BiggerPockets Real Estate Podcast - 498: Real Deal: BRRRR Deep Dive w/ Joe Asamoah (Pt 1)

Episode Date: August 26, 2021

When most people think about section 8 housing, they think of run-down homes, troublesome tenants, and negligent landlords. This stereotype may prove true in some markets, but for Dr. Joe Asamoah, this is far from reality. Joe has built his real estate portfolio by renovating homes to an incredibly high standard, situated in some of the best neighborhoods in the DC market, and all while under section 8 housing. Joe figured out early on that section 8 housing authorities gave much more rent money for houses with 5 bedrooms and up, so he started renovating to match the rent section 8 could provide him. This not only allows him to take home a sizable profit, but score tenants who will respect his homes as their own, and stay there for 15 to 20 years minimum. This is no joke, Joe has tenants who have been with him for two decades! You’ll see a deep dive of Joe’s latest property in today’s episode, complete with pictures, videos, and other helpful visuals. If you’re only listening to this podcast, we’d highly recommend checking out the video version over on the BiggerPockets Youtube channel! In This Episode We Cover: What the “Big City BRRRR” strategy entails How to control tenant turnover so you have ZERO vacancy  Using section 8 to take in higher rents How to create a top tier product that attracts top tier tenants  Becoming the best landlord a tenant could ask for Adding bedrooms, bathrooms, and getting permits for everything in between And So Much More! Links from the Show BiggerPockets Forums BiggerPockets Calculators BiggerPockets Pro Membership BiggerPockets Youtube Channel BiggerPockets Bookstore Brandon's Instagram David’s Instagram BiggerPockets Podcast 356: 30+ Rentals (in a Pricy Market) Through BRRRR and Section 8 with Joe Asamoah Rookie Podcast 03: Coronavirus Crash? Do's and Don'ts from Recession Veterans Joe Asamoah and Steve Rozenberg BiggerPockets Youtube: Big City BRRRR Strategy & Recession Proof Cash Flow Real Estate with Joseph Asamoah! Check the full show notes here: https://www.biggerpockets.com/show498 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 498. I start with the ending mind. Who am I trying to attract? And I buy in those areas where can I attract those? I renovate with the understanding of what the tenant is looking for. And to renovate in such a way that it's going to attract and retain the type of tenant I'm desiring. Then obviously the renting part, which is the key because I'm looking for zero turnover. So it's not just a matter of just finding somebody, but it's carefully screening in such a way that you get what I call a tier one tenant.

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 to more? It's Brandon Turner, host of the Bigger Pockets podcast here with my co-host, Mr. David, high-performance car green. What's up, man? I couldn't remember the phrase you used in the show, but it was something like that. That works. I don't mind being called a high-performance car. All right, high-performance car. What's up, man? I'm doing good. I could hold you pit stop green,

but, you know, it's not as good. Pit stop doesn't sound as appealing. I've been, I've been spending all my spare time looking at houses. I'm trying to buy a new primary residence for myself. And I'm getting a little taste of what it feels like to be a buyer right now. And it's not always a blast. No, it's not always a blast. That's fun. What are you looking for? What kind of property? I'm looking at a house hack, but I wanted to be in a really nice area. So very similar to the strategy Joe talks about. I'm looking for the best land I can find then the biggest property, then what would work best for my purposes, which is a house hack or a property that could be house hacked if I move out of it. So with the minute you add all the extra criteria into what

you're trying to do. I just gave you three. You make it three times as hard to find a house and you're already in a challenging market. So you really have to be patient. You have to ask yourself about some of the criteria you have. Is this really important or is this just something I would like, but it's not something that I would need. It's funny that as he was talking, I was thinking, yep, this is exactly what I got going on right now. That's cool, man. That's awesome. Yeah. I'm excited to see where you land. I come hanging out with you and we'll hang out and play video games. And you're going to be so, you're going to be like, dude, this is all you got for what you paid for that. You could have come to Hawaii. you could have got an estate for this price.

That's funny. Yeah, you are an expensive area. Anyway, speaking of expensive areas, today's guest is Dr. Joe Asamoa. We've had him on the show before back on episode 356, one of the most popular episodes we ever did. And today we're going to dive deep into the world of Joe Asamoa. And that is we're going to look at a specific property that he is buying right now. We actually planned this whole show to go into one property. We're going to talk about how he found the deal, how he financed it, in detail.

