BiggerPockets Real Estate Podcast - 275: Buying 300 Homes While Working a Full-Time Job with Attorney Rob Oliver

Episode Date: April 19, 2018

“The wrong lease could cost you $15,000 or more.” That’s one lesson of many you’ll get today on this powerful episode of the BiggerPockets Podcast. In this show, we sit down with real estate investor and attorney Rob Oliver to learn how he went from helping other investors buy real estate to owning over 300 condo units while working full-time. In addition to his incredible story, you’ll also get keen insight into the world of real estate investing from the eyes of an attorney—without the $250 billable hour! You’ll learn the importance of a strong lease (and what happens if you don’t have one), as well as instructions on how to find a great attorney and get the most from the attorney for the least cost. In This Episode We Cover: How Rob got started in real estate The journey from lawyer to investor How to find properties other investors aren’t looking for Why he invests in condos Tips for investing while working full-time Advice for those starting out in real estate investing The different hats he wears and what he does in his business How to grow a 100-unit portfolio What to do with nonpaying tenants How to find a great lawyer Why it’s OK to cancel a deal What his future looks like And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Landlord Forms Zillow Redfin Books Mentioned in this Show Rich Dad Poor Dad by Robert Kiyosaki The Cashflow Quadrant by Robert Kiyosaki Jesse Livermore: World’s Greatest Stock Trader by Richard Smitten Fire Round Questions Hey guys what are some of the clauses that you find extremely useful to have in your leases? Without starting from scratch, I’d love to see if anyone has an existing clause to a lease listing certain conditions that shall be adhered to by the tenant. Tweetable Topics: “You don’t need to know everything before you get into a deal. There is actually time to research it.” (Tweet This!) “Each deal that you cancel, you learn something from it.” (Tweet This!) Connect with Rob Rob’s Law Firm Rob’s Email Address Learn more about your ad choices. Visit megaphone.fm/adchoices

Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income. Legally, 100% IRS compliant. That's instant cash flow improvement. Cost segregation guys is the number one firm nationwide, specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from remote cabins to

apartment complexes. So if you own investment property, this is a no-brainer. So visit costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsor job Post help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works.

Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. and listeners of this 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. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. the lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a program

to help prevent that. With their new Express rental loan, you can close in 10 days or less. And they still offer their price beat guarantee so you can get great pricing and a timeline you can count on. Fast, simple, reliable. That's Dominion Financial.

Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. This is the BiggerPockets podcast show. number two, 75. You don't always have to know everything before you actually get the deal. And there is actually time to research it. And sometimes if it doesn't pan out, you find something you don't like and the seller won't work with you or if you want to cancel the deal, then you cancel it.

You know, there's no, you don't have to bat 100% on your offers either. So like I said, if it was one in 10, I got an accepted contract, there are probably 20% of those deals that I also canceled too. So it is a numbers game. And each deal that you cancel, it's you're going to have learned something you're listening to bigger pockets radio simplifying real estate for investors large and small if you're here looking to learn about real estate investing without all the hype you're in the right place stay tuned and be sure to join the millions of others who have benefited

from biggerpockets.com your home for real estate investing online what's going on everyone this is brandon today's host of the bigger pockets podcast here with my wonderful awesome co-host, Mr. David Green. How you doing, David? I'm doing great, man. How is Hawaii treating you? Hawaii is treating me well. I got one more month here and then everyone will be able to stop listening to me, talk about how awesome Hawaii is. So we're heading back in May. You're buying a house, right? You're trying to buy something and move out there permanently. Well, I'm exploring the idea, or at least having a property, like a second property I can rent out when I'm not there and I can go back and forth. That would kind of be ideal. So I put an offer on a house last week.

actually, or was it two weeks ago now? And, you know, we're in negotiations. I actually don't think it's going to go through. But as we talk about on today's show, that's fine. This is a numbers game. I'm not emotionally attached to it. I was a little emotionally attached, but I'm not that emotionally attached. Like, it's a, if they end up accepting my offer, it's going to be a great deal. As an investment property even, in Hawaii, which people say it's impossible to find. It's not. But if they don't take it, I'm going to keep looking. That's how the master buys real estate. That's the master real estate strategy. No, it really is.

And we talk about that on today's show that like our guest talks about how 90% of his offers get rejected. You know, and that's kind of about my number too. I typically lose about 90% of my offers. And he talks about why that doesn't matter. But before we get to today's show, I don't want to talk too much about it. I want to get to today's quick tip. Now, today's quick tip is I want to tell you guys a little bit about bigger pockets landlord forms. If you are in a real estate investor who owns rental properties,

or you plan to. You need to pick up some of our landlord forms. We have currently 34 different states that we have landlord law, like, you know, specifically state was, what's the word state approved landlord? Yeah, state specific landlord forms that have been looked at and prepared by other, like, attorneys in those states, which is super cool. There's eight different documents, including a 12-page lease and application, addendums, et cetera.

and it's like way more comprehensive and way more legal than you're going to find like some free form online. So like as you'll hear today and today's show, having a good lease is so important. In fact, our guest today tells a story about how, you know, you can lose like 15 grand if you would just have the wrong lease. So don't have the wrong lease. It's like not that expensive to buy the leases on Bigger Pockets. I think right now where there's a sale, you can get it for like 100 bucks. I don't know when that sale ends. So pick it up today, biggerpockets.com slash LL forms.

And with that, let's get down with today's show. So, DG, today we're talking with a lawyer. That's always fun, right? Talking with lawyers. Yeah, that's one of the things that I wake up every morning and I'm upset if I don't have a lawyer to talk to. I know the day is going to be boring because I don't have any legal advice. But they're kind of like vegetables, right?

Like nobody really wants to learn the law or talk to lawyers or you vegetables, but you need to do it. It's good for you. It's healthy. So you just go through with it. And then when you're done, you're like, I actually feel really, really good. and I'm ready to go take on whatever I have coming up next. So I'm a big fan of learning as much as I can.

And when it's just topic that's really boring that I don't enjoy learning, I enjoy listening to someone else give me kind of like the quick, condensed version that I can learn from there. Much like these forums on bigger pockets, I'm really not going to want to have to go try to figure out how do I drop a bulletproof lease. I just want to click a button on bigger pockets because someone who likes that boring stuff, some vegetable eater has already made it for me. And I can just go get it from them.

So this show is actually, it's very, entertaining, right? It's a good show. I'm not trying to say it's not. It's great. But where else can you find a lawyer where you can actually be entertained while listening to them? That's what's awesome, right? Yeah, because he's got an awesome story. Like, we don't sit there and drill him on legal stuff all day. Like, it's not like a, but we talked to this guy today. His name's Rob Oliver and he's an attorney that he like just like happened to go from like one like condo to 300 condos like in a short period of time. And he like, I don't even think he realizes how awesome that is. Like he's just like, it's just what I did.

and like what's the big deal. But you guys are going to love this story. Again, Rob Oliver is amazing. Lots of good advice in there about like being a landlord about buying rental property, but why condos might need a, you know, like I've shot away from them. But after talking to Rob now, I'm like, maybe I should have looked more into them. And maybe I should. I know.

I'm thinking of that too. Yeah, I'm like, this is cool. So anyway, he's got a super cool story. But again, today's show is with Rob Oliver, an attorney from the Chicago area who went from like, you know, buying nothing or having nothing to like 300 condos. And he talks about his journey there today. So with that, let's get to the interview. Oliver, welcome to the Bigger Pockets podcast.

Good to have you here. How you doing? What's up, guys? How are you? Good, good. This should be a lot of fun today. And I will be honest, I know pretty much nothing about you whatsoever. So we're going to start very early in your journey.

Tell us about yourself. How did you get into real estate? All right, sure. Yeah, I've got an uncle that is a real estate lawyer and owns a title insurance company. So after being a caddy at the golf course for about seven or eight summers, I graduated high school. And my uncle says, hey, listen, why don't you come work at a real job and stop carrying golf bags around? So I showed up to his title company and, you know, rolled in the door, saw a couple real estate closings going on and quickly got assigned some duties as a clerk paying water certificates and recording deeds and kind of like an assistant around the title company for a summer. And, you know, it's one of those things.

It's like a full transformation. You see the lawyers. You see the brokers, the buyers, the sellers. They all walk in and they're all walking out, you know, smiling. or yelling and they've got big checks and wire transfers are coming in. So it was a nice welcome change. So I did that for, you know, I worked my way up to a closing agent at a title company and did that on like summers and holiday breaks from college.

And then I also, after college, ended up going to law school. I got a degree in college in real estate finance. And then I was pretty interested after seeing all the lawyers come through the title company. So I enrolled in law school and, you know, I had a job as a closing agent and I worked as a real estate broker in law school and was pretty fortunate to be able to pay cash for law school, not have any loans. And I kind of had, you know, my own sort of internship instead of working at a big law firm. So it was a good learning experience and paid pretty well and kind of got me, got me going as a real estate lawyer. And it was a nice head start. Okay, okay.

