BiggerPockets Real Estate Podcast - 420: Finding the “Sweet Spot” in Multifamily: Scaling to 150+ Units with David Grabiner

Episode Date: November 26, 2020

David Grabiner takes the term “long distance investor” to the extreme. While he was a hospital administrator in the Democratic Republic of Congo, he was calling real estate agents in Chattanooga, Tennessee trying to scoop up multifamily deals. David started out by partnering up with his father, buying a quadplex that helped him get his initial training in property management. He later scaled up his and his father’s investment portfolio to 24 units, and then, within 3 years, scaled up his own investments to 150+ units! This meant that David had to quit his job and go full-time into real estate investing. He did it, and he isn’t looking back! Now David is a deal-finding machine, buying directly from listing agents and becoming one of the go-to multifamily investors in Chattanooga. Whether you own one single family home, a dozen duplexes, or hundreds of apartment complexes, you’ll take something away from David’s in depth discussion on property management, landlording, and tenant screening. In This Episode We Cover: Finding your “unfair advantage” and how it can help your investing career Approaching different investors with different points of view The importance of networking for off-market deals Why you shouldn’t be scared to be “the owner”, and actually use it to market yourself to others How to find, screen, and keep tenants in place How you can quickly increase a property’s value (simply by being a great property manager) Finding the “sweet spot” in multi-family deals Setting up systems for automated property management (so you can scale!) And SO much more! Links from the Show BiggerPockets Forums David's Instagram Brandon's Instagram BiggerPockets Podcast Buildium Collegedale Credit Union BiggerPockets Podcast 362: Big Goals? Here’s How to Get Your Spouse or Partner on Board with Jay and Wendy Papasan BiggerPockets Podcast 260: The Ultimate Guide to Negotiating (for the Negotiation-Averse) With Former FBI Hostage Negotiator Chris Voss Rent Manager Check the full show notes here: https://www.biggerpockets.com/show420 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 420. I got this crazy opportunity. I was buying a single family home, and the lady happened to have a pocket listing for 10 duplexes on one street. And I didn't have the money to get it done. And before, I would have let that limit me, be like, oh, that would have been an amazing deal if I had the money. But then I realized, it doesn't matter how much money I have in my pocket.

How can I get this deal done? 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 about it's Brandon Turner, host of the Bigger Pockets podcast here with my co-host,

Mr. David Green. David, it is almost time for the new year. it's almost 2021, right? What are your, what's your plans? You got some big goals in mind? Yeah, this is the time of year when I actually start planning for the next year. Because as we talked about with our guests, you make it easier on yourself when you come up with like, I paved the roadway before you start the journey.

So I'm an analogy. That was a good analogy. I guess it was. Yeah, I couldn't help myself. It's good, man. People play drinking games, I'm sure to your analogies. And it's great. It's great.

Oh, that's funny. I wonder if anyone does that, you should comment. on about Instagram. I'd like to see it if there's a David Green analogy. No, they would be dead. They would be dead. Alcohol poisoning would kill them at the end of like the introduction of the show. I feel like analogies have become the new rural. Remember when you and Josh had that thing going on for a while? I couldn't say it. I still can't say it. Whatever. Yeah, we keep up the pace a little faster than you and Josh used to. I think so. But there's still inside jokes in there. So yeah, anyway, the goal for my real estate team, we're going to try to double

our sales of what we did in 2020. So, gearing up to try to sell $150 million. Did you like double in 2020? 20 30. I tripled in 2020. Yeah. Like it's been going. You know, I'm just going to double it. Okay, whatever. It's fine. This is why planning is so important, you know, because like if you're doing what everything that you can be doing, you should expect to be successful. And I feel like in in your subconscious, if you expect, I'm going to go get a deal. I'm going to go write offers. I'm expecting one of them to be accepted. Therefore, I need a plan for what property management software I'm going to use, where I'm going to get my loan from, things like that. I just think it really, really helps getting your own psychology working with you. accomplish your goals as opposed to constantly fighting these fears of like what could go wrong. That's so good, man. It reminds you that phrase like, work until your success isn't a surprise. I really like that a lot. A wise man once said that.

Yes, he did. I actually don't know who said that, but I say that now. I'm sure I heard it somewhere. But yeah, work until your success isn't a surprise, which means like you shouldn't be like, wow, I tripled my, no, you had a goal. You planned on that. You worked toward it. You worked backwards from what it looked like.

and then you achieve your goal. And you're like, great, I did it. Like, not that it's not awesome, but it shouldn't be a surprise because surprises are like, I won the lottery. Point. Yes, you weren't expecting to do it. Now, that doesn't mean you first start that you should not, you're going to be disappointed several times as you're getting going.

But that's why you're working. You work until you hit that point where you're like, yeah, I had metrics in place. We hit our metrics. I put things in place to make sure we did and we accomplished our goal. So it is possible, everybody, absolutely. All right. With that said, let's get to today's quick tip. Hey David, there's an important holiday coming up in the next couple days.

You know what it is? What would it be, Brandon? Well, actually, I think it's today. Thanksgiving. Happy Thanksgiving for everyone listening to this today on the day it comes out, which means, besides the fact that we're all stuffing our face with turkey and cranberries and all that today, it means that tomorrow is a national American holiday, Black Friday. And I don't know if that's going to be someday.

Which means big savings around bigger pockets. It's a Black Friday sale going on. Basically, it's our, we're doing the biggest book sale of the year. We do it every year. We do a huge book sale. 30 to 40% off books, including paperbook, ebooks, and audiobooks. In the intention journal that I put together, people love that thing, magazine subscriptions, free shipping on everything.

And David Green will come to your house and give you a back rub if you buy one of his books. So just go to BiggerPockets. Best backrub you've ever had, to be honest. Just go to BiggerPockets.com slash store between November 27th and November 30th. And these discounts will apply automatically. Again, biggerpockets.com slash store. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. The job of a property manager is protecting and growing your operating income

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Terms and conditions apply. Hiring Indeed is all you need. And now I think we're ready to jump into. of this episode. David, you ready? Yeah, let's do it. I love today's show. All right, so today's show is a guest named David Grabiner. David was a, you're going to hear a story, but basically he started investing from thousands and thousands and thousands of miles away, but as far away you could possibly

get from where he was investing. And I had some really massive success he's had over the last several years, and you're going to learn how he's done that. Using what we call in the show Sweet Spot apartment complexes, you're going to learn about how he finds these, how he finances them. He talks a lot about how to manage these. properties and why they're difficult, but why that's where the money is to be found in today's market and in the future market. So you're going to learn all these mid-sized apartment buildings

today and a lot more. So without further ado, let's get into the show with David Grabener. David, welcome to the Bigger Pockets podcast, man. Good to have you here. Thank you so much for having me. It's a real honor. Thanks, man. We've got to be careful today. We've got two David. So I'm going to call David Green here, baby beard, and we'll call you normal beard. And we'll be all good. It'll be a good show. So tell us about yourself. I mean, how'd you get into real estate?

What did you do before that? You kind of had an interesting background. Yeah. So before I became the DIY underscore landlord on Instagram and had all my multifamily properties, I was just a hospital administrator working in the Democratic Republic of Congo in Africa. Just like everyone else. I mean, it's just normal story. Exactly.

And I had this crazy idea that I wanted to become financially independent. And but I didn't have any money. and I was only making like 54,000 a year, and I had two kids, two of us, are four in the family. Yeah. And I was like, how am I going to do it? Yeah. Hospital administrator to, in Africa, in the Republic of Congo? Am I saying that right?

Democratic Republic of Congo, yeah. Is that kind of like United States of America, but you can shorten it just by saying America, or it'd be weird to say Congo? Is that weird? Well, there's two congos, so you can't just say Congo. Oh, okay. There's the Republic of Congo and the Democratic Republic of Congo. So it's very.