It's like the deal deep dive, but like to the extreme. I thought this came out. We just got done recording it and it came out so good. I think this strategy is one that could change a lot of people's lives. I think it could allow people to invest in real estate who thought that they can't invest in real estate because they're in a crazy expensive market or it's too competitive or they can't find cash flow because they live in some expensive market. This is a strategy for you. In fact, Joe changed a lot of my life when he introduced this the last time and so I'm excited to introduce it to everyone today. And before we get that, though, let's get to today's quick.

All right, so today's show is a little bit different in that you can listen to the show just fine and you'll get everything out of it that you need to get out of it. But if you want a kind of an added bonus of this show, watch it on YouTube because we're actually going to interject a bunch of, is interject the right word? I don't know. Insert a bunch of pictures and videos and like maps and stuff about the property we're talking about. So not only are you hearing that, but you're able to see what's going on as well.

We'll actually map out some of the numbers that Joe talks about right there on the screen. So we want to make this a little bit more interactive because this is very much a teaching, training, helping you kind of episodes. So if you have any ability to do that, go to biggerpockets.com that show 498. Again, biggerpockets.com. That show 498 and you can access the YouTube video right there. But again, if you can't do that, just listen to it right now. You're fine. Or maybe you listen to it and then go back later and click through and watch some of the clips and watch some of the pictures. I will probably also put some of the pictures right there on the show notes page at 4Begercopaccom slash show 498.

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landlord insurance designed for the modern investor. your house gets bored when you leave. I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking,

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to handle it all. A co-host can handle guest communications, it can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress

and more time enjoying your trip. You can relax. Relax, knowing guests are taken care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host, but could use some help, find a co-host at Airbnb.com slash host. Time to get into this show. Anything you want to say, David, before we bring in the high performance machine himself, Dr. Joe. I would say this is one that probably should be listened to twice, just because of the level of detail that Joe gives. It's not sort of a high-level show. We really dig deep on exactly. I mean, he gives the order of how he repairs a house from the

You get into the end, the step, the 10 steps that he takes. So this is one that if you're listening to it, unless you're paying a lot of attention, you should listen to it a second time because there's a lot to miss. There you go. All right. Well, let's get to the episode with Dr. Joe Asamoa. Joe Asamoa. Am I saying your name correctly?

Your last name? I didn't want to butcher it. It could be pronounced better. Well, welcome to the show. Joe, how you doing, man? Thank you, Brandon. Thank you, David. It's an honor, truly honored to be back and looking forward to this discussion.

Well, thanks, man. Well, last time you were on the show, You know, one of our more popular episodes of all time, people love the episode. If they haven't listened to it, they should go back and listen to it. It was episode number, I don't know. 56. Really? Okay, good.

Good. You're on top of things. I am not. Story of my life. So 356. Yes, sir. An episode that actually changed my strategy a little bit. Like I was in the middle of buying a property and or like, you know, renovating a property.

And then I changed my strategy based on what you. taught me. And then that's, the strategy you show has been going really, really well. I had some other complicated issues come up with zoning stuff, which I won't get into today, but we're working through that stuff. But basically, okay, people are like, wait, what is it? Basically, the property was a three-unit property. And I bought it as a three-unit property. After buying it, then the county was like, oh, wait, that's not a three-unit property. You have to take that back to a single family. And they're okay renting by the bedroom. So essentially, I'm just turning it into a right by the bedroom, but which is fine. It's just another way doing it. But the Section 8 actually kind of saved my butt on that property because

the whole rehab process of turning it back to a single family. Well, everybody gets that Section 8 money and throughout the whole pandemic and everything. So, Joe, thank you. You're the man. Thank you very much. Yeah. All right. David's like, wait. That's my good deal for the day, huh?

Yeah, there you go. Well, that's a wrap, guys. Thanks for coming today. Have a great day. And, no, we have a deep, deep, deep dive show today. And I don't have a very low voice. So I can do it. Like David can do it.

But we have a deep dive show today. I just sound like a pirate. say that. I'm like, this is the deep dive show. Arr. All right. The deep dive show. We're going to look at one of your properties because the idea of what you're doing in an expensive market. You call it what the big city. Big city burr. I like it. You know what? You know me? I love frameworks. And I like things that sound cool and all that house hacking. Big city burr. Big Dave. I don't know. Nobody calls up the big Dave. But we're going to. That doesn't even rhyme. Everyone's like, That's not alliteration.