So you went from lawyer to eventually investor, correct? Correct. So walk us through that transition. Like how long did that take and like why did you decide to make that jump? Yeah, sure. So the practice I started at was again the same uncle that owned the title company. You own a law firm. So small firm, only four lawyers.

And I wasn't given a book of business when I walked in. He basically said, you eat what you kill. Whatever you bill, you can take half of. And the other half goes to the office for support staff, malpractice, insurance, stuff like that. So, you know, I was on my own. And I linked up with some real estate brokers I knew and some other real estate clients. And, you know, I started practicing law.

And for the most part, I was interested in doing real estate transactions. You know, I knew I wanted to become a real estate investor at some point in time. But, you know, I didn't have any money. I didn't have any experience investing in property. I certainly didn't know what the correct pricing of properties were. So, you know, I went about practicing law. It was 07. I got out of law school.

And at the end of 2008, you know, I'd been practicing. and maybe a year and a half and, you know, the recession hit. And transactions came to a screaming halt. Prices were going down. And, you know, I had very little business. So I was kind of put in a situation where I needed to adjust and become a litigator or I needed to find some other way to make money. And I stumbled upon a foreclosed condo with whose gentleman who's now my business partner. And by happenstance found a deal that had the perfect fundamentals in terms of rental income, acquisition price and, you know, it's sort of like the rest is history. So, Rob, one thing I know is that lawyers make their living.

They literally make their living by knowing everything there is to know possibly about what they're doing before they get involved, right? If they're like a trial lawyer, they know all of the law, they know the judge, they know the jury, they know exactly where they're going to go. Real estate investors don't get that luxury. A lot of the time we are learning as we're doing things, right? And sometimes we're only learning through doing things. Can you tell us how on earth you made that shift to get comfortable buying your first deal,

what that first deal look like, how it shifted your mindset getting into it, what that kind of journey was like on your first deal? Yeah, sure. So, you know, it definitely helped because I had a background in title, you know, working at the title company, I understood how to research properties, how to go through the public records, which I would recommend to any new investor. If you're, you know, trying to get your feet wet and you want to get in there, just soak up as much information as you can.

You know, the public records are, although you can. find some things on, you know, Zillow or Redfin or these, you know, various websites out there, you know, I think they're somewhat inaccurate or you're not verifying at the actual source. So, you know, what we did in terms of research has reviewed the public records in the recorder's office. So, you know, on the particular condo unit, I'm talking about we, you know, researched, I knew what it sold for before. I knew what it sold for before then, what year it was, what all the other units in the building were selling for. And it provides a good roadmap in comparisons, you know, hey, here's what I'm getting into. I stand to make a good deal because my

discount is this compared to the other units. And it sort of fell into place. But you can't just stumble around and say, I'll just make an offer. And, you know, I think I'll get lucky. And I think it's a good price. But if you don't really know anything, you know, you're basically doing the same thing as if you're, you know, walking into the casino and playing a little blackjack. So, you know, in this particular unit, we ended up buying a condo. I paid $30,000 for it. It had previously sold about five years earlier. This is 09 when I bought it. And it was sold in 040,05 for $140,000.

So I'm thinking, wow, this is an incredible discount. You know, it was, you know, 20 cents on the dollar. Okay, something, okay, wow. If it goes lower than 30 grand, you know, the whole world is sort of done for us. So it doesn't even matter. I'll just go with them. So, okay, so my partner and I walked in, we made the offer. we got it and I think, okay, now what do I do?

We found a contractor. We paid some closing costs, finished the closing. So calling them all in for $35,000. I had it rented for $650, you know, about a week later. And I ran the number. I said, okay, this is a 12% cap rate. You know, the cash on cash return, you know, assuming we pay cash for everything, it's 12%. I'm going, okay.

So I'm getting a 12% yield on my money. I just bought for 20 cents on the dollar. These are good fundamentals. I just don't see what's going wrong. That was a cool first deal. It was definitely small ball. It's not sexy or glamorous, but, you know, that's kind of why I attributed to why it was such a good deal. No one wanted it.

It was just, you know, a crappy little condominium. Where was that? Where do you find a $30,000 condo? Albany Park. It's in the, you know, a neighborhood of Chicago on the northwest side. Working class neighborhood, you know, just at the time, it was not a favorable asset class. So it didn't trade for, you know, for a high number. but, you know, all the sharks and the sort of institutional money at that time were chasing after,

you know, distressed apartment buildings that were selling it, call it, call it, 80 or 100 grand a door and also had like inferior finishes than what was a, you know, an older or converted condominium. Okay. So if I hear you right, Rob, you're, you took the knowledge that you had from working at a title company, which was kind of a unique set of knowledge that many people might not understand what help you with investing, but that's what you had. You dug in and you did a research of the history of this property and you found that at the peak it had been selling for 160,000. And then it was listed at 40,000. You offered 30. Is that correct? Yeah, 140, I think was the, 140 sale price. So you felt, you felt confident to jump in because you knew the history of this thing is crazy. It was so much high.

This, you know, 30, 40 grand is a deal and you knew it was a deal because you knew the history of the property. Correct. Yeah. You just walked up and looked at a listing and said, hey, this con, does list for 40 grand. You're just thinking, okay, it's junk. What am I doing here? But, you know, you don't have the vantage point of knowing, hey, here's what, here's what previously sold for. Oh, by the way, there's 30 other units in the building. Here's what they all previously sold for. Something's wrong here. You know, whether it's broker mismarketing or, or, you know, a lot of different variables as to why you can find the price. But, you know, just in general, it seems like you got to have some skill to bring to the investment table. You know, mine happens to be.

in, you know, title insurance and law, but, you know, whether you're a broker or a lender, just, you know, some, you have to have some, I think you have to have some kind of angle to approach the deals from. So you have, you know, you're not just an outsider, like, you know, it's the equivalent of looking at a stock and saying, oh, I, I like the way the Microsoft logo looks or I like the way Google looks now. You don't know anything. You're just throwing darts of the board, right? Yeah. So, uh, that's great. And I love that you, you said you have to have a skill. That's totally true. And not everyone needs the same skills. Some people can analyze a deal. Some people are great with finding other people and building relationships and they can find someone that finds a deal.

Some people are contractors and know how to estimate rehab costs. You know, there's all kinds of skills that you can have. You use the ones you had to get you to move forward. Then you said something else that was really interesting. I want to dig in on. You mentioned that nobody else was looking for those deals. Institutional investors were looking for something much bigger. You were kind of flying under the radar going for these condos.

And the rent you were getting was putting you at like the 2% rule, right? Yeah. It was, you know, again, it was totally. it was a random occurrence, but we fell into it, saw some of the fundamentals, and I said, hey, this is a good model. No one wants these. You know, like everyone's going right. So I just said, okay, we'll look left and see what we can do here. And, you know, it's not a sexy business model. It's not glamorous, but, you know, it was very programmatic and I was able to replicate it over and over and over. And, you know, at the end of the recession, you know, with that same strategy,

you know, I massed about 300 condo units, buying them for the most part. one at a time. You know, we did some small packages, but a lot of, a lot of small dollar transactions. Did you say 300 condos? Yeah. Holy cow. And they probably spread out through, call it, 250 different condo buildings. Wow. All right. So we, I want to dig on, on condos because like, this is something that I've generally been avoiding in my investing as condos, because condos freak me out a little bit because of HOAs. And I'm like, well, what if they raise the HOA fees? or what if they suddenly do this, but you're finding a lot of success with condos. Right.

So, I mean, can you just talk, like alleviate my fears here? Like, am I, am I justified in being afraid of condos? Am I just not focused on that so I shouldn't get into it? Like, what do you have to say about condos? Yeah, again, ever the investment world doesn't like them. That's, and I think it creates opportunity because there's, there's gaps in that which make it inefficient. Like you just said, you think of the average person that says, okay, I'm going to buy

$200,000 our condominium. I've saved up 20% to put down. Now I've got a $160,000 mortgage. A working class person or someone living that unit is also going to be, it's going to be a big burden to pay a large special assessment. So I think if there's a whole building full of people that has to deal this, I can deal with it too. It's not going to be totally detrimental.

It may be a little bit of a cash flow hit, but a lot of times special assessments are financed over periods of time or else I can attend a board meeting and, you know, provide a contractor or provide some input as to what's going on. On the flip side, what you don't realize, for a new investor, the condo association manages the entire, everything outside the primer of the unit. So, you know, from the walls out, I don't have to deal with roofs. I don't have to deal with shoveling. I don't have to deal with common areas, mowing lawns, any of that stuff.

All I have to do is maintenance on the inside of the unit. So I pay a monthly assessment, which covers the insurance, covers the water, covers some utilities, and then overall management. So, you know, my calls from my tenants are, hey, I've got plumbing issues. So I send a plumber. Turnover. I've got to send a painter. Otherwise, it's just general maintenance or you send a pest guy to clean up bugs or whatever. So it really eliminates the size and the frequency of maintenance calls.

