you could potentially work with. It's great advice. Great advice. So with you and your partner, you said, Matt? Was that? Matt? Yeah. So how do you guys

actually structure your partnership? Do you guys do everything together? Do you do just certain deals together? I heard you talk about an LLC earlier. So are you guys just splitting the LLC? How do you guys have it set up? So we're 50-50 exactly and everything. Matt does on some of our other properties that I'm sure we'll get into. He does some on the ground work, and so we compensate him for that. I had a little more saved up in money, so I put in a little more funds earlier that he's sort of putting money in when he can. And then when it comes to responsibilities, anything that can be handled online is primarily my responsibility. And then I'm also the driver for finding deals. And we use primarily the MLS right now, but finding deals, speaking to investors.

I network a lot on bigger pockets. Matt's involved with interacting face-to-face with tenants. He handles the leases. We're actually looking into potentially starting a contracting business because he handles a lot of subcontractors and things like that. And so that's kind of our split. Anything that's on the ground is him. He's the boss.

He consults me. Anything that's online, I'm sort of the boss on that and I consult him. we don't do any major decisions without both of us being in agreement. That's great. That's great. So how should people network on bigger pockets? I mean, it's totally self-serving question, obviously. But as somebody who's who's probably doing it the right way, how do you go about doing that? Yeah. So here's my advice for a new person. There's a lot of people that get on bigger pockets and they're like, hey, I'm new, teach me real estate. And that's kind of their only post. If you're very serious about it,

doing this. Let's say you're in the Houston market and here's a good newbie post. Hey guys, I'm interested in bigger pockets. Listen to a webinar, a couple podcasts. I'm really interested investing in 77015. I've looked at all of the MLS deals that are in this market and here's my analysis on how the market works. Can you guys give me any feedback on my analysis? you will have someone that invest in that market reach out to you because after my five house deal, I posted a success story said, hey, this is what I did. I got contacted by four investors saying, hey, let's meet up, let's talk. Let's work together on something if we can.

And so by offering value and something is simple saying, hey, I'm looking at this zip code. Here's my analysis of that zip code. If you did that, I would reach out to you because that means you're interested in the real estate market and you're taking it seriously and you've done some legwork. Yeah. Yeah. And the other thing is lots of people set up keyword alerts on the site for things like zip codes. So, you know, you set up a keyword alert at biggerpockets.com slash alerts for the zip codes

that you're interested in. And active investors who participate in those zip codes will get an alert, get an email or a text message if they're a pro user. And they could jump in and, you know, investors want to know other investors. That's where deals come from. That's where opportunities come from. So, yeah, that's awesome. I have my text message keyword set up for like my town name and the couple towns I invest in.

I never actually did a zip code. I don't know why I've never thought of that, but I'm going to do this. I'm going to do that. I'm going to do that. I'm going to do that. I'm going to do that. I get a text and no matter what I'm doing, I always jump on to see what it is. I can be on a date with my wife and it's terrible.

But like, I'll look because I'm like, oh, somebody just mentioned Montesan. I'll go and look and I'll read the form post. Why are they talking about my town? And like I met people, a ton of people that way. I mean, I live in a tiny little area and we're having conversations almost every day about my area. So yeah, good recommendation there. I also like how you said, you know, just to get out there and share your success stories. You know, you went up there and you said you did something cool. So you went and told people about it. I mean, that inspires people, but it also shows that you're

legit, right? Yeah. And actually, I would not have gotten my next property, which was the 14 unit without that first post on bigger pockets. Because I met a real estate agent, and I'll plug her Sharon Zeeb, who actually Ben had recommended when she had been an agent in California. I actually looked up all her post history. She was very active. So I chatted with her and said, hey, we're interested in multifamilies in this area of town. She set us up an alert. And we also worked with a bank that kind of ended up leaving us at the altar. But either way, we got a property in an area that I had been crunching numbers in. It's the Heights area of Houston, which is one of the best rental markets. So here's this crazy deal. It came up. I already knew that the price was almost exactly at the

land value because I had looked at a deal on that same street. It was a 14 unit, but because it was listed on the MLS, they could only max put 12 units. So everyone thought it was a 12 unit. I contacted Sharon. We offered on the property with a bank commitment letter within 24 hours. And because our presentation was so professional, they ended up accepting our deal over an offer that was $30,000 more. That's awesome. So that's how we got our second deal. And that one was a tough deal. It still is a tough deal.

We're still working on improving that complex. So let's talk about it. What was tough about it? I'm assuming since you got a nice deal out of it, some work had to be done and it sounds like some work continues to need to be done.