We're going to dive into a big city bird today. I want to learn exactly how you do what you do, because this thing is a phenomenal strategy, and a lot of people can replicate it in their areas. And it helps people, and it builds equity, and it builds cash flow and wealth and everything. So before we get into that, the deal, the entire show, deal deep dive,

let's go back to you. And for those who didn't listen to episode number 356, 356, my memory is about, about as long as, I don't know. I'll go there. So who are you? Where'd you come from? Who am I?

That's a good question. My name is Joseph Asteroa, and I'm based here in the Washington, D.C. Good job on the last name. Good job in the last name, by the way. Okay. You did it. The name originates from Ghana. So when I was born in Ghana, and then we left when I was five years old, we moved to England.

And I lived in England, about 37 years ago when I came to the U.S., $100 to suitcases, you know, that stuff. But essentially what I do is I buy houses and renovate houses and rent them out primarily to Section 8. But the problem we have in places like Washington, D.C., Maui, you know, Boston, New York, and those places, it's so expensive. And we get the appreciation. You can get that. But the problem is the cash flow. And it's very hard to do the two.

So if you want to get cash flow, you have to go to a different market. And some of those other markets, you don't get the appreciation. So I want both. And kind of over the years, develop this strategy, which I call the Big Sliper, with a Section 8 twist, whereby you can get both cash flow

and depreciation, and also you make money, but also you can do good as well. Yeah, that's cool, man. So how long have you been investing for, total? It's been a while, right? It's been a while.

It's about 30, I forgot now, about 35 years now. Yes. I've been buying houses. I've been through four cycles, four real estate cycles. So I have a pretty good idea how these cycles play out.

And, you know, I've been through ups and downs. I've been through hell and back and made every single mistake you can think of. I've learned. And this strategy does work. It's recession-proof. It doesn't matter. Good times, bad times. COVID, no COVID.

It really is totally irrelevant. People lose their jobs. It doesn't matter. And it's time tested. So, and it works. So I'm looking forward to sharing that with the community here. And hopefully encourage us. other people to replicate what I do.

So we're going to talk about, again, ideal, a specific property that you are in the middle of doing right now. And in fact, this show is going to be kind of a two-parter where we wanted to bring you on now at the beginning so you can tell us your plan. And then we're going to talk to you at the end so you can tell us what happened. And so that way people can then in the future listen to both back to back. But right now you're all going to have to just wait in suspense to what happened. But we're going to hear your plan today.

So what exactly, Joe, do we want to cover today? I know you got kind of a list of some topics. Yeah. So today, what I want to cover is that. a deep dive, where we're going to go to get how I found the deal, the analysis of the deal, how we negotiated it, you know, the design, you know, or the rehab from start to finish, or at least to where we are today. And also kind of talk about some of the lessons learned experience so far. So that's what we're going to cover today. And I'll give you a little teaser

for part two. Part two is when we actually take the property, finish it off, and then mark it to find a tenant screen, what I call a tier one tenant, and then go through the whole Section 8 process in terms of getting the property approved by the city, the county, and then moving the tenant in and then managing that relationship. And the lessons learned. That's part two. All right. We got a lot to cover. All right. We got a lot to cover. Before, there's something I wanted to ask you, it's not even on my notes, but for a guy who's been through four cycles now and you've been in the game for a long time, I can't help but ask the question, what the heck is going on right now in the real estate market? And where do you think it's headed? Well, I can talk about

this market here, which is the Washington, D.C. market. And, The reality is that it's always expensive. I'm sure you say the same thing in Maui. I'm sure you say the same thing in Northern California. It's always expensive. And then five years, well, five years later, you think, what a genius I was for buying it in 2021 when it was cheap. So it is what it is.

I mean, it goes through cycles. And if you take a long-term view, a long-term view, as opposed to a short-term view, it tends to play itself out. I mean, time is very, I don't know, time is sort of very healing. and time is very forgiving. The issue is if you think it's too expensive, you wouldn't do anything. And therefore, you're waiting, wait and wait,

waiting for all the stars to align, and they never align. You just have to just do it. And if you take a long term view, it's usually pretty much okay. Well, you know, we talk a lot of on the show how cash flow, in fact, David, why don't I ask you to explain

because you're really better than I am about cash flow, like not making you rich and being an offensive metric, that kind of stuff, in case people aren't sure what we're talking about with the cash flow versus appreciation. Yeah,

I appreciate that. And Joe, you opened a really good talking point here that I like to do. Did you swallow the cockroach? They flew all the way across the Pacific Ocean really fast. Sorry about that. So when Bigger Pockets was really sort of coming into its own and being formed, it was right after the real estate crash. A lot of people had lost a lot of money. And when we looked at investors and we said, well, I say we, I wasn't involved in Bigger Pockets at the time. But when people looked at investors and tried to figure out how they lose their house, we found out they were buying it just basically. on speculation of appreciation. It was like a stock. I will buy low and I will sell high. And that was all they knew. Prices are going up. So I'll just buy a house and wait. And it was discovered that if they had just bought properties at cash flow, they wouldn't have lost the house when the market tanked.