And it just allows it to be very programmatic. Also, at the time of turnover, like on a single family house, you know, you could have a roof go out. You could have to paint a whole house. You could have structural issues. I don't have to get involved with any of that. I may have to pay if there's a special, but for the most part, you can underwrite these buildings

and see if they've got reserves or a good board that's running it. Okay, Rob, you said you went from buying that first condo, realized you had found something and then somehow went from one condo for 30,000 to 300 units, right? That's amazing. There's a whole lot that you learned in that.

That's right. That's incredible, right? Can you share with us a little bit about what that process would like. How did you fund these deals? How did you do this while working a full-time job? Did you put a team together? Like give us some of an idea of how you structure this whole plan and what your thought process was where you said, I got a good thing. Let me multiply at times a hundred. Yeah, sure. So like I said, the fundamentals were great on the first deal. We're at a 12% you know, cap rate and I was buying a

20 cents on the dollar. So he said, okay, we need to do some more of this. So my business partner, I got one business partner and I, we both have full-time jobs. He was working as a real estate broker and an acquisitions guy for a local larger scale investor who would happen to be going bankrupt at that time. So he was looking for a little bit of a transition as well. Sort of replicated that first unit, not exact numbers, but very close. We did that about 30 times with friends and family money, which we would call up or, you know, we got some people to take a leap of faith with us. We said, hey, we'll give you, you know, I'll give you a first position mortgage on our, on our condominium that we're purchasing. I want 100% loan to value, which was sort of,

to wild. We did have a lot of trust from some friends and family, but I was paying 10% in trust. I'd give them a first mortgage. And then once we'd get to the point where we had called five to 10 units aggregated, we'd find some local community banks that were willing to refinance based on appraised value. So we buy rehab, rent them, and then we bring them a stabilized package saying, hey, we've got this much income. We'd like a first mortgage cover all these. And then we've used the mortgage proceeds to repay our investors and then sort of recycle the procedure, recycle the money and do that over and over. When we got to about 30 units, we realized we need to step in gear. We need to move quicker. You know, we couldn't recycle and refine fast enough and we weren't

able to offer fast enough. So, you know, we were coming in the office on Sundays at noon and leaving at two in the morning. And, you know, we didn't even, we weren't even really, we were just analyzing deals on paper. Title research of public records. We could determine how healthy the building was. And we'd look at pictures of the listing to see generally what it looked like. We look at the location on the map and we know pretty much what we needed. So on those Sundays, we'd put in, you know, 100, 200 offers some days, strictly off MLS or through public listings that we saw. And, you know, we were probably striking out 90% of the time.

But, you know, we were offering what we saw fit. We had a lot of angry responses from brokers. But, you know, batting 10% was fine because we knew we were alleviating a lot of the risk. And the deals were byrogan fundamentals. But you know what? To jump in real quick, I think you said something super, super valuable here is that like you're striking out 90% of the time. A lot of people get into real estate and they're like, they make an offer and they don't

get it accepted. And they're like all disheartened and they're like, ah, man, you know, I tried and they didn't take my offer or whatever. But like most investors I know typically will strike out 90% of the time, right? Like they lose over and over and over and over and over. Yet like I just think that's like a good testament to your like, I don't know what you call it, grit maybe, the fact that you like, if you're striking out 90% of the time, that also means you're achieving success or at least like getting closer 10% of the time, right? So it's just a big

numbers game. So can you talk about that? Like, what's that? Like for people who are listening to the show right now who maybe made one offer and got rejected, can you talk to them at all or like anything that helps you kind of get through the hard times of getting rejected? Yeah. So it's, you know, it's patience. A lot of these deals, you know, you got to fight for them. And you can't, you got to just offer where you're comfortable with. If you're putting in a number, because your incentive is to beat your competition, then, you know, you may end up in trouble. I think generally speaking, you put in the offer you're comfortable with, you find, you find exactly what you know and what you can do and make the offer.

It's a lot better to get one in 10 deals than to get five in 10 and then have four out of those 10 B deals you're going to spend, you know, months or years and tens of thousands of dollars getting out of it. You know, I'm generally the opinion that if you have one loser deal, it's going to take at least three or four good deals to work your way out of that. and also your morale is going to be going to be low because you're just, you know, you're questioning your own ability. I love that.

I guess a quick example. I'm, you know, just staying patient and hanging in there. I bought, my partner and I bought a six flat in Chicago just this year. It's not totally different strategy than our condo portfolio, which, you know, is not, our buying opportunity on those condos have pretty much been closed. You know, the distress market's done after the recession. So we're, you know, I'm just looking for new strategies and new asset classes to buy. but you know back to staying patient why there was a deal that was listed on the mLS had an asking

price 595,000 my partner and I looked at it is very close to our office six units there are two retail units four residential units and one store was empty one with there's like a local grocery store and then the four apartments up top were in terrible shape but you know nice size and in good bones to the building so it's for sale for 595,000 and you know we sat that we toured it We looked at it. We talked to the broker. We said, listen, you're overpriced. I'm willing to give you $300,000. You can realize, you think about the reaction. I got a 300, 300 bid on a 595 ask. You sort of like, beat it, you know, okay. So fast forward six months. They've lowered the price. They're down to, they've had a contract fall apart. They lower the price 50 grand. He says,

hey, listen, you guys, you were in the initial group of interested parties. Come tour it again. So we tour again, you know, 300 grand. That's our number. So it's, it's. says, no, sorry, lower the price again. They're at $4.75-ish. We say, no, $300, that's it. So three contracts fall out. Then finally, the broker calls back and says, okay, the deal is yours. Do you guys want it?

And it said, yes. Okay, great. So 500-some days, the property's on the market by the time we got it. And, you know, it ended up working out. The deal, it needed a new roof. There was a gas tank in the backyard that required to be dug up as an underground gas storage tank, which is typically a nightmare for most people. But we had a ton of time. So we were able to get a couple opinions that, hey, we can dig it up and get you all clean letter from the Illinois EPA

within the next three to four months. And, you know, we had one store to rent and we've got four apartments to rehab. We're almost done stabilizing it. And I think we're going to, you know, our numbers are penciling out to being about a 13% cap rate. And it was a deal that sold in 2008 for $535,000. and it sold in 2002 for 495,000. You know, I think when we're all done, we'll be in at about 450. It'll be worth about 750 once for stabilized. And then we'll be able to refinance all our capital out

and just, you know, kind of hold it as a long investment paid on debt. You know, practice old man real estate where you, you know, hang on to stuff for life and pay it off. So, Rob, one thing I want to call out about what you're doing here is like Brandon Turner talks all the time about the more tools you have in your tool belt, the more projects you can take on on a rehab. So if all you have is a hammer,

you can put in a loose nail, but you can't take out a screw. And if you don't have a saw, there's certain things you can't do. You described how you went from one to 300 units. And you mentioned several strategies that we talk about on bigger pockets to help people to kind of grow and to get into the game.

And the first was the burst strategy, the buy rehab rent, refinance repeat. You mentioned several times, we bought a house at a very discounted rate or not a house of a property. And then we made it worth more. And then we refinance and got our money back. And that allows you to now go reinvest that same capital so that you can grow at a much

faster rate than having to save up 40 grand for every condo you want to buy. You mentioned syndication. So you were gathering other people together and getting money from them and going and investing that money. You mentioned private money, which is kind of how you got started, friends and family. And then you talked about making several offers and you're just going to keep offering and offering. And I just want to highlight, that's how you go from 1 to 300 is you master all these tools

that real estate investing provides. You combine them and you can scale really fast. Can you tell us a little bit about why you think you were successful raising money from your family for the listeners who want to do the same thing? And they're just, they don't really know where to start. They don't know what they need to say or how to propose this, what language to use. Can you share a little bit about tips you would recommend?

Yeah, sure. I mean, for starters, you can't really get 10% in any sort of CD or a non-stock market. If you get 10% of the stock market, you found a good investment. guy anyways. But, you know, if you offer your friends and family, any sort of trusted person and say, hey, I'm going to pay you 10% interest. I'm going to give you a first position mortgage on the property is collateral. So, hey, listen, not only my guarantee I'm going to pay you, I'm going to pay you 10%, which is a large number. So that means I'm going to want to get you paid back as soon as possible. And if I don't pay you back or if I get hit by a bus or something

catastrophic happens, you can go foreclose the property and take it back and you'll be able to sell it and recoup all or very close to all of your money. So I think the downside risk is pretty low. There is a leap of faith to get some trust, but you know, you've got to go to a close friend or family member or if you can't, you don't have, you know, capital available. Go find a real estate professional and that, you know, kind of mentor them and gain their trust so you can get a small loan. Okay. But I also think that when you've, when you've taken the time to perform the diligence and you've got the facts and you can clearly explain to somebody why it's a good deal. You haven't answered any sort of negative feedback that you get. You're going to exude confidence

and that's kind of what gets you the money. It's just, you know, be prepared. You have to, you have to know all the facts about what you're buying, why you're buying it and just, you know, soaking as much of the public data as you can. Yeah. Confidence comes from preparation and education. And then that confidence is going to be how you win the people over when you're when you're giving an opportunity to invest with you. And that's what I wanted you to kind of highlight. the more you understand about this whole real estate investing thing, the more likely you are to have someone else that puts their trust and confidence with you and gives you money and then you can go from one condo to 300.