Yeah. It's the story. So I just posted an imager link in the comments. For you guys, you could see what we're dealing with here, but I'll describe it for the listeners. The first picture is

the unit we're going to be looking at the after pictures for, but essentially these were studio apartments. They're referred to as Shotgun Studios where it was an area of town that was it was the heights used to be a pretty

dilapidated area in this part of town and it's starting to be turned around and so this was buying the worst property I used to own this building yeah so I'm looking at pictures right now I'm like holy cow we're gonna put a link to this on the show notes as well at biggerpockets.com slash show

is that mold on the light and the ceiling? It is mold. Yeah, yeah, yeah. If you scroll down to the bathroom, you'll see that it's PVC pipe outside of the wall hanging by a string to a showerhead. Yeah, that's cool. That's cool. This is what I would call a D-D-minus level apartment. And then let me just show you like the type of work that we're doing and the drastic change.

I just posted the updates. Which we will also show in the show notes at biggerpockets.com. slash show 167. Yes. That's incredible. The difference. Wow. And so you could see in the previous picture, they had put fake laminated over this floor.

And these floors are all natural wood that have been there since the late 1920s. And we found someone that would refinish the floors for us. And then the bathroom, you can see it looks like a normal bathroom now. Yeah. Rather than the PVC piping. I can't admit the PVC. I want a blue string to kind of hold up the showerhead. I mean, there's something special about that.

Exactly. And so we're in a transition state right now, and you can see going from what I would consider a D minus to an A plus, you're going to have some tenant differences there. This unit actually just got finished within the last month. And we just now rented it, but we found someone that was willing to pay $700 a month, for 12 months in advance. So we got all of that rent prepaid. The property was listed at 740. And

prior to that, it was renting for $500. So that's a pretty big increase, but it also was about three months of work. It was very challenging at times. And I kept thinking back, I think there was a podcast with the apartment owner who in Chicago bought that really dilapidated property and moved his office inside the property. Oh, yeah. Oh, yeah. I had to do an eviction. None of the tenants had leases or anything like that. We didn't have any identifying information. I had to do an eviction on one of the units. One of the units an individual was selling drugs.

I mean, we're dealing with like very, very tough situation that has been a long time coming. And obviously, Matt did a lot of work. And something that we did that I haven't heard any other bigger pockets podcast folks do is we actually met with the designer to determine kind of, what the best look was for our apartments and how we should remodel.

What did it end up costing or did it was somebody you knew? So it was someone we knew. His name's, I'll plug him, his name's Rob Reagan, and he has a website, rob Reagan.net. But what he did is, you kind of, I don't know, I'm not a design guy, I'm not a fancy guy, but I don't know if you've ever walked in a place and you're like, for some reason the paint just looks off.

Like I was outside, I walk inside, and the paint just looks off. And so, you know, we meet with him and he's like, you can't use this interior paint because your exterior paint is this. They don't match. And we have originally had, for example, butcher block counters on this remodel. And he was like, that's terrible when you have natural wood. It's going to look cheap.

And you should go with a white countertop. And I think these are within $200 of each other. But it's something that I highly recommend if you're looking to do a remodel because you do it once. You get a lot of education very quickly. It's less than a thousand dollars usually. And it could be as cheap as a dinner and like a consultation for like a hundred bucks or something. But you'll learn so much in that amount of time for an area, at least for me where I don't know anything about design or anything like that. And it can be as in depth as, hey, this is how much space we have. And he can actually design models and

things like that. We didn't do that because we knew where we wanted our cabinets and things like that. But he really did help us with the colors and the matching. And now we have five or six tones that we can use that will all match our apartment that we have right now. So, nice. He did a good job. I'm looking at the pictures and it's fantastic. Yeah. It looks great. Hey, I want to dive into the transition because I think it's a process that a lot of people probably have questions about. So you have a 14-unit building that is a D-minus. You have tenants selling drugs, tenants who you don't know who the hell they are. It's a mess, probably not in a great neighborhood either, correct? It's the transitional. It's much worse. Yeah, it's much worse than the,

this is like the worst property in the neighborhood. Okay, great property to have. So now how do we go without going broke while we're doing it. How do we transition 14 units from D minus to A? How do you do that mathematically, financially? And then how do you do that in terms of putting in new tenants in a building that has a bunch of crap tenants in there? And you're trying to elevate kind of the level of tenants, so to speak. So how do you do that? And does that not scare off? potential new tenants, things like that. Those are the questions I want to know and I think other people would want to know. Yeah, so I think the first key is do not pay for the bad property. So in our case, we were getting a deal on the land. We basically paid for the land.

