BiggerPockets Real Estate Podcast - 175: The Power of a Team to Build a Multifamily Real Estate Empire with Mike O’Connor and Matt Wood

Episode Date: May 19, 2016

Building a real estate portfolio can be challenging — but taking others along for the ride can help everyone achieve incredible results. That’s the topic on today’s episode of the BiggerPockets Podcast,where we sit down with Mike O’Connor and Matt Wood, two young investors from the Atlanta area who have built a sizable portfolio (150+ units) in a very short time thanks to the power of a team. You’ll learn why they jumped straight from a single house to an apartment complex and the mindset and strategies needed to pull it off successfully. This highly entertaining show will have you taking notes — and laughing — ’til the very end! In This Episode We Cover: The backstory of Mike and Matt’s investing career The cool story on how they started working together The value of analyzing deals “Aunt Jemima” as their first property What Section 8 is and some of its benefits Tips for bringing more people on the team Why their first deal was important How they find the right people for their team How they scored a 32-unit as their second deal How they went from 32 to 100 units through creative financing Tips for having a job while investing WhatsApp and why they use it How they differentiate roles in their company The importance of systemizing and automating to scale their business The Unique Wide Oak Deal Why you should build relationships with your local banks Why confidence matters in this business And SO much more! Links from the Show BiggerPockets Forums Google Play Tim Ferris’ Podcast BiggerPockets Contribute Evernote WhatsApp Dropbox The 5 C’s of a Perfect Loan Proposal BiggerPockets Analysis Tools BP Podcast 108: Building a $350 Million Real Estate Empire Using the 10X Rule with Grant Cardone BiggerPockets Forums 8 Tips For Screening Out Professional Tenants: Your Worst Nightmare! (blog) The Professional Tenant – Just How Painful Can Evicting One Tenant Be? (blog) BiggerPockets Local Connect Books Mentioned in this Show The Book on Investing with No or Low Money Down by Brandon Turner The 4-Hour Workweek by Timothy Ferriss Tweetable Topics: “We want to be good landlords, we truly enjoy providing good living conditions to our tenants.” (Tweet This!) “To know that there is something that we can control that is providing us income is huge.” (Tweet This!) “I’d rather have a small percent of a deal than zero percent of the deal.” (Tweet This!) “You have to be ready to pivot based on the deal because not every deal fits in the same box.” (Tweet This!) Connect with Mike and Matt Mike’s BiggerPockets Profile Matt’s BiggerPockets Profile Azeez’ BiggerPocketes Profile Kiran’s BiggerPockets Profile Cambridge Investment Group Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, this is the Bigger Pockets podcast show 175. That's the unique thing about real estate, though, right? Is you have to be ready to pivot based on the deal because not every deal fits in the same box. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the height, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from BiggerPockets.com. 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, Brandon Turner. Hey, what's going on? Hi. What's up? How are you? You know, I'm doing pretty well. I've been, like I said, playing racquetball a lot lately. I think I said that last week.

And today, this morning, I got hit with like the hardest he could possibly hit the racquetball right in the back of my upper leg, we'll say. Oh, you got a welts, huh? Yeah, I got a nice welt there. something a little sort of sit. Other than that, things are good. Everybody, let's give Brandon a big fat. Oh. And if you want to tweet that, you could tweet Brandon at BP on Twitter.

Give him a big fat. Oh. Thank you. And now my Twitter's going to blow up for the next year. That's what I'm talking about. You're talking about. I'm still getting knock knocks. You are still getting knock.

You are still getting knock. Years ago. Yeah. And Felicity you don't know what that is. At the end of one of the early shows, after the music played at the end of the podcast, everything was done. I came back on and I was like, hey guys, go ahead do me a favor and tweet knock knock to at J.R. Dorkin and people are still doing it.

I got one a couple days ago. That's awesome. Cool. Today show. Today show, yeah, today's show is great. We've got two guys who work together and they've got a cool story about how they do that and how they've built up this pretty cool portfolio for folks who've been in the game for only a couple of years and focused on large multifamilies. I think what I like most about today's show is the idea of overcoming your fear to just jump in and do stuff that really makes sense and finding ways to get past that. I think for me that was the big takeaway. Yeah, I agree. There's a ton of action to stuff and they're just like, I mean, just one after another about how to do that and how they did it. And you guys are going to love it. So listen up. Yeah. Well, let's get today's. Let's get two today's. I tried to harmonize with you there. Yeah. That didn't work. I know. It usually doesn't. All right, quick tip. You want to take? You want me to do it? Yeah. In the show today, we talk about the power of networking locally and how important it is to participate in local networking groups. And if there aren't any,

to get out there and create your own, which you can do on BiggerPockets, which is fantastic. And to do that, you just go to bigger. On the forums, there's actually a drop-down menu item for local networking. But to get there quickly, you just go to Biggerpockets.com slash local connect, and that'll take you right to that local forum. So get out there and do that. All right. Cool. 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, communicating with guests, preparing your space, managing reservations, everything runs smoothly while you're off making memories.

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wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims.

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landlord insurance designed for the modern investor. And oh, you know what? I'm going to say one more thing before we get to actually bring the guests today. I don't want to say if you guys are interested in writing for the Bigger Pockets blog, we said this a few weeks ago. I want to just reiterate. If you guys are interested in writing and can write fairly regularly and you want to get your name out there as somebody who knows what they're doing about real estate, BiggerPockets.com slash contribute. BiggerPockets.com slash contribute. Let us know. We'd love to have you writing some good articles and send it out to our

500,000 members. It's a great way to get exposure. It is. For sure. For sure. All right, let's get this thing going. Today's guests are Mike O'Connor and Matt Wood. And like I said, these guys have a lot of cool info to share. They're down in the Atlanta, Georgia area. And let's bring them on. All right, Matt and Mike. Welcome to the show, guys. It's great to have you. Thanks for having us.

Happy to be here. Yeah. So you guys listen to the Bigger Pockets podcast, correct? They're brothers. Are you related? Not related. Thank goodness. But you do listen to the BP podcast.

You're members of BP. You love Josh Dorkin right here. He's your idol. That's what I heard. Yeah. Love something like that. Love's a strong. Oh, come on.

Seriously, Matt. We had more of a relationship from that. We're going to throw you a bonus and say we love Brandon, but we'll go to Josh route. All right. All right. All right. Well, you also love real estate. That's what I hear.

That's correct. All right. So let's talk about that. Tell us your story. Before real estate, what was it? How'd you guys come together? And just you two? I think there's a couple more involved as well. But tell us kind of the backstory. So Matt and I know each other from college. We were somewhat acquaintances. We happened to actually join the same job coming out of school, working for a big four consulting firm. Who was cooler in college?

This guy. Okay, Matt. That can be debatable. We'll let him have that one. Okay. So we knew each other from college, knew each other from work, and it's actually kind of funny. I got married in August of 2013, and I was in Maui for my honeymoon. And we're six hours back from where we are here in Atlanta. And he sees me online somewhere around 10 o'clock his time.

He's like, dude, why are you online on your honeymoon? Like, what are you doing? It was like, you should be doing other things. It's your honeymoon being on the computer. I'm like, I'm looking for a house. He goes, are you trying to move out of your condo? I said, no, I want to get into real estate investing. I'm looking for something to invest, and he goes, me too.

And from that moment on, we realized that we had some synergies together, and we hit it from there. We ended up about a few months later in December of that year after analyzing about a hundred different deals, found a house that we bought, and eventually sat on that for about a year, really trying to get an idea is real estate something that we're interested in? Do we like doing this? And ultimately decided that we did. I just want to stop you for a second there and jump in a little bit. first off, you definitively should not have been looking on the internet while you're on vacation. I'm not even going to go into what you're looking at, but whatever. But let's talk about this.