That's crazy. So tell us, okay, you scaled big. You did very, very well. I'm sure your portfolio has a ton of equity and capital is really strong. Can you kind of tell us like, what are you doing now? What's the big picture of Rob's life? I know you're involved in more than just real estate investing. You wear many hats and that's part of why you're successful is you see this from many angles.

Can you share with us the different hats you wear, what you've learned from each one and how they all kind of play into this big scheme of what you put together now? Yeah, sure. So, you know, I love being an active real estate investor. Unfortunately, the market is not totally right for it right now. I think it's there's very little supply. I think there's a ton of cash on the streets that are looking for deals. And it's not impossible to buy. There are still great deals out there. It's just a little bit more competitive and it takes more time. So at the time being, I'm not pedal to the metal, but I am always looking at deals. And I'm practicing law.

I'm a real estate attorney. And, you know, I focus a lot of time on managing our and making our existing portfolio more efficient. Some of the ways you do that are by sharpening up your systems, I'm constantly updating them to deal with new laws that are coming out or experiences that I've had that I think can that can streamline our tenant relations. So that's, you know, property management and practicing law are sort of what it most focused on at the moment. So how do you do your property management? What's that look like? I mean, you're not out there swinging a hammer fixing plumbing under a house, but are you taking phone calls? Do you have a property manager?

What's that look like in your life? Sure. I've gotten excellent in a house property manager. Believe it or not, my business partner and I are both actually involved in property management, but we do have one gentleman who's our full-time property manager, works in our office every day. and he is sort of the front lines with, you know, taking calls from the tenants, doing leases, collecting rents, and dealing with all the rehabs. But for the most part, it's, you know, it sounds made up that you can have one employee to manage 300 units

and not, my partner and I don't have to do it full time. But the reality is with technology today, it's amazing. We, you know, we can docc sign leases. I can collect rent payments via Venmo, Chase Quick Pay or ECH. We've got portals set up for placing repair calls or repair emails. And then we've got a very tight list of vendors for, you know, like I said, for rehabbing the inside of a condo unit. There's only a list of five or six things that can go wrong.

So I've got two or three professionals in each sort of rehab category that I send for different tasks. So it becomes a very repetitive business. Okay, Rob, what you're saying sounds too simple. I know that that may be the case, but I'm still scared. I still just feel like having 300 units would create so much liability that I could never grow that big. Can you tell me if there is an answer out there how I can feel comfortable enough to grow a portfolio that big without worrying about being sued, having my places burned down, having somebody throw a huge party in the condo and trash shit? How can I know that this is a good idea?

Yeah, so first you've ever got a monster umbrella policy to back everything up. Okay. No, no, just, I mean, enough, something that's adequate. your insurance agent can always help with that and helps you sleep at night. You need to segregate liability with LLCs. So I've got, you know, different limited liability companies for, you know, not for each property, but, you know, I group them up and depending on how I finance them or the asset size, you know, it's good to separate them.

You don't want to have all your eggs in one basket and you want to make sure you've got enough insurance. You know, on condos, the association assessment covers the majority of the insurance, which is for the building. but then I carry a rental policy for the inside contents. And I require the tenants also to get a renter's policy for their own personal property. So that alleviates things like, you know, hey, the unit upstairs flooded into mine, the pipe broke, or I was broken into and you didn't provide enough security, things like that. So, you know, you build insurance.

You need to build the cost of your premiums into your underwriting models and just, you know, make sure that's taken care of. But otherwise, it's, you know, there's a lot of common sense. If someone emails you or calls you, get back to them. I mean, don't put it off and, you know, just be responsive and be of service. Okay. Is there anything that you can tell us specifically about the lease that kind of gave you, you know, confidence or a sense of security that, hey, I'm increasing my risk by increasing my size,

but I'm also making steps to mitigate that risk. Sure. So in Chicago, and I suspect it's the same case. I don't almost all my property in Illinois. So I can't really speak to other states. But in Chicago, and I suspect it's most of the larger metropolitan areas in the country, the laws are heavily slanted in favor of the tenant. You know, pretend that the person running the laws or the legislators,

they're under the assumption that each landlord is filthy rich. They own 5,000 apartments. And they don't ever fix anything. They don't ever respond to a call. There's cockroaches all over the place. you know, so that's sort of what you're dealing with. When you roll into court day one and the judge looks at you, he's got to follow the laws. You may not agree with them, but they are written to favor the little guy.

And it's not, it's, there is a reason for it. There was a reason for it, but it's not always fair. So, you know, if you don't have the correct lease or if you don't have the right disclosures in your lease, or if you collect a security deposit, there are many different circumstances where you're going, you're coming into court and your tenants, 10 steps ahead of you. For example, in Chicago, there are a whole handful of tenants rights attorneys that partially part of the court fee when you pay to file an addiction funds the tenants attorneys. It's a nice service. It's necessary and it's good for social purposes. But when you're a landlord and you

have a non-paying tenant and you haven't done anything wrong, you need to be in a position to protect yourself. In the city of Chicago, the biggest issue is security deposits. Believe it or not, I don't have, I maybe have three or four security deposits on all 300. my units. Those are tenants who haven't moved out since 2009 or 2010, and therefore I haven't had a reason to refund the security deposit or they haven't accepted a refund when I'm offered it back to them. But for the most part, that's the biggest no-no in the city of Chicago. For any of my clients, I recommend not taking a deposit for the simple reason, you have to hold it in a segregated account. You have to give them interest, which could amount to, you know, 12 cents a year. And you

have to do it by a certain deadline. The list goes on. There's probably 20 different things you have to do correctly. I'm an attorney and I would need a full-time, you know, extra property manager or two just to figure out how to deal with secure deposits correctly in each circumstance. So in the penalty, if you don't do that, is three times the security deposit plus the attorney fees for the tenant. It totally puts you behind the eight ball when you've got a non-paying tenant. Quick example, one of my clients comes into my office and says, hey, I've got a tenant. They're not paying rent. I need you to do an eviction. So it said, no problem. I gave him a notice. They came back a week later, said, hey, I gave them the notice. They still haven't paid. Why don't you go ahead and

file? So basically, I'm walking into court. I know their lease is bad. There's nothing I can do about it. They've already broken all the security deposit violations. I didn't write the lease form. They, you know, they pulled it off of Google and it maybe wasn't even written for the state. So it was a rough lease. So I'm hoping, okay, let's hope this tenant doesn't get a lawyer. Sure enough, lawyer shows up to court day one. I've got counter claims. You didn't pay interest on your security deposit. And we're coming after you.

And by the way, my tenant's not leaving. Okay, so here's fast forward to the end of the case. I'm in court probably five or six times dealing with these tick-tack violations. It takes six months before the sheriff actually goes out and evicts this tenant. So it's a thousand a month, was what the rent was. No rent was paid for six months. So landlords out six months for $6,000. I'm into I'm into them for a thousand dollars for court costs and fees so at seven thousand

dollars they had to pay the tenants lawyers fees that's eight thousand dollars another a thousand and then there's a one hundred dollar penalty for the violations that they had now they're in you know well almost almost about ten thousand dollars and tenants just out places trashed they've got to do turnover now it's unbelievable because all of this is avoidable had the tenant done it correctly on day one not taking a security deposit I could have gotten them out of court and probably or out of the unit in probably six to eight weeks or negotiated with their lawyer to get rid of them because they'd have no leverage in court. And it's one of those things where it's like, hey, for, you know, one or two billable hours,

you could hire a lawyer on the front end. You never have to deal with this. And, you know, this is not something that I see sometimes or on occasion invariably. Eight out of ten clients that come in my office have a terrible lease. They've broken all the rules because it's sort of, you know, everyone's intimidated to go talk to a lawyer on the front end. And it really, you meet a new person, you got a new advisor. The lawyer's going to want to do closings for you and do legal work. So, you know, they're going to like to meet you as an investor. And for call it $500 or $600, you're going to have

a bulletproof lease for whatever city you're in. So it's, in my opinion, a no-brainer. You got to get a tailored lease for your properties on the front end. Yeah. I think the biggest mistakes I've made in my own career have been because I was trying to save money up front, like not using a property manager, for instance, when I was not in a position to do it myself. And then that led to a horrible eviction and lost rent and all kinds of problems because I didn't want to pay up front. I think having a lawyer in your corner is really, really valuable, even if for nothing more than just your own sense of confidence, it comes from knowing, hey, I got big brother behind me flexing his muscles and he can take care of me when