So we didn't buy all these bad things, but we then had to fix them up. And we've definitely spent more than we thought. The first time you get contracting, like I said, I've read 25 books, listen to the webinars, listen to all the podcasts. The first time you get contracting work, you're going to work with bad contractors, they're going to overcharge you, they're not going to do things when you say, and I don't see how you can avoid this. Because we actually got recommendations from contractors on bigger pockets, etc. But not in this unit and another unit. It was sagging to one side. The beams on the second floor had started to collapse. And so we got quoted $7,000 to fix that. And we got six different quotes and it was the only person that came out

quoted us. And it still ended up being too much. He didn't get it done on time. So I'm coming from a place to say we have not done this perfectly and we have made mistakes in this properties. So don't feel like I did things perfectly. But the first thing we did, we went to the property. There was trash outside. We've found someone, someone was driving around. If you hang around your properties start working on stuff. People will come around. And we said, they said, hey, can I do any work? We said, we'll give you 50 bucks to remove all this trash. So they removed all the trash out of the property that was on the outside. That immediately improved the look of the property. So I always, it's like a snowball thing where you work from, what's the quickest, fastest way to add value?

If you could do anything cosmetically, that's really quick. Do that. The second thing we did is what are things that are either dangerous to people or are going to cause a lot more problems later on? So there was a leak in one of the roofs, actually in the roof of the property, the remodeled property that I'm showing you here. We got that patched. We then started fixing the beams. We didn't feel safe with someone living in that unit because it could collapse it looked like. So we worked on that. And then we had the eviction. So who's not paying rent? We evicted. And something that was interesting about. about this. Another reason why we thought we would add a lot of value is out of the 14 units, two of the tenants were managers and not paying rent. Yeah. And one of those quote-unquote managers was the bully who got everyone else to pay. And that's all he did. And so he was the one

that was evicted. He was actually some of the tenants that we felt like were very good tenants. He scared them and things like that. And so immediately getting him out of the the property really improve the mood of the tenants as well. And then the tenants were like, hey, these guys are coming in and they're fixing things that have been broken for a long time. They're looking at, hey, I was on paternity leave and so I was there in Q4. What is that? But yeah, exactly.

Is that a real thing? We should have paternity leave at bigger pockets. This is a great idea. I would take a book out of Google's page. By the way, I'll be getting phone calls and emails for Brandon for the next. six months to a year post. Thanks for bringing that up, Kevin. Awesome. And so Matt and I are there working every weekend. We both had full-time jobs. And the tenants are like, these guys are working on the property. They're improving it. They're asking how we are. They care about us. And so some of the individuals improve themselves because their mood improved. They felt safer. We were moving out bad tenants. And then also we implemented things like a late fee. We started out real small. Most of these guys still don't have leases, but we said, hey, you have to pay if you don't. It's $5 a day, which is very low, but to go from nothing to $5 a day, we were really

scared of losing tenants when we already had four vacant units out of the 14. So we're slowly, I would definitely recommend not completely gutting the place. You want to get some cash going. otherwise you're going to be out a lot of money for a long time. And so, yeah, then once we did that, now we started working on, okay, what's the worst unit that's open? It was the one I showed you guys. There's trash everywhere and stuff. Let's get that tenant rentable. And then we're going from five, $540 per unit to about $700 a unit.

And so that's in the process where now is going step by step and improving each of these studio apartments and then renting them out. Yeah. Cool. That's awesome. Are you planning on doing renovations on units that you have tenants in and potentially moving them to other units? Or what's kind of your plan for that? Because surely, I'm assuming, of those 10 remaining, there are probably a few that aren't in great shape. Yeah, yeah.

I would say almost all of them are in pretty poor shape. But what our plant is to give, we're kind of going to work our way from bad tenants to good tenants. and to a bad tenant will say your options, we're renovating this property. It's going to rent for this much. You can either stay in the unit at the new rent. We did kick the drug dealer out, obviously, so he didn't get this deal.

But you can either stay in this unit at the new rent. You can leave and then come back at the new rent, or you can move out. That's kind of the strategy I've seen, because once in a blue moon, you'll get the A deal where they'll say, I'll just pay the new rent and not require you to make any changes.

It's very rare, but if it happens once, it's a huge windfall. So that's kind of the letter that we're going to give to these tenants. Okay. Cool. Now, let me ask you this. Is it worth it? You know, this is a lot of work for you. At the end of the day, do you think this is all going to be worth it for you?

Do you expect to have a ton of cash flow equity? Or what's your thoughts looking back? Yeah. So if you do not have the cash flow, and I would say add 300% to what you've reserved for doing this, sort of deal. And it's your first one. If I would have gotten into this 14 unit deal as my first deal, I would have drowned probably. I would say that if this is your first deal and you're getting started, do not do this deal. If you're looking to get into multifamily, if you know your area well, and you see the potential and you know what that property can rent for and you see the ability

to go in, you know, we're looking at a three to five year plan here. You see the ability to go to, you know, add 500, 600,000 dollars and value and cash flow that property. And also we think there's going to be appreciation in that area, though we didn't buy for appreciation. Then I would say this is a fantastic deal. So it's not a deal for everyone. And it's not a newbie beginner's deal. And it's not a low maintenance deal. But I think, I like the thing. I mean, I did a very similar deal. Well, I wasn't quite as bad as yours, but my 24 unit I bought was 11 units when I got in there. And we did one at a time.