You said you went and analyzed about 100 properties before your first deal. And that's something that we, it's something we push people to do. A lot of people are like, how do I get started? What do I do? And we always say, get in there and just analyze, analyze, analyze. What value do you think that brought to you guys, the analysis of 100 deals before actually getting started. It brought a lot of value because we were still trying to figure out what our criteria looked like. We didn't know what locations we were going to go after, what price

points, what tenant base we were going to look at. And so we started reaching out to other people who had been sort of in the industry, found kind of a mentor for the area, which was huge. It gave us a big confidence booster to know that, hey, we could actually handle this if we actually do our research, don't have analysis by paralysis and just jump in. Yeah. Right. So it's a combination of looking at things on Zillow, getting set up with a real estate agent having FMList listings pushed to us, buying anyone we knew coffee to meet us out and pick their brains. I mean, we, for this little $65,000 house that we end up buying, we probably put in more work than we put into date on anything else. But it was the best time we could have

ever spent because it got us into the game. It got us actually taking action and it's got us where we are now. It also made us realize that we spend way too much time on a single-family house and that there's value in multifamily. That was a big pivot for us. Right on, right on. Cool. Hey, Mike, really quick. I think you need to pick up the energy of it. I think you might need my coffee. I don't know, man. I mean, yeah, there you go. There you go. All right. Josh was making fun of him and his coffee before the, before the call started. So that first deal turned out to be a $65,000 house. Why did you guys settle on that house? What did you do with it? What did the numbers look like, fill us in. Yeah, so like I said, we analyzed about 100 different deals and something was always

kind of wrong with it. Looking in that price point grants, it was 2013 when you can actually find a better deal. We were very timid. We didn't exactly feel like jumping into something in the $150,000 range in a nicer area. So we eventually settled on this one house. It was very sturdy. A previous investor had actually bought it, really fixed it up nicely himself. He did a lot of put a lot of sweat equity into it. So we were actually able to get it for a better price than what it would have normally retailed for you got to tell them the nickname too yeah we we call the the house aunt jemima it's on it's on maple drive so maple syrup and we wanted sweet returns on it so maple syrup so we we got it uh certified with section eight we run it out for eight ninety five a month

so it's it's a good return we get about 1.5% if you're looking at the 2% rule it's absolutely not a slam dunk but it's a very very solid investment for our first time you You know, you hear about a lot of these people who go in and, you know, lose their hair on their first deal. You know, we've done great on it. It continues the cash flow. We probably put in our pocket about $450 every month based on it. And that's combined. That's not per person.

Right. $450 per person would be awesome. But you guys know their expenses that come with these properties. Right. So it took a lot of analysis and something about it just felt right. And again, we were ready to take action. And we ultimately decided that this is the time and we just kind of jumped right in. Wow.

Yeah. Right on. Man, seriously, like, I'm giving you a hard time. But, like, you're motivating. You're like, you got this energy about you that I love. It's awesome. You got to have energy. You got it.

All right. So you said that you made it a Section 8 property. Why did you decide to do that? And before you even go there, can you explain to those folks listening? What exactly is Section 8 and what's the benefit? Yeah. So long story, sort, Section 8 is subsidized housing. It's for individuals who, for one reason or another, aren't able to pay full rent for wherever

they're living. So we really like sectionate. You'll hear people on both sides of the fence. Some people really like it. Some people don't like it. And the way that we look at it is we cater to that B minus to C range of properties. And in that tenant class, they're all very much similar in the way that they are. We find that those who are Section 8 are actually very grateful to have the opportunity

to have a nice roof over their head, a nice house to live in. And on top of that, part of that check every month is guaranteed from the government. So I would say our tenant, 70% of the money comes from the government itself. So even if our tenant is late by the fifth of the month every month, we have $650. Don't quote me on that 70% I just said. But we have that money in our bank by the fifth, and you can count on it every month. So it's been nothing but smooth. The best tenants that we've had, we actually really enjoy the program.

Cool. What are some of the downsides? What do people complain about? As far as the tenants, they're in that program or they're in the best. Yeah, what have you heard other investors complain about? Yeah, I mean, I think that there can be some challenges where maybe one person has a bad experience and that kind of ends up being a bad apple in the group, whether it's a tenant that doesn't pay their portion or maybe leaves a property in shape that's not as great. But, you know, the tenants that we've experienced really value the voucher that they have and they don't want to lose that voucher for the rent. So we've had a really good experience with it, honestly.

And then the other element of it is depending on, you know, we want to be good landlords. We truly, you know, enjoy providing good living conditions to our tenants. We really believe in that. And the great thing about Section 8 is they come in and do semi-annual audits of your living conditions. So the way we look at it, it's a free inspection of your house as to what's wrong. So our house isn't sitting out there being that house with the grass up to your knees, the roof's not leaking.

We're obviously not out there every day. We have property management who handles the day-to-day specifics. But it's a free inspection. And as long as we're willing to take care of it and repair it when needed, it's fantastic. Yeah. And to Matt's point really quick, you know, those are some of the things I experienced with Section 8.

I had folks who weren't taking care of their portion, folks who just weren't treating the property well, things like that. That was kind of the, that was what I was dealing with. But, you know, at the end of the day, whether it was Section 8 or not, I think the class of property will oftentimes dictate that, you know, if you've got to be a B.C. class, you can end up with that. That's what I would, I always feel like that Section 8, it's fine. but the house matters more and the tenant matters more than anything.

I mean, like, I'll accept Section 8, but they better be a good tenant. Right. But a lot of landlords just look at it as like, oh, I'll just put a Section 8 person in there. As long as they approve for Section 8, that's all the landlord thinks about. They don't do any more screening besides that point. Exactly. We've got a lot of Section 8, and we have a lot of non-section 8, and we've had plenty of issues with non-section 8. I don't want to say issues, but, you know, typical pains that you have when you're renting to that many households.

Yeah, yeah. I hear you up. So what are some lessons that you guys learned on that first deal? I mean, is there anything you say like, this I did wrong? For people listening today that I've never done a single deal, they want to buy their first. Like, what can you tell them about that first deal for you guys and, you know, either encourage them or warn them? Sure, sure. So looking back, if we were looking at this deal at our current stage in investing, we wouldn't have done it.

We don't think that we're getting the best returns that we could get. But having said that, if we hadn't had done that first deal, I don't think we'd be sitting on this podcast with you guys. Because it meant a lot to be able to walk into a meeting with investors or other potential business. business partners to say, yeah, we've got an investment property. And you don't have to say what the investment property is, but you're in the game. You know, you have risked it. You're just crazy enough to try. You know, I think that that was really big for us to get started. Yeah. I would have said we also probably overpaid just a little bit. I know it was in better condition and we got it for less than we would have normally if it wasn't for the person putting in the sweat equity

rather than hire a contractor to replace the roof, fix the furnace, replace the HVAC. But we still overpaid just a little bit. And again, that was more so us not understanding. the rental market enough, not being picky enough, you know, as picky as we are now. One other thing, we didn't look as much as we do today at the area to think about future potential growth. Like, is a target moving in? Is there a Chick-fil-A or Publix? You know, what other, you know, trends are out there? And we started to look at that a lot more closely, but it was something that we didn't consider as much initially. Yeah. And I think a lot of people like stop and they won't, they never buy their first property because they think they need to do all

those things. So I will commend you guys, you're right. Whether this was a home run or not, It was a simple base hit, right? But it got you into the game, and I think that matters. I wouldn't say by a bad deal, but you don't have to hit our home run on your first try. Just get in there. Like I said, our money comes in every month. We still cash flow it, and it's fantastic. Last quick question about this.

