BiggerPockets Real Estate Podcast - 366: 40 Doors in His First 2 Years with Henry Washington

Episode Date: January 23, 2020

From panicked newbie with just $1,000 saved to 40 rental units—in two years’ time! On today’s show, we sit down with Henry Washington, a buy and hold investor from Arkansas who’s built a sizable portfolio while working full-time. You’ll learn how Henry changed his mindset as he and his wife prepared to start a family and how he secured his first deal by doing something anyone can do—simply announcing to the world that he buys houses. You’ll also learn how Henry built a deal pipeline by looking in places other investors didn’t, how he asked more experienced investors for help when he didn’t know what to do next, and how he does business with local banks to expand his portfolio. Plus, Brandon and David dig into how to property screen tenants, how to decide when to flip or BRRRR vs. when to hold onto a rental, and how to use an online ad campaign to drive a steady supply of leads to your website. This episode lays out a blueprint for building massive wealth. Just adapt it to your market, and work the process. Don’t miss this one, and subscribe to the BiggerPockets Real Estate Podcast so you won’t miss the next! In This Episode We Cover: How “panic” drove Henry to start saving and investing How he started his investment career by simply “paying himself first” The list he used for his first (wildly successful) direct mail campaign The lessons he, Brandon, and David took away from Rich Dad Poor Dad Why he told people he bought properties (before he ever did!) Why writing down his fears helps him conquer them How he sought help from a more experienced investor on his first deal How he used a 401(k) loan to buy a cash-flowing property How he launched a Google Ads campaign to drive traffic to his website The power of small, local banks to fund deals Why he holds open houses rather than individual showings for tenants Why the best real estate investors buy “situations,” not houses And SO much more! Links from the Show BiggerPockets Forums biggerpockets.com/podcastsurvey BiggerPockets Business Podcast 30: How to Guarantee Profit From Day 1 with Mike Michalowicz Google Adwords LeadPropeller Cozy.co Trulia Realtor HotPads Zillow Craigslist BiggerPockets Bookstore BiggerPockets Business Check the full show notes here: http://biggerpockets.com/show366 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 366. We basically had a meeting where we decided we weren't going to buy the thing we went to have the meeting about. But because we spoke up and said, well, what else you got? We landed probably our best deal. 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. others who have benefited from biggerpockets.com.

Your home for real estate investing online. What's going on, everyone? This is Brandon, host of the Bigger Pockets podcast here with my co-host, Mr. David Green. David Green, what's up, man? Welcome to the podcast. Thank you very much. It is dumping rain over here, which is very odd for California. Is it odd for San Francisco in the winter? I feel like that's all it does. Probably fog more so. But yeah, California in general, we don't get a whole lot of rain.

It's like you forget it exists until it happens. Well, I understand that. I understand that. Well, I escaped that because I don't want to live in Washington anymore. And now I live in Hawaii. Oh, I know why I was going to tell you about the rain. Because I have two flips going on right now. And the rain is keeping the contractors from getting out there.

I was wondering why I brought that up in the first place. But I just realized it's, I didn't factor in for rain because we never get it. In other words, you were just starting conversations so you can talk about yourself. So it's like, hey, do you do CrossFit? Oh, I actually do. I do CrossFit. day. Is that kind of thing, wasn't it? Admit it. I have to fit my crossfit in between not eating meat and having like a healthy, clean food lifestyle. I believe you do. Well, you ruin my segue,

so I'm going to do it anyway. Speaking of Washington, today's guest is Henry Washington. Like that? Was that pretty good, that was pretty good chance? Because Washington rains a lot. Yes. Nicely done. See? Thanks. Our guest today is Henry Washington, real estate investor out of the Arkansas. Isn't that right, Arkansas? No, it's Arkansas. Arkansas. Arkansas.

The Arkansas market, super legit investor. I met him at BPConn, 2019. I was really impressed by him in a story and I said, you have to come on the podcast and tell it. The guy's done, he's got 40 doors in the last, just been doing this for two years, 40 doors doing over half a dozen flips a year and just has such a great way of thinking about real estate and growing his business. You guys are going to love it today.

So hang tight for all of that. But before we get to today's interview with Henry, let's get to today's quick tip. Quick tip. All right, today's quick tip is simple. Something Henry talks about on the show today, he actually landed his first deal. He's going to tell you the story. He landed his first deal simply by doing what this quick tip is. Tell other people what you're doing.

We've said it before in the show, but I'm going to say it again because people still don't do it. If you're trying to invest in real estate, tell people, hey, I'm getting into real estate investing or I'm trying to invest in real estate. or I'm a real estate investors. Do you have any deals? Those questions, or I should say those statements to people, are going to land you deals if you do it consistently enough. Let everybody in your circle know that you invest in real estate. And that is today's quick tip.

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If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. And now it's time for the interview with Henry Washington. Again, so many good things in this interview, this story about how we got to 40 doors in the last just couple years of doing it, while still working a full-time job, make sure you listen to his idea of like the deal funnel,

how he's built that in multiple different ways of getting deals and why that's so important. In the deal deep dive, he walks through an amazing property. I call it like the better than burr. It's like even better than a normal burr deal. You'll love that. And then in the fire round,

we talk about something called the four, we actually name it on the thing I stole it from David, the four C principles with contractors. So there's a four C principle when dealing with contractors. And if you follow this mentality, process, you're going to have a million times easier time of dealing with contractors. And you won't do what I did like last Friday night, which was drive around at 10 o'clock at night looking for an ATM machine to pay a contractor.

Don't do that. Don't do what I did. Instead, follow the 4C principle. So hang tight for that. And without further ado, let's get to today's interview with Henry Washington. Mr. Henry Washington, welcome to the Bigger Pockets podcast, man. Good to have you here. Thanks for having me.

Appreciate it. Yeah. So let's get into your story. So you and I met at the Bigger Pockets Conference 2019. And I was like, I got to get this guy in the podcast because his story is incredible. And that's how this came to be. So why would I say that, Henry? Tell us your story.

Start at the beginning. What did you do before real estate? How did you get into it? Sure. Yeah. I've spent most of my career working in the IT industry. So I've done software development and data analytics for big. retail mostly. And let's see. So I moved to Arkansas where I'm at in 2010. And it was just me.

And I was here by myself and I was working and, you know, life was great. I'd make a paycheck and then I'd spend a paycheck. And then I got married. So I met my wife and 365 days after the day we met, we got married. And so yeah, that went fast. And then I'd say, say maybe about six months into being married. We had had a conversation and we were talking about what we wanted our future to look like and family and kids and all that. And so in the middle of a night that night, I woke up literally in a panic because, you know, I had gone from this single guy, you know, just good job, educated. And now all of a sudden I've got a wife and we're talking about having a kid and I had no savings like none. I had $1,000 in a savings account. And I knew that

that wasn't going to be enough to support a wife and child. Like if anything goes wrong, I was going to be in a tough place. And so literally two in the morning started Googling like how to make extra money and started Googling passive income and side hustles. And I came across a TED talk where a guy was talking about passive income streams. And the way he said there's tons of passive income streams, but, you know, he uses real estate and rentals. And I thought, we like real estate. You know, we'll stop and look at open houses for no reason. So, you know, why don't I look into this real estate thing? And finally, I was able to go back to sleep. And the next day, reached out to a real estate, a agent friend of mine who worked at the same place I worked. And she was super thrilled to kind of

that I was into it and literally brought me a box of books and was like, and was like, pick one and read it. And so the one I picked was rich dad, poor dead. I read it and was hooked from there and decided, okay, well, I'm going to do, I'm going to do real estate. And I'm going to buy a rental. I figured I could, I'm a people person. I didn't, I didn't have any fears about being a landlord or what that was like. So I knew from there, I wanted to figure out how to buy a rental property. And so that's kind of, that's kind of what got, what got the wheels turning. What do you think it is about rich, dad, poor dad? Because, I mean, we talk about that on the show a lot, right? A lot of people, I mean, myself included in there, it changed our life and pointed us towards real estate, though it's not a real estate book. Why is that? What about that book made that such a thing? So I think one thing I got from it that actually is it technically related to my real estate background, but kind of, so A, I think it's super motivating. Like, it just, most.

motivates you as a regular guy to feel like I can do something powerful, right? And I can do something that's going to change my life and my family's life. But I think one of the most important takeaways I took was the concept of paying yourself first. That's not something I had ever thought about or done before. I had always paid all my bills and then tried to save. And that worked for like two weeks. And then it didn't work anymore. And so I told my wife, I said, hey, after reading this book,

I said, let's just set aside 10% of our income first. We'll pay our ties and then we'll pay ourselves and then we'll figure out the rest. And I said, we'll just put it in a savings account. I said, if something crazy happens, it'll be there. It's not like we're spending the money. It'll be there. And let's just try that. And let's continue down the real estate path.