And, like, yeah, it's tough. And it's not low maintenance, like you said. Well, let's talk about that, though, really quickly for you, Brandon. And then Kevin, I think we'll try and wrap it up with this. So 24 units, you took it, you know, it was a nightmare. I'm assuming you got in there. But after you've gone through and done all the renovation, increased the rents. kicked out the bad tenants, fixed up the units one by one. Surely, you know, there was a fair

amount of cost to that, but now is that one of your better properties? Yeah, for sure. I mean, I get, it's one of those things that I wouldn't trade for anything. I mean, I could probably find better deals today. I could probably find the same cash flow with less work. But the, the lessons you learn in those projects will help you the rest of your life. Yeah. And so, Kevin, to you, I mean, when this is all said and done, how long do you expect this process? to take from start to finish. And what do you expect to be walking away with in terms of cash flow on it? Yeah.

So this property right now, I'm actually looking at the financials now. And property and maintenance, we've put between like 33 and 40,000 into the property. Each unit, we probably expect to be about 2 to 3,000 to renovate. and we're not sure. The back unit is kind of this shotgun house that was thrown up. It doesn't have the 1920s wood floors. It doesn't look as nice, basically. So we're not sure if we're going to renovate those.

If we stopped and if we wouldn't have remodeled any of these units, we would have been cash flowing pretty much from day one. But we are going for value. And so I think for us to get to exactly where we want to be, I think we're probably looking at a three-year, three-year type project. But it's us taking risk and putting money into that property to get the value up. If we stopped or if we wouldn't have started, we would have been cash flowing from day one. But we see the value in increasing the look of the units.

Well, it sounds like you're, I mean, you're recouping your cost in a year, at least on the one unit you talked about, you went from five to seven hundred something bucks a month, 12 months, that's two grand. I mean, if you're spending 2,000 bucks, that's pretty good ROI. Yeah, yeah. No, I mean, I think there's a lot of opportunity here. But like I said, you need those cash flow reserves to be comfortable doing that. Yeah. Cool.

And yeah, I don't know if you guys want to go on to my last property, but we actually... No, we don't care. No, we love it. Go ahead. So I posted that success story as well. And then another bigger pockets investor got online and he said, hey, I'm in San Jose, which is near where I live. Kevin, I'd like to meet with you, discuss. I actually invest in Houston as well.

Chatted with him over two or three, you know, coffee, coffee meetings, things like that. We started talking. He's like, I would like to get into the multifamily space. again, this is 100% through my bigger podcast post. I'd like to get into the multifamily space. If you guys find something, then, you know, let's think about working together. And I went back to Houston, like I had said, for paternity leave in Q4. And then I'm going to talk badly about those lifestyle design, $30,000 courses, because one of the properties I looked at for us doing a deal together was a 40 unit. And it was a guy that was, I felt,

terrible for him because he had followed the model, bought a 40 unit that needed massive remodels as his first property. And I walked into the property. He was losing five figures every month and had nine of the 40 units that were being remodeled at once. None of them were done. And he didn't have any money left. So this is again why I say you don't want a big fixer up as your first project because you will get on it over your head. And then also I think, you know, these lifestyle design courses, you can't just follow a model. There's real world problems and challenges and you can quickly lose tons of money. So be very careful when you're looking for these huge value add properties.

So anyway, we obviously, we didn't take that deal. It was offered for way too much. But there was this six unit that in February, so 11 months ago, I had started working on this deal. A woman had owned a bunch of properties in the Heights, which is, again, what I consider the best rental market in Houston. She passed away, and there was this trust that was selling this property. It was listed for $795,000 for a six unit.

It's in the very best part of the Heights, so much better than our 14 unit, our 14 units about three or four miles from this area. And I kept talking to them in trying to. trying to get a deal, trying to get a deal. And I would just, I'd abandon it. And then I'd listen to a podcast and they'd say, keep checking up on your deals. If you find something that you want, keep talking.

And I'd listen to something like, okay, okay, I'm going to call the agent. So February, I call her, March, try to do a deal. Call her in June. Call her in July. Call her in September. And then finally, I'm talking to him, talking to him. Finally, while I'm there in Houston in November, she says, the owner wants to meet with you.