Was it just you two or was it the other partners as well? Because I know you have a couple more guys, right? Yeah, this was just us too. Okay. I think we really started to hit our stride when we combined forces with two other guys, but this one was just the two of us. Okay, so let's talk about that. I mean, how did you bring in more people under your team?

Yeah, so, lucky. I said, we found this original deal in December 2013, and we sat on it for really about a year while we were trying to figure out, is this something that we're interested in, is real estate for us? During that time, we realized it was, and we were looking to kind of trade up, if you will, you know, you're always talking about 1031 exchange or kind of trading up from a single family house to a duplex, duplex to a quadplex. So we actually called this guy, Eric Halverson, great guy, you should talk to him sometime, that's kind of advised us on this single family house. He was there. We probably ran 50 deals prime. He was very patient with us.

We said, hey, do you have a duplex or a quadplex? Because we're looking to step up what we have. He's like, no, I've got a 32-unit deal and I've got a 200-unit-plus deal. And we were like, no, that's fine. That's too big for us. I appreciate you, I think, at us. Let us know if you have a quadplex. And the more we got to thinking about it, we were like, you know, why not do that? The numbers make sense. It was a fantastic deal. They got it for a really good price. And we're like, you know, we just probably need one more person to help us close us out. And so that's when we reached out to Aziz, who was our, you know, one of our other partners, you know, the Cambridge Investment Group, if you, if you'd like to call it that, he's a very active guy here in the Atlanta area with bigger pockets. He schedules a lot of the in-person meetups and was very vocal about being interested in getting into the multifamily space. He had a small quadplex and a single-family house, but still was in that kind of, looking to expand place that Matt and I were in. And we got together, we let him know what our intentions were, showed him the deal, showed him the numbers.

He's like, wow, this actually is exactly what I'm looking for. And, you know, at that point, it worked. The three of us could have made it happen, but it was such a large jump from one to 32. You're like, let's just bring in one more person. And that's when we brought in our other partner, Kieran, who has some experience with single family homes, but nothing with multifamily, to kind of, you know, spread the risk, but also bringing more knowledge, more expertise as we tackled something that was, you know, literally 32 times as big. And it's, you know, it's all downhill from there.

Okay. Okay. So tell us about the 32 unit. I mean, what, you guys ended up buying that, correct? That was the second deal, right? That's right. Yep, we went from thinking that we would look at a duplex or triplex to all of a sudden having a 32 unit. It was crazy.

I mean, we, as Mike, yeah, as Mike pointed out. That's what my wife said. She was, right. 32 units? Right. I think convincing our wives was one of the bigger challenges, but they're on board now. Yeah, I mean, going from hearing about the 32-unit deal and thinking, like, no way we're ready for that to kind of wondering, like, why not? You know, why can't we put our heads together and see what possibilities are out there, which is something we had to do with our 100-unit deal and with other deals down the road.

If you don't have the limiting belief to prevent you from really diving in with something, then you can make it happen. You should have to be a little creative and a little crazy in some cases. Yeah. Cool. So what are the numbers? You know, the 32-unit, what did it look like? And then you talked about creativity. So I'm assuming you guys did something with how you're all working together.

Did you just divvy up some kind of LLC four ways and say, hey, we're all going to put in 25%. How did it all work out? Yeah. So for this one, as far as how we split it up, it was pretty much that simple, Josh. As far as forming LLC, splitting it four ways, some of the creativity, you know, as Matt was saying, as we got kind of towards that the 16-unit deal, the 100-unit deal. But for this one, we found 32 units. They are all two-bed, one bath.

It was, what was it at? It was 56% occupied. The units were renting somewhere in the ballpark of 450 to 485. And we were able to land the property for $640,000. We basically got conventional financing from a local bank, 80%. Before you freak out and think, you know, how could you be going from a single-family house to a property that has $400 per month tenants? The unique thing about this property is it's situated in a neighborhood, like a nice neighborhood of some retired families, a lot of single family houses, and it's a rent-controlled

property that kind of limits that ceiling. So there are a lot of people who would pay more in this area for rent. But part of the reason we were able to get involved in this deal is because it had a lower purchase price because of the lower rent rates because of the rent control. And it's in a nice, safer area too, which is... Right. Now, how does that rent control work? Can we just touch on that real quick?

Because, I mean, I know there's a lot of rent control out, you know, San Francisco, that kind of stuff. I didn't know there was that in Atlanta as well. Yeah, so the reason we were able to get the property for the price we did is, a charity actually owned it before we did. So the same guy, like I said, that was mentoring us, actually bought the deal from the charity. And because it was in a charity, it had some specific language in its deed about how much we can charge for certain units. And to be simple with it, a certain percentage of the units needed to cater to very low income. So eight of the 32, 16 of the 32 needed to cater to low income, which essentially a percentage of of your income as what percentage compared to the median income in the area. And so with that in mind,

we could only charge up to certain ceilings. But what the charity was doing was they still weren't charging up to those full maximums. So they were at 450, 485. We've actually been able to come in and start charging anywhere between 550 and 625 and kind of push those rents. And the eight units that weren't occupied when we bought it were actually kind of used as some type of transitional housing. So it required a little bit of a rehab to go ahead and get that. I'm rent ready. But we basically were able to do that, knock that out in a couple weeks and get the property fully occupied, I would say, in about two to three months with very little rehab. Yeah, we were able to, I mean, we still put probably $40,000, $50,000 into the property that we

rolled into the purchase price. So we've been actively trying to upgrade the units to justify the rent increases. But as we said, there's a wait list for people who are trying to get into this area at that price, which is help. Right. Well, when you say you rolled it into the purchase price, what do you mean by that? Yeah. So we have a, at this point, like I said, we're going from that single family house to this, we weren't as experienced with doing a large-scale renovation. And the person that we bought it from had more experience. And he said, look, I can sell this to you for 60,000 or I can sell it. Yeah, 600,000. 60,000 would have been fantastic. We can sell it to you for 600,000, or we can sell it to you for $640,000, and do some of the renovations. He's like, I'm going to assume that, you know,

for some reason the sale won't go through and we're going to hold onto it. So I'm going to start renovating it. We said, that's fine. We'll show you our proof of funds soon. We'll get the financing, and it kind of worked out that way. Okay, cool. Interesting. Interesting. So the property, have you guys done anything? I mean, you got 80% financing. Once you got it fully rented out, did you go and refy the property, do anything like that to pull your cash out? Yeah. I mean, it's interesting. You asked that we're actually in the process of working on that refinance right now because we bought it knowing that there was some equity based on the appraisal at the purchase price. And that was when 56% occupied or whatever the number was. So there was equity a year ago. And now we know that we'll have a better position to refile. I take some cash out and look to potentially deploy it in some other places. Did you have an estimate of what it's worth today? So when we bought it for 640 at appraised, I think, for either 725 or 750.

So, you know, I would, I don't know, 800 maybe, 850. If we're being conservative, I'd put it at 800. I'd really like to think we're getting into that seven-figure range just because of what we'd be able to do with the occupancy. We've shown steady, you know, if one person moves out, it's filled the next week and pushing the rent. So I'd really like to think we're touching the seven-figure range at this point. That's awesome. Cool. All right.