But if in 12 months I've never done a deal, I did the math on 10% of our income, I said, look at how much we'll have in our savings account. that's way better than the thousand we have now. And I mean, that was just a powerful thing. Taking that little step and watching that money grow showed me that there was, that the words in the book were going to actually be helpful for me. And so I think it's just a motivating book. You know, that concept of like paying yourself first, it's a common thing.

You know, like rich dad, poor dad talks about it and the richest man in Babylon talks about it. Dave Ramsey talks about it. And it's so how, it's so simple, it's so powerful, right? And now a lot of people will say, you know, well, I don't have any money to set aside for savings. But the fascinating thing, and Mike McAllivitz, who was a guest on the Bigger Pockets business podcast recently, he makes his point about the reason we do that, even if it's just a dollar or $2 or $5 is because it's more of a mental game than it is a tangible one. You're not getting rich necessarily.

I have 10% of your paycheck going into a savings account. But it's more of a mental thing. So what do they do mentally to you? Yeah, that's kind of what I was going to say. is the thing I think that is a key for an entrepreneur to be successful, right? It's mindset, right? It's, I think differently now, two years into this real estate journey than I ever thought before starting, right?

And it's just a lot of, it's the power of knowing you can do something, knowing you can take nothing and turn it into something, right? And when you know you can do that, it kind of takes away from some of the fear that investing can bring, right? And, you know, one thing I tell people I like to do now that I never did before is when I do have a fear about something, when I have a fear about an investment or a fear about making a decision, I try to write those fears down, right? I'll put them on a piece of paper because I want to see, I want it, I want to, I want to, the chemical reaction of writing it down and then looking at it to say, okay, is this a legit fear? and I take those fears and then I write down what some of the actual things I can do to alleviate those fears are.

And if there's little things I can do to alleviate those fears that can help me take that step, then I know that the fear wasn't really a big deal. It was just something, we just kind of have these predetermined fears in our mind that aren't really real. And so by writing it down and thinking through what are the things I can do to alleviate those fears that kind of helps me get over them and it helps me to move forward. and kind of keeps you out of that analysis paralysis or just fear for no reason kind of things

that entrepreneurs tend to get. Yeah, that's really good. I know a lot of people when they're learning, I want to learn something. They come looking for a step-by-step process, just like a formula. Tell me, and I hear this all the time, tell me where do I get the deals?

Like there's this idea that there's a website. If you tell me what the right website is, I'll go there, they have the deals and I can buy it. And it's that simple. And when people realize it's not that simple is when they lose heart. And I've noticed that the people like you, Henry, and we're about to tell people like what you've actually done in the period of time you did, which is where this credibility comes from that I guess we probably should have established before we started talking to. It's very, very impressive.

Trust me. It is the mindset is what the common denominator is with the people that are successful. And the thing about rich dad, poor dad, to me that really stood out was it was actually kind of an offensive concept to a lot of people, but it was that rich people think differently, right? that wealth is a result of how you think, whereas we like to believe, well, wealthy people think that way because they started with wealth. And so that's why they think that way. But it's not, it's they became wealthy because they look at money differently. And that little thing, like paying yourself first, I'm going to set aside 10%, 20% of my money, and I got to make it work with everything else. And if there's not enough, well, then I better get another job where I better make coffee at my

house instead of Starbucks or whatever little change you have to make is what rich people do with money. They don't earn money through W-2 jobs. They don't pay as much taxes on their money. They think about investments and something that will grow when they're not working. And really, if you learn to think like rich people think, what Robert Kiyosaki figured out was that you will get the results rich people get. And I don't know why when it comes to money, it is so hard for human beings to get that through their head, because it's like that with everything else in life, right? If you want to get a better body than you do what people who have good bodies do, you eat the food they eat, you work out that they eat and boom, you get the body, right? We would never.

go to someone who's in really good shape and say, I'm not going to listen to your advice because you, you already look really good, right? Like, of course you think that way. But with money, that's what we do. It's like, well, he's just a rich a hole. Why am I going to listen? He doesn't know what it's like to be me. Like, yeah, that's exactly why you should listen to him because he doesn't know what it's like to be you. Your way doesn't work. Your way gets you the result you get. And I love, like, Henry, you have a, you have a talent for explaining this and very easy to way understanding that you got to think like this. And actually, I'm looking through the notes and you have such a solid, simple process for how to know when to buy, when not to buy. I'm really excited to get into this.

Brandon, would you agree? Have you seen similar patterns with people that are successful? Yeah, definitely. I mean, it definitely is, how many times do we hear people talk about that rich people are lucky or, you know, I'm not wealthy so I can't invest in real estate. It's like, it's a simple mindset shift. So obviously, Henry, you made that shift by reading rich debt. Port ends. So let's walk through that.

How did you go from that? Now you get the education side. You're excited. You're motivated. What did you do then with that information? Sure. The first thing I did was I decided to just tell people that I was a real estate investor and that I was buying rental properties. I hadn't bought a thing, but I wanted to put that energy out there because I knew that that's

where I wanted to go. And I knew I was going to do whatever I needed to do to be successful. So why not go ahead and tell people that that's what I do? And so by doing that, a good buddy of mine. to me and said, hey, man, I heard you're buying rental properties. I said, I have a house that I need to sell. Are you interested? And I was like, yeah, man, tell me about it.

So he had a house where he and his family lived. He moved out of that house to move over to the church campus where he was going to church. And he was living there to save money because he had plans of buying this larger property that someone he knew in the church was going to sell to him. And so he was saving the money and he had gotten to the point where This guy had to sell that property. He had the money to buy it. He needed to buy it now.

But for him to use the loan product he needed to use, he needed to sell the primary residence he had before. And so he said, I got to sell it. I've got a tenant in there. I was letting him live there so we could get his credit together and then he could buy it. And that never came to fruition. So I need to sell it. Here's what I'll sell it to you for. And I ran the numbers and it was a good deal.

And I said, okay, well, I'll buy it. And we talked it over and I put it under contract. then I panicked because I had no money. No money and I didn't know how I was going to buy it. I was just going to figure out a way. And he understood this. Like I said, he was a buddy in mind. I said it was my, he knew it was my first deal.

And I, you know, but, you know, he trusted me to figure it out. And so I went and just looked into how I could buy this thing where I could get money from what I could sell, like how much I needed. And so once I figured I needed about 20 grand, I couldn't sell enough things to get 20 grand. And so I called a business partner. Well, he's a business partner now. He wasn't at the time. He was just kind of like a mentor kind of situation then. And I said, hey, I've got this deal.

It's a good rental. I don't think I'll be able to come up with the money. Would you step in and buy it? Because, you know, we need to help this guy out. And this is kind of when I got that first taste of that entrepreneurial mindset. And I got it from who then turned out to be my business partner. He said, this is a good deal. He said, I can buy this deal.

I will buy this deal, but you need to figure out how to buy it. Go figure it out. And so we sat on the phone and we brainstormed and 401K came up and I said, well, my wife has a 401K. And he was like, well, I think you can take a loan out against 401Ks. And I was like, okay, so I did some research, called my wife. She called her company. They said, told her what she needed to do. She called me back and said, we can do it.