All right. So you were in the Democratic Republic of Conduct. Why there? I mean, did you grow up there? I grew up as a missionary kid. So I grew up in Zambia. I went to high school in Kenya. And then I met my wife who's from Argentina in Kenya. We got married. Her parents had a hospital in the Congo and they asked us to come work there. Very cool. My brother-in-law is Kenyan from Kenya. So, oh, awesome. I've not been there, but it is in the works at some point. So I hear it's cool. You need to go. Kenya is amazing. That's what I hear. All right. So how did you get from there to now? You live in the states now. Right? Yes, I do. All right, in the United States of America. Because I say America, they could be South America. I don't know. But you live in America now. So to walk us through that journey, you went from hospital. What was your first kind of foray into real estate investing? So when I was over there,

I was like, okay, I need to buy invest in real estate. But I couldn't use my income because all my income was from over there. So no one could verify. So I had a lot of disadvantages. But as Brandon always said, you need to look at your advantages. So I was like, what advantage do I? I have. You say it all the time on bigger pockets. Okay, it sounds good. And I'll claim it. It means a lot. I'll take it. I'll take it. It's probably what I'll say David says and then everyone just says that I say it. I'm going to go. But I'll take, I'll take credit. It's okay. So my advantage was I had a dad who lived in the States and had some income that could be used

to get loans. And he's also a great partner to work with and we get along really well. And not everyone has a parent who they can work with, but I happen to have one of those that I do have that I can work with. So we partnered up and we bought a quadplex. We put like 50, 50 down payment, 25% down, bought the quadplex and then just like started going from there. Hey, this is working. Let's save up a bunch of more money and buy another duplex. Let's save up a bunch of other money and buy another quadplex. And we did that all the way to 24 units. Really? In about three years. Wow. Okay. So I want to unpack this a little bit. First of all, there are people who right now, I'm going to call some people out listening to this.

They're going to go, well, sure. Must be nice to have a, you know, super rich family that can just give you money, right? So first of all, I don't know your family estate, but I'm assuming they're not just super rich loaded, right? No. So, but more importantly is I would encourage people to ask, like, that are thinking that right now, like must be nice to have a family that can just partner with you or something like that. And this is the unfair advantage thing that we talk about all the time. It's like everybody has something.

Everybody has something that they're unfairly advantaged in. And so if you spend your whole life going, oh, must be nice, must be nice to have this, must be nice to have that. Like, you'll never get anywhere. Like you just, people get sucked into that must be nice. Somebody told me the other day that some real estate guy has a T-shirt he sells that just says must be nice because of that same thing. Like, yeah, like, yeah, it's crazy. My dad was a missionary, like working as a missionary his whole life. When I was growing up, my parents were making $600 a month.

Woo! Yeah. $600 a month. That's how we grow up living off. He didn't have money set aside. I mean, he had a tiny little bit that he had saved up. But it wasn't like he had all this money. We just like, we're going in this together. We're putting all our money in in one basket and let's go. Yeah, that's awesome. So walk us through that very first one. I mean, like, let me even go back from there. You call your father and you're like, all right, hear me out. I got this crazy idea. I know I live over here and you're over there, but we're going to make million. How did you approach

it with him? What was your? logic there. So yeah. So I was like, okay, yeah, I've been reading these books. Here, check out this book. Hey, check out bigger pockets. They have an awesome podcast. I've been listening to the podcast. Like, check out all these things. And he's like, he was interested in real estate too. He's like, yeah, we could do this. And I had developed this little Excel spreadsheet. And I was like, listen, if we buy for this and this, we're going to make 20% cash on cash return. And he said, that's what Warren Buffett makes. And I said, I don't know what Warren Buffett makes, but I know we're making 20% cash on cash return.

He's like, you sure? I was like, yeah, if we buy it for this and we do this. And then he started looking at the number. He's like, yeah, we could probably make a 20% return on this. That's cool. And just scale from there. All right. So you started, you pitched him.

He's like, all right, I'm into it. Which, by the way, I think is a good way. There is a thing. And David, I would love your thoughts on this because you're really big into the disc profile stuff. But there's like ways to pitch people that appeal to certain types of people. Like some people love that. Like, you can make a X amount.

return on investment. They'd be like, yeah, that's right. And other people, you'd be like, you could retire five years earlier. And that would really appeal to that person. Or you could, you know, work few hours every week. You spend more time with your family. That would appeal to other people. So I find interesting is when you're pitching potential partners to think about like what what drives them, what motivates them, what gets them excited. And it might not be the same thing that gets you excited. So kind of interesting thought there. David, what do you, David Green? What do thoughts on that. I think that's a common mistake a lot of people make is they assume everyone else thinks like them. So when when there's people that you bring an opportunity to and you say

you can make a lot of money, to some that's actually distasteful. That just sounds like a terrible reason to do anything. You know, if you say, hey, would you like more time with your kids so you work less overtime because I can make you passive income on the side through what I do? That's a completely different story. So the disc profile that Brandon, you're talking about is a behavioral assessment that breaks down what people value. So the D, the I, the S, and the C are the four components of a personality. Your D score is your dominant score. It's how quickly you make decisions in an environment you've never been in or in a situation you've never seen. Your I is your interactive score. That measures how much you like interacting with other people and how much you value being

liked. Your S is your stability score. That measures how much change you like or how much you kind of like to live by the seat of your pants. And your C is your compliance or your score. which kind of deals with how much you like structure protocol. Those are like your engineers, your architects, your bookkeepers. They like Excel spreadsheets. They're very analytical by nature. And so it's not just the motivation for why someone would do it, but the way you present the information,

if you're talking to a certain disc, you definitely want to give it according to what they, how they perceive things, how they would like to hear. And man, when I learned about that, to me it felt like the Rosetta Stone of communication. I went from continually being first.

frustrated that people didn't understand what I was saying. It just became so easy to get your point across. That's cool. Yeah, real helpful. All right, so walk us through. So you guys started buying properties together. You bought the fourplex. What went right, what went wrong?

And also, where was it that? Okay, so this is in Chattanooga, Tennessee. I love Chattanooga. It's an amazing city. That's another advantage I had. Like, I went to college here, and I didn't know it at the time, but I sold after college was a terrible market. and everything collapsed, and I started selling insurance. And I went door to door, like selling

insurance. I would call up and say, hey, I'm coming to see you to explain Medicare to you. I'm like, okay, come on out. So I was driving all around Chattanooga. And I didn't realize it, but that was an advantage later in life because I knew all the areas. I knew the zip codes. I knew the streets. And so I was able to invest back here in Chattanooga. And even though I wasn't in the States, I knew what areas, what they looked like just from my memory. So in Chattanooga, find a quadplex from another investor for 125,000, and we still have it today. It pretty much has just gone right. And that was kind of lucky that the first deal went 100% right and hasn't had any major problems. But it made it easy to go on to the next thing. Now, to go to the next one, though, we were sacrificing. Like,

we were living off of like half of my income and saving up the other half of the income to invest. So it's not like I had a lot of money and I could just keep investing. No, we sacrificed a lot. We lived on like 20,000 a year, 24,000 a year. And we were. And we sacrificed a year. And we're just a lot. And we sacrificed a year so we could save up. And we did that for a number of years and, you know, credit to my wife, an amazing wife who was willing to do that in the beginning to set us up for success in the future. Yeah, that's cool. Yeah. So many people refuse to even entertain the thought of sacrificing because it's like, it's like, well, I want to have my cake and eat it too. I really want to enjoy my nice car payment right now. You know, my nice car with a hefty car payment. I want to know it and have that

nice house in the nice part of town. And some people don't like, Some people will blame it on their spouse. I don't say blame it, but like maybe that's what it is. But they have a spouse that just doesn't want to sacrifice because they don't have that same mindset. Any suggestions for people that are listening right now going, yeah, my spouse would never do that. I think it goes back to kind of what David Green was saying about how they see things and more importantly, how they see money. Early on, I read a book, Millionaire Mindset by T. Harv Ecker or Secret of the Millionaire Mindset, something like that by T. Harv Ecker. And I read it with my wife.