Yeah, so what happened next? I mean, so you got this 32 unit now you got four guys working on this. What comes next? Yeah, so once we kind of realized that we were, I don't want to say on autopilot, but we were figuring things out with the 32 unit, we were like, all right, what's next? You know, let's figure out what we can do. And back to that guy, Eric Halverson that Mike mentioned, he was kind of a mentor a little bit with the process, called him one day and say, hey, do you have any other deals?

He's like, well, I'm driving down to Albany, which is a town about three hours outside of Atlanta, Atlanta to look at a hundred unit deal that seems like there could be some really good value at opportunity. The owners were not charging tenants water, but each of the units were submetered. So there was potential for that. And he's like, you know, I'm really interested in being involved from an equity position in the deal as well. So if we could figure out a way to get $2.8 million, let's do this. And so we hung up the phone and laughed and we were like, ha, you know, not a chance. Where would we come up with that? And then, you know, our wheels started turning and we started to think about some friends who had, you know, some money. And we started to think about how we could

set up infrastructure with the same property management company that we were already using for the 32 unit and just try to leverage some of those processes that were in place so that we could scale. Because I think that's one of the unique things about multifamily is the ceiling is a little bit higher in a lot of ways. Yeah. Yeah. So we essentially went from one to 32, from 32 to 100. But getting to that 100 unit, that's when we really started to get creative with how we were structuring our deals. You know, this deal, we basically, you know, taking advice from you, Brandon, with the fantastic investing with no money down. Best book ever, I get it right.

Best book ever written, right there. The book on investing in real estate with no and low money down found at biggerpockets.com slash no money. Shameless plug. That was amazing. Shameful plug. There was a little shame in that. No shame on this.

Okay. So we started to get creative. How can we make this work? Because we saw the potential, like Matt said, you know, submetered for one. under rented. There's just so much on both the income side and the expense side of the P&L that we saw opportunity in. And so what we ended up doing is we worked with a really small local bank who wanted the business, who was willing to give us a loan at 80%. The sellers had gotten a fantastic deal on it on the front side. So they actually seller finance 10% of it. And then we found

investors who brought the other 10%. Now, we have to buy our way back into our equity portion over the course of five years, but we're letting our portion of the property cash flow to pay back the portion that we owe for the down payment. I like it. If all works out, we're in the middle of a HUD refinance. We're going to try and pull money out, pay down both the seller financing and our portion and kind of all be in even keel going forward. So what was the cost on that property?

2.8 million. So 28,000 a dollar. Yep. That's great. Yeah. So what lessons did you? learning that one. I mean, like, besides being creative, anything you can tell us that, like, was a big aha moment for you there? Yeah, I would say there are a couple. One that jumps out at me is

pay attention to the tax assessment value of a property because when you buy a property that was assessed at, say, $1 million for $2.8, then the county will get excited and potentially bump up your tax bill. So that's something that kind of jumped at us. Another thing, though, is we mentioned the water and how tenants were not paying water, but every, every, every unit was sub-metered so you could actually read the water usage. Well, we sort of immediately began charging water back to the tenants while we were simultaneously pushing rents up towards the market rate. And we realized pretty quickly that that wasn't the best idea. To do those things at the same time, it was too much of a hit. We wanted to work with the tenants and make sure that

they knew, like, hey, we're upgrading your units. This is why you have a rent increase, but we should have phased it more. So we actually saw a dip in occupancy. We bought it at 86%. It dipped down into the 78 to 80% range, which was getting dangerous for us, because there's a break. break even point there. But as soon as we made a few changes and had, you know, daily calls and text messages and things like that, we adjusted. And we're actually at like 99% right now, occupied. That's awesome. Did the property need work or did what was it, you know, ready to go renovated? It's interesting because it was a HUD approved built. So it was built to HUD standards when we got it. So, you know, what that basically means is it's, it's compliant for certain handicap regulations.

It's built to a higher standard. The previous owners had previously replaced all the roofs on the buildings. And for the most part, it was in great shape. You know, a lot of what we've seen is appliances, paint and carpet are the big issues. But, you know, as far as the asphalt and the outside, the exterior, it's all in great shape. You know, but really what Matt said, we just, we just push a little too hard, a little too quickly. And we realize that with a hundred unit property, it takes a little more time than the 32-unit deal. It takes a lot more time than the one house that we had. You've got to be smart about how you phase it in. So, a little more conservative than our approach to turning it around and driving the value.

Got it. Got it. I want to go back a quick second before we move forward. What are you guys trying to do? You know, I mean, you're buying properties, you're splitting it up. What's the intense? I'm assuming you're no longer consulting. I'm assuming you guys are full-time in the business, but maybe I'm wrong. Yeah, actually, don't mean to cut you off, but we are still full-time consulting. have day jobs. And so pretty much everything that we do here is, you know, before work, on our lunch break, after work on the weekends, or texting, you know, using WhatsApp and things throughout the day. But actually, that has its limits, but I really think it's a differentiator for us because our W-2 income, you know, allows us to get better financing in some cases. You know, we have,

we have a good pad of money, you know, every two weeks. It's nice to have that to fall back on rather than relying on rents. And we like our jobs. You know, we enjoy what we do. So I think, I think it's a differentiator for us. Yeah, and like I mentioned before, you know, the power of the team is absolutely critical for us. It's, we've all really starting to get into a stride with one another where we understand each other's strengths, our weaknesses, our time restraints or lack thereof in some instances. And playing off each other has really helped us hit a stride. You know, using technologies, Evernote, using WhatsApp to constantly stay connected, Dropbox, so we know where everything is at all times we're really working on being as efficient as possible because of our W-2 jobs.

You know, as far as where we want to go, the idea is to have enough passive income where we don't need to rely on our jobs. Like Matt said, we do enjoy our jobs. We like what we do. We get fulfillment out of it. But to know that there's something that we can control that's providing us income is huge. And if we can turn this into something where we start having people, you know, work under us and start managing other properties, start a brokerage, the transaction, real estate, things of that nature. We're constantly looking to expand different revenue streams. I have two quick questions for you. First of all, and this might sound like a stupid question, but I just honestly don't know. What's app? I've heard of that. What's the benefit of using that?

I mean, what is it? Why do you use it? Why not just text messages? Yeah, sure. It's a group text messaging application. It's free. It's literally called What's WHATS, A P, WhatsApp. I think Facebook bought them recently. But it allows us to share pictures, videos, text all the time, honestly. And you You can make phone calls through it. So it's a good way for us to stay in touch. Again, throughout the day, if there's an emergency, you know, we bring in our contractors onto some WhatsApp conversation groups. We bring in our property managers onto some WhatsApp conversation groups.

So we're always trying to automate and find ways to, you know, make things more efficient. Right. So yeah, we've literally got one that's called private and we know it's just the four of us. We've got one that's called contractor. It's got our contractor on it. We know that's one that's called management. It's got our management company on there. And so it's a very easy way to kind of compartmentalize, but quickly.

fire out messages or approve things from our management company, you know, if needed. Okay, okay, cool. Second question then I got for you. Mike, this is for you, Mike. Has anyone ever told you you look just like Ben Affleck? Please do not make Mike's ego any bigger than it already is, Brandon. It's funny. I've heard that a couple of times, yes.

Okay. You kind of talk like him, too, a little bit. I've been told. It's the mannerisms I've been told. Interesting. Interesting. Yeah, I keep getting the. The Batman feel out of you.

Well, cool. All right, that was actually my... I'm just going to sit here, Simon. Josh and I'll let you guys have your moment. We'll be back here. All right, my real second question. What do you guys, how do you differentiate your roles? Who does what in the company?