And so this cash flow, cash flow really became the rally cry of like, if you just cash flow, you don't have to worry about losing your house, which was very healthy advice, to be fair. That was what was needed. That was the recipe or the, not the recipe. What is it when a doctor gives you your prescription? Yeah, there you go. I'm sure Dr. Joe, you understand that. So what the problem, though, is we are in a different market now than we were 10, 15 years ago where that was the main prescription that was needed. We now are in a place where the rules of the game have changed a little bit. And the people that are still chasing cash flow, it's not bad. We obviously cash flow is good. No one will ever tell you it's a bad thing. The problem is cash flow. It's not meant to build wealth. Single family homes don't produce enough income on their own. Just, you know, if you leave them as they are the way they're built, they're not valid. They're not valid. based on their cash flow, you have to make them work for cash flow. It's not natural. And so cash flow is what keeps your property alive. What builds wealth is paying down the loan and seeing appreciation. And this is the dilemma that investors find themselves in, where if I go too far

on the side of appreciation, I can outkick my coverage and I can maybe lose the house but doesn't cash flow enough. But if I play it too safe, quote unquote, I won't lose the property, but we'll never actually do anything for me. And I'll just be stuck in this cycle of getting some money and then dumping it back in through CapEx, getting some money and dumping it back in through a vacancy and you got to get it ready for the turn. And so the whole freedom you were trying to find with real estate never actually happens because you played it too safe. And so what I do, my strategy is to recognize cash flow is for defense. It helps me to keep a property, but it's not going to get me anywhere. I got to buy in the right neighborhood where rents are going to increase and prices are going to increase. So the question becomes how do I do that safely? How do I combine the best of both worlds?

And Dr. Joe, you've really found a method that works very well for those two points. So as people are listening to the story, understand that the key ingredient is investing in a market that is going to become worth more. Things like having like limited inventory, a very strong economy, strong metrics overall, good schools, things like that. They're going to make a property appreciate over time and then doing it in a way that protects yourself with cash flow. You need, if you're going to hold a house an asset for a long time, you've got to find good quality tenants, okay? because if you don't, you know, it'll drive you crazy. You know, they won't pay their rent. They trash the house.

They, you know, give you drama every day. And they just, that constant turnover. And that's the key that got me towards the Section 8 model is that if you have a constant turnover, you make absolutely no money. I don't care what anybody says. That's just the hard reality is that you have an asset that's, you know, it's vacant. It's cost you money. You got to clean it up.

You got to paint it again. You got to advertise. You know, it's just very. very, very expensive. All that cash flow that you've made for the past few months gets completely wiped out. Gone. Gone. And so I realized the only way I can survive this thing is to have tenants that stay 5, 10, 15, 20 years. They have no intentions of leaving. And therefore, that cash flow that you make stays in your pocket as opposed to going out through to turnover expenses and vacancy expenses. So that's just the addition of that, is that the cash flow sounds going

in theory. But if you don't take a handle of the turnover of vacancy cost, then it's a revolving door that will drive you to craziness. Oh, that's such a good point. I never thought about it, because there is a psychological sort of understanding that once you get that check and it's more than what your expenses were, you made that money. But those of us that have owned real estate for a long career time, no, you did not make that money. It will get sucked right out of your hands just as fast as it came in in many cases. In the book that is coming out, or maybe it's out by the the show comes out, the multifamily millionaire that Brian Murray and I wrote, I spend a ton of time explaining this concept of what I call phantom cash flow versus pure cash flow. Phantom being something

that appears real, but it's not actually there. And then there's pure cash flow, which has been purified, just like gold goes through the fire and gets purified into like pure gold. Cashful that goes through the fire, meaning we account for those turnover costs on average over time, right? We account for the vacancy, the empty unit that sits empty once every other year on a typical rental. Again, this is why I love your strategy, Joe, is because you minimize that. The repairs and the maintenance, which again, why I love your strategy is minimize that. The capital expenditures, we average that over time. But again, I like your strategy because it minimized that.