something goes wrong. Can you tell our listeners a little bit about what you would recommend for an investor to do? How does this whole process look to get a lawyer? Do you just start calling people and say, I need someone on standby? Is there an agreement you fill out? What does that look like? No, I think it's just a referral. You know, if you're if you've gone as far as to buy a property, you know, depending on what state you're in, you may have used a lawyer to buy the property, or you, you've probably worked with a real estate agent, either the listing broker or the, or if there was a broker who found it for you. So, you know, you've met a few people. You've gone that far, you know, ask around for recommendations. The other thing that's kind of interesting is, you know,

in the past, what I've done is I, even though I am a lawyer, what, what I've done is I've hired other lawyers in my city who specialize in representing tenants and evictions. And I'll pay them three, four, or five hundred dollars to draft a lease for me. And it accomplishes two things. One, I see how they attack it from the tenants perspective. And if there's other laws or angles that I haven't considered, even though I am a lawyer and understand generally how it works. And then two, the second best part is now I have an attorney-client relationship with a tenant lawyer. So if I have a tenant that I'm suing and this, you know, Shark tenant lawyer tries to represent them. They've got a conflict of interest. So they can't, now they have to back out of the case or in the tenant has to find a new

lawyer. So that's, that's kind of a decent strategy too. So me as an investor, do I want to call a lawyer and say, hey, I'm an investor. I need a lawyer. What can you do for me? Or do we, is there specific questions that the listeners can know, hey, this is what I need to call a lawyer and ask him? How does that process work with you when you're working with a lawyer before you're being sued? Yeah, you want to, you want to get the lease done. You know, you want to, are you talking about like before, before you sign a lease? I think, I think that's the best timing. And if you, if you don't have direct access to the lawyer, you know, just don't go on Google and look it up. I mean, there might be, there's probably a lot of other trusted sites where you can buy tailored forms.

And that's the next best thing. And if you, if you are intimidated or don't want to spend the money or your budget's too tight to hire a lawyer, then you can probably buy a custom tailored form from from various sources online. And at least it'll be specialized to whatever state or or city. At Bigger Pockets, we actually just launched a bunch of like state specific legal forms. We went and partnered with a lawyer and I don't know if partners, worked with a lawyer in every one of the states. I think we're at like 34 right now and talked with that lawyer and said, hey, like, can you review this? Can you make it state specific? Make it look good as a way for our members who don't want to go to an attorney who want to save

some money. They can buy legal forms directly from Bigger Pockets. So it's kind of a new feature, just FYI, everyone. I think it's at BiggerPockets.com slash LL forms, like landlord LL forms. But so so the legal thing like it's important, it is important, but it's also super intimidating. Like David said, like, yeah, I don't even know where to start most of the time. When I was starting with real estate, I was like, well, I'm broke. I'm poor. I can't go to a lawyer? That's going to charge me tens of thousands of dollars.

Kill, can you give us like a couple like if you, if I were to book out an hour of your time or two hours of your time? Like, and I'm just getting started with real estate. I'm just about to buy my first property, we'll say we'll go at the very beginning. What do I ask you? I mean, am I going, hey, can you, you know, get me a lease? Is that all masking you? Or what else? What is you going to help me in that hour of time to do?

Yeah, sure. So, I mean, you know, and look, if you came into my office, I'd be billing it, I don't, depending on what the matter is, somewhere between 250 and 300 bucks an hour. And, you know, compare that to what you're going to spend at the title company on fees or brokerage fees or whatnot. It's not, if you have real questions, it's not, you know, really all that much money to sit on. And you can extract a lot of info in an hour.

Well, yeah, you know, if someone came in my office and they said, hey, I'm a new investor, what should I do, I would help them in terms of structuring contracts when they're making offers and making sure they've got the right contingencies. In Illinois, for example, there's an attorney review on most residential form contracts. So you sign an offer to buy something. If you know that there's an attorney review provision in there where once the seller accepts the contract, you've got, call it five or seven business days for the lawyer to make modifications, then you can offer with confidence. And when there is a deal, you can start investing money into the deal at that point. And whether it be on the contract or preparing a lease or helping you research, you know,

not everyone is experts at analyzing recorders' websites or, you know, the assessor's websites to determine what the taxable history is or how the taxes on the property will change. You know, in order to help underwriting, you know, a lot of the lawyers, once you do have a contract or once you do have a tenant you're looking for, the lawyers can help guide you through that process. So that's so valuable what you just said right there. for people that may not understand the legal jargon, what you're saying is that you can go put a property under contract and have a contingency to back out

based on the fact that your lawyer looked at this and didn't agree with the way that the contract was written or the condition of the property. That's so valuable for people that come across a deal and they want to buy it, but they just don't know what they don't know and they're afraid to pull that trigger. You go write your offer,

you put it under contract. Then they call you or another lawyer and say, hey, I need you to look at this. Am I missing anything, right? Find the holes in this. And if the guy's saying, no, it's good to go. or the gal says it's good to go, you go back to and show your agent, yep, let's stay in this thing and let's move forward. Brandon and I talk about that all the time is newer investors think that you take down

a property with one swing of an axe, right? You better be sure before you swing that thing, you're getting into it. When in reality, it's like 30, 40, 50, very small steps that you take and you don't take this one until you've already taken this one, right? The due diligence process does not have to be done all at one time. It's a process as you move through. And understanding the contract kind of is another tool in your tool belt. It lets you. me know, I can go this far and I can still get out of this thing if I don't like it. So now I know I need to look at the next step. And I just love that you've dedicated yourself to understanding real estate, to being a lawyer, to working in title services, to being an investor, to managing a fund,

all these things you're doing. You know what you can and can't get away with and how to navigate in this world. And that's why you have so much confidence. And I just want to stress to people that if you're feeling fear, you're feeling anxiety, it's probably a result of your own lack of education and knowledge, right? If you can gather more information and learn more about what you're doing, you will feel more confident. You'll put yourself in the arena more often. You get more victory. So, I mean, I just listening to you talk,

it just inspires me that, man, I want to go learn as much as I can. I want to have a tool belt that's just incredibly big, like inspector gadget, you know, running around with a tool for every situation that you could find. Brandon, do you have anything you want to add before we go to that fire round? Nah, just that like, you know, I want to just encourage people. Like, one of the mistakes I made early on was not going to a lawyer more often. You know, like I, what I found is that lawyers are good for,

I mean, obviously a lot of things. What I didn't realize that they were good for was like knowing the right questions to ask. So like recently I sat down with a lawyer when we bought our mobile home park out in Maine in Bangor, Maine. And I sat down, Ryan Murdoch is one of my partners on the deal. And Mindy and Carl Jensen, who are the other ones and lawyer. And I sat in this room. Well, Mind and Carl were on a phone. And like the lawyer just asked us questions after question after question after question.

Especially about partnerships, which technically it's not a partnership, but it's a tick. But anyway. Because like we didn't even know the right questions to ask. He's asking like, well, what are you going to do if one party does this? Oh, I don't know. I never even thought to ask that question. Or what are you going to do if this comes up? I don't know.

I never thought about that. So like that hour we spent with that attorney will save us tens of thousands of dollars, potentially hundreds of thousands of dollars potentially down the road. So again, my advice to people would just be like, don't be afraid of a lawyer, you know, but just go in there, you know, asking the right questions or asking the attorney. What are the right questions to ask? Anything you want to add to that, Rob? Yeah, as David was saying, a lot of times you don't have to do anything until you have a contract that's accepted because you're going to have certain due diligence, you know, clauses in the contract inspection, attorney review, title review, whatever it is.

You know, like I was saying in the beginning of the show, you know, I'd come in on Sundays with my partner. We'd make 100 offers sometimes in a day and I hadn't looked at any of the properties. Now, I did research the heck out of them on the front end, so I knew that I liked everything on paper, but I hadn't actually viewed the properties. because it was crazy labor intensive. There's no way I could have done it. And, you know, I knew what the investment parameters were, but I hadn't actually inspected them. Okay, so fast forward a week or two

after negotiating and going back and forth on counteroffers, finally getting an accepted contract from a seller. And I'm saying, okay, cool, they accepted the deal. Now I've got five business days to go out and inspect these properties. So I'd go tour with my partner and my contractor, and then we'd figure it out. And sometimes we'd go back to the seller and say, listen, I didn't know that the furnace doesn't work. There's no way I could have known it because I didn't

bring my furnace guy in there before the contract was signed. Now I need another $5,000 to fix this furnace. And most of the time, they tell you to pound sand, but sometimes you get $1,500 or $2,000, and you may have already had some funds set aside or built into the deal for that purpose. So you don't always have to know everything before you actually get the deal. And there is actually time to research it. And sometimes if it doesn't pan out, out and you find something you don't like and the seller won't work with you or if you want to cancel the deal then you cancel it you know there's no you don't have to bat 100% on your offers either so like I said if it was a one in 10 I got an accepted contract there are probably 20% of those

deals that I also canceled too so it is a numbers game in each deal that you cancel it's you're going to have learned something you cancel because you figure it out you know there's there's something wrong there was one condo I was trying to buy one time and it was it was a bank owned property I went in there with our inspector. It was a killer deal. It was $40,000 or $50,000 in Cicero Avenue in Chicago. I was in Skok, Illinois, just outside Chicago. And the property was rehabbed.