That's a good question. When we first bought that 32 unit, we thought, hey, should we divide and conquer? Should we, you know, go at this and let one person do the management, one person do the maintenance? And we decided for the first couple months for everybody to get a full 360-degree view of everything in case somebody's out of town. and we wanted everybody to understand some of the core components of the business.

But once we started, once we went from the 32 unit to the 100 unit and then another 16 unit, we had to divide and conquer. We had no choice because we would have different phone calls each week on the properties. And, you know, it helped, though, kind of building a base foundation of knowledge as far as what needed to be done to manage it. Yeah, so we kind of divide out now by property. I focus on the 100 unit deal, and that is my focus. I don't have a lot of flexibility with physically where I'm located because of my job. And so I handle a lot of things via email phone calls at night, phone calls in the morning.

And I don't need to be at that site because it's, you know, it's in Albany, Georgia, which is three hours away. So that is my focus. Whereas, you know, Matt and Aziz focus on our White Oak property, which we haven't talked about yet, and the 32 in a deal, a little more hands on with that. So it gives us both an idea of the whole 360 picture of running a property without having to step on each other's toes. We know if it's something with Sunchase, Mike handles it.

If it's something with White Oaks, I kick it to Aziz or Matt. And then we kind of cross-reference with each other if we need to approve something or make a strategic decision. Cool. We all stay informed, though. I mean, in case there's an issue and Mike's tied up with meetings at work, I need to be able to jump in and handle it. But he's the first point of contact, and I'm the first point of contact on other properties. Right. And we also talk weekly.

We have a standing call. As soon as we hang up with you guys, we actually have a call with the team. it's more of a formal call. We talk regularly, but we make sure that we have an hour once a week where we formally sit down and we talk about our properties. And a lot of times that's talking about anything we need to approve or any issues, but we're trying to actually move that towards finding deals and expanding rather than reacting to things that are happening on our property. So we're trying to establish processes and technology so that we don't even have to be a part of, okay, you know, a leaky faucet is at, you know, at Cambridge Woods. Someone go out and fix it. We, you know, we cool with that. And we're trying to focus towards. you know, finding a flip now or finding a new multifamily deal. Okay, go ahead. I was going to ask about the White Oak, but we'll get there in a second. The last question I have kind of about partners is, like, don't you feel like you're diluting yourself a little bit?

Like, you know, you got four guys. Now you've got to split everything four ways. A lot of people say, I don't want a JV ever or I don't want a partner because I'll lose a lot of my profit. What do you say to that? Honestly, yes, the reality is we're diluting ourselves, but I'm perfectly okay with that because we're four smart guys with four different backgrounds. and any time that we end up making a decision, I feel extremely confident in that decision

because we're approaching it from four different directions with four intelligent thought processes. And, you know, if it were just me going in by myself, there would always be that element of doubt, you know, am I making the right decision? Should I be thinking about this differently? And so, yeah, it's diluting ourselves, but at the same time, I know we're making the right decision when we do it. We're very patient and picky with our deals. And again, we have our W-2 jobs, so we want to make sure that we can actually spread around

some of the workload. The other aspect is apartment investing is a team support. I mean, you have to have more than one person in a lot of cases to get involved. So it's also the classic of like I'd rather have a small percentage of a deal than zero percent of a deal. And that's allowed us to scale more quickly. Cool. Awesome. Love it.

Love it. And, you know, for me, I guess my question is, what other ways could you divvy up? You know, you go and you pick up another property, you pick up another property. you know, suddenly, as my wife and I do with our kids, you know, you're now playing zone. You can't necessarily do man to man. So as you guys scale, you're going to probably have to change what you're doing, at least in my mind. How do you guys see that happening? That's a great question.

So far, we feel like we've set up infrastructure with our property management company and our full-time maintenance guy that we work with to be able to scale with more deals. but you're right at some point, especially if we do out-of-state deals like we've looked at, we're going to have to look at some other opportunities where we're either pulling another person or I don't know, that's the unique thing about real estate that right is you have to be ready to pivot based on the deal because not every deal fits in the same box. Yeah, and to kind of piggyback on that, I'd say every day is kind of a test with our property management company, you know, wanting them to step up to the plate, handle certain issues

without us having to intervene. And sometimes it's successful. Sometimes it's not. as we continue to vet that out and get more comfortable or less comfortable with them, we're figuring out, you know, can we put more responsibility in their court to literally manage this for us as a property manager should so we don't have to be involved. We're talking about potentially hiring, you know, a part-time person to go out there and do some of the day-to-day for us and say, you look, we don't want to hear about it unless it's a level eight or above issue. This is, you know, literally setting out step by step. This is what you do for each process.

You know, here's how rents are collected. Here's how work orders are handles. Here's how XYZ is handled. So the more we can systemize and automate what we're doing, the more we can scale without actually having to further dilute ourselves with more partners. Yeah. And to Mike's point, I think when we had like a Christmas Eve call at 1130 at night because of a plumbing issue, we realized that we needed to do some things to give our

property management company more autonomy and decision-making power to say, hey, these are the vendors you need a call when you have this issue because we don't want it to be us, right? Yeah, makes sense. Makes sense. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase

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So this White Oak thing, what's the story? I mean, it sounds like you mentioned another 16 unit. Is that it? Have you guys gone and picked up other properties as well? Yes. So White Oak is the third multifamily deal that we picked up at 16 units to your point. And it's been unique because we've really learned more about construction and renovation. I think eight units were down when we bought it.

Two of them were down to the studs, completely covered in mold. And we basically bought it knowing that there was a lot of value at opportunity, but also knowing that we had a lot to learn about ourselves, about construction, about how we divide and conquer. But that has led us into the flip world because now we look at a house, like a 1950, these brick ranch house that's got a hole in the roof and we're not scared of it anymore because we've dealt with water coming down from the upstairs unit into the downstairs unit and we've learned how to how to address it and how to fix it so when we see mold now we get excited because it's opportunity in our eyes it's cash in our pocket but it's a cool deal it's it's it's eight duplexes

on two separate lots so i think it's a little over three acre lot it's in a neighborhood that's surrounded by these craftsmen little mcmansion style homes that are really nice. And the coolest thing about it is each of the units is a two-story duplex. And they both have, or all eight of them have their own tax ID. So there are multiple exit strategies in that scenario. We could continue to cash flow it. We could sell the lot to developers, which we've heard that they're coming in and starting to buy some developments in our area. We could also break them off individually. We can sell one lot. We could sell one unit. So the opportunities are kind of, I don't want to say endless, but it's more than just having one apartment complex.

complex or one single duplex. So we really like that. And like I said, the opportunity to grow in that area is huge. So it cash flows from day one, even with all of the repairs we have to do in the down units. But there's also the upside because of the area. So this is one of our, it's one of our smaller multifamilies. But I would say it's been sort of a catalyst for us because it was one that was more of a point of contention where two people wanted to do it. The other two were kind of on the fence about it. And we're glad that we got involved because of how much we've learned. But it's, it's certainly been one of the more challenging projects we've taken on. Did you say that, so it's a 16 unit, you had six occupied units and you were still cash flowing? Yeah. We got it at a really good price.

Well, clearly. And yeah, so that certainly helped. I'm going to look for a grave of a guy that you robbed. We might have had to actually put one or two tenants in to make sure it properly cash flowed. We also, another kind of in terms of creativity, we were able to, we'll give Kieran, Artham, one of our partners' credit here. He negotiated where we'd only pay the bank, I think, interest only for the first three months of the loan while we worked to stabilize the property. And he also was able to get us a situation where the bank loaned us money for the construction after we put in our own money for construction. So essentially they said, hey, in three months, we're going to come out and make sure that you have fixed the property up and show us the receipts. And then we will give you, you know, X number of dollars, 50, 60,000 dollars back as like a construction loan, if that makes sense. So that helped our initial cash flow.