So the idea is, like, pure cash flow is the actual number on average that you're going to make after you account for all of those things after you put your property through the fire. And this is one of the biggest irritations I have. Like, when I post anything or say anything ever about how much money I want to make on a rental property. There's always like people who are like, he only makes a couple hundred dollars a month on his rental house. Like I make $5,000 a month. I'm like, no, you don't. You rent it for $5,000 a month. Like, idiot. You know, like, that's not cash flow. That's like, you take out your mortgage. And you make, like, even people who are like, oh, yeah, my mortgage is, you know, a thousand.

And I rented for $1,200. My cash flow is $200 a month. I'm like, no, it's not. Like, that's your phantom cash flow. Anyway, exactly. Well, the thing I want to add to again to that, I'm sorry if I'm interjecting this one. is that most real estate investors focus on the physical asset, okay, the property. And what I realize is that, yes, it's important to take control of the physical asset and do the numbers and so on. But the most, probably just as important, is the human asset, which is the tenant, okay? And if you take care of that human asset, okay, they'll pay their rent, they'll take care of

your property, they'll, you know, sort of be pleasant to deal with, and they stay a long time. So that human asset, if you don't take care of it, it will destroy your, it could destroy your physical asset. But if you take care of the human asset, it will really enable you to really appreciate the value of real estate in terms of the appreciation, in terms of the cash flow, in terms of the tax benefit. All those things emanates from when you can sort of have quality tenants that take care of your house over a period of time. There we go. Yeah, it's so good, man. It's such an important point that I hope everyone really, like, sinks in and takes to heart. because, yeah, take care of your people.

They'll take care of your property. Nine times out of 10, you're going to be just fine. That's why I do Mother's Day gifts. Yeah, exactly. That's why you're good to your tenants. Like, I love that stuff. All right, so we got to move this thing on because I want to get into the property that you bought. But before I do, I do want to know, like, how you're finding, like, how did you,

well, like, how do you find this property? But how did you just find properties in general? Like, what's generally your strategy for find properties in a crazy competitive market, like we find ourselves in today? What's your thing? My thing is it's all about networks. It's extremely competitive right here, but I network with what I call deal finders. These are agents, brokers, bird dogs. I just network, let them know who I am, what I'm looking for,

and also try to bring value to them in a sense that if they bring me a deal, then I'll also give them the opportunity to see how I execute the deal. That's cool. Okay. So if there, for example, let's just say David has a deal and you and I, Brandon, wants it. You know, so David goes see you, Brandon. He said, okay, this is the deal for $100,000. You're going to say, okay, I'll give you 105. And he's going to come to me and say, Joe, David's off me, Brandon's off me 105. Will you go 110? You know, it's like a race to the bottom. So I didn't want to get into that. So what I tell David is, David, look, if you give me the deal, I'll show you how to execute. I'll show you what a real investor does all step by step. And hopefully you can learn what I do so you can go out there

do it yourself. So now there's an advantage for him giving me the deal as opposed to giving to you, Dave, Brandon, I'm sorry. And that's essentially how I do that kind of stuff. Yeah, we do the same thing at Opener Capital. I'm like, hey, you bring me an apartment deal or you bring me a mobile home park. You get to see everything. Like, you copy that from me, I'm sure. I probably did. I'm sure I did. I copy most things in life actually from you, Joe. They call me Dr. Brandon Turner now, actually. So I copied that from you. I didn't go to med school or anything like that, but we're just going to go with it. All right. So, connecting with people, you know, getting the JV, like the partners or other investors to bring new deals because they want to see how it works. Very, very smart. How are they getting

deals? Like, how are, like, is there something that you see happening more often than not with other people? Well, I mean, like the case that we're doing today, that was a listed property. Okay. So even this crazy, expensive market, there are, well, you have to create the opportunity. Yes. I talk about how we did that from that. But I mean, it's crazy. For every one good deal, there's 20 people that want it. and prices have just been bit of crazy, and therefore you have to have some kind of differential advantage, I call it, that allows you to get these things.

Yeah, like in today's market, I mean, me and David says all the time, today's market you don't find great deals. You make good deals or make great deals because you see something everyone else doesn't. Like, oh, I can rehab this property. I believe the property we're looking at today is a pretty big rehab, right?

That's what's behind you on the video. Yeah. At least the Zoom fake and digital background, but it is the actual property, right? Yeah, this is the actual property is in Washington, D.C., And it's about 175 to 200. It was 175 is the estimate. I put a little buffer on that, $200,000 rehab.