And at this point, I'm like, oh no, Matt and I don't have any cash left. We have this 14 unit that we're remodeling. And luckily, the investor I met through bigger pockets, chatted with him. He said, I'd be potentially interested in this deal. Start meeting with the owner. It's an older man that's overseeing the trust. And he's moving to Arkansas. And I'm like, okay, this is great. He's moving out of the area. He doesn't want this property anymore. The property now is listed for 680,000. I think, and it started at 795, chat with this guy for three and a half hours, like talking to him about his life, making friends, chatting with him, telling him, you know, what our goals are. We want to remodel this area. And he says, okay, make me an offer. So I go back to my original deal. There's three properties that they're selling left. I offer on all three of them. One's a single family, one's a duplex, and one's the six unit. We offer all together. at a really low price. I think we offered like a 1.2 million or a million on these properties and they were listed at way above that. And he says, I'm never going to take that. That's a terrible deal. And I said, well, how much do you value this single family house for? And he's like, yeah, yeah. And he's like, he's like, oh, this is 200 something thousand. I was like, okay. And then I was like, how much do you value this duplex for it? He's like, oh, this, this is, you know, this price. And it's really high. And I said, okay, so that leaves us our offer at this. Would you take the six unit at 550,000? And I was like,

you know, there's going to be some work here. We need to do some. And he's like, okay, I'll do it. And so we ended up getting 200, you know, over $200,000 off the original price. And it was a deal that I worked for 11 months. And I ended up being able to do the deal because of, you know, this goes back to again, Brian Burke, my favorite podcast. And he says, you know, a part of some deal is better than no deal. And so this is a very money, cherry deal. But it's getting us started with an investor that we could potentially do more deals with. And in my experience, I think if you identify the class of properties you want to go into, there's an infinite number of deals as long as you're patient and stick to your numbers. And so this property doesn't need near as much work. And, and we're already seeing the ability to raise rents, and it's in the very best part of the heights of Houston. So we're really pleased with that property, and we closed on that one less than a month ago.

That's awesome. By the way, lots of people are going to now be making offers on package deals only to negotiate for one or two pieces of the pie, which I think that's a fantastic technique. and I love hearing how successful it's worked out for you so far. Yeah, it's, I would highly recommend looking at negotiation books. I know everyone's a big fan of, is it a Mike's podcast? It's like 77 or something like that, but it's a podcast on negotiating.

I heavily recommend that one. And actually, I listened to it because Brandon recommended it a couple of podcasts ago. Yeah, the podcast, I think it was Michael Quarles. I think, yeah, 77. Yeah, yeah, yeah. That's a fantastic negotiating podcast. Definitely check out some books. But, you know, you make money or lose money most of the time when you sign the deal. So make sure your numbers work. Make sure the worst thing that can happen is they take your first offer in my experience because then you're like, oh, no, I could. I paid way too much money for this. This is terrible. Yep. And then sometimes, you know, you have to work a deal for 11 months and it ends up paying off. So never compromise. on your returns. We actually had worked out in the summer before this like a seller financing deal, but then he wanted to be first lien on the note and wouldn't accept a bank lien and all this stuff. So, you know, a lot of headaches with this deal, but found a bigger pockets partner, someone

that we trusted wanted to work with and were able to close on probably our best property to date. I love it. Kevin, so what you're trying to say is bigger pockets has been betty, good to me. Yeah. No, that's what I'm saying. I think something that's key is, is don't go on bigger pockets and say, I want investors. I've never ever asked for investment once. Interact with the site, show how you can add value, show how you can be a trusted resource, and people will reach out to you. I reach out to people, people reach out to me, and we talk real estate. You know, oil prices have been going down. I talk to people that own properties in different. areas of town. Ask them how the oil prices are impacting their Houston market. What do they

see the market doing? Having these conversations is really important. The forums are very valuable, but I feel like the relationships you can pull from those forums are even more valuable. Awesome. I love that. And just FYI, we did not invite Kevin on here. I didn't even know that he was like using bare pockets until like right before the show when I was reading over the show notes. So, yeah, that's awesome. I just, I lied your story, but this is great that you're, you're kind of one of our success stories. So that's great. Super fan.

Yeah. Yeah. All right. So let's move on and to shift gear to the next section of the show, which we lovingly call our fire round. It's time for the fire round. Wouldn't it be great if your houseplants paid rent while you were out of town? I mean, they've got the whole place to themselves, lots of sunlight, zero responsibilities. But no, they just sit there waiting for someone.

to spray them with some cool mist like a bunch of leafy loafers. But guess what? Your home actually could be earning you money while you're not there. Airbnb has a great feature called the co-host network, which makes hosting your home so easy. If you live far from your property or are away for extended periods, you can hire a local co-host to take care of the hosting for you. These co-hosts are vetted locals who already have experience hosting on Airbnb.

A co-host can handle all the details like messaging guests, creating your host space, and managing reservations. So everything runs smoothly. It's a practical way to earn. earn a little extra money, maybe even some cash toward your next trip. Plus, you get to share your place with someone traveling to your area while you're off making memories somewhere else. Your home might be worth more than you think.

Find out how much at Airbnb.com slash host. All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry. Now, they're the fastest, too. They just launched 10-day DSCR closing. That's right, 10 days. And they're still the only lender with the DSCR. our price beat guarantee. That means faster closing, the best terms, zero guesswork, that's

Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm,

having done over 12,000 of these studies with $500 million in total depreciation identified. Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. If you think property management is expensive, try mismanaging a vacancy or an eviction. or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive.