And there's a partner there where you talk to your partner about how they view money. And it was really, really important because what might be holding that person back is just their view of money. Some people think money is meant to be spent. If you have it, you need to send it, spend it. Some people think it just needs to be, you know, you just need to save it up. And a lot of this is like internal. You don't even realize that's how you think about it until you like do a deep dive in your own mind and like, oh yeah, why do I think about money that way? So having that conversation of how people think about money, especially with your spouse, can be so helpful if you're trying to.

to get to the next level. That's cool. I'm reading a book right now. I'm in the middle of it. Wendy Pappazan sent it to me, actually. Jay Pappasan's wife, one of her favorite books. And it's called Happy Money.

And it's not about how to make more money. It's literally about how to spend money. And what are the things that you spend, like what actually makes you satisfied and happy and fulfilled in life? Like I think the tagline of the book is, those who say, what was it? Something like, those who say you can't buy happiness

haven't looked at the research. I think it's what the sub-relieline is. Yeah, it's basically like there are ways, There are things that we can do that we can spend our money on and that we should. But, I mean, it's stuff we all know, but it's cool to see it and research. Like, buying crap doesn't make you happier. Buying a nicer car, nother house doesn't actually make you happier in life. Buying experiences makes you happy in life.

Helping other people makes you happier in life. And so it was an interesting book. I'm really enjoying it a lot. But yeah, all right. So let's move forward. So you started pick up these units. Kind of what came next? So you got up to a certain number there, right?

Yeah. So like a duplex, a quadplex, another duplex. duplex, and I, from bigger pockets, I heard about going directly to listing agents. So I would be over there in the Congo researching, and then I would find out a property for sale. I would call them up through my Google voice number. It looks like I'm calling from the States. Hey, I'm a local investor. I'm interested in this property. Okay, I'll send my partner over to come take a look at it. So we started buying stuff directly from listing agents. And then they started bringing other stuff off market because they knew we were buying. And so that helped us get to about 24 units. And then unfortunately, at that time, my dad got sick and he actually got misdiagnosed and they said he only had six months to live.

And it was like my whole world was turned upside down. And so what am I going to do? Just sell all the real estate. Let's find a cure for him. But fortunately, he was actually misdiagnosed. Now he still has a health condition. And so I decided at that point, we have 24 units. I'm going to come back to live close to my parents here in Chattanooga.

And what am I going to do? Well, if I get a hospital administrator job, I have to go anywhere. So I decided then, okay, I'm going to dive in and be full-time real estate investor after we had 24 units. Wow. That's cool, man. So let's, let me ask you as far as how you got to those 24 units, what did you think your secret sauce was? What did you do better that other people didn't do? I don't know if I feel like I had to do anything better than what other people were doing in the market. Back then, there was a lot of deals to be had.

You know, this was like starting like six years ago, six and a half years ago. so it wasn't as hot as it is now. You didn't have to be so good to pick up good deals. Like Chattanooga was just an easy market to find good deals in. Now, what I did do better was going straight to listing agents, and even though I was over there, start building a network of people that bring me off-market deals. So it's getting a little bit better deals.

But honestly, if anyone goes back to 2014 and buys all the duplexes in Chattanooga, you would get a good deal now. You know, there's a really good point to that, that real estate good is a subjective term you know like i think one of the mistakes i see newbies make is they do a year one analysis and they say oh it's only a six percent return but if they looked at five years later it's a 19 percent return and it's grown in value it's very easy when you get scared about doing something to really zoom in on what could go wrong and that's what happens but when you talk to

people that own properties for 10 years they're never mad about it they're always like i could have paid way more and I would have still been happy. So do you think that you just kind of figured that out faster than maybe some other investors do? Well, I'm very decisive and my dad as well. Like when we see a property, okay, we'll buy it. Like there's not a lot of second guessing and hymning and hewing and that can be bad at some points, but we make decisions pretty quickly. So yeah, like, okay, we have the money with the property. Let's take action. So we did take action a lot more than other investors were at that point for sure. That's cool. What did you like about Chattanooga, by the way?

I mean, it's a nice climate. The area's nice. The people are friendly. And more importantly, the real estate is really good for the purchase price versus what it rents for. So especially when we started out, you know, you could buy something way better than the 1% rule. Now it's kind of gone to the 1% rule. But still, for a lot of markets, hey, you're at Chattanooga's at the 1% real still hasn't gotten worse than the 1% rule. That makes sense. All right. So you bought the 24 units, father got sick. What came after that? You quit your job then. I mean, you move to the States full time. What happened? Yeah. Okay. So I got an opportunity when I was moving back to the States to go and manage 120 units for this organization. Now, it's a nonprofit that owned the properties and they were managing

themselves and they needed some help. So I didn't get paid a lot to do it, but man, I gained so much experience by going and managing 120 units. And at the same time, I started managing my 24 units. And that's the money I was living off of, okay, I got a management income from my 24 units. I've never touched like the profit my properties were generating, just like my management fee. And then I started managing 120 units at that same point. And I learned a lot by jumping in and just doing that. that's cool that's cool all right so i guess i want to walk to walk to some of your skill sets you have today because obviously with your instagram handle DIY underscore landlord right you must be a

DIY landlord yes let's talk about why like why are you managing yourself versus hiring property managers and let's go into that a little bit okay yeah let's talk about property managers it's important and i think this was a really big advantage i had one i started managing myself so I could go into real estate full-time quicker. Now, that's not the right path for everyone, but for me it was. And when I went into managing, I mean, real estate full-time, it exploded. I went from 24 units to 150 units and two commercial buildings in three years. So, yeah, it exploded when I started doing it full-time because I could network. I got connections. I talked to banks. It just built on itself. So if I hadn't managed myself, I never would have been able to

take that step sooner. And then I started seeing as I'm managing it, I have a unique advantage because I know exactly what I'm going to do to this property. If I'm going to buy something, I don't have to depend on a third party manager to determine what my outcome's going to be. You know, it's dependent on me. I also have some handyman skills. I was a framer. I had my own construction, a framing company in, so that kind of fit in. And so I do some of the manual labor myself. I've kind of stopped that now that I've hired some people and stuff like that. I'm phasing some things out. But in the beginning, I was doing a lot of it because I had time and because it saved me a lot

of money and it helped make me money. So it just helped me build my portfolio by doing those things at that point. Yeah, that makes sense. Well, we haven't done a show in a while on just landlording skills, but a lot of our listeners, they start by managing their properties themselves. And, you know, we can have the debate all day long whether or not somebody should or shouldn't. But, you know, I started that way. David even started that way.

and David didn't stick with it long because he realized his skill set was better in property management. But like I started that way. So let's go through some specifics on property management. First of all, when you're looking for a tenant, like what do you say to people? Like, one of the most common questions I get is what if I can't find a tenant? How do you answer that? What if I can't find a tenant if I have this vacant unit? If I mean, and nowadays in America, who is saying that?

I don't know where you're living that you can't find a tenant. Like, I mean, the tenants are everywhere for one. And two, you control a lot of what you need to do to find a tenant. Do you have a good property? You know, is it desirable? Yeah. You can lower the rent a little bit. You can figure out how to market it better.

Like, there's so many different areas. You can be a better landlord and so you get referrals from your other tenants. Are you telling everybody that you have a property? A lot of people are kind of scared to be like the owner or whatever. I'm not scared to be the owner. I want everyone to know I have properties so that they call me and say, hey, do you have a place? I'm like, oh, yeah, I have one coming up. Come on into it.

it helps me to find tenants by people knowing what I do. Like, I find tenants from Instagram. Believe it or not, I have tenants reaching out on my Instagram. Hey, yeah, I saw that you're on Instagram. Do you have any properties to rent? That's funny. So it's good to manage your property and you're mentioning ways to get tenants. But like you said in America right now,

it's not super hard to find somebody who wants to rent someplace. So what advice do you have for the listeners on how you're going to screen these sentence, how you choose who you're going to rent to? Okay. So, and I will say, how I get a lot of tenants besides I use Facebook Marketplace, which is an amazing tool because it like basically advertises for you for free and that you have this place. You don't have to pay for if you use your own personal page. Anyways, when I screen them, I have a property management software

and I do a credit and background check. If anyone has an eviction on the record, I do not accept them. I verify their income and I hate to be that person, but I don't like renting to entrepreneurs. like you have to have real verifiable income. It's kind of bad thing to say. Yeah. And then I get up their landlord history. Like, do they have good rent or history? And I, like, when I get an application and they put their landlord, I Google the address.