And so she took out a 401k loan. for the amount that we needed to close on the deal. I closed on the house. I kept the tenant in it. I raised his rents. And the new rent amount covered all my expenses and the loan payment back to ourselves for the 401K. So that house is paying us back with interest for that loan. Yeah, that's cool.

That's cool. And what I love about that is it shows that concept of the rich that poor debt thing, the rich people say, or poor people say, I can't afford it. rich people say how do I afford it? And so you basically, that's what you're, that mentor of yours was like, you need to start asking the question, how do I afford it? Which is where you started asking questions and saying, hmm, because this wouldn't have worked though if it wasn't a good deal, right?

I mean, if this was a horrible deal, it wouldn't have worked. Right. What really got me hooked on it was, hey, now I'm getting, I'm getting paid for an investment that I technically didn't have to use any money for. Yeah, we used some 401K money, but it was a little different. And then because we bought a good deal, I was able to take out a line of credit on the equity. And I've been leveraging that to buy other properties, either to flip or to burr. So that one deal has opened the door for me to grow exponentially.

That's cool. Now, did you buy that one for 20 or that was a down payment you needed to be able to buy it? That was a down payment. I paid $1.15 for that one. And it was worth about $150. Okay, that's cool. What did it rent for? 1100. Okay, that's awesome.

All right, so what happened after that? You bought that first deal and then you said, all right, I'm retired and you kicked your feet up and did nothing. Yeah, exactly. No, after that, you know, you kind of, I just had this energy and I was like, all right, well, I need to get more deals. And so while I was going through that process of buying that home, I was also starting to build a marketing campaign so I could do my first direct mail marketing. campaign because I wanted to start a lead funnel. And also at the time knew nothing about direct mail marketing, I just knew that I needed to find a way to get deals. And so I started my first direct mail marketing campaign. And at the same time, because I was putting that energy out there of I am a

real estate investor, I had another deal come to me. It was from a local realtor who was in the same real estate investors association as me. He called me and he said, hey, I heard you're buying houses I have a deal. And that deal turned out to be my first flip project. So simultaneously, I bought a flip and started direct mail marketing. So the flip was, I've kind of heard you talk about before we can get spoiled by our first flip. Sure. 100% that situation. So I bought the house for $19,000. It was a large house. So I knew I couldn't rent it and turn a profit on it. But it was a large house in a super desirable location. And the realtor had already figured out what the seller wanted to sell the house for. So I ran the numbers at that price in it, and it worked great

from a float perspective. So I bought it for 190 and it needed $40,000 worth of work. And I got to that 40 because I walked it with a couple of contractors. I had no clue walking in it the first time what it actually needed. So I took a couple of people with me that knew what they were talking about. So I needed about $40,000 worth of work, and I was able to have the bank finance. They financed the purchase and the down payment. So I didn't have to bring any money to the table, but they didn't finance the rehab. So I had to find rehab money. Again, I had no money.

So this guy who was a mentor turned business partner, his name is Dustin, he had access to a line of credit. He lent me $20,000. or he lent me the 40 I needed to do the rehab. So I was able to basically finance 100% of the deal. We rehab the property and it sold for 325, I believe. 325 in two days for sale by owner and the buyer also didn't have a real estate agent. So you just got to take all that as cash.

I mean, like, you know, save all that money. And so I was like, yeah, house flipping is awesome. Let's go buy a hundred more like that. I haven't found one that awesome since. But that first one was great. That's how that works. That's good because it builds up that confidence you need to just, you know, start moving forward on it.

That's actually fantastic. So, all right. So again, you figure out a way to get this deal done. In fact, for no money because you borrowed money. The bank lent the money for the purchase and the rehab. And then the, the bank of the down payment, they didn't need a down payment. The rehab, though, you borrowed you sent from a friend. Yep.

And so you just did this flip. You made a bunch of money. I mean, how much profit was at the end of the day? Do you remember? I think after all was said and done, it was about $60,000. Yeah, that's amazing. That's amazing. Okay.

All right. So then you're also building this deal pipeline at the same time. Can you explain what, like, why is that important for people listening to this show right now? Because a lot of people just think in terms of one-off deals. They're like, I just got to get a deal. You're saying, I want to build a deal pipeline. What do you mean? Absolutely.

So I knew. And this is what I tell new investors all the time. But I knew that even though I was a new investor, no matter what strategy I wanted to do, whether it be rentals or flips or assignments, however I wanted to go about that business, the one thing I need is a good deal. And kind of what got me there was I kept going to the Real Estate Investors Association meetings prior to me doing any steps myself. and all everybody was saying was there's no good deals. There's no good deals. I want to buy a house, but there's no good deals. And what that made me think was they're not doing the work to find the good deal.

So if I do it, I know I'll always have exit strategies because there's a bunch of people in this room who want deals who aren't going to go find them. So I'll go find them. Right. And so I knew that no matter what I do, I need a good deal. So I should focus on that. I should take whatever resources I have, whether that be time or money. and funnel that into to creating a pipeline of deals. And then from there, I can, you know, whatever my situation is,

whatever my capital situation is, I can let that dictate what I do with those deals. Because if there's multiple access strategies, I know that I'll make money on those deals. And so that's what I did. I wanted to start direct mail marketing. And since I knew nothing about direct mail marketing, I just listened to different podcasts.

And I listened to, I, you know, read different books. and I wanted to send postcards. I chose postcards because they were cheaper. I mean, I didn't have a bunch of money at the time. Matter of fact, I had no money to market. So I'll get into that in a second. So I wanted to send postcards, and I didn't know what I wanted them to say. So I literally just Googled real estate investor postcards.

Google them and searched them, looked them up, and picked what I thought looked good, and was a message that I want to put on there and jotted that. down, decided to mail. So the criteria I chose to mail, again, I had done a bunch of research. And what I would do is I would jot down from these different podcasts or things like who these people were mailing for motivated sellers. And then I would go through that list. And if there was something in common with who everybody was mailing, that's who I decided not to mail. I wanted people to get my letter who weren't getting letters from a bunch of people in my area. I wanted to find maybe a niche market or somebody who wasn't getting marketed to all the time because I was so new. And I figured, you know, I don't know how to compete with everybody. But if I can find somebody who's not, doesn't have a ton of competition in that space, then maybe I have a better chance at getting a good deal. And so at that point, everybody was mailing to absentee owners. And so I said, great, I'm not going to mail the absentee owners. And so I picked kind of the least common sources that I would, that I would research. And one of those was age for me.

which turned out to work out really well. So I mailed to people with equity who were 50, age 50 or older. And kind of what that brought to the table were people who were in situations where their house was catching up to them. There was too much maintenance. And they were looking for a way to sell, couldn't really sell traditionally because there was so much maintenance with the house that needed to be done for them to sell traditionally. And maybe they were embarrassed by it. And so I got a really good return. I sent a thousand postcards in my first direct mail campaign and probably got 50 phone calls.

Wow. And I'd say I looked at 10 or so houses. And I think I got two to three deals out of that first direct mail campaign. So it was a good, it was a good start. So once the phone starts ringing and you get people on the phone, I want to talk with you about what you do to get them under contract. But before, I really like your decision making criteria. So can you explain to people how simple it can be when you're looking at a deal and you've analyzed it and how you decide what to do with it? Yeah, absolutely.

So for me, I look at every deal that comes in from a lens of buy and hold first because that's what I want. That's my bread and butter. So, you know, if I could buy every deal and keep it as a rental forever, that's what I do. So that lens for me is if I can run the numbers and that single family home is going to pay me over $100 a door. after all the expenses, I'm going to buy it. It just makes sense for me, barring that the location makes sense. But from a number standpoint, over $100 a door, nine times out of time, I'm going to buy it. If it doesn't hit that criteria, but it may hit the, if I flip it, I could make $15,000 to $20,000,

then I'm going to buy it so that I can flip it. Because if it hits that criteria, I can either flip it or I can get that to another investor because I know that'll make their criteria. So when I'm going to evaluate a deal or when I'm going to make an offer on a deal, I know at this price point, if I get the deal, I can keep it. If I get it at this price point, I can make money from a flip or at another way. So it kind of helps me when going in with negotiations because I can have multiple options for people. Now, when you say $100 a door, is that putting a certain amount of money down or is that no money down? That's, I do 15% down.