Another creative way to kind of get in and stabilize ourselves. Did an $80,000 rent out, the bank came back, gave us $56,000. We had to put the money in up front, but we got it quickly. That's one of the things I like about commercial lending departments is that when you're dealing with a larger property is like they can be creative. I mean, try doing that on a Fannie Mae Freddie Mac loan from, you know, bank of whatever. Like, they're going to laugh at you if you try to get creative. Exactly. And they're part of our team. We consider our lenders a part of our team because if they don't like the deal and they think something's up, there probably is something up. You know, we need to take into their experience into consideration. Exactly. Yeah, that's a huge tip right there. Solid.

Building a relationship with the local bank is one of the best things we've done. Kieran, again, give him credit. He has single family experience. He probably has about 80 homes in the Atlanta area. He does every single one through this one individual bank. Quantum Bank. They're in Norcross, Georgia. And they're fantastic. They work with us. They understand what our needs are. We understand what their objectives are. And as long as we meet them, they're happy to work with us. How does somebody go about building that relationship if they don't have many deals to start with or any deals? It definitely, it takes time. And one thing that we've learned as we go to the refy process is it takes a lot of organization. You don't want to just blast emails to the lender with your, you know, you don't want separate emails with each person's tax returns or W-2s. Because then if you put yourself in the shoes of the banker and they receive 50 emails and they're trying to compile everything and organize everything, they're not going to have as much incentive to actually, you know, work for you and pursue this loan. So we're working on, we've worked on binders of our information with pictures of the property and trying to make it as simple for the lenders as possible. Yeah.

Another thing is we don't bring them, you know, B deals or JV deals, if you will. Like I said earlier, we're very picky. We don't like to lose on a deal. We've been fortunate in our, you know, a few, you know, we've done. some bigger deals, but not a ton of them. We haven't had a loss yet. And so we're, yeah, knock on wood. We're very picky about what we find and what we bring to them.

So they know that when we bring something to them, that it's going to be a quality deal. And that everybody will meet the objectives that they're trying to meet. Yeah. Well, just emphasize on your point there about being organized, right? Like I've told this story before and I talk about it a lot on like the bigger pockets webinars we do every week, is that this, like, when I was trying to get a refinance on my fiveplex, I went to like five or ten different banks. and everybody just kept shooting me down, shoot me down, because I was bringing in this just box of paperwork. It's like, here you go.

Well, what's the guy who doesn't have any incentive to work with me over the next guy? Why would he want to sort that? So finally what I did with the staples, I got one of those little plastic binders, even had a cover sheet. I put my BP calculator right on the front. I had tabs that went to each section, and I handed that.

And they were so impressed within like a day they had approved it. And then they refinanced my 24 unit the next month. Like there was just, yeah. I mean, that stuff works. And it's so obvious. yet nobody talks about it. So I love that you guys brought that up. Awesome. Absolutely. One last thing, confidence is huge. Being confident when you go in there, knowing your numbers, knowing what you're talking about, you can't replace confidence.

I mean, especially, especially at our age might just turn 27. I'm 29. So we're in our mid-20s. We like to call it. You're in your late 20s. I think 30 is late 20s. I think 30 is late 20s. I like that. I love that, actually. I'm in my late 20s now, actually. Exactly. Yeah, very good. Thanks. guys. You guys are my favorite guests. I'm in my late 30s too, apparently. You're in your early 30s, Josh. 40 is early 30s. There you go. That's a scale. So yeah, walking in with confidence to make, you know, if you, if you're not confident in yourself, right, the bank is going to look at, look at somebody and say, well, why should I entrust them with our funds? So, yeah, made a difference. There's a, there's a, there's a, a book, I should say, like short, short ebook that I wrote a long

time ago and gave out to some people. Anyway, biggerpockus.com slash five, like the number five, CS is in cookie Sam. Anyway, people want to check that out. It's the five like Cs you have to do to get a deal approved through a bank. And one of them is confidence. Like I put that right in there. It's like, you know, creativity, confidence. I don't know what the other one was.

Anyway, check it out. BiggerPocksecom slash 5CS. Just a free download. Check it up. Cool. All right, moving on. Before we move on. Yes, yes, really quick.

I want to find, get a couple more bits of information. One, how did you find the deal to any numbers you got? Because that's always interesting for people. And I think at that point, we can probably start moving on to, the next segment of the show. Yeah, so the first two multifamily we found through our network, but then the third one, this White Oak 16 unit, was

actually from the MLS. And I think most people that walked by and saw it were scared off by how many units were down and we were able to get it through there. So I think we, I think the purchase price was in the 470 range. To Mike's point, we put in about 80,000 in renovations

and got an additional 50,000 back from the bank for that loan. So the rents right now probably average around 800, 850 is what we're looking at because they're all three-bedder and two-bath in a nice neighborhood, nice area. So it's tough to say we're still stabilizing the property of cash flows, but it's not where we expect it to be probably a year from now. So it's tough to say what it's going to spin off in terms of the net operating income going

forward, but we'll have a pretty good picture probably in about six months. Right. Got it, got it. Oh, this was, oh, you know what, and I asked you where you got it, and you already talked about that. I want to kind of circle back on, you had said a few of the years. units or the low income. Am I confusing this with the other property?

I might be at this point. When you're getting your late 30s or early 30s, you know, early 30s, the memory starts to go. It's hard to keep up at this point. All right. So you didn't talk about how you found this one. Talk about how you found this one. Besides, you said MLS.

Yeah, so it was on the MLS. And our buddy Aziz found it. He stumbled across it doing a search one day in the area code. We like to focus on the East Atlanta to Kemp. area and he's like guys you know I found the 16 unit deal it almost seems too good to be true why it's been sitting on the MLS. We're like, oh yeah, let's go check it out. We went in there and some of the units were stripped to the stud. Some of the units were literally, it was like a black cloud when you walked in just filled with mold. And at that point, it was it was kind of stressed us out. We didn't know

what to think about it. But we've started network with some people who have handled the situation before, found out that it can be remediated. It takes a lot of work and a little bit of capital. And we thought, you know what, why not? Let's get into this one. Let's make it happen. It's a great value play. And that's why I say now we love mold because other people have seen it. I can't, you know, I don't know the exact number, but at least two other people have actually put an offer on. We're under contract and backed out. And we were just crazy enough to get in there and not be afraid of the mold. And one thing on the mold, always get the units mold tested after you're done working with them. I don't want anybody to just think to just go in with mold. Mold is a serious, it can be a serious thing.

So you've got to make sure you get a certified person in to test it out. possibly run through your air ducts and clean things out before you get a tenant in place. Good tip. Good tip. You know, before we move on, I just want to say one thing, like, I noticed like a common theme throughout this entire podcast today is like this idea that every deal that was presented to you guys, it sounds like you were initially like, oh, no, we can't do that. And then you started just thinking, how do I do that? It's that same concept we talk about all the time. Instead of saying, I can't, it's how can I? So there's the 32, the 100, the 16, every one of those was these challenges where most people, 90% of people will say no, and they'll go back to

watching their dance with the stars or, you know, American Idol or whatever. But you guys are like, how do I make this work? I love that. Yeah. No fear. You had someone else on your podcast, I don't know how many shows ago that basically said, I started to look for the can and the deal and then kind of figured out how can I make this work. And don't get me wrong, we're looking at a couple deals right now that we're probably

going to kick to the side. We're very picky still. But every time, just because it might look like something on the surface, doesn't mean that's what it actually is. And we do all we can to try and make it work because, you know, it's getting to be a tougher and tougher market now, so you need to think more creatively. Yeah, I love it. Love it.