I look up the owner on the address. And I basically scrub it down to see if that's the actual landlord. Yeah. And if they're giving me a fake landlord, okay, they're out. If I get a good landlord reference and they have income and they don't have an eviction, it doesn't really matter what their credit score is. If those three things are true, like I know I have a really solid tenant. Yeah. Yeah, that makes sense. I want to have this great tip. I really liked it a lot. And we do it a lot where when they put down a landlord reference,

I will call, like, not me anymore, but we'll call that landlord like and just say, hey, I'm wondering if you have any vacancies available. And then wait, if they say vacancies, what hell are you talking about? Then you know they just put down some random person or a friend or whatever. But if you're like, hey, John said that he rents from you. Are you as landlord? Then his buddy is like, oh, yeah, yeah, yeah, John. Yeah, great guy, right? So, like, just a little sneaky way to get in there to try to make sure that they're not just

giving their friends name and number because, like, they could. They could. But that is, that is a good tip. Yeah, that's a little sneaky trick there. I don't remember where I read that, but it was some land learning book. All right. So what are the things that are, I mean, you mentioned those, like, you know, the credit score may not be quite as important if they have out all the other things.

Right. What are some red flags that you're just like, uh-uh, not going to rent to that person? So if they have an eviction, definitely not. If they have utilities in collections, that's also a sign normally that someone kind of got kicked out of their apartment without going through the eviction process. So that's a huge red flag if they owe on, I have passed due on utilities. If obviously criminal history, I check that. I don't want to have any violent felons living in my place just as a safety concern. And so that's a big red flag.

And then also verifiable income. That's a huge thing. Like I got to get the pay stubs. I got to see how much they're making. Is it from a real place that if I have to evict them, I can go garnish their wages? You know, if someone's an entrepreneur, you kick them out, that money's all gone. If they work at a place and they've been working there for a number of years, they're most likely not going to change the job.

I'll get my money eventually. That's a really good point. You know, one other point you made that I don't think we've ever talked about on this show, it's not in depth, but I want to make the point now because I've been researching a little bit, is about this idea of like renting to the criminal history so here's what i've been finding and honestly i didn't even know that the law had changed over the last few years where the way you said it is exactly the way that and now we say it i don't want violent felony like felons in my properties basically what has happened in the last few years is listed in a lot of states and i think it's just federal now

is if you have a blanket no felony policy that can be called discrimination because certain types of people have higher rates of incarceration or at least higher rates of arrest. And so if you say like you can't have been arrested or you can't have been like you can get in trouble for discrimination. So you have to be able to apply the same principle across all your properties of course, but you also have to be careful not to either a do something that could be considered discrimination against a certain type and also drug abuse today. And even even other drug related felony. Again, we're not lawyers and not giving legal advice here, but like even certain drug-related things can be considered a disability, not a, like, I've even heard people say to the

point of like DUIs and DWIs that they won't screen against them because, I mean, if they're an alcoholic and they were driving, well, that's a disability. Their addiction is a disability. Therefore, you shouldn't discriminate. Now, I don't know if I go quite that far. Not that I would necessarily discriminate against a DWI anyway, but just something to be aware of. If you're a landlord, there are rules and there are laws that we have to be careful and we have to follow. and they might seem silly to some of us, but they're out there. So do your research. Yeah.

And I didn't, I haven't followed it, but it's going to the Supreme Court. That whole thing, because the largest landlord in America got sued because of that. Interesting. And I hear it's going to Supreme Court. I haven't followed up on it. But yeah, so I always say violent. Yeah, violence. Like, that's the thing.

And the truth is, like, whatever, I'm not a little bit of possession of here or there. That's not the biggest problem to have an tenant, to be honest. I agreed. And going back to, I just wanted to mention. with this whole property management, like why I did it. And looking back, I can see why it was an advantage for me, because there's like two types of property managers. There's a property manager who is a real estate agent broker and they know how to manage single family homes. They know how to show the heck out of a single family home. They understand that type of buyer or renter. You know,

they speak that language. And so they do really good with the single family. Then you have the sophisticated property management companies who manage like 100 units and more. So they manage those apartment complexes. And they have all the fancy systems and they understand apartment renters and how to put all these little fees in there to get the most you can. And they even have software that tells them how much to rent the property for depending on their vacancy. So if they have like a 2% vacancy, the price will be here.

If they have a 5% vacancy, the price will be a little bit lower. Like they have all these things. But there's not normally very proficient property managers in the in between in like the multifamily from like six units to 40 units because the big guys, they want staff on site. They need a property manager and a maintenance person on site because that regional director is never taking a phone call and they're not doing anything themselves. They need to have people to do it. And then the people who manage the single family stuff, they're not used to apartment renters.

Because when someone moves into an apartment, something happens to their mind. They become a different type of person. I don't know what it is, but it's the truth. They don't know how to throw their trash away. Like they can't get it in the dumpster. Like, I don't know what happens to these people, but something happens. So there's not really good property management in between. So I kind of put myself in that market, the in-between market, and that's kind of where my sweet spot of managing is because I can handle a 40-unun apartment complex having no staff on site.

Yeah, you know, I'm writing this book where I wrote this book where it's in editing right now, but the multi-family millionaire comes out next year. And we have two volumes. The first one's on small multi. The second one's on large multi. And in the small multi, I make this point very clear and very often that there is a sweet spot in multifamily exactly what you're saying because it's too small for the big institutional guys and all the ones that are really, really, really, been doing real estate forever and they're going to steal every deal because they're good.

And it's too big for all the people just getting started by their first house or single family or at least they think it's too big. So just like in managing, there's no good managers. There's also not as many investors looking at. that range either. And so if you're in a market, you're trying to get started with something a little larger, there can be a good sweet spot right there. Now, I am curious, how are you able to get loans for all these properties? That's another question I get very often from people saying, well, what if you get, I thought the limit was only four loans, or I thought the limit was only 10 loans.

Like, how do you get these loans to get up to 100 and some unit that you have now? So the limit on loans that people talk about is just conventional mortgages. That's the type of mortgage you get on your own house. You can also get on an investment property. And they check the heck out of your credit score and your tax returns and everything you spend and your insurance and they look at everything. And it's like a long list. And you can only get a certain number of those up to 10 normally. They're like four and then it becomes harder and then you can get 10. But there's no limit on the amount of loans you can get from a local credit union. There's no limit on the loans you can get from a local bank. They call them portfolio loans because the loans are

held in a portfolio at the bank. They don't sell them to another bank. And there's no limit. on those loans. Your terms are a little bit different, but you just have to make your deals work with the terms that you get depending on what place you're at in the borrowing cycle. Yeah. Per se. Yeah, that makes sense. Yeah, I think people, I have never known anybody. Hopefully this kind of puts this issue to rest for those listening. I have never known anybody, and I doubt you guys ever have either, who went and got their 10 loans and went, shoot, I don't know what to do next. I can't figure it out. I'm done. I'm stuck. I guess I'll give up. Like, nobody, like, everybody figures it out when they get to, like, three properties.

Like, it's like, you figure out, like, you get in the game. So everyone worries about that when they have no properties or when they may have one, but they don't, they weren't, don't worry about it down the road. They're just, yeah, something that's one of those non-issues that everyone thinks is an issue, but it's really not as big of an issue. You're exactly right. Yeah. Funny.

All right. So let's, let's, let's, let's, one more question on the property management side. Like, from me anyway, what do you see, like, successful property management? I know later on the show, I'm going to ask you about what, you know, what do top investors do that sets them apart? But good property managers, like what do they do? Like, what are some of the principles or trades or skills that good landlords, property managers, people who take care of residential property?