Okay. That's cool. All right. So what's great about this is it just shows like if you have a good deal. If you're out there hustling for good deals, you're going to get leads that are coming in. You just put yourself out there. You did direct mail. Not everyone who sends a thousand postcards are going to get two or three deals.

Who cares, right? Like you put yourself out there. You started getting leads coming in. You started getting deals. And then you get to put them through the funnel. Everything's a funnel. Right. I would say that.

Everything's a funnel. So you're like, all right. So this one, it's almost like sifting. Like, you know, like as a kid, you like, You're sifting for gold or whatever. And, like, yeah, the big rocks get stuck and they go to the next pan and then the middle-sized ones get stuck and they go on the next one. That's all you're doing is sifting for good deals. That should be the name of this show, sifting for good deals with Henry Washington.

So like, anyway, so you're able to say, hey, if this can work as a rental, great. If not, then I'm going to try it as a flip. If it not, okay, I'll try it as a wholesale. If not, you know, we'll let it go. And maybe even pass, do you like pass things on to real estate agents? Sure. Yeah. Absolutely.

Yeah. Well, because I'm not an agent. one of the one of the things I did to build to build my team was in order to know if you're getting a good deal you got to run comps right i don't have access to the mLS so i had to run comps so i networked with realtors from the from the real estate association and i told them i said hey um if you're willing to run comps for me like any deals i don't buy that are that they don't need me they need a realtor i'll give them to you and that's been a great way for me to be able to get accurate comps because now I have a relationship with a realtor who will jump on my comps quickly when I need them run fast because he knows that if it's not going to work for me,

it may work for him and he'll get a deal out of it. And he'll get a listing out of it. So it's been, that's been a great relationship for me. And then he lists all my, I don't do for sell by owners anymore when I'm done rehabbing them. But so he lists all my properties after I flip them. So it's a good, you know, symbiotic relationship. That's solid. Where are you out right now in terms of your whole portfolio? Like rentals, how many flips are you doing wholesale? What's kind of like your life look like?

Sure. I'm at about 40 doors from a rental perspective. And then we flip six to ten houses a year. Wow, that's awesome. And some of the, most of them, I would say, half of those are wholesales, where we're just buying them because they're good deals and putting them back on the market. Yeah, wholesaling is fascinating, right? you're buying a property and then you're not going through a massive rehab.

You're just reselling it against. You're flipping it with no work. That sounds like the ideal scenario. And the reason you're able to do that again is because you're good at getting leads. You have a deal funnel. The deals come in the top. You sift through them. You get leads.

You get things that are good. So let's go back real quick because is direct mail still your kind of main avenue for finding deals today? Or have you shifted away from that? Yeah, direct mail. And I have a website, a lead generation website. that I have a Google AdWords campaign on. So the Google AdWords helps the sponsored ad rank toward the top. I want to talk about that.

That's cool. And so I get a lot of leads through there. I'd say my best deals come from my website. Well, okay, let's talk about that. So I want to also go back to the direct mail, but now that you brought that up, now I'm intrigued. You got a website, a lead gen website. Is that through, like, who's that through?

Or is that just your own? Through Danny, through lead propeller. Lead propeller. Okay. So I have a lead propeller one as well. So you get to lead, you got a lead provider website. People then either search Google or they come up on an ad words. Explain that process because some people just have no idea even how Google ads even work.

So what does that look like? Sure. Yeah. So once I got the website, I needed to find a way to get that website ranked in the searches, right? And so you can do that a couple of ways. You can do it organically, right, through search engine optimization by ensuring that you have all the special write words in your website or blog content. or something that's going to help when people Google help your website to come to the top.

But that takes time, right? And so if you don't have the time for that, you can do a Google AdWords campaign. And so what that means is you basically pay Google to create or pay someone to create a marketing campaign for your Google page. And you'll get a sponsored ad at the top when people search for whatever different types of, of words you put in. And so I again used lead propellers, Google AdWords team, and they were

able to create just different ads for me. So when people search, you know, sell my house fast or sell a house fast in northwest Arkansas, my ad will be at the top of the search results and it helps them to find me. That's cool. And of course, like, you're paying for those ads. So do you have any idea off top of your head? Like what, what's your average cost to acquire, so to speak, cost to acquire customer, cost to get a home? What do you pay? Yeah, it depends. So it depends on, like, uh, what their search was. So you pay, you pay per click and then depending on what their search was. So certain searches cost me more money. I, I would say as a whole, I pay about $500 a month for my Google AdWords campaign. And I'd say during the busiest part of the

of the year, I might get 30 to 40 clicks a month. And during the slowest parts a year, I won't, you know, like right now, I'll get five, six, seven clicks just because not a lot of people are searching for selling their houses right now during the holiday season. Sure. Well, so if you were, let's say you spent over the course of a year, $6,000, $500, bucks a month. Over one year, what do you expect, like what kind of number of deals are you getting from that

source? Yeah, I would say I do almost six to ten deals a year from my website. Yeah, that's amazing. Yeah, it's, I mean, it more than pays for itself. It's not, like I said, it doesn't sound like a huge volume, but if you look at the profit margins on a deal versus what you're paying per month, it's well worth it. Man, this is where like I wish more people understood, like, just the power of paid marketing. I mean, I've had so many conversations with people in the past where it's like,

you know, well, I'm not paying Google for an ad or I'm not going to pay for that, you know, this or that. And I'm like, if, if you paid me $500 and I gave you back $30,000, would you do that? And everyone's like, oh, of course. Okay, well, that's what we're talking about. No, it's not a guarantee. And that's where people get weirded out. But, man, I love, I love, love, love paid marketing like that.

That's cool. It's absolutely worth it if you're going to do the work after you get the lead. Right. And I think a lot of people, so part of the reason why I paid for the marketing is before. I did it, I would search these things and then click on who came up and I would call them. And most of them either didn't answer the phone or if they did answer the phone, it was a VA or somebody who wasn't local. Or they were just unpleasant. And I thought, great.

That means if I get on here and I get my ad at the top of the page and I answer the phone and provide good customer service, then I'm probably going to get the deal. It's smart. It's smart. It's just a funnel. I mean, you get a certain cost per click and then certain number people are going to call you and a certain number of those are actually going to be interested in and certain number of those are going to accept your offer. And the more you can improve each part of that funnel, the greater chance you're going to have of getting the deal and the more money you make and the less you spend. And you've really seemed to have optimized that really well. I mean, 40 doors is no like small amount to do. How many years? I mean, it's like two years now, right?

Just over two years. Yeah. Geez, like 40-door? Now, are those multi-family? I mean, that's not like 140-unit apartment buildings, is it? No, no, no. I think our largest is an eight-unit. Most are duplexes in single-family homes.

And the eight-unit is technically four duplexes. It's just on two parcels. Yeah, that's amazing. And how are you going about financing all these properties? That's a lot of bank loans. Yeah, yes, it is. Most of them are small portfolio loans from banks. So we'll do the, you know, 15% down and, and we'll, we'll finance them that way.

We've got about four banks that we work with, small regional banks that we work with. And then a few are owner financed. So those have been great for me. I'd like to do more of those. But yeah, small portfolio loans and owner financing. That's so funny. The other day somebody messaged me and said, you know, I tried to get a loan to go through, trying to get something.