It was foreclosed. The lender was selling it. And when we went in there, you wouldn't believe this. The electrical outlets were screwed into the wall, and there was no electrical behind the outlet. The plumbing fixtures looked like they were there, and I went and turned the sink on, as if there was a regular pedestal sink,

and you'd open up the cabinet below, and there was no plumbing fixtures in there. So it's like this is a total fraud. And the bank that's selling it has never been there. They don't know. And it was like the craziest thing ever, but whatever. I was justified in canceling the contract. What am I going to do?

I'm not doing an entire buildout and putting an electrical and plumbing on a $40,000 car, which is, you know, sorry next up. You know, and I don't know what happened to that unit, but, you know, I wasn't prepared to do that much work. I've heard of stage furniture in a listing before. I've never heard of stage plumbing. and stage electrical. Yeah.

That's hilarious. It's like the Barbie dream home or something. They just thought it's like a sink and plug it in. Don't live there. You're just going to go hang out on the couch and look around. Don't live there though. One thing you mentioned is you don't have to get a hit on every at bat and you're 100% right.

But what I found is that the more at bats you get, the smarter you get just from getting up there, right? You're seeing pitches. You're getting to know that pitcher. You're figuring them out. You may not be getting a hit, but you're getting closer to a hit with every at bat. and you're learning something, right? Because I buy house site unseen all the time.

I buy houses in different parts of the country, and everyone wants to know how I feel comfortable doing that. And the answer is just what we're saying is I'm not just committing completely the minute I write that contract to buy the house. That's a step in the direction of a purchase. Now I have a time frame that I've negotiated in that contract to go get an inspector to go. I don't need to go look at that house to make sure that the sink is actually plugged into plumbing.

I need my house inspector to go do that and read his report because he's going to find that much better than I would anyways, right? That six-plex that you mentioned that you bought. You had to dig out the gas tank, I believe. There's a lot of people that hear that and say, oh, I could never buy that. What if I didn't catch it? Well, your inspection would have caught that if you paid for one. So can you tell us a little bit about the last question before we're the fire round? What's your future look like right now in real estate? You mentioned that you bought a six-plex. Are you focusing on multifamily? Are you waiting for a market correction? Like, what's Rob doing now? Yeah, I'm actually looking at deals. Anything that makes sense. I would, I would love to have

another programmatic strategy like I did with the condos from like 09 to 2015 and and buy them or have some sort of strategy, you know, in any asset class where I can sort of master one little niche and exploit it and build a system for it. It was one of those things where it's, you know, if I had to go back and look at it again and I didn't have any hiccups or learning curves, I would have bought 3,000 condos. But that's, you know, that's the equivalent of back to the future too where Biff gets the sports almanac, right? So, you know, it's just, it's learn as you go type thing. I want to, you know, find new deals that make sense.

But I'm not rushing into them. I'm still making a lot of offers and I'm not getting many. But, you know, I'm hanging in there. I'm still trying to, you know, get a lot of at-bats. So, you know, the other thing in terms of learning, it's not only when you're offering, too, the learning curve is there on the property manager side. You know, for as long as you're a property manager and as much experience you have, you're always going to learn some sort of, you know, some sort of angle or a way to make your,

you know, managing your properties better. I happen to self-manage because I think it's nice. I want to control the cash register. I want to know what's coming in and coming out. And I'm sort of the opinion that no one watches your money like you do. But there is something to be said about also having a huge scale of thousands of properties and having someone else manage it and then you manage the manager. I'm just, I'm not quite there.

And, you know, you know, I don't have institutional type capital where I want to do that. But, you know, in terms of the management, I had, uh, my cousin called me about a month ago and say, hey, listen, I, you know, I was just at her wedding. She, she got married and said, hey, my, my husband and I, we need to get out of the apartment. We're in. We hate it. I'm ready to move. Can you help me get out of my lease? And I'm thinking, okay, great. I hate representing tenants. I just, you know, it's like kind of goes against what I do as a landlord. However, I said, send me your lease. I'll take a look. So she's, she's paying, you know, in the city of Chicago. and there is the landlord filed absolutely none of the landlord tenant laws.

So I'm looking at it saying, okay, if you want to see your landlord, you've got the right to get about three times of security deposit plus my attorney fees. I'm like, okay, it's 15 grand plus attorney fees. It's totally harsh and outrageous. The woman who owned her condominium that she was renting had owned it for like 20-some years. She'd never had a problem before and obviously didn't know about any of the laws because it was in, you know, an old town in a nicer area of the city. but she still didn't know that, you know, you've got to follow these security deposit rules.

So, you know, after a couple of conversations with her and her attorney, you know, they realized, okay, it's time to let them out of the lease. The tenant walks. They've got to do turnover. They've got to find a new tenant. And it was a big learning lesson for them. I didn't, you know, my cousin, thank God, didn't want to sue them for that money. All she wanted to do was move and she didn't want to exploit them or take advantage of them.

But, you know, there's a ton of lawyers out there in that all. also have to make a living and they view it as being, hey, it's the law, I'm going to enforce it. And the judges have no choice. They enforce it too. So, you know, we could have rolled into court and gotten a $15,000 judgment against this woman who, who's, you know, maybe invested $100 or $150,000 into her condo. So it's like, that's a catastrophic event. If you're a first-time landlord or a newer landlord or an uninform landlord, you don't know about stuff like that. I mean, you can cruise by for a long time, but at some point in time, you can, you know, you can't always dodge every bullet.

So this woman hopefully became informed and won't make that mistake again. But it was a wild situation. And unfortunately, I think there's probably a lot of municipalities in major metropolitan areas in the country where you've got rent control and things like that that exists. So it's kind of a harsh story, but good to realize why you can alleviate all that on the front end. Yeah. So to kind of sum up like, I think kind of what you're saying, there are very severe laws. I mean, in every state, even tenant-friendly states, I mean, a landlord-friendly state.

There's laws everywhere that govern what we do. This is not the Wild West. Like, there are, like, in most areas, it's governed pretty well. So if you're not willing to go and learn exactly what your landlord-tenant laws are like, then you need to either hire a lawyer and have them consult with everything or hire a good property manager who can take that. But don't just wing it. Like, this isn't a wing-it kind of a game.

Would you agree? You could do it for maybe a short period of time. But to think that you're going to build a sustainable business without having, the correct lease in lease forms and tenant forms is like beyond reckless. Yep. Yeah, totally agree. Well, super super cool. Now, before we get out of here, we're going to head over to the next segment of a show,

which we lovingly refer to as our fire round. Fire round. It's time for the fire round. If you own a large or complex rental property, congrats. And I'm also sorry. One day you're building a portfolio. The next, you're reconciling six accounts, five states, four LLCs,

three partners, two property managers, and running your portfolio starts to feel like running a median-sized accounting firm. And if you got into this to get your time back, that's not ideal. That's when you need Stessa Pro. Stessa Pro is built for investors who've outgrown other tools. One dashboard, every property, every entity, real-time performance, clean reporting, tax-ready documents in a click. If your portfolio has grown up, it's time your tools did so too.

Go to stessa.com slash mkTG slash bigger pockets to try Stessa Pro and get six months free. 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, and they 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. 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 Csuit, and Cells. 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. 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 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, let's get to the fire on. Now, these questions come direct out of the Bigger Pockets forums, and we're going to fire them at you, Rob. You ready for this? Can you handle it? I'm ready. Let's hear it. Number one.

Appliances. What exactly is the landlord's responsibility to repair or replace? Now, specifically, I'm going to add a little bit. It was a long question, so I'll summarize. Basically, this woman owns a duplex. And for one of the units, when the tenants moved in, she supplied a washer and dryer. But because it was there when she bought the property. Well, now the washer dryer broke.

Does she have to fix the washer and dryer? It's not anywhere in the lease. So what does she do? Can she just say, hey, sorry. well, now you got to go get your own, or does she have to supply a new one now because it was there when the tenants moved in? What do you think? Yeah, so it depends what the lease says. If the lease says it doesn't include a washer and dryer and one happens to be there, then there's an argument that you don't have to fix it. But the most common circumstance you'll see this in is like window air condition units. You can say property comes with no air conditioning unit. If there happens to be one there, I'm not liable for it. However, if it's unclear in the lease and it doesn't specifically, state that the tenants liable for it, then it's going to fall on the landlord to fix and or replace it.