What do they have that's different? Really good customer service. You know, people think like, oh, I have a tenant and then they're just there and I don't have to worry about them. If they call, I'm not going to pick up the phone or da-da-da. No, like, if you have really good customers. custom or service, if you have a property manager who always picks up the phone, that is just huge because you reduce your maintenance expenses because you're heading off problems before they start

or you're fixing them before they become a big issue. You're reducing your vacancy because, you know, you're a good, easy to get a hold of. So when someone's calling to rent a place, they get in touch with you right away. They're not waiting a day to hear back from you or anything like that. And that's kind of like the main thing is like being proactive, being available, that kind of thing. A lot of people don't want to be. They're scared of that. What if someone calls me in the middle of the night? What about this or what about that? Like they're scared to pick up the phone, but being always available to the phone is really, if I were to hire property manager, that's what I would want. I would want my tenants to be able to call them any time of the day.

And at least if it's an emergency, they would get someone. And that if they're listing it, if they call, it gets picked up right away. I mean, I've done tenant screenings for people who live in other properties and I would never ever let those people manage my property because it took me four days to get a landlord reference back like no one would pick up the phone and I knew the owner of the company personally like I had a message him on Facebook and be like hey like get me this that's funny yeah customer service is notoriously bad with landlords and property managers because they don't they don't know how to manage a business they know maybe you know how to manage tenants and do a tenant screening report maybe but

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Well, they have a Google voice number that goes to my cell phone. But they're pretty well trained to text. If they need something, they send a text message. And that's pretty easy. Like, I don't mind text messages because I can answer them when I need to get to them. I can see if it's an emergency. I really like text messages. But on top of that, I have a property management software called Buildium.

And Buildium is a pretty good property management software. where if you're kind of already gone past maybe like 10 units or 20 units and you're not yet to like the big dogs, Buildium is a good software for that. And people can text within the app and they can also send in maintenance requests. And I have a maintenance guy who can get those requests right away as soon as they come in. And it really helps. Like, okay, if this person really is like kind of tech savvy and wants to just put in requests, boom.

If it's an old lady who doesn't know how to use the internet, fine. She has my phone number. At least she can learn how to text and she can send me a text message. I've seen some people who are like, no, they only have to send in requests online. And I don't think being rigid like that really helps because there's some people who just can't figure it out. And you might end up with a whole house flooded because that person couldn't figure out how to put in a maintenance request. Yeah. Yeah, that's really good.

Can you share some of the specifics? It sounds like what you're saying is that building them is a portal that allows communication between landlords and the tenants to make it easier to service what they need. probably also avoids that whole awkward. They're calling me. They're asking me for something. I know I don't want to agree to it, but I don't know what to say. Does it also help with rent collection? Does it also help with like maybe reminders that maintenance needs to be due that you can leverage off to handymen or people on the team? Yeah, it is a complete package. So I do all my accounting in there. All the rent collection comes in. People can pay online. They can even pay cash. You know, a lot of people are like, how do I accept cash? Well, with this product, I accept cash.

except that people go to CVS to CVS with cash in hand. They scan their barcode, and then the cash automatically goes into their ledger, and it's just accounted for it greatly. It's amazing. I get like $30,000 a month in cash payments that I don't ever have to deal with. It just comes into the bank account automatically accounted for. And then the tenant also has a website. It's the same.

It does my tenant screening in there. I mean, it does everything in there. E-leases. I mean, it's all in one. and that's why I like it and it's pretty easy to use. Yeah, we actually operate all of our residential, like my Grace Harbor, Washington, like my starting properties, I guess are all managed on our building. I think my property manager company that does the mobile home parks use something called

rent manager, very similar. Anyway, yeah, so, yeah, very cool stuff. So you're using that to kind of handle all your stuff, which is important. And the nice thing about most of those platforms, and there's a number of them out there, is that they allow you to kind of scale up a little bit. Like, you don't have to necessarily pay thousands of dollars a month or hundreds, even hundreds a month to get started. Like, you can get started a little bit cheaper. But it's good.

What I think is that it's good to get those systems down when you only have a few units rather than waiting until you have 50 or 100. Because that's what I did. I waited until I had like 60 or 70 units. I think before we started using Buildium. And then it was hell. Like, then it was like a lot of work to get figured out out. I would have rather started when I had two units and just acted like I had a big business. Do you agree?

I do agree. Yeah. at least have a couple of units, see how it's working, and then figure out a system that's going to allow you to grow. Like, yeah, be ready. It depends what you want. Some people only want two units. Fine.

But what is your goal? If your goal is 100 units, we'll start acting like you have 100 units and get all the systems in place. So when you do get there, you'll be ready. I'll tell you something else in addition to that that's really cool for the people listening. There's something about that if you build it, they will come mentality from the field of dreams movie that just works so good with human brains. When I go and hire staff and I have people on payroll, it affects me emotionally when it comes to lead generating for business because now

if I don't do it, either that person loses their job or I don't turn a profit. It changes the way that I interact. It's not, do I have to do this right now? You want to go do it because you've set everything up. When you've got systems in place like what you're describing for 120 units and you've got 10. There's this part of you that feels like, I need to fill these spaces. I need to find properties. I need to analyze deals. You don't mind doing it.

You look forward to it. Is that a similar experience? It sounds like because you said you're very decisive and you take action quickly, that may have been what led to you scaling was you kind of paved the road and said, now I got to go take the journey. You're right. And I can pinpoint the time, though, that I realized, okay, it was going to flip and this was going to go big.

and it came down to two things, and Brandon mentioned one of them. One, I realized there was a space in the market between like 10 units and 40 units that there was hardly any buyers in Chattanooga for. Like, I know all the buyers, like there's like five of us. There's just not that many who are buying in that space. And there wasn't then, and there still isn't now, not as many. So I realized that. And then I got this crazy opportunity.

I was buying a single family home, and the lady happened to have a pocket listing for 10 duplexes on one street. And I didn't have the money to get it done. And before, I would have let that limit me, be like, oh, that would have been an amazing deal if I had the money. But then I realized, it doesn't matter how much money I have in my pocket. How can I get this deal done? And I looked at it from that perspective. Okay, how can I get this deal done? And then I went and found someone.

And I brought her in as an equity partner. she paid the almost entire down payment, got 35% of the share. And we got a loan from a local bank and we figured it all out. And boom, got 10 duplexes on one street, almost doubled my portfolio on one purchase. And that kind of like opened my mind to say, all I'm looking for is deals. I don't care about money, how much money I have in my bank account, da, da, da, da, da, deals are what matter. And I know deals are found in this space because there's not that many of us here. so this is where I'm going to target. Yeah.

You know, one of the reasons I think that that sweet spot exists, a 10 to 40 unit range is because they are, they are a little more difficult to manage. You don't have onsite management, right? You don't have an institutional grade, 180 unit with a pool and a, you know, jacuzzi or whatever. Like, you don't have that. And it's not a single family house that you're going to get really,

really nice hand. So there is a difficulty that is present in that space. So like, we don't want to lie and say there's not. But that's where money is, especially in a competitive market like today is if you're willing to take on hard things like that and you can become good at solving those hard problems like that. I mean, that's why like people a lot of times ask why I stick with mobile home parks. It's because they're freaking hard. They're like mid-sized apartment buildings. They're hard. They're difficult. The tenant quality

is tough. And so I like difficult things. I think that's where a lot of money is made. So, yeah, do you agree? Do you agree? I agree 100%. And I will say, I agree 100%. And I will was fortunate because the 120 units that I managed for that company when I came back, same thing. It was built up of streets of duplexes and small apartment complexes. So I was already handling all these really difficult situations. I mean, I had someone murdered at one of my duplexes. I had all sorts of stuff go on, right? And I was already handling these issues and I was making it better. And I improved it so much. We ended up selling that package, 120 units for $7.5 million to another investor. I was like, oh, wow. Then I saw, oh, wow, I can do this. I can manage all these things.

I can do it. I can make them better. I'm going to do it for myself. Yeah. And that's actually another great point about these apartment buildings is that let's say you buy a 20 unit apartment building, right? And each unit rents for $800 a month. I'm just making up numbers here. But let's say you're $800 a month times 20 units. If because you're a better manager and you clean up the property a little bit, you make sure that things are getting done on time, you're responding to maintenance requests, you're keeping an eye on the market. And you can bump that from 800 to 1,000 over a couple of years because, or maybe it was under rented and you just brought up to where it should be, you know, you added $200 a month in rent.