I remember what it was. But they said, and I kept hearing about these portfolio lending. on the podcast. So I finally just went out and found, we called a bunch of local regional banks, and I found somebody and they funded my deal. And I was so shocked, they were so shocked that it worked. And I'm like, I'm like, I know. Like this stuff actually works. Like, if you go outside the big Chase Wells Fargo US Bank world and talk to local people at a local bank, they want to fund your deal. That's how they make money is by funding you. And a lot of other people are just going to the big dog so that they can, they can take those smaller deals that you got. And like you said,

15% down on a rental property because a local bank was willing to do that and you build them relationships with them. Beautiful thing. For that eight unit, we only had to put 10% down because we bought it at such a discounted rate. So, I mean, the smaller regional banks are, there just can be more flexible, especially if your deal is a really good deal. You know, one thing I've heard that people do at these smaller regional banks, and it sounds too good to be true, but it's not if you think about it is the bank will not lend to them on a loan to value of what you're paying for the property. They'll lend to you on whatever it appraises for. So on that $150,000 house you got, they would say, we'll give you 75% of that.

And you may end up getting more than $1.15 to put down on that house, right? You may put nothing into that deal if you get a good enough deal. And it's just like Brandon said. And like you said, Henry, when you find the deal, all the other stuff falls into place. Of course, if you're buying a house for $50,000, that's worth $200, the bank's not going to make you put down 15% of 50 grand. They're getting like a 20% loan of value. They're going to give you a lot more there.

And if they don't want it, well, somebody else will. Even if they let you borrow $100,000, they still have 50% loan to value. It's a super good deal for the lender. So definitely do what these guys are saying and find the local bank that's maybe not doing a ton of business, especially for you, Henry, being in an area that I would consider a sleepy town like Arkansas. You may not get that in the Bay Area where everybody needs money. But out there, like Brandon said, those banks, they're not doing a whole lot.

That guy's hungry. He wants to put food on his table. He's going to go to the board of directors and say, we need to give Henry this loan, aka I need to get some money right now. I need to get paid. And that's exactly right. The power is in the deal. And that's why I tell new investors, you know, especially if they're having the, you know,

the either fear of getting started to the analysis paralysis. If you focus that time and attention on finding a good deal, that is going to motivate you to take whatever the next steps are for you in your situation, right? If you get a deal that's a sweet rental, it'll motivate you to go figure out how you're going to finance it, to go figure out who's going to do the rehab, you know, to go figure out all those things that people are turning their wheels over all the time, that, you know, it's hard to figure out unless you have a deal that you're working on. So this is going to give you that motivation and push you in the direction, right? because it's the key to success anyway.

If you find that good deal, you'll get there. Yeah, yeah, you find a good deal. You're going to find a good deal. You're going to find a partner maybe. You're going to be able to hold a sale or whatever. You find a good deal. You're going to get the money. You're going to get all that stuff's going to come together if you just go and get the good deal.

Yeah, on the Bigger Pockets webinars, I teach a webinar every week on Bigger Pockets. David Green here teaches webinars. And that's what we talk about all the time is like once you know how to identify good deals, like get a lead funnel. And it's not that complicated. You can do direct mail like you did. Or you could do, I mean, I mean, there's lots of ways.

They're good to drive them for dollars. You could connect with wholesalers, tell everybody you know about real estate, which we didn't, we didn't harp on that, but I meant to. And then we moved on. It's like, if you're listening to the show, tell everybody you know what you're doing, like you want to be in real estate because people will naturally come to you. Just like they did it for Henry here. Anyway, filter them through your funnel.

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Hey, what do you wish you would have known, Henry, when you got started that you know now? Like, whoa. Like, other than find a great deal, like, what advice could you get a new investor right now and say, hey, do this? So I would say the most difficult part about real estate investing is finding contractors and managing contractors, which is not something that I would have thought was difficult going in. into it. I have, you know, I would say that there's, there's been plenty of situations where not having a contractor lined up and ready to go as, it costs me money on the front side, right? Because you're, you're holding times and much longer. And it takes time to vet a good contractor. So I would

have spent more time trying to understand that part of the business and trying to understand how to find a good contractor and how to, understanding how to set your contractors up for success. You know, the first, the first, you know, deal I did, I didn't have a spec sheet or anything. I just walked contractors through and said, I want to do this, this, this, this, this, and this. And all that's great on the walkthrough, but then when they actually start doing the work and they forget what you said, right? Oh my gosh, that too. And so, yeah, little things like that have cost me time and money. And if I would have known those things on the front side and gotten, at least gotten educated enough to know the right approach to finding a good contractor, I think it would have helped me help me a lot more.

You know, the contractor thing is so much like, you know that quote? If I had six hours to chop down a tree, I'd spend the first four sharpening my axe. Like the contractor world is exactly why that is such an important quote. Like if you just do the work up front to do the right things for like project management in any field, doesn't matter. It could be computers or it could be real estate or could be anything. Project management in general, the more work you do up front to keep things organized and to vet the right people on your team that are me working with you, the easier the whole rest of it is.

Even though like the rest of it takes up 90% of the time. It's that first 10% of about the time if you just do that right. I mean, I realized story. Like I've been doing this now for what, 14 years now, I think in real estate. Still trying to get better at this. Though still on Friday night last week, it was 10 o'clock at night. And I was driving around looking for an ATM machine to get cash to give to some random contractor guy who wanted to get paid because somebody on my team said he would get paid.

and he didn't get paid. And I was like, I was like, what am I doing? I have been doing this now for 14 years. How did I get here? And I was like, oh, because I didn't do the upfront work required, that would have enabled me not to do that. And so I was punished and rightfully so because I didn't do the upfront work needed to sharpen my axe. Isn't that the way it goes?

Like, I just think, like, you have such a good attitude, Brandon, that you acknowledge this is my fault. Because most people would have found someone else to blame, right? It's the contractor's fault for needing money. It's my team member's fault for telling him he to get paid. It's the real estate's fault for being this way. But really, it's exactly that. I look at it like there's like stuff's going to happen in a project. Like water is going to come down this shoot, right?

And if I don't have a place cut out for that water to go to, it's going to spill over me. And eventually it's going to cover me and I'm going to drown in it if I don't prepare for it coming. Problems will happen in business. People will need to get paid. People won't show up. Things will go wrong. when you take the time up front to put contingencies in place and a plan in place and train people for, what are we going to do when this happens?

That water has somewhere to go and you don't feel like you're drowning. When you're lazy or you don't respect that there's a lot of work that's going to go into this, you just say, I'll deal with it when it comes. And then you get caught up in this flood and you're like, that was horrific. I don't ever want to do this again. And if you think about Henry, his whole system is carving out a place for that water to go. He fills out a bunch of deals from his direct mail and his SEO and his phone rings and these deals come in. He jumps in right away and he filters them and he finds the three out of the 50 he can work with.

Then he puts them along one of those paths that he's already carved out. Here's my criteria for buy and hold. Here's my criteria for flip. Here's my criteria to give it to another investor. So Henry never feels overwhelmed and freaked out and like, ah, I just can't take it. But somebody else would if they didn't prepare the same way that he did. So what I call is like what I'm describing right now is making a place for the water to go. That's your funnel.

That's your system. That's your business. Whatever you want to call it. You've got criteria in place and people that are trained and all the little pieces you need. And then the deals would be his phone ringing with someone, oh, that's all you need. You find a way to find deals. You find a thing to do with the deals when they come. And you end up with a whole bunch of wealth and a really cool life.

And it's just those two things you got to work on. And if people could get, I see Henry smiling because you're like, yes, that's exactly right. If people could get that in their understanding. that to be good at real estate investing, to be good at selling houses, to be good at whatever you're doing, you find a bunch of leads, you figure out what to do with them,

you proactively prepare for what's going to happen when they come, you will have a really good business. Absolutely. 100%. Real estate is just so super powerful and not extremely difficult. It takes work, right? It takes effort.

It takes hustle. It takes a never-quit mentality. but anyone can do it, right? If you are willing to put in the work and you have the mentality, you can change your life and not just your life. You can change the life of people around you and stimulate your economy. And there's just so many positives. And I just, I want to share that message with as many people as possible.

That's so good. So true, so true. All right. So Henry, let's go over to the next segment of the show because I want to go a little bit deeper. It's signed for the triple D, the deal deep dive. Hey, it's Brandon. I wanted to get a quick break from this podcast to invite you to this week's webinar in Bigger Pockets.