All right. Good answer. All right. Okay. The next question is about going from a year contract to a month-to-month lease. So this forum guest says they have good tenants whose lease is up for renewal soon and the tenants want a month-to-month situation. The landlord's instinct is to say, no, they want to insist on a full year renewal, even if it

means losing them as tenants. they don't like the idea of going to month to month lease because the tenants can leave during a time when it would be hard to put a new tenant in the property. What are your thoughts on this? Do you have any experiences going through something like this and how would you advise someone to handle it? Sure. So there's a couple of factors that go into it. Most important in Chicago is seasonal. Leases that expire in December, January, or February will have the longest vacancy period.

So if someone says in the middle of December, hey, I need one more a month. My lease is up 12.31. I need to a 131. Yes, no problem. In the middle of the summer, spring, fall, when the lease up period is good, I customarily will not do it unless there's some special circumstance. And if the tenant wants the flexibility to have,

you know, a termination or termination option within like a short horizon, they need to pay a temporary rent bump. You know, if there's a good reason, hey, I think I'm moving, I'm waiting for a job. I'm not going to renew a one-year lease.

Then you can say, great, you know, you have a 7.5% rent bump while you're month to month. That way you get some compensation for the lack of stability. The other thing you can do is you can build into your lease agreement that says, you know, sometimes Illinois law provides it if the tenant is able to find, or at least Chicago law, if the tenant's able to find a suitable sublesser, then you've got no choice. But suitable means, okay, you run credit. They've got good enough income. They can sustain the rent payment. They don't have criminal history, things like that. You know, usually the tenants won't go through all the steps to do that.

So, but that's an option. The other options, a buyout. I've gotten all our leases. If you want to terminate mid-lease, it's three months up fronts. And you pay it, you prepay three months for it, and then I terminate it. And it sounds like it's a windfall to the landlord, but when you think about it, it's not entirely because you're going to have some turnover costs. Minor paint, minor fix-up.

If you've got to have a realtor, relet your place, you're going to usually pay a half a month or a month commission, and then you've got your, you're short speccing the risk for whatever vacancy might exist. So I think it does compensate you adequately in like an efficient market, but if you're in a time period when, you know, the economy's bad or you can't rent really quickly, you know, you may want to reconsider that. But from my experience in Chicago, the three month lease buyouts been pretty good. All right. I like that actually a lot. I think that's cool sort of compromise there. All right, next one. I purchased my first rental property at the end of December. It was a foreclosure and I purchased it from the bank with cash.

Now, after the closing, I received a credit for the sanitation bill, but now two months later, I'm receiving a water and sewer bill that starts from way back in October. How did that happen? I had a realtor. I had a lawyer. I had a title company. Now what do I do? Who's responsible for that?

Call the lawyer. I mean, your contract said they're supposed to have real estate tax prerations. The lawyers in charge of seeing that all the conditions of the contract were, performed at the closing. Unfortunately, a lot of contracts have a merger clause, which says once the deed is received, that all the, all the pre-closing conditions have deemed to have been agreed upon and satisfied. So, you know, while you can, there's a possibility that you'll get a seller that is cooperative in a bank-owned REO situation. You know, I think your probably, your requests will probably fall on deaf ears. So if I was in that person choose, I'd call the

lawyer and say, you know, hey, here's my bill. Why didn't I get the proration? And maybe the lawyer's not going to write you a check to cover, you know, whatever the loss was. But maybe you can work out a deal. Hey, on the next, next time I have some sort of legal work, you'll give me this much credit off my bill or, you know, something along those lines. That's a great idea. Yeah. It's very good. But also it's, you know, kind of you got to get the big picture too. Unless it's an astronomical bill, it's, you know, you bought a foreclosure. There's going to be some, there's going to be some expenses. And, you know, it sounds like the big picture, everything was good. And, you know, you have one little issue.

So you got to kind of, there's always going to be little hiccups in the deals. You've got to keep them forward to. That is fantastic advice. Yeah, there's always things are going to go wrong. Like people are always, I don't want to invest in real estate because something might go wrong.

Well, yeah, something will go wrong. Like, you know, you deal with it. I mean, look,

it works, it cuts both ways. Sometimes you do a closing and the, the seller says, hey, this tenant has not been paying. So you say, okay,

no problem. I'll assume the risk. I'll evict the tenant. And hopefully you're getting the right price on the building where it's worthwhile to assume, you know, the task of dealing with that. But, you know, I've had times where the tenant comes into our office, you know, two, three weeks later and says, oh, here's my five grand back rent. I just got my tax return and I sorry I couldn't pay it. So, you know, there's situations when you come up to, you know, it works both ways. Yeah, nobody complains when that happens.

You don't hear those stories. Real estate is horrible. I got more money than I expected to get. This is ridiculous. I don't know what's going to happen. We definitely tend to focus on negative and that becomes an excuse not to go. And when the positives happen, we just assume it should have happened that way. So that's a really good point. It does cut both ways. And training yourself to recognize that is a good way to kind of keep your own confidence levels high. All right, Rob, last question. I'm asking for a friend. What is the best way to invest $500,000? Good friend of my own's two units for the past 15 years. The stock market is leveling out and will not be as exciting as last year. So he's looking for a new way. What do you think or recommend would bring the safest ROI? I guess it's sort of

a sort of a loaded question. It depends where you're at. You know, it's different in different areas of the country and what you're used to. If you're not a season, you know, real estate professional and you're not going to do all the research, study the data like we talk about throughout the show and really, you know, immerse yourself and have some other sort of real estate expertise and stay involved and active with it, then you should, you should invest in a passive fund. You know, you can find REITs or institutional funds that will take your money and have good track records and give you a good return, whether it's, you know, you're investing in a limited partnership interest or, you know, publicly traded REIT. It's sort of whatever your flavor is,

but half million dollars, you can do some damage. I mean, that can be a down payment on, on a pretty big building. So, you know, if you want to, if you want to manage it yourself and jump into the arena, 500,000 is a lot to play with. So study the data and make 10 offers and hope you get one, right? What do you think, what do you think about the investment strategy of watching billions on HBO and copying whatever Bobby Axelrod does. Yeah, he's good. It was a big learning curve switching from homeland to billions, but he's pretty good. He bought up all the bonds in the one city and then foreclose all the real estate and basically took down

the government. I mean, it's totally wild. I was watching an episode last night and there's some tsunami that came because of an earthquake and they're like the person running the fund was expected to have seen that coming and known what to do. Yeah. It's interesting though. I mean, there's people in Chicago that sort of play that strategy that, hey, I've got enough money. I'm going to buy the market. You know, there's a couple landlords that own, you know, thousands of units. And they say, hey, I can't really get the return. I don't see the yield anywhere else. I've got this big, you know, platform built already. If I add another 500 units to it, it's no big deal. And there's nowhere else I know that I've got a patient enough long term enough expert strategy where I'm going to clip 5% a year or 5.5% a year. So they'll buy deals that, you know, the general market considers be overpriced. But if it's in the location where they already manage other property and getting more scale does good for them, then it, you know, each deal, like I said, each deal kind of is different for each investor. And some deals make sense for some people and they don't make sense for other people. So at the end of the day, you got to know why you're comfortable buying whatever asset you're going to buy.

And you have to have sort of a strategy and stick with it. Yeah. I love this. So today's quick tip, don't bother learning real estate when Bitcoin, you down. Just copy what they do in the show billions and you can. Yeah. Yeah. Don't work for Bobby Axelrod. Yeah. There you go. All right. Moving on to the last segment of the show, which we lovingly refer to as our famous fire. Ooh. Yeah. Way to go. Way to screw that one up, DG. I did. But before we get to today's famous four, let's hear a quick word from Mindy on what's going on this week over on the Bigger Pockets

Money podcast. Thanks, Brandon. On this week's episode of the Bigger Pockets Money podcast, we chat with Alan Donigan. Alan watched and helped his father run a super successful sportswear company until the economy shifted and they lost everything. Determined not to follow this path, Alan got a job. Then another and another and another, he couldn't find anything he wanted to do. So he created his own job, teaching people how to create theirs. Taking lessons from his father's experiences, Alan teaches entrepreneurs how to start really small and test the idea before jumping in with both feet.

If you have an entrepreneurial itch, this is a can't miss episode. Okay, and now for the Famous Four. Famous Four. All right, so let's get to the Famous Four. These are the same four questions we ask every guest every single week. We're going to throw them at you, Rob. So number one, do you have a favorite real estate, specifically, real estate-related book? Yeah, so I liked rich dad, poor dad a lot.

And then I think a follow-up book was like the cash flow quadrant. And I don't, I guess it's not like deals specific to real estate. And it sort of doesn't analyze all the real estate deals and not totally real estate focus. But I thought it was, it was really helpful for me because it helped analyze the tax perspective of being a business owner versus self-employed versus an employee. And at some point in time, I think that, you know, in everyone's career, if you can get to the self-employed or the business owner phase, the tax consequences or the tax

benefits are insane, right? You've got, you can run a lot of your life through your business because you have, you know, you're using your car for business, you're using your phone for business. If you, you know, if you work at a company, you may have a phone or have a car, but if you don't, you're buying all that stuff with post-tax dollars. So I thought that was a pretty cool takeaway and kind of showed me, you know, the way real estate can help you get there. Very nice. You wear many business hats, Rob. What is your favorite business? this book? There's a book called. I like kind of true stories and biography. So there's a, there's a book that I read that kind of had a good impression. It was a biography on Jesse Livermore.