And it's like, well, that's not very much. But times 20 units is what, $4,000 a month? Over the course of a year, that's almost $50,000 in extra revenue. And so at a five cap, that's a million dollars in additional value, you just made a million dollars by increasing. And I hope I did that math right because I did it really quick. But I think that's like, you just made a million dollars in a couple years off of just being a manager and knowing what you're doing, which is why the key to that level, that sweet spot,

I believe the key to success in that level is management. If you can manage that team or if you can hire the right property managers and keep an eye on them, you can be massively successful. This is not hypothetical. Okay, two years ago, I bought a 40-unit apartment complex. Now, I bought it for the company, so I'm the president of that LLC, but I don't have an equity share. But anyways, I bought it for $1.2 million. Two years ago, the end of this, month, we're already under contract. It's going to close and we're selling it for 2.7 million. Wow. In two years. And that was just, it was, it was professionally managed when I bought it.

And I took it over and I professionally managed it better. And just that, I increased rents. I reduced expenses. And boom, turned around using the cap rate. And like, yeah, like in two years. Like that's where like amazing money is made, amazing wealth is made. Like I love cash flow. If you're starting out, I started out as a cash flow investor and I still am a cash flow investor. Yeah. But I realized along the way, cash flow is like so important for safety and security and

when you need it. Yep. But real wealth is built on your personal financial statement. Real wealth is built as you increase the property values. I mean, you cannot get enough cash flow to compete with the wealth you can generate by improving a property property's value. Yeah,

so David, like what you always say about it being a defensive metric. You want to talk about that? I mean, because that's still good. Yeah, that's really good.

And it's good for people to hear, especially from someone like David, who's doing this. Cash flow keeps you safe. It keeps you alive. It keeps you from losing a property. But it does not build massive wealth. You know,

you look at a typical deal. You're going to get $100, $200, $300, $300 a property or a door. It takes a long time for that to turn into a million dollars in, in value. The people that are really good at investing, they're looking at the big picture, not just the cash flow. And I feel like cash flow becomes this addictive siren that calls to you because you're unhappy with something in life most of the time. You don't like your job.

You don't like that you're stuck at home with nothing. You just want some change and you think that cash flow, that real estate is my savior. And it pulls you in. And the next thing you know, it's, you know, it takes a long time to build wealth just through that. Look at it. Instead, like this keeps me from going bankrupt. It keeps the property around time, equity, paydown, rising rents, more efficiency and how I manage it. That's what's going to build wealth. Now, I think another thing to point out, David, that you mentioned is that by managing

it more efficiently, you improved your NOI, which would be kind of the same as improving cash flow. And that led to bigger wealth. Do you want to talk about maybe some of your plans to scale? Like, once you've improved a property and brought it to its peak and you think that now it's time to exit when you would do that and then what you'd look for in the next deal, like what you're looking for now with your strategies of what you're trying to acquire? Okay.

So you ask a couple of things there. So first of all, what I look for now is other properties that have an opportunity. Like they're mismanaged, they're under rent. They need some light repairs. Not major. I don't actually normally do huge renovations. I'm more looking for like, okay, the mismanaged properties. I'm also, I've started doing commercial as well.

And that I just look at is there from some reason while I'm getting a good deal? Like if I can get something for a good cap rate and it's a commercial property, even if it's not mismanaged, because there's not much management to like a commercial retail center. Honestly, it's pretty easy. But that's just like, okay, there's some problem here in the market where I'm able to get this for a good cap rate. So I'm looking for deals that have the potential to increase. the revenue, so more rents. And then when do I sell? That's a tough question because I like holding onto my properties. I don't always sell. I sell sometimes, but it has to be like if I think I'm really

getting a premium for it, even for this apartment complex, the 40 unit, I probably wouldn't to sell it except I set my price and they met it. And I was like, okay, fine. I never even listed it. Like, I just told a realtor about it and they brought someone. It was a really easy transaction because I was like, you know what? If I'm going to sell it, I have to get enough because now I got to take all this money and go reinvest it. And I got to go find another deal. And so that means I have to put more work in, but it will be worth it because I have cashed in all this money. Yeah, that makes sense.

Hey, man, how do you find them? How do you find these Swiss spot apartment complexes? Yeah. So network, network, network, network, honestly. It's more about like I'm really dialed into Chattanooga market. That's kind of my, it's my advantage. That's what I really stick to this market because I know so many realtors. I know so many other investors.

And I want everyone to know that I buy properties. I mean, I got some deal from a pest control guy. You know, he does pest control at another apartment complex or another duplex. He's like, hey, they probably want to sell. Oh, yeah, then put me in contact with them. I'll see if they're willing to sell. And sure enough, they were. They were.

Instagram. I got people bringing me deals on Instagram because they see me. I'm active in the market. I really just want everyone in Chattanooga. I mean, I hope Bigger Pockets interview. Like everyone in Chattanooga, if you have a deal, come to David, because I buy. And I get repeat sellers, especially real estate agents, because my goal is to be the easiest buyer ever. A lot of real estate agents are dealing with really difficult sellers, especially when it's multifamily and there's this and there's that. The seller, the seller, can be really difficult. So I try to be the best buyer possible. I will gloss over some things. You know, I don't, I try to get it for a good price, but I'm really, really easy to deal with,

especially on terms and on inspections. I'll be flexible. I'll work with their schedule. I'll come whenever they can. I always do what I say I'm going to do. I've never not closed on a deal that I put under contract unless I found something in due diligence. It's just never happened because that's my reputation. I am a good, easy buyer. Now, I buy things for, a deal. Everyone knows that. It has to be a good price. But if it's a good price, I'm definitely going to buy it. That makes sense. What about financing them? You get this is a good deal. You have to just put 20% down. You just have to be rich to be able to buy these big apartments. It's, you know, the bigger, and this is going to sound funny to people, the bigger the deal, the less money of my

own I actually need. Yeah. Like, that doesn't really make sense, does it? Like, the bigger the deal, the less money of my own I actually need because if it's a big deal, I can bring in other investors. And not even doing big syndications or actual syndications like one or two investors who have a couple hundred thousand dollars and they want to be in real estate and they know that I do it. And hey, here's a great deal. And they know it's a great deal because I'm going to manage it. I'm going to make sure it's a great deal. So the truth of the matter is what's limiting to me is just the deals. It's not the down payment because I find a good deal. I will find the down payment.

I'm sure, Brandon, you know. Like, it's like, if it's a good deal, people are gonna come with their money because they're gonna make a good return and they trust you. Yeah, it's so true. I love that you say like the thing, the thing that you focus on is the deal.

Like, it's not that you don't think about money at some point. Of course, you're gonna think about that. That's why you're networking. That's why you're connecting with people and doing all that. But like, if you're focused and your primary driver is to understand that if you have a great deal,

everything else falls in place. It's kind of like the book, The One Thing, Gary Keller, like the one thing is all about what's that first domino? What's that the one thing that you could do that makes everything else easier or not necessary? I'm butchering the phrase there. But basically, yeah, get a great deal. Everything else is easier.

And guess what? Getting a great deal is totally something that you can learn. It's totally a skill just like basketball or fishing that you can get good at by reading some books and by practicing and by talking with other people who are already good at it. And so when you think about real estate and that, way and you realize that yes, it is that simple. Like, it should make everyone listen to this right now going, well, shoot, this sounds way easier than I thought because it is. It's like, it's not easy. But it's also not like, this is not trying to figure out how to, you know,

I don't know, day trade stocks with Warren Buffett or something. I don't know. Like, real it's not that complicated. Like, I don't think I'm that smart. Like, honestly, like, I, no trigonometry, no algebra even. Like, I'm like pretty basic. But it's pretty easy to see for me because I put in the time and the research, I listen to Bigger Pockets, I read the books. Like, you have to put in the time. But once you put in the time and the research, you realize, okay, I have the data now. The skill set is actually pretty easy. It's not very complicated.