All right, cool. Well, hey, let's shift gears a little bit here and head over to the fire round, the world famous fire round. It's time for the fire round. All right. Fire round. Let's do it. All right.

You guys know what this says. These are questions asked by Bigger Pockets members in the Bigger Pockets forums, which, of course, our listeners can go engage in at biggerpockets.com slash forums. It is free to post questions and ask people's advice and to even offer advice. if you've got some experience. So with that said, the fire round. Number one, what tools, strategies, et cetera, do you guys use to find whether or not a multifamily house or a property is worth pursuing? How do you do the numbers and decide, yes, it's what I want to do?

First off, I think you have to have some sort of spreadsheet calculator. And I know bigger pockets have some great tools. We've sort of adapted some of those spreadsheets with other tools that we've used before. But you need something that's going to spit out. What's the break even point on the purchase price, you know, how our rent's coming in, what are the potential deferred maintenance items. So I would say, really, and don't just take somebody's spreadsheet and plug your stuff. You need to know what the mechanics are behind those numbers. You need to know what drives them. You need to know what to look out for.

I mentioned the tax assessments. Just because you buy a property and it was assessed at a $15,000 annual tax assessment, that may not be what it's assessed at next year, which could impact your cash flow. Yeah, and that's some of the quantitative stuff. There's also a very heavy qualitative side of this. We're looking at a deal right now in Athens, Georgia. Go dogs. Go dogs.

Dog. Yeah. Which is about an hour north of Atlanta. Northeast of Atlanta, excuse me. Mike's from North Carolina. Like a married couple of these two. Yeah. Yeah.

Yes. Anyway. It's the deal that we're seeing, it's a seven duplexes. And it's way over price. But we looked at the rent roll. And what you find is over 50% of the rents, are on month-to-month leases, or excuse me, 50% of the units on month-to-month leases. They haven't been updated since 2014.

So what that says to me is there's a disengaged owner. The owner is either lazy or he's out of state or he's looking for a reason to sell because he hasn't been managing his leases. The units are under-rented as far as how much they're charging. And if they're doing month-to-month, there's obviously some level of disorganization. So looking for those qualitative aspects about why that seller might be motivated is huge. So comparing that with the numbers. Good. I love it. All right. Next question. How many people on a team do you think is most effective? If there are too many hands in the pot, does it become an issue? At what point does the team get too big?

Sure. That's an important question. I think more important than the number of people in a team, you need to make sure that you're all marching in the same direction. Mike mentioned earlier that we had some synergies with Aziz Khan and Kieran Artham as a core group. and we have the same value system in terms of being a real estate investor. So if there was a fifth person that was just amazing and fit in, you know, in lockstep and it made sense, then that's something that we would evaluate. But we still, we don't want to dilute ourselves any more than four. Four works for us right now, I would say. It's kind of nice to have a balance.

Two people, you know, often have one viewpoint. The other two have another viewpoint. So we have to get over that hump and make things unanimous before we make a big decision. You're kind of like the Ninja Turtles. Yeah. Yeah. Who's like Raphael? I'm Michelangelo, definitely. Oh, okay.

Okay, good, good. I'll go with the Ben Affleck. I'll stick with that. Okay, okay. See what I told you, Brandon? You're going to create a monster. He's got a big ego, man. His head's almost, almost as big as your head was when we started the podcast, Brandon.

Almost, you know? Almost. They'll get there. They'll get there. Hey, really quick. Aziz, I know you mentioned Aziz is a BP guy. I mean, did you actually find him on the site? or how'd you guys come to meet?

Yeah, so we did. We actually found him and Kieran on the site. So, you know, a big, thanks to bigger pockets because the networking there is huge. There's the behind-the-screen networking that you can do in the forums, which is invaluable. But then there's also getting out from behind your computer and going to those meetups and finding those local investors. He went ahead and scheduled these meetings, 30, 40 people, you know, at a local lunch spot, just sharing, you know, what their real estate experiences. We knew each other beforehand, but we really really. started to hit a stride with our investing by sharing Bigger Pockets articles and, you know,

getting in the forums and, you know, passing things back and forth to each other. But we actually met Aziz and Kieran both on that side. Yeah, and I think another point on bigger pockets, and I know you guys didn't pay us to say this, but really we attended, you can if you want, right. We attended some meetups that Aziz or other people had, but we've also tried to create meetups of our own at our properties, kind of like a workshop thing where we, we walked people through. that 16 unit property to see, you know, just how crazy we are to even buy the thing, but then where we were in the construction process. And that has led to other connections. So, you know, you think we're giving back, which that was part of our intent. But the other

part of the intent was to see who was out there, who would show up, who was interested in other deals. So it's a great networking community that doesn't really exist anywhere else. And congrats on 500,000 members, by the way. Boo-ya. Thank you. Thank you. Boo-ya. All right, just a quick, quick tip here for people. We actually do have a forum on bigger Pockets where you can go and, you know, post about upcoming networking events in your area or find ones in your area. Just head to BiggerPockets.com slash local connect, local connect, and you'll be redirected to that forum.

Check it out, people. All right. Question number three. How do you guys tenant proof your property or do you? Yeah, we definitely take that into consideration. And I would think the thing that we most factor in are carpet versus vinyl or tile, you know, whenever possible, we go with a vinyl or we go with a tile because the durability is there. The cost is somewhat similar if you're bargain shopping. So, you know, again, in some of these B minus properties

that we have, the specific tile we're using isn't a huge issue. So we'll go around Atlanta and find 33 cent apiece tiles and install those. We also try and not do things like ice makers, little things like that, because those can break easily. If you have some overhead electrical fixture, put a light in there, not a fan. Fans break easier. So, really trying to reduce the amount of technology, if you will, in the house. I know fans not exactly a technology, but things that could easily break. It's easy to put a light bulb in. It's tough to put a fan in. And one thing we're working on every day is reducing turnover costs at our properties, especially that 100 unit property. I remember Grant Cardone, the 10X podcast,

taught about how you wanted bigger problems. That means, you know, bigger opportunities. And this one has a potential to be a bigger problem for us when we don't manage expenses. So we're in the process of trying to figure out how we can, you know, eliminate carpet as we do turns to Mike's So it would be significant for our bottom line. Yeah. Throw one quick tip, another quick tip out there. One thing that I find that works really well, and maybe you guys can use it. Have you guys seen that Allure, Vinyl Plank Floring that they have?

Sell at Home Depot. Yeah, I put that in, I put that in like eight years ago with some of my worst rentals. It looks as good as a day I put it in. It's like two bucks a square foot. So I like that stuff. And this isn't exactly tenant proofing, but we buy in bulk. So we have a guy who has a lot of HVACs or furnaces, and he might find a good deal. And you'll have, hey, we'll have three to five of these.

You want them. Well, we don't need them now, but yep, we'll put them in a down unit. We'll get them for later. It saves us money. Cool. Good idea. All right. Last question of the fire round.