Wow. Okay. $200,000 rehab. We're taking a three-bedroom, one bathhouse, and turn it into a five-bedroom, three and a half bathhouse. Wow. All right. For those who didn't listen to your first episode,

can you give a quick rundown? Why do the bedroom count matter? Yeah. In Section 8, the rent that you receive from the housing authority is based on two things and two things only. Number one is the location, whether it be the zip code or the neighborhood. Okay, so if you're in Neighborhood A or Zip Code A, they'll give you this amount of rent based on the number of bedrooms. If you're in Neighborhood B, then you'll get maybe the same or a different amount. So, neighborhood is number one.

Number two is the number of bedrooms. So if you have a three-bedroom house in Neighborhood A, then you'll get this amount. If you have a four-bedroom house in Neighborhood A, you'll get more. If you have a five-bedroom, you get even more. So one asset, depending on the number of bedrooms that you put in there, you'll get three or four different rent. And so in this case, it was a three-bedroom house. But because of the numbers, it didn't make sense as a three-bedroom. We had to increase the number of bedrooms.

Four bedrooms didn't make any sense. We had to make into a five-bedroom in order to get a decent cash flow. Yeah. Another house I just did, we turned that into a six-bedroom. That's awesome. Yeah, I remember when you said that on the last episode, we interviewed you on, in the middle of it, I messaged Ryan, who's like, it lives out here in Hawaii with me and he kind of helped run pretty much my entire life.

So I messaged him as like, hey, can you look up section eight rents for, you know, Maui? And he looks it up. And it was phenomenal. Like the bedroom, like the difference between three and four and five, like bumps up like a thousand dollars a month in rent just for that. Even six and seven bedroom got crazy. But it was mind-blowing. I never thought about that before. Now it's something I look at all the time. And in these kind of markets, you don't find good deals. You make good deals. I'm always thinking now, oh, that house has three bedrooms, but it's 2,800 square feet. Hmm. Yeah, well, how do we make this into a five-bedroom and something it rents for way more? So again, all right. So this property itself, tell us about how it came on your radar. What happened was that, you know, again, through networking, I came across another real estate investor. And she told me about this particular opportunity. It didn't meet her criteria, you know, in terms of what she was looking for. So she said, hey, I've got this house at 1, 2, 3 Main Street. You may be interested.

And it just so happened that I own another house six doors away on the same block. So I'm very familiar with the neighborhood, very familiar with the type of houses that they are. And I said, yes, I'm interested. How much is it going for? And she said, well, it's listed at 675,000 listed. And I said, well, that's kind of high in terms of I did my mental calculation, too high for me. And so I says, well, you know, let's see if we can do something about that. So she connected me with a listing agent.

I spoke to the listing agent, introduced myself, I told that I was an investor. I've been around for a while. I do deals, can make it happen. And she said, well, yeah, you investors. You people. Yeah, you people, yeah. Oh, you're one of them. Right, well, you two, you people.

But what's it called? I convinced that house that I was legit. And she said that, well, there's a family member in there that's supposedly doing some work on this house. And I said, well, in that case, then they're probably doing started some renovations. Therefore, I'll offer 600. So I offer 600 site and scene, which is the max. I could pay, give him the numbers. So we arranged a visit to the property. I went over there, and that's when I realized that the guy that was supposedly doing the work hadn't done anything.

So I counted and said, I'm going to make an offer for 550. So it was listed at 675, and I offered 550. So I'm sure you know where that went. They were like, great. Let's go even lower. Let's go. So I offered 550. And believe it or not, you know, we're going back to the forest for a while. And ultimately, we agreed at 555. Five 55. All right. Not bad for us. And when was this? 2012? This is three months ago. Okay. So like this is not like the crazy, like this is still crazy competitive. It just goes to show there are still properties. You can still get discounts. But I'm sure you probably make a lot

of offers that get rejected that don't work out this way. Is that right? No. Well, yeah, you do. But again, it's developing the relationship with an listing agent convinced that I was legitimate, convinced her that, you know, I could execute the deal if she was, you know, take my offer. I did agree to make the offer through her and so on. So that's what we did there. And essentially it was an experience of relationship building, if that makes sense, and built that trust because during the time that we're negotiating, somebody else came in and offered 585. Okay, so somebody else offered a higher price than I was prepared to pay. But still, once they realized that person was a wholesaler and probably wasn't going to execute,

they still went with me. So I think establishing credibility, establishing trust, letting them know that you're a person of your word, providing your financials, and providing sort of your track record and projects that I've done, I think, was able to convince her that, yes, it makes sense to go with me as opposed to with somebody else. Yeah, that