Yeah, I love that. If you could say there's one thing that you did well, that other people didn't do well, and really just say, hey, this was what I got right? And that's why I got here. What would you say that is? You know, that's hard to say because I don't think I necessarily, there's a lot of ways to do things in real estate especially. And I'm happy to share my story, but I don't necessarily think it's the only or the right way to do it. There's a lot of other ways and a lot of other successful, more successful people than me, honestly.

I took action, though. And the people who don't do anything, they didn't take any action. That definitely sets us apart. But not only did I take action, I had a goal that I was going to reach. and I was determined to reach it. So I wrote it down and said, this is the goal. And then I made a plan to achieve it, wrote that down. And then I took action and I was determined to achieve it.

And then it happened like 10 times faster than I thought it was going to happen. I find that pattern over and over my life when I, when I set a goal and I write it down and I start working toward it. It's amazing how fast things fall in the place. Like you get your conscious mind and your subconscious all working toward it. And just, it just, yeah. I tell everyone to write their goal down and probably 1% of the people that I meet. Because people, other new investors, they come and ask me questions and I'll go out to lunch

with them or whatever and I'll share my secrets. And I don't really have any secrets. And, but I'll share and I'll answer questions. And I think probably 1% of them actually go back to their house and write down their goal. Yeah. And it's just so easy. It takes no money. It takes hardly any time.

But it takes commitment. And I don't know. We were like, it's all a great idea, but to actually commit to it, what if I fail? What if it doesn't happen? Like, yeah. Yeah, so good, man. It's really good. Really good.

Well, I think it's about that time, David. I think it's time to move to the deal. Deep, deep dive. All right, Mr. Grabiner, it's time for the deal. Deep dive, the part of the show where we dive deep into something that you've done. So we're just going to tear apart a property in a good way, you know, and find, I get the dirty details. So with that said, are you ready? I'm ready.

We'll start with what kind of property is this and where is it located? Okay. So I'm going to do a pretty simple one for people to understand because I do a lot of creative stuff. So I'll just do a pretty simple one. It is a duplex. It's really a house with a basement apartment. But it's a duplex in a little town outside of Chattanooga next to a college. All right.

Okay. And how did you find that deal? I found that deal because I was... in closing with a realtor for another property. And the realtor is like, hey, I have some people who want to sell a property, but they still have some work to do on it. Are you interested? No, no, thanks.

Yeah, no, no, no, no. I don't want it, right? All right. How much was it? How much did they want for it? And what did you end up getting it for? They wanted, I think, $150 originally. I got it for $130 cash.

Okay. And how do you negotiate that price? So I went and I talked with them and I met with them and I was like really easy. I did my inspection really easy. And I was like, well, if you want to list it and I put financing on it, the realtor had said something around like, oh, they probably would want 150. But then I walked the property and they had some work to do. Like the bathroom needed to be finished.

And I was like, you could just stop working today. How about 1.30? And they're like, oh, stop working today? All right. Yeah. that's awesome i actually love that when i was younger and i wanted to pick up other shifts from people at work i would simply just call them an hour before their shift and i would say hey do you want to just knock them to work today i'll just go for you at every time every time no how much they needed

money people would say yes they don't want to work that day right so i could pick up more shifts i've wanted to earn more money it's because people think in the immediate they make decisions in the immediate because that's the emotional i'd rather i'd rather go see a movie i'd rather hang out in bed I'd rather watch some TV. I'd rather do anything else than do that work. So if you can apply that to real estate like this, like right now, you can stop working. I mean, you're not telling them, hey, if you would just work two more weeks, you get 10 grand more. That's a lot of money per hour.

But like, they don't think that way. It's not a logical thing. It's an emotional. I could stop right now. And like, I've done it. I've fallen for it many times in my own life as well. And not, and I don't regret it. Like, sometimes I just want to be done with something.

So I love that. Very good. All right. So that's how you negotiate. How did you fund it? You said cash, but was it actually like you just. you know, walked up with a briefcase of cash? Or like, what did the financing look like?

So that one I took out of a line of credit that I have against one of my properties that has a lot of equity in it. So I kind of use that line of credit to buy properties and then I refinance them. But even for someone who doesn't have a line of credit or cash, there are hard money lenders out there and they don't require much. Like, don't let that, oh, I didn't have cash, stop me from being able to do it. Like, you had access to cash. It was just more expensive than the cash I had access to.

Oh, that's good. That's a good way of looking at that, yeah. We all have access to cash. We just have it at different values or different costs. It's different money to use it. Yeah, different costs. That's really good. I guess we buy everything with cash.

It's just whose cash are we using. Exactly. All right, cool. So once you had this property, what did you do with it? So I finished up the basement. It took a little bit longer than I thought because my maintenance guy actually had to have a pacemaker put in. So he was out for a couple of weeks.

But good thing I know how to do stuff myself, because I can step in when I have to, That's the advantage of knowing I'd do some things yourself. But anyways, so I fixed it up a little bit, and now I got it rented out. The upstairs rents for 1,200 and the downstairs rents for 700. I actually didn't even list it. And a previous tenant of mine called me and said they needed a place to stay. And I was like, perfect. I got the perfect place for you.

So you got this property, you bought it for 1. You said 130, right? How much you put into it? 5,000. 5,000. Okay, so not much at all. Okay, so you just finished it up there. And now you're renting it for 1,900.

month total. Are you paying water sewer and garbage there? Do you have it split? No, no, tenants. They pay their own water? Ah, yeah. That's like the, that is like the golden like, the golden, whatever you want to call it, goose will say for now. Like in, in a small multifamily, I think if you can get the tenant responsible for their own water sewer and garbage, like it's, it's unreal the difference. Like all my best properties are the best because of that. That's cool. If you can split it, if you can do submeter, if you can do whatever you can do that. Oh yeah. It's so important. I have a 24 unit right now that I'm like have my maintenance guy like taking meter readings because it's like individual meter but I'm I'm then I charge them back but I'm in discussions now with the water

company to have them take it over and it's going to be so awesome once they take it over I don't have to worry about that but the other guy was just the previous owner was just eating it because it was too difficult to deal with so he was eating a 12 200 a month yep in cost and he was just eating it and let's do some quick math right 1200 a month times 12 is 14,000 dollars roughly a year and that is $700,000 in value at a five cap, I think, right? So like seven, like, or at a 10 cap, it's, am I doing that math? Yeah, well, no, it'd be like, let's see, a 10 cap, there's not quite that much. But 14,000 a year to buy by 10 would be $144,000 by 140, roughly.

At 10 cap. So at a 5 cap, it would be 300. Okay, fine, 300K in value that he's just thrown away. Not quite a 7, but yeah, yeah, it's crazy. A lot of people are wondering how I'm doing that math. If you want to know, like, just look up like cap rate and NOI on bigger pockets and you'll find that how that formula works. And there's a lot of article about it. Yeah, but over a three year period, that's almost a million dollars.

It's a lot. That's what we're talking about. And it's easy for three years to go by where you just think, oh, yeah, I got to get to that. Yeah, there's, it's, it's crazy how much leverage there is when you can shift that water bill over and how much more valuable your properties are. When we buy our mobile home parks, it's like the first thing we do is we shift all, like we install submeters if they're not already there, tenants pay their own water sewer garbage. And I have never, ever had a tenant, like, leave because they had to pay water sewer garbage. Ever.

I've never had a tenant leave. I've never had a tenant, like, even, like, complain, oh, you pay water here? Like, it's almost like they don't, they don't understand. Because to them, it's like, oh, it's just a little water bill. It's 50 bucks a month, $100 a month. So it's not a big deal for them. They just accept it as like, oh, it's the cost of living in this property. But for the landlord, it's huge.

And it also cuts down and saves water and saves the environment. So there you go. You're doing something good. All right, man. Let's the end. The last question here, so you funded it. What did you do with it? So did you refinance at that point? Oh, yeah. So I am closing on the refinance on Friday. Refinanced it out. I got it appraised for 165. So I'm pulling out all my all my money back out. I won't have anything in it. And I got a great little deal from the Collegedale Credit Union over here down the road. And they give me the loans. and they're so easy. And it's like never going back to conventional because it's so easy when you're

into the commercial land, honestly. That's cool. All right. The last question. What lessons did you learn from this deal? Ooh. To appreciate my maintenance guy. Because when he was out and getting other people to do the work was tough.