It's this week we're doing about my favorite webinars of the year. It's called the 90-day challenge, how to buy your first or next property in the next 90 days. Because look, we do this occasionally a few times a year where we really help you set down some time to make some big goals and then make a plan to achieve them. So to help you prepare, we're hosting this special free online workshop to help you just dominate the next 90 days. So I'm going to walk you through the process of creating a actual goal that you're going to work towards.

And then we're going to walk through how to create a daily and weekly plan of action to help you actually achieve those goals. So in the webinar, you're going to discover why now is such a good time to buy real estate. But only if you're savvy. We'll talk about that. We'll talk about how to learn how to begin generating leads on autopilot. How do you get leads coming into your inbox automatically? And then we'll talk about how to create a personalized step-by-step checklist towards hitting your goals. Like follow this and you're going to achieve your goals and a whole lot more.

space is limited to this, so don't miss it. Sign up today by going to biggerpockets.com slash 90 day webinar. Again, 99, the number 90 day, bigger pockets.com slash 90 day webinar. And I'll see you there. All right. So time for the deal deep dive. Henry, we're going to dive deep into one particular property that you've bought or a deal you've done of some kind and get to know it a little bit more intimately, if you will. So let's fire a bunch of questions.

You got something in mind that we can. dive into? Yeah, absolutely. All right. Question number one for me then, what kind of property is it and where's it located? Yeah, this is, so we'll talk about that eight unit. That's four duplexes. It is multifamily, four duplexes and two empty lots. All right. And that's an Arkansas, right? Yes, Fayetteville, Arkansas. How did you find it? I found it through hustle. So I was a, my partner and I were out, driving for dollars one day. And we came across an apartment building that looked like the roof was having some trouble. And so we had added that to our driving for dollars list, but because we were mainly only looking for singles and duplexes, but because this building looked pretty

dilapidated, I looked into it as soon as we got back home. And so I pulled up the county records and I found the owner. And I happened to pull up the deed as well because I didn't want to mail a PO box. I wanted to see if I could find an actual address to mail. So I pulled up the deed to see if I could find an actual address. And what I found on that, on that deed was it had the stamp from the title agent at the closing company that they closed with. And she was the same title agent that we used to close all of our deals. And so I said, well, maybe I'll call her and see if she knows the guy. And so she's been in the business for years. So I called her. I said, hey, Brandy, I'm looking at this deal you closed, you know, umpteen years ago with so-and-so. Do you know this person? And she was like,

oh yeah, I know him. He's a good friend. So she was like, you want to talk to him? And I was like, yeah, it'd be great. So she called him, told him we were interested in buying this apartment building and set up a meeting for us. And so we went and sat down, my business partner and I went and sat down with this gentleman and talked through that building. And it worked out that we were not able to purchase that building. So right at the end of that lunch meeting, my partner and I like, well, do you have anything else you'd be willing to sell? And he was like, well, I got some duplexes, but they're bad. You don't want those. And I'm like, no, we probably do. We probably do. And so we got up from that meeting and we drove over to these really run-down duplexes on this,

you know, cul-de-sac street. And he said he was willing to sell them if we would buy them at what he owes the bank on them. So he just wanted to get out. I mean, and they were, they were bad. I mean, are falling apart. But four duplexes and two empty lots. I say they're empty lots. There were six duplexes, but two of them burned down because drugs are bad. So, and so we were able to, we were able to, that's how we found them was through him. And so we went through the purchase process from there. How much, how much did you pay for it? We paid $200,000. And how did you negotiate that price? Yep. So he, that was, that was a struggle. He said he just wanted to to pay off the bank but didn't want to tell us what it was. And so we made, we made an initial offer

of like 110, which is crazy low. And they shot it down. And so we went back and forth maybe three or four times and landed on 200,000, which is, which is what he needed to pay off the bank. So we bought it for 200,000 and it needed about, I think we budgeted 140,000 for renovations. Oh, okay. So what, how did you fund that entire thing then? Yeah, so small regional bank. We went to them with the deal. And because we were buying it for such a good deal, and we were putting about 140 into it, and they wanted to see it. So they actually came out and they toured the property. And we showed them and told them what we were going to do to renovate it and what we thought rents would be. And we got done. And so we were able to buy that for 200 with 140 renovation budget. And we put 10% down. So they actually wrapped the renovation in there and you just pay 10% of the whole entire thing down. We pay 10% of the purchase price. I love it.

Dude, that's amazing. And they funded 100% of the rehab. Yes, sir. Boom. Yes, sir. So good. This is a good time to be borrowing money. I'll tell you what.

Okay. What did you end up doing with this? Because I'm sure this sounds a little different that it's a standard deal. Yeah. So we still have it. And the plan was always to make it a long-term rental. Right. And so we renovated, let's see, we've renovated six of the eight units.

The other two are starting construction right now. And so we're renting average rents at this place or 725 to 750 a door. So we've got six units rented at about that rate. And a couple of months we'll have eight units rented at that rate. And then the plan from there is to the benefit to, to the empty lots as they're zoned for multifamily up to 24 units. So we're going to try to stick as many units as we can on those other two lots. And so we were able to buy a good deal, buy a great deal for very little capital down.

That's already cash flowing at six units. That's going to even get better with eight units. And then we'll build as well. So I'll kind of get to get my feet wet and some new construction. That's because you bought somebody else's problem. That's right. That's exactly what you did. That's right. And we asked, he wasn't even going to show it to us. You know, you just, whenever you're meeting with somebody who's in this business, ask them, ask them what they got.

They might have something that's great for you. Isn't that funny that just you'll hear people say there's no deals and then Brandon will say, well, how many people have you talked to about real estate? And they're like, well, why would I talk to people when there's no deals? Right. Right. I mean, we went, we basically had a meeting where we decided we weren't going to buy the thing we went to have the meeting about. but because we spoke up and said, well, what else you got? We landed probably our best deal. You know, oh, that just scares me as to how many chances

I might have been something in life because I did it. I know. I actually, one of the strategies I teach on webinar sometimes, that's a really easy thing for new investors to find deals is go on Craigslist. On like, set a reminder on your phone every Monday morning, go on Craigslist and go to the for rent section

and go look for every one of the mom and pop landlords listing their properties for rent. You always know it's a mom and pop because it's like two lines and like a crappy picture, right? And you call them and just say, hey, I'm not looking to rent your property, but I'm a new investor and I'm looking to buy something any chance you want to sell that. Now, chances are they're not going to want to, but what do we know? We know that, A, they're a real estate investor, and B, they're probably not very good at listings,

which means they might not be a good landlord. And so, and then the third question, if they say no, I mean, it's a win-win either way. Because if they say no, fine, you built a relationship. You have a phone number of a landlord now in your area. that owns property. If they say no on that one, the question you just asked is perfect there. Okay, well, do you have anything else? And chances are they're going to go, hmm, well, there is that one piece of junk property I hate, but you're not, you're not going to want that one. Like, and so that one phone call could lead you to a dozen or two dozen leads because that person

owns two dozen properties. And now you get to find out what their problem is and you get to take it. So yeah, simple strategies like that and then combined with what you just said about asking if they have anything else, so, so powerful. What's cool. Also about this is interesting is, you know, we talk a lot about the Burr strategy at bigger pockets. They buy a property. You rehab it. You rent it out. And then you refinance. You get a whole new loan and then you repeat the process. Now, the reason we talk about this, number one question I get about Burr is, and I don't know, Dave, if you're the same way, but why wouldn't you just get one bank loan on the whole thing? Because what you did is that. You didn't have to even refinance it.

You got a loan that had the rehab into it and they just made it one thing. That's like better than Burr. It's like the Burr plus method. But it's really hard to find those banks. But the banks, they're the local community banks that are going to be the ones that can do the better than Burr strategy there. That's cool. Absolutely. Love that. All right.