Should I avoid buying property in an area where the laws are highly tenant friendly, rent control, things like that? That's a good question. We're in a unique situation because Georgia is probably more landlord friendly in some cases. So I don't know. You know, when you are dealing with a number of tenants, If you're getting in the 10, 15, 20 plus tenant range and you start dealing with professional tenants, maybe that can be a challenge in some states that have different law,

law for, you know, landlord-friendly versus tenant-friendly laws. It's a tough question. I don't have any great advice on that, but again, that will go back to that qualitative component of analyzing a deal. Something you factor in. Yeah. And really quick, we've had a lot, not a lot. We've put out a few articles on professional tenants for those people who don't know. these are tenants who know the laws better than most landlords do and they know how to manipulate the system

and they know how to basically get into a unit and never get thrown out and it can be exceptionally costly. I know one of our users I believe was trying to evict somebody for like two, three years, was it, Brandon? Will? Yeah, yeah, I think it was four or five years even, I think. It was a long time. Yeah, it's crazy. So if you don't know anything about professional tenants, you don't understand it, jump on Bigger Pockets and search for the term professional tenant.

And we'll try to add one or two pieces to the show notes as well at Biggerpockets.com slash show 175. But it's something you definitely want to know about if you're a landlord, especially if you're a new one. Yep. They're challenging. Yep. All right, cool. Well, hey, let's close this thing out by moving over to the

Famous for. All right. The World Famous For, which funny enough has kind of turned into Famous Five. You notice that? Because we actually ask a fifth question. But whatever. Famous Four. Number one, what is your favorite?

And you can each answer this. What is your favorite real estate-related book? We taught ahead of time and decided we'll just do one and one. Because I think we have kind of share an answer a little bit. But in terms of real estate books, instead of giving the Robert Kiyosaki, although he has some good stuff, it's really lately for us been looking at like market trend reports and bigger pockets articles because books are important, but right now we're looking for like what, what do we need to know in 2016? What do we need to know today that's impacting our local market? And there's

so much information out there, but looking through the MLS, looking through just general real estate reports, I think, are really important for us at this stage. Love it. Cool. Cool. Cool. Yeah, so this one gets thrown around a lot, but I'm going to say the four-hour work week. Cool. Again, when someone writes a book like that, they kind of take it to the extreme. But if you really kind of pair it down to some of its core fundamentals, it's all. about being efficient and automating wherever possible. So if you look at it for underlying themes, it's a great book. It's something that you can read a couple times without getting bored and pick up something new every time. I've read a handful and then really love it. Yeah, I reread that

every year. Yeah, I try to give it to Matt and he hasn't read it yet. It's been like a year and a half. Oh, Matt, just listen to the first few podcasts. Yeah, you'll hear about my story with that book. I'm like, I'm right there with you, Josh. Matt doesn't know how to read. So by the way, I I know, you know, but by the way, you know, it was probably for like, it was probably a day or so. But like when when Google's new Google Play podcast store launched, they now have charts and rankings. We were, I believe we were ahead of Tim Ferriss for like a day, which was, you know, we took some pride in that. But on the business category. Anytime I can beat him, it's good day.

Yeah, anytime I can beat him, it's good day. Eat this, Tim Ferriss. I think I did that one time. All right. That's awesome. My question number four. The last question of the famous sport. Oh, no, that's right.

You have yours. Oh, I was going to skip yours. Hey, guys. Hey, guys, what do you do for fun? Good question. We, you know, like Georgia football. I like to hunt and fish. I like to play golf.

When we're on a vacation with his family or I'm on vacation with my family, though, we'll still kind of stay in touch. about real estate stuff. So we're nerds about it. Just like the honeymoon. Yeah, I mean, it's kind of an itch that you just scratch it. Nice. All right, guys. Last question. What sets apart successful investors from those who give up fail or never get started? Pretty good job, Josh. And Brandon Turner.

It's not your impression of me of Brunit, dude. I saw it Italian. Yeah, that sounded just like Italian. Are you kidding? You know, there's so many different things. You know, you can take this so many different directions. I'll hit on a couple. Being intentional about what you want to do and actually following through with your intentions. It's very easy. It's very easy to sit there and talk about it, to kick deals back and forth, to run the numbers. It's a whole different ballgame to actually go through with closing on a deal.

I would say focusing on taking action and then surround yourself with like-minded individuals. You know, we're big on the team. The four of us, we all worked together really great. Couldn't replace, you know, any one of them because we have such. harmony with what we do. So surround yourself with like-minded people, people who want you to be successful, people that you want to help be successful, and then just follow through. And we talked earlier about confidence. You know, I think when you're dealing with these larger-scale deals that seem intimidating, having the confidence to say, hey, you know, I could figure this out. This isn't

too outrageous and just going from there, not limiting yourself to thinking that you can't handle something. Exactly. I love it. I love it. Awesome. Well, before we let you both go, where can people find out more about you? Yeah. So you can find us on bigger pockets or you can find us on our website cambridge dash ig.com we can send you that information so you can put in the show notes cool sorry you just you just you just did you stole his line that's all right we will we will put all the information including links to all four of you guys's bigger pockets profiles and i'm going to throw up a picture that just shows how much you look like ben afflick i'll put that in the show notes at biggerpockes dot com slash show i'm never going to hear

the end of that 175 mike and matt thank you guys so much for coming on. We really do appreciate it. That was lots of fun. Congrats on all the success so far. Thank you guys. Congrats to you all as well. Thank you. Thank you. We'll see you around. All right. All right, guys. That was Mike O'Connor and Matt Wood.

Big thanks to Mike and Matt once again. A lot of fun, cool show. My God, that guy needs to get more energy, doesn't he? They're both fun guys. I really enjoyed the energy on that show. I mean, from beginning to end, I don't know. They had a lot to say. They were very fun. and he looks just like Ben Affleck.

Oh, right. My God. You're kind of obsessed with Ben Affleck. I'm just saying, like, I felt like I was talking to a celebrity, the whole, the whole episode. Well, you, I mean, people say that I look like, you know, a mix between like Tom Cruise and Matt Damon and Ben Affleck. I don't know. I'm trying to think of all the good-looking guys in Hollywood they say are, you know, like to combine them all. Oh, what's his name, Adam Levine?

You know, just combine them all into me. That's what they say anyway. Right. Yeah. That's what I hear. They are the voices in your head? My wife. Come on.

Yeah, yeah, yeah. Anyway, great show. My mom, too. Can we move on? You're done. You're done. I was a lot of fun. Lots of cool info.

Kudos to those guys. I mean, very impressive that they tackled what they tackled. I mean, to go from one unit to, you know, bigger and bigger multis was pretty impressive. So, and the fact that they weren't afraid to realize what, when they needed help. and step out there and do that. I think that's one of the things that folks fail to do a lot of times is, you know, they get stuck and they're like, oh, I'm stuck. I'm out.

I quit. I'm done. I quit. Yeah, versus saying, you know what, let me go get some help. Find another way to do it. You got to find another way. Like, if you just quit when things get hard, you're never going to be successful in anything. That's all there is to it, right?

Like, hello, obvious. Yeah. Yeah, I love it. Cool. All right. Well, good show. Guys, check out the show notes, it's a biggerpockets.com, slash show. 175, that's biggerpockets.com slash show 175.

Jump on the site, create an account if you haven't already. Obviously, you can link up and connect with guys like Mike and Matt. And as you heard, I mean, they've used bigger pockets to build their team. And if you haven't even thought about doing that, you're definitely missing out. There's a whole ton, 500,000 plus other real estate investors on bigger pockets. And there are certainly some in your area. So get on the site and create a free account today. And with that, let's get 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. Famous. That was good, guys. I like that. Thank you. Yeah, we sub it in now with the sound effects, but we still do it every time. We should still use it, but we should just. Yeah, just nobody hears that.

We do it every time. All right. And the harmony. That's amazing. We're singing. All right. Nice. 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, 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. 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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