Basically, I mean, it's a pretty small, basic deal for me. I didn't really, you know, it's nothing really new to me besides that. I had to do it when my maintenance guy was sick. So I appreciate him even more. There you go. That's awesome, man. Well, good, that's a really good example of a really good burr. Like where you burr to property, the buy rehab rent refinance repeat property.

You used short-term money, which was that line of credit to buy it. You then refinanced it, got paid off your line of credit then. So now you have a nice long-term loan that cash flows like an ATM machine. This property, I'm sure it does. What's your estimate on what you're going to be getting for cash flow? You know, I don't know, actually. I, as that's sad, I should know. But off the top of my head, I don't.

I have a lot of properties. Yeah. I mean, the fact that you're not paying water sewer and garbage, it's probably, you already did some work to fix it up. I mean, you've got to be cash playing hundreds a month per unit. Oh, yeah, yeah, yeah, definitely. Oh, always. Yeah.

At least 400 a month. It'll be at least 400 a month for that property. Yeah, that's awesome. Very cool, man. All right, well, with that said, let's get to. One of the last question is actually I will ask before we get to the famous four. I got two quick ones. First, where do you see yourself headed in the future?

And secondly, what can our audience bring value to you? How can they bring value to you? Okay. So where I see myself headed in the future is very unique. I am actually starting a program where I hope to use a modified burr method to help end homelessness in Chattanooga. Really? So I already house homeless in my apartment complexes, but I had this idea. I'm going to buy properties using investor money who want to make a difference.

and a return. Then I'm going to rehab the properties. In partnership with the city of Chattanooga, they'll pay for half the rehab if I agree to rent it out to low-income individuals. Then I'm going to rent them out to people who are on Section 8, who are homeless or at risk of being homeless. So when someone goes homeless, they often get a Section 8 voucher. Then I put them in the property. At the same time, I'm going to re-educate the tenant. There's a program called the Homeowner FSS program that Section 8 does, but no one takes advantage of. And it will teach these people how they can achieve their goal of becoming a homeowner, like over the course of the year.

And it incentivizes them because if they increase their income, they don't lose that money like they normally do it. Instead, it goes into a pot that they can use as their down payment on a property. Then I'm going to refinance the property, pull my money out. And then hopefully I'm going to resell the property to that previously homeless individual so they can just buy the house that they're in. So it's a completely kind of shift from what I've been doing. But it's something I'm really passionate about.

And hopefully, so I already bought my first property. I'm going to buy 10 next year. And then in the course of three years, I'll have 100. I'm going to get 100 in three years. And I'm going to try to see how many people I can successfully put through this program. That's cool, man. That's awesome. Yeah.

Just yesterday I was walking around and I saw like a kind of a homeless camp out here in Maui. There's not a lot here in Maui, but there was some. And I was like, man, I should be doing more like to try to like, because like, we educate so many people on how to be a landlord's, but like, yeah, I need to find more ways to give back and try to end homelessness or at least try to limit it some. Yeah, kudos to you. That's awesome. Well, thank you. Yeah, I'm excited about it. It's not the most profitable thing I can do with my time for sure, but it will be one of the most rewarding things that I can do with my time. And at this point in my investing career, I don't need more money. I mean, I want to do things

profitably because I want this to be a model for other people to then take into their markets and be like, okay, David's doing that. I could do that too. And it won't be the most profitable thing, but it will be a good thing for my community. And it will be steady income and it will be a little bit of money. And then I can then grow my career from there. Yeah, that's awesome. I think that that is key is you want to, like, you don't want to just think, how do I help? I mean, you can think this.

How do I help a dozen people or even 100 people? But I love that you're thinking, how do I make this scalable? How do I make it profitable enough that it can be scalable? Because if you're just relying on goodwill for scalability, it's very, very, very difficult. Right. So how do you align, like, capitalism with humanitarianism to scale something? I think that's like the perfect, perfect model right there. So, yeah, very cool. Thank you. And so how people can, if they want to be involved in that, or if they just want to reach out to me on Instagram, I really appreciate if people go and follow me at DIY underscore landlord on Instagram. I post stuff on there about being a realtor, I mean, not a realtor, a landlord, a real estate investor.

And also, I'm going to be scaling up this, I call it, Homeless to Homeowner Program. So be looking for more about there. And if you have any questions, you can message me on Instagram and I will answer your questions. As long as it's not, do I want to buy foreign currency and crypto. Yeah, you want some Bitcoin? No. Yeah. All right.

Yeah, that's awesome, man. I just followed you as well. So now we're our Instagram buddies. So with that said, let's get to the last segment of our show. It's time for our famous four. All right, time for the famous four. The part of the show where we ask every guest, the same four questions every week.

David, number one, what's your current favorite real estate related book? I think my favorite real estate related book is got to be the millionaire real estate investor by Gary Keller. It was just such, when I read that book and I still reread it. It's like, that's such good basic concepts in there. Like to really, it gives you a good foundation.

There we go. What about a favorite business book? Favorite business book? And this is, I don't know if people really think it's a business book. It's a negotiation book, but I think it's the most important thing in business. Never split the difference by Chris Voss. That book has made me more money probably than any other book. It's amazing.

That's great. We had him on the podcast. It was really good. Brandon and Josh interviewed him. Yeah. Okay, what about some of your hobbies? Yeah, I love playing soccer since COVID hit. I haven't played in a while.

And I just started doing adventure racing. What's that? That like, I don't know if you. Okay, so I don't know if you saw Amazon had this, the most difficult race, whatever. Yeah, I heard about it. Yeah, anyways, where they go all through Fiji, like 10 days, a race 10 days through Fiji. So basically I watched that, the Echo Challenge. And I was like, oh, I want to do that too.

I found this adventure racing where you run, bike, and kayak or swim, depending, but you also have to navigate at the same time. So you get a map and you have to find your own way through the course. That's cool. And then it's like crazy long too. So I did one, I've only done one so far, but I'm starting, I did a 10 hour one. And then they have like a 24 hour one. They have three days, five days. So I'm building my way up. I want to do, there's one that goes across Florida. It's called the C to C and it's three days. So I'm building up. to be able to do that. That's awesome.

Very cool. All right, man. Well, last question for me. What do you think separates successful real estate investors from all those who give up, fail, or never get started? One, they write down their plan. Two, they're determined to succeed in their plan. And three, they give themselves enough time to achieve it.

Too many times people want to be millionaires overnight. Real estate will turn you into a millionaire, but don't put a 10-month time frame on it or a one month time frame, give yourself a couple of years, and I guarantee you'll get there. So write a plan down, determination, and enough time, and that's what the successful people are doing.

I guarantee it. I love it. All right. This has been awesome, David. Thank you very much. For people that want to learn a little bit more about you, where would you recommend they go? I would recommend that they go to Instagram,

DIY underscore landlord, and follow me. And I also want to give a big shout out to my other investor friends on Instagram who helped me actually get on the Bigger Pockets podcast. Ayoka, Rob, Forrest, and Rebecca, you guys are the best, and you actually help me get on this show. So I am very, very appreciative of them.

That's awesome. Well, thank you to those four. And with that said, time to get out of here. Thank you. David Gravener. You've been awesome. I can't wait to kind of continue following you on Instagram, see what you're doing,

following your journey, learning from you, growing together. That's what's cool about the Bigger Pockets communities. We're all doing this together, learning, which is awesome. So if you're not plugged into that world, everyone listening to this, you should be, you know, sign up for a free Bigger Pockets account and then follow us on social media, David Green 24, Beardy Brandon, and DIY underscore landlord. It's just a, it's a good place to learn while you're

looking at cat videos. It's great. All right, man. Well, David Green, you want to get us out of here today? Thank you, David. This is David Baby Beard Green for Brandon Big Beard 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.

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