So finally at the end of the day, what was like the outcome in terms of, you know, what do you think the property is worth today? Sure. You know, what kind of cash flow are you expecting from it now? Sure. I think it's worth somewhere between five and 600,000. Oh. If you count the buildings and you count the lots, who knows what it'll be worth once we actually develop those other two lots. So, I mean, it's just been a good.

deal. Awesome. Awesome. And like I said, average rents are 725 to 750. One of the, one of the duplexes is a one bed, one bath. So the rents are a little lower on that one, but the other ones are two ones and two twos. And the fact that now you own this property that's already been rehabbed, your cap X, like your capital expenditures and your repairs should be lower long term. You might have a few kinks to work out. There always is at the beginning of a rental of a new unit that's been rehab. But you should have fairly low expenses for years going forward now. Right. So cool.

And also this property is we own most of the street. I think there's only three houses on the street that we don't own. So we were really able to kind of change the whole dynamic of the neighborhood by rehabbing these properties, which helps us keep the rents up. Yeah, so good. So good. All right. Last question, David, from the deal deep dive. Well, what did you learn about this deal?

Oh, man. drugs are bad. That's for sure. It's one thing we definitely learned. So I think this deal has gone on longer than we've wanted it to from a rehab perspective. So I think I'd say we got this deal early enough in our career in our real estate investing journey that we didn't have the ducks in a row on the contractor and rehab side. We spent a lot of time vetting a lot of contractors and have still, we're on our third one now working on this same project.

And so we've kind of taken learnings from each of those scenarios and we're trying to be better at at being able to do rehabs on projects, especially when you have them at a large scale. So we, like I said, we're doing spec sheets and I'm sending those spec sheets out before I even meet the contractors there.

Like, I want you to get a sense for what you're getting yourself into before you get there so that we're not wasting each other's time and so that you understand kind of what the size of the prize is for you before you even get there. Those are things I never, I just didn't think to do on the front side. And so most of the lessons learned are from that contractor perspective there. Very, very cool.

Well, thank you for your sharing that. That's one of my favorite deal deep dyes we've done yet. That's a super legit deal. It reminds you a lot of the fourplex that I bought for my daughter, Rosie. We bought that one for dirt cheap. Had to rehab it. Now we're getting $750 rent out of each unit. Yeah, it's very similar.

Cool. All right, man. Well, before we get on to the last final couple segments of the show, I'm curious, what's the future look like for you? I mean, are you still working a full-time job somewhere? Is this your full-time gig? And then what's it look like going forward? Yeah, I'm still a full-time employee, man.

So the real estate is still a side hustle. I am trying to move into small multifamily. I say small multifamily, you know, five units and up to as many as possible, really. So I'm halfway into Matt Fairclough's book on raising private capital. And so the next steps for me, I've already started marketing for a larger multi-family buildings. And so now I'm at the stage where I'm trying to figure out how to source the money for these larger deals because I want to start scaling a little higher. Super cool. Super cool, man. All right. Well, with that, let's head over the next segment of the show, the world famous. Fire round. It's time for the fire round. This is the part of the show where we fire some questions directly at you from the Bigger Pockets Forum to see what you got to say.

So let's do that now. Number one comes from Brent Davidson. When you're hiring a contractor, this is actually perfect for today's thing, how do you handle payments? Like, I know you're not supposed to pay for the whole job up front, but do you pay for something up front? Yeah, yeah.

So I've got a couple different scenarios. So I've been lucky enough to find a contractor who puts his skin in the game and I don't have to pay him until he's completely done. So in that scenario, I don't pay anything. But most contractors want some form of down payment from me. And so what I tried to do is I'm fine paying a down payment, but what I ask them to do is to show me which line items that down payment is going to cover

so that when they're asking for their next draw, it's easy for me to say, okay, I paid you X down, and that covered these things and these things are now done. So I'm okay paying you the draw, and then I make them tell me what that's going to be for. All right. Beautiful. And I'll just add on to that that 99% of the complaints I'm getting from people I love right now saying, I did everything you said in your system, except I paid the contractor up front. What do I do now? I don't even know if there's an answer for what do you do now. You just can't. It's like trying to put the toothpaste back in the tooth. But you paid them. You're committed. You just got to trust, right? Stop doing that. If you really, really like that contractor. okay but let them do a give them a little bit of money let them do some work and give them some more money promptly don't make them wait two weeks that's not cool but yeah don't squeeze out the toothpaste and

then call me and say how do I get it back in the tube or anyone else because science has not solved that most of your deposit when you first start goes towards materials for them to get started I just make them tell me what materials they're going to get and then you buy it either I'll buy it or I'll make sure that that's what they got I was going to annoyed that like when contractors who I'm paying material because a lot of times I'll buy all the material ahead of time like at like a lows. I'll just go get a big bulk order. Then they still ask for, you know, half down. I'm like, but I'm buying all the material.

You, you literally have no expenses other than your employees, which if you get the work done, you get paid, you know, at the end of the week or whatever, every couple weeks. And still, it's irritates me. And I know why they're doing it. It's because they have to pay for last week's work that they don't have money for. And so they're using your down payment as salaries or whatever for their team or for their beer for the weekend. I don't know, whatever.

drives me, drives me insane. So yeah, the one, if there's like one trick I've learned with contractors that just works so well, it's that it's like, they got to always be hungry.

And then if you do your job and pay them responsibly and quickly, like you said David. Like, for example, if it's like, hey, you get $2,000 when the carpet is done. It is amazing how fast

that carpet will get done when you hold to that rule of you get paid the $2,000 when your carpet's done. They will work till midnight. They will bring in a friend to get that carpet done by midnight

because they want that. check from you. And then if you pay them quickly, then you're training them. I just get this done. I get this done. I get money. And so they work faster because they know that. It's, I don't know why that's so hard for us, though, because Brandon, you have dogs. Do you notice your dogs are more obedient when you have a treat in your hand? Not to compare contract. I realize that that's, I make this mistake a lot. Okay. But it's like just with little kids, you want a little kid to do something and you say you can do this if and you say you'll get to do something else you want. All of a sudden, it's so much.

Last night, I got, it's exactly like that. I have carrots. So like I've, uh, low, my head, Rosie refuses to eat carrots or any vegetable at all. So I have, I have a piece of carrot, a chocolate chip. A piece of carrot, a chocolate chip. And I teach her, you eat one carrot bite. You get to eat the chocolate chip. You know what she did?

She wouldn't pick up every single piece of the carrot. Sheld them all in her mouth at one time, swallowed it, and then grabbed a handful of chocolate chips they ate it. And I've been trying for an hour to get her to eat her vegetables. And all it took was a little bit of a reward. That's, you just. Got it done. Yep.

Yeah. And how much effort would it have taken for you to get her to eat those carrots without the chocolate. Yeah. Impossible. Like a hundred times more. Yeah. That's, there you go. You heard it here first.

Carrots, contractors and chocolate chips. There we go. That's not like a book from bigger pockets. Carrots. Yeah, carrots, contractors and chocolate chips. Contractors. I would buy that book. How to handle contractors.

You know, yeah, this is a great idea. Folks, listen to this podcast because Brandon is going to take credit for that quote. And as soon as we wait like a year from now, he's like, no one's going to remember. He said it. He's going to jump on it. It's all mine now. All right. Next question.

The CCC principle, actually, the CCC principle. You heard that. The four C's, yeah. You're right. The four. I call it the four C's principle. And I just made that up. He's already named it.

That's funny. He's like texting Ryan Murdoch. Trade Mark is really fast before David's team kick it on it. Anyway, all right. All right. Next question. From Roman in. Philly. How do you go about finding new tenants? What websites are you getting most of your leads from?