A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score. have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first

month free, which is much cheaper than learning the hard way. All right, the world famous by around. Let's get to it. Question number one, these come direct out of the bigger pockets forum, so you may have even seen them because I know you interact there. Number one, in preparing to buy an apartment complex, do you have a checklist of things someone should take action on when doing the due diligence on buying something large, or how do you know what to do when you're buying an So I think it's very, very important to find an inspector that you trust. And potentially, if it was my first apartment deal, I would try to find a local investor to walk the property with me if I could. Because you are going to miss things, even with those people attending your walkthrough.

There are problems that you will not foresee. And having a very good inspector is very important. I've definitely read on the forums where folks have had an inspector that that wasn't good or missed something very major, that was detrimental to their purchase. And so our inspector actually trains other inspectors. So we've got a lot of confidence in him. And he was also, we found him through the individual that we bought the five houses from as well. Oh, cool. So he's been in the game for a while.

So find very experienced people if you're inexperienced. That's great. So walk through that property with you. Awesome. Awesome. What's the best characteristic of a business partner? They need to be different than you, in my opinion. I am not a great people person at times. I get very frustrated with people. Matt is very much more of a people person. Matt's also, I'm the big idea guy like, hey, we should do this. This looks totally awesome. And then Matt's the guy that actually creates the checklist, executes on the deal.

So I'm the big idea of bringing the deals, finding the deals guy, but if I was the guy that had to create the checklist of everything we're going to do in our business from a contracting perspective, it would be done much worse. So Matt has a lot of strength in areas that I don't have strength in. And then something else that's very crucial as well is we have the exact same goals. So we both have a view of the type of real estate. We want to invest in the direction we want to go in. But Matt eventually wants to leave his job, pick up the contracting business. In Texas, you don't have to be licensed to be a contractor. And so there's a huge variance.

And we found out that we can do fine subcontractors that'll do work for a fraction of the cost. And so eventually we want to help other investors perform the work cheaper and with better quality and maybe prevent some of those mistakes that we made early on. Awesome. That's great. Go ahead. My turn? What?

You're trying to take my question, Josh? You try to steal my question? Well, see, we're getting main round answers in the fire round. That's all right. But they're great answers. Number four. Don't come up. Number three.

What is the most important attributes to have in a property when making a deal? When buying a deal, what's the most important thing you look for? I think it depends on your goals. But for me, the most important thing. If I'm not going to do a lot to the property, it needs to be cash flowing. If it's a multifamily, it needs to be at a good cap rate for the area. We typically like properties that we have to put a little bit of work into. And so when we're looking at that property, we want to make sure we're not paying for things that are broken.

So if the property is in really bad disrepair, we don't want to pay for that. And we want to, again, look at the property compared to things in the area and see we don't want to improve a property that's already one of the nicer properties in the neighborhood as well. So I think the better your neighborhood is compared to your property, the more we're willing to take on some work to improve it. And then the opposite of that is true. If the area is in poor shape, we're not going to buy a property that we're going to completely remodel because we're not going to get a lot of value from that. That's great. That's great. All right, last question. What do you think of the biggest differences for, I'm going to tweak the question a little bit. What do you think are the biggest differences from a new investor perspective between single family and small multifamilies?

Yeah. So I think the biggest difference is what Brandon has said on the webinars is definitely true, where multifamilies have a lot more handholding with the tenants. You typically are going to get more calls. You're going to have to do more work wrangling the tenants. your things tend to break more because you have a bigger building. The benefit of that is I think you can add a lot more value to a multifamily property. And then a lot of your major repairs like roofs and things like that are consolidated into a smaller space. So you will have a little bit more overhead in terms of work, I think, with a smaller multifamily. But I think that work will translate into value if you buy a good property. Fair enough. Cool.

Cool, cool. All right. Let's see, let's move on to the last segment of the show, The Famous Four. Famous Four. All right, these questions are asked of every single guest. So let's see what you've got to say. Number one, what is your favorite real estate related book? So I thought a lot about this one. I'm going to give folks one that's not named very often. It's called Investing in Apartment Buildings by Matthew Martinez. I really like that book. I think it doesn't try to sell you a formula and instead really focuses on the numbers you need to look for how you add value to apartment complexes. And I found it to be a great read. And it's really what made us focus long term on apartment buildings. So I definitely recommend checking that one out. Also all the classics investing in our millionaire real estate investor is also a fantastic book for someone who doesn't have any exposure to real estate. state as well. Cool, perfect. All right, favorite business book. So I'm going to have to go with a four-hour work week just because of what it did for me personally. I was in Houston working in a big four accounting firm. Tim Ferriss is the author that

really found his blog and his books. He was real big on lifestyle design and improving your life. And so fast forward a few years. And instead of being, you know, an accountant in Houston doing normal work I'm in the Bay Area living a pretty good life and loving my job and so that book