I think it was called the greatest trader who ever lived. And, you know, it's not exactly related to real estate. Well, I guess not at all. But it was about a, you know, a guy from the Great Depression area. You know, he started off as like a little kid working in trading shops and became, you know, the biggest short seller ever. He was the guy that was short the market. when the Great Depression stock market plunge happened. And, you know, became like one of the richest guys in the U.S. And he was just someone who had very little formal education and, you know, became immersed in his market, figured out his skill and exploited it as best as he could and sort of, you know,

found out ways to make value as a trader. I thought it was, it was pretty cool to show someone who, you know, came full circle from walking in the door as like, you know, the 10 or 12-year-old kid, you know, sweeping the floors to become a guy who, I guess there were no jets in the 19. 30s, but maybe limousines or whatever he had. He had the nicest horse-drawn carriage. Yeah. Yeah.

Yeah. Choward Clyde Stills, pulling them around. I always love those stories, you know, the rags to riches. And I wonder who the next listener of the Bigger Pockets podcast is going to be that, like, you know, what they're hearing. It scratches that itch that they need to scratch. And then they become, you know, very, very wealthy and going to be really successful because it could come from anywhere and it's so cool when it does. Can you tell us a couple of your hobbies?

What do you, what do you like to do when you're not representing, people and evicting people and all the fun stuff you're doing real estate. Yeah. So I play a lot of golf in Chicago. You get like five months a year. So I try to do that as much as possible. A lawyer playing golf. Come on.

Really? That happened? It's good though. For real estate, a lot of times you get involved with deals. You want to have partners or you need to have partners. Someone has the deal. Someone has the money or you both have a reason why you need to be partners. Golfing is pretty good.

You get four or five hours. to hang out with someone. You know, you can kind of judge character, analyze if it's someone you want to be partners with. Once you get into a deal, you're going to be ends usually for years. So, you know, it's kind of like, you know,

picking a good partner, you get to vet them out pretty good. It's better than going to 10 dinners with someone. I totally agree. I didn't know. When are you going to learn how to golf? I'd never want to learn how to golf. It looks so boring.

And he's like, no, you need to learn how to golf if you want to be a good business person. your game will step up huge. And like every good business person says what you just said. It's like I can't get someone to come in for four hours and interview them, but I can go hang out and play golf with them when they don't know they're being interviewed and find out everything I would ever need to know. Yeah, get a few beers in them and you get a lot of disclosure comes out.

That you do. All right. What do you believe, so my last question of the famous for, what do you believe sets apart successful real estate investors from all those who give up where they fail or they never get started? Yeah, I think it's patience. you know, you can't exactly time what you're getting into. When, you know, when you wake up and say, okay, today's the day, I'm going to go look at a property or buy a property, you know, at that point in time, you probably know, nothing about where the market was, where it is today and kind of where it's trending towards.

So, you know, you got, obviously, you have to get your feet wet and there is risk involved. And, you know, you do need to take risk when you buy that first property. But, you know, you also don't have to rush into it. You can be patient and figure out when is the correct timing. So just because you woke up and said, hey, I'm ready to buy today. You don't have to actually buy today. You just need to start your process today and carry on your process until you do actually buy. Very nice.

Rob, where can we find out more about you? Jeez, to be honest with you, I'm sort of embarrassed by it. I don't even operate. We don't have a website. We don't, you know, a public website. So it's, you know, I think my email information is on with Mindy on the show. but apart from that, I'm not, you know, we're not incredibly public with all our information. Are you taking more clients of people in Chicago area want to use you?

Yeah. Yeah. We're interested in clients. It's, uh, what's your, uh, our website. Our website, our law firms called Bull Lou law offices. It's, uh, Bo Lou, B as in Boy, E-A-U, L-I-E-U. Um, um, and you can find us at, uh, B-E-A-U legal.com. And, um, you know, our information and attorney profiles around there. So if you want to, you know, reach out or whatever, it would be happy to discuss anything you've got on your mind. Perfect. And we will link to that on the show notes at biggerpockets.com slash show 275. So Rob, thank you so much. It's been awesome. Super informational. I love hearing your story. I just think it's crazy. You went from, you know, zero to 300 condos. Just like, you know, we just did it. Not a big deal. So I think

that's awesome. So thank you for telling us your story today. Yeah, I appreciate it. Thanks for, thanks for having me on. Appreciate it, guys. All right. Thanks. Thanks. Thanks. See you around. I'm going. All right. And that was our show with Rob Oliver, attorney at large. Is that what they call them? I don't know.

That's what you call. Attorney at law. Attorney at law, not large. Attorney at large would be the kind of guy I would have been arresting in my previous. That's funny. Turning at large. Oh, man.

We should rerecord that. But we're not going to. That's funny. Anyway, super cool show and super important lesson. Like, you know, like I said in the show, like this is not like a. flippant, like just go and buy some real estate. Like there are, there are legal consequences to what we're doing here, which is why most people will never get into it. So, you know, get the right advice,

get the right attorney, go out there and make some deals happen. Yep. And try to find an attorney that invest themselves. That's so cool, right? Like I trust whatever Rob told me because he's got 300 condos, he's done this himself. So when you're looking for an agent, when you're looking for a property manager, we're looking for a contractor, all the pieces you're going to need, a lawyer, find one the same perspective we are. And it'll be the advice that they're giving you will be much more tailored to kind of what you're doing. There you go. Rock solid. Rock solid.

Well, hey, I know you like analogies, David. So I'm going to give you an analogy. So I was watching, my wife and I are rewatching Lost right now. You know the show Lost, right? Oh, yeah. You guys tried to suck me into watching that. And I refute. Oh, okay, so you haven't seen Lost yet.

You got to get there. No, I don't do drugs. And I'm afraid to get it. All right, so we're rewatching Lost. Probably because I talked to you about it. And I was like re-spark to watch it. So anyway, we're watching from the beginning. And there's an analogy that Mr. John Locke,

who doesn't mean anything to you, but he's shaving head like you. And John Locke gives us. It's a great analogy. He points out this butter, like a moth. There's like a moth in a cocoon. And he points it out. And he goes over to it. And he says, you know, this, right now this moth is inside here, you know, this caterpillar or whatever it was. I don't know what a moth pre, a pre moth is. But whatever that is. There's a pre moth inside this cocoon, right? And he's struggling and fighting right now to get free of this cocoon. And he's tearing at the stuff. And it's going to take him a few days to get through it. And by the time he does, he'll rip open that thing and he'll fly out. Now I could and he's got this big huge hunting knife in his hand. He's like, I could go over here and just very carefully create a little line here and free the moth from his cocoon. And he'll not have to struggle at all. He'll just come out. But if I do that, he'll die. He won't be able to survive because the cocoon is what gives him his strength. The struggle is what gives him his strength. Anyway, so I was watching that and I was like, that is such a good

analogy for just life. This is hard sometimes real estate investing or just like, you know, like trying to build any kind of business entrepreneurial thing. But that's what gives us strength later on in life. So I thought you'd appreciate that little analogy for a non-lost fan. It's like, that's my favorite analogy, I think, in the whole world. I usually say it with a little baby chicken trying to get out of the egg. Very same thing. But yeah, like when you're feeling pain, when you're feeling struggle, know that that's for a purpose because it's making you stronger to accomplish your goal. It doesn't mean you're doing the wrong thing because it's hard. Too many people quit because it didn't come easy and they think that's a sign that they're not supposed to be

doing it. I'd say the opposite. If it's coming easy, then there's nothing for you to gain there. The struggle is, you know, what is what the goal is because that's what's going to make you stronger. That is, I'm very impressed. I don't think I've ever been as proud of someone as Brandon finally embracing an analogy. I feel like my little boy just took his first step. I love analogies. I just make fun of you from being like the king of analogies. You're the best person I've ever known at analogies. Like you just come up with an analogy off top of your head. Like right now, give me an analogy. Go. Okay.

You telling me that I'm the best person you've ever known at giving analogies is like Tiger Woods saying that's the best putter that I've ever met, right? Like, you're very good at yourself. So that's a huge compliment coming from you. Okay. Well, that was a good analogy. Very well. Right off the cuff. All right.

Thank you guys for listening to the show today. I hope you enjoy it. And if you have not yet left a rating or review in iTunes, please do so. We'll give you a nice big bear hug next time we hang out. So with that, let's get out of here. DG, anything you want to end the show with? No, sir. This is David Green for Brandon Investor at Large Turner. 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. 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. On the host and executive producer of the show, Dave Meyer, the show is produced by Ian K, copywriting is by Calico 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 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.