Thank you. Yep. All I do for new tenants is, so I use Cozy as my property management system, cozy.cozy. Cizcindicates. So I create the listing on Cozy. It syndicates to Trulia and Realtor and Hotpads, I believe. And then I put an ad on Zillow. That's it. I don't put a sign in the yard. I don't use Craigslist. I don't use Facebook. I just use those sources. And I get enough leads to filter through. And then I do open house style showings. So I pick a time when I will be there and everybody has to come at that time. And, you know, kind of what I've learned doing that is I get there. I try to get there a little early and I don't stay much long past the time. I said I would be there. So if I said I'd be there at one and the showings done at

110, I might stay till 115 and then I'm gone because, you know, if people show up late, that could potentially be a problem for me later. Maybe they'll be late on rent. So I like it when people are punctual. I like to utilize my time well. And so I make everybody come at one time. And if it doesn't work for them, I'll give them another time the next week when I'll be there

or the next couple of days. But I don't just meet every individual tenant at the place. Very cool. And that takes a little bit of faith to be that way, because you always wonder, like, what if I miss the perfect one, you know? Yeah. But all my experience with having, like, good employees

or good tenants or good anythings, is they don't let something really small deter. them. Right? Like if they really want that place, they're going to show up when you tell them to be there. They're going to be there on time. They're going to come with a good attitude and make a good impression. Yeah, absolutely.

Good stuff. All right. Next one. Next one. I like this one. So how do you, this is the standpoint that they're asking about like motivated sellers when you're talking with sellers. But how do you make yourself more likable?

How do you get a seller to sell to you and not to somebody else? Any tricks on that? Yeah. I think I'm just naturally a people person. And I, you know, and I think that helps. I always try to keep in the forefront of my mind that this, this is a people business. It's not a real estate business, right? Real estate is the way that money is made, but people are the vehicle for getting us there.

Right. And so I make sure that I try to take the time to understand, you know, what the situation is. Because we're buying situations, right? We're not buying houses, right? If we were just buying houses, they'd call a real estate agent, right? but there's definitely a situation going on. And I want to try to sympathize and empathize with these people as I'm dealing with that. So I sit down with them and I just talk and I just listen.

And sometimes I know, you know, I know the second I get there that I'm not going to be able to buy the house. But that doesn't stop me from trying to understand what their problem is. There have been multiple scenarios where we've done things to help people that had nothing to, do with buying their house and we didn't buy their house, but it was just the right thing to do, right? And like what? Sure. One of the things, there was a lady who was suffering, it looked like from, she had cancer at some point and she had this immaculate yard. I mean, looked like a professional landscaper had maintained this yard for years. I mean, it was just, everything was well groomed. And we went to look at her house and she just wanted to look at her house and she just wanted to

wanted more than what made sense for the home. But while we were talking to her, part of the reason she was wanting to sell was because there was a lawnmower repair shop behind her and they were running big machines and the carbon monoxide it puts off really made her more sick. And she just couldn't run her lawnmower to then take care of her yard because she just wouldn't feel well. And so kind of one of the things we did there was even though I couldn't buy her house, we went out and we bought her an electric lawnmower so that she could take care of her

and we dropped that off to her. That's cool, man. It meant a lot to her. And, you know, if you think about it from a people perspective, it's just a good thing to do. But also, I've since gone back and checked on her just to see if she was all right. And she told me about a deal around the corner.

And I went around the corner and knocked on the door for a house that ended up being a really, really good deal. We didn't get to buy it another investor. Actually, a friend of mine ended up buying it. But, you know, had I shut up at her house, sooner. I might have been able to buy that deal, right? And, and, you know, had we not done what we've done, you know, you might not have some of those opportunities. And like I said, it's a people business. People talk, right? You never know who somebody you're dealing with, whether you're not buying

their house might tell, all right, and have to call you. I get word of mouth referrals all the time and I bought several properties from word of mouth referrals. So I just try to find a way to help everyone. and if you think about each of your appointments as an opportunity for you to help someone and figure out a way to do that, whether that means buying their house or not, like the success will come. Yeah, really good. Really, really good, dude. All right, well, let's get on to the next segment of the show, the last segment of the show,

and this is our Famous Four. All right, the Famous Four is the part of the show where we ask the same four questions we've asked every guest every week, and now we're going to ask you. Before we get to that, let's hear from Jay Scott to see what's going on this week over on the Bigger Pockets Business Podcast. Hey there, Brandon and Bigger Pockets podcast listeners. This is Jay Scott from the Bigger Pockets Business Podcast. This week on the business podcast, we have an awesome guest. His name is Britt Foshe, and he tells us all about how we can buy a small business with essentially no risk whatsoever if we do it the right way.

So tune in this week. Here, Britt, tell us about buying small businesses and how we can do it. do it with little or no risk on the business podcast. Now, back to your famous four. All right. Big thanks to Jay as also. By the way, I mentioned earlier a guy named Mike McAllivitz on the Bigger Pocket of Business Podcast. Just a big shout out to that episode was so good. Like it transformed a lot of how I operate my business. I just want to recommend everybody. Go listen to the show in general and a subscribe to it and all that. But go look up the episode with Mike McAllivitz. It was so just inspiring yet like reminding me of some stuff that

I just wasn't doing right in my business. So check that out. That's why, again, the Bigger Pocket Business Show is so good to listen to because, like, we are running businesses. Like, yes, we're investing in real estate, but we run real estate businesses. Kind of like a guy who owns a bakery. Yes, they're baking cakes, but they own a bakery. And we own a real estate business. So check it out.

And anyway, side note there. But now, Henry, Washington, number one, favorite real estate related book? favorite real estate book i would have to say honestly right now has been the the book on raising capital wow and that's only having read half of it having read half of it it's really been i mean i think it does a good job of kind of explaining some really uh what can be difficult uh subjects on raising money in a in a way that makes sense for everybody and so yeah absolutely i'm i'm definitely enjoying it. That's awesome. Good job, Maddie F. Very cool. All right. What about your favorite business book? Favorite business book? So it's a little different. I don't even know if you

classified as a business book, but I really enjoyed the alchemist. Not necessarily a business book, but just a great book for motivation and understanding that if you're doing the things that you are meant to do, then the opportunities will come and you'll be able to realize the things that you want to realize in your life and in your business. I really want to write a book someday just like the Alchemist. It was such a powerful book. I loved it. Yeah, I'm like, I got to write the next, The Alchemist 2. Revenge of the Alchemist. It's going to be great. All right. That's hilarious. Revenge of the Alchemist. Number three, David. It sounds like the office, like the Michael Star. Yeah, yeah. That's what it is. That's how you sound. All right.

Henry, what are some of your hobbies? Oh, man, hobbies. I've got a 15-month-old daughter, and she is so much fun. So no hobbies, though. She is so much fun. So I'm really enjoying spending time with her. I play basketball. I haven't played in a couple of months now, but I used to play quite a bit. So I enjoy doing that and just, you know, hanging out with my life. We have a good time. Very cool. All right. Number four. Henry, what do you think separates successful real estate investors from all those who get? give up, fail, or just plain don't get started. Yeah, man. I mean, we talked about it earlier. It's mindset, right? Being open and willing to understand if you're first getting started that you probably don't

have the right mindset and being open to understanding and changing that mindset and realizing that there probably isn't a problem that you can't figure out a way to solve on some level. So having the right mindset and the right attitude is what really sets apart those successful investors. So good. Beautiful. This has been very good, Henry. So for people want to find out more about you, where can they find you? The best place to reach me is probably Instagram.

So you can find me at Independence Realty Group on Instagram or you can shoot me an email at J-J-W-A-S-H-4-5 at Gmail. or my business email, which is Henry at Independence Realty Group nwa.com. Very cool. Very cool. All right. Well, I'm going to go follow you on Instagram. I think that's what Brian and I were actually both doing. That's a little brief on.

Very cool. All right, man. Well, thank you so much for being on the podcast today. Really, really good stuff. And I look forward to kind of seeing where you're headed in the future. Without, I guess, further ado, David Green. Do you want to take us out? Yep.

If you want to follow us on Instagram, he is Beardy Brandon. I am David Green 24. Brandon's trying to get to 100,000 followers, so please unfollow him. I don't follow me to catch up. This is a socialistic competition that we're having right now, and I need some help. Just kidding.

And then, Henry, you were Independence Realty Group on Instagram. Independence Realty Group, yes, sir. All right, cool, man. This is David Green for Brandon Revenge of the Alchemist Turner, signing off. Your list. to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype,

you're in the right place. Be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform, our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media.

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