was just really influential for me personally and being able to go from a starting point and this is how you get better at everything and so I'll recommend that book great

what do for fun so what I do for fun so I am sort of a geek so I do play games with my friends online sometimes. I barbecue. I enjoy that. Barbecue here is horrible and very expensive. And being from Texas, never done it before, but I was like, I'm going to teach myself how to barbecue. And so that's become, that's become a hobby. We try to, we try to hike when we can. We have a new daughter

that was born last August. And so she's a handful for us. And yeah, that occupies most of our time. Sounds great. Hey, I'm going to, I'm going to, do question three and a half here. I'm curious how many, I want to ask this on, try to start asking us on more podcasts. How many hours a week do you say you work? I'm going to ask two parts. How many hours a week do you say you work at your real estate? And how many hours do you work at Google? So I work at real estate. I would say it's hard to say because there's so many questions that come in throughout the day and stuff like that. We have a few people that help us for, they're not employees, but they help us a little bit. And we're dealing with questions all the time.

but I would say maybe four to six hours when I close the books at a month end. That takes time as well. But it's always occupying my mind. I'm thinking about things. Google varies as well. I think one of the benefits is you don't have to be at work per se in a building in a chair, but you do have to be, you're expected to output product. So there's been weeks where I've had 40-hour weeks,

And then there's been weeks where I've had, you know, 80 to 100 hour weeks. And I'd say I'd probably average, you know, 50 to 60 depending on the work. But I just changed positions as well. And so I've had a little more work this week. But like I said, I really enjoy working with engineers. It's a cool place to be. And, you know, I definitely have nothing but positive things to say about it. It's been great for me.

Yeah. Awesome. I ask that because, like, again, a lot of people say, well, I can't invest in real estate because I work a full-time job. And I know that working in the tech world, it's a pretty time-intensive task generally. I mean, it might be a little more flexible, but you work a lot of hours. And so people have no excuse. After hearing your podcast, they have no excuse not to go out and do something.

Yeah. And that's why I definitely recommend the podcast to folks is because I guarantee you, I'm a guy that's coming in. I had been saving money. I invested. But you'll also find people that have full-time jobs that didn't have a lot of money when they get started. Or you'll find people that decided they wanted to make a career. out of it. There are thousands and thousands of ways to get involved in this space if you're

passionate about it. And bigger pockets is basically all use cases for how to make real estate work for you. And so that's why I can't recommend it enough because everyone's stories different and it's inspiring and listening to them will remind you to do things within your own business. If I had not been listening to the podcast, I wouldn't have got that deal over 11 months because that podcast would remind me to call that agent about that deal. frequently. And then I wouldn't have met either, you know, the investor that we've invested with Sharon, who's been a great agent for us. So we've really built this team out of this community and it's it's grown us from from our zero to 25 units. So I love it. That's awesome. And by the

way, Sharon is an awesome lady. She actually edited was one of the editors on the book Uninvested in the real estate with no and low money down. So just give her a little shout out there. And I never knew how to say her last name. Was it Zib, you said? I say Zib, but she's probably listening and telling us that we're all saying it. Whoops. Probably it's TZIB. TZIB.

Yeah. TZIB, yeah. TZIB, yeah. She's awesome. But I would say if you're a new real estate investor investing in the Houston market, she's, I have worked or reached out to seven or eight real estate agents, and she is better than all of them probably combined. Like, she follows up.

she will work with the seller and say, you haven't sent me the expenses for these items and we're not closing until you get them for me. So I can work with her on a deal and I don't have to do all of that. And she saved me hours and hours of time. And like I said, we wouldn't have gotten our 14 unit without her presenting a professional package to that investor. So I can't recommend her enough. And she goes above and beyond any other real estate investor that I've worked with. Yeah, I love it. That's one more reason people should be interested.

I mean, if you are an agent on, you know, a real estate agent, interact on BP, get to know people, you'll find people like Kevin and start working with them and build your ransom. That's great. I love it. All right, my last question of the day officially, what do you believe sets apart successful investors? And I'm going to even tweak this question a little bit. What made you different from those who are listening to this podcast, who have been talking, who've been listened to all 167 shows and have still not taken action? They've not bought their first deal or the second deal. What made you different? What makes other investors different from those who give up fail or never get started? Yeah, I think for me, I'm always the guy that wants to read every single book on the topic, and you just feel like you never know enough.

And okay, I'll finally pull the trigger once I've learned everything. And honestly, for me, listening to, again, when I listened to the Brian Burke podcast, he was like, you have to get started, get started somewhere. And he said something that Josh hated, which was, I don't care if you have to use your credit card to put your down payment, get started. But for me, I had the money, but for me that was saying, you know, once you find that yes and your numbers, you have to put your feet to the fire and execute on this. And, you know, taking action is, and listening to people that have done it made me comfortable enough to take action. And that's really what pushed us along. And also, I was having a daughter. So it was like, are you going to wait until after your daughter's born to get started on this? Or are you going to pull the trigger. And so, yeah, you have to take action once you're comfortable with

your market and with your deals. Awesome. I love it. And I think that's the power of this medium, you know, the podcast being able to talk to somebody like you who in a year has done so much. I mean, we love doing those. We don't do them enough, but the shows where we have folks who've just done their first deal. Because, you know, new investors, it's hard to relate to maybe a Brian Burke or somebody who's, you know, got tens, hundreds or thousands of deals. You can't, but you can relate to that other guy or gal and, you know, it just may be the thing that kind of puts you over the edge. But that said, I've got my final question for you, which is where can people find out more about you? Where can they connect with you? Yeah, so my bigger pockets profile is

probably the number one spot. We do own a domain, but it doesn't have a website because we're not doing any direct mail or anything at this time. It's probably something we'll move towards in the future. But bigger pockets, my email's up there. I think my phone number even. So that's the best spot. Perfect. Cool. Kevin, thank you so much for coming on. Congrats on all the success. And of course, we'll see you back on bigger pockets. Yeah, thanks for having me. It's crazy that I'm on the show. Look at you. Nicely done. Thanks. Thanks. Thanks. I've seen. Take care. You got it. Bye. Our guys, that was Kevin Wood from sunny, northern California. Not so sunny.

I doesn't say, is it sunny over there? I don't know. No, I don't know. It's sunnier than here. Yeah. Where I live. That's not hard. That is not hard. That is not hard at all. But yeah, yeah. So, great show. I mean, very smart guy doing some really cool things. And I'm certainly impressed.

And as we alluded to in the beginning, you know, he is in probably the most expensive area the country to invest in real estate. He's working a full-time job and he's succeeding at building a portfolio. So to the naysayers, it can be done. Listen up again. Go through some other podcasts. We've talked to lots of people who are making it happen. You too can make it happen. There you go. Look at that inspiration right there. You too can make it happen. I don't think you want a poster saying that. You too can make it happen. Yes. Yes. Speaking of posters. Speaking of posters. Yes. Yes. I don't know where you're going with this.

I don't either, but Kevin talked about his job. And so I just wanted to take a second to talk about jobs. And Bigger Pockets is offering jobs right now. We have five positions open. We are hiring. And, you know, Kevin works at Google, which we both have spoken at. We spoke at it together. That was a lot of fun.

And ate their free lunch, which was nice. We did. We did. And great company, big fan. we use Google for all sorts of stuff. That said, we want to steal Google employees. We are a Google. No, but listen, like, I mean, we're looking for

high-skilled people, and there are high-skilled people at Google and elsewhere who don't want to work 50 to 60 hours like Kevin does. And, like, you know, thousands and thousands of people around the country are doing, working at great companies, but, you know, working really, really tough hours. And we have bigger pockets in the number one city

in the country, according to U.S. News and World Report. Yes, Denver is the number one city in the country for all you guys looking for a place to relocate, go somewhere else because... Number one for bloody nose. Unless you're going to come here and work for... I was going to say number one for Bleddy Noses. I don't know what they rank number one for. Oh, stop finding.

Anyway, we are hiring. So, you know, come join us at Bigger Pockets. 40-hour work week is actually a 40-hour work week. And come, you know, come be a part of our team. You can apply today at biggerpockets.com slash jobs. and for all the Google folks and other Facebook people that are listening that are looking to work less hours and work at a really cool company, changing lives. We're hiring. We're hiring for tech folks. So check it out. And you get to hang out with Josh Dorkin in Denver. I don't know if it's a benefit or better.

I mean, granted, I get sick of hanging out by myself after about five minutes. Yeah, you know, well, everyone else does too. It's okay. Let's close this thing up. Wow. I enjoy working with you, Josh. Okay, I was going to say. I was going to say, I mean, geez, man. Yeah. Yeah, it's a great, great place to be.

Yeah, it is. All right, guys. Well, listen, definitely, definitely sync up with Kevin. Check out the show notes, biggerpockets.com slash show 167. Make sure to check out the bigger pockets video podcast, excuse me, on iTunes. It's these shows, but in video form. So definitely check that out. We also have video form on YouTube.

YouTube. But if you could, jump on iTunes and leave us ratings and reviews on both the audio and video versions of the show. That would help us tremendously. Otherwise, jump on the forums. Interact. I mean, I don't have to sell it. Kevin said it all. I mean, the site's amazing and you get to connect with guys like him. And, you know, if you're a newbie, he kind of gave you the formula for how to get things going. So make it happen. And let's get you out of here. I'm Josh Dorkin. Signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the 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. Welcome to the show, Kevin. Thanks for, what do I usually say? I don't know. Let's try that again. 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 Calicoke 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.w.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 only risk capital you can afford to lose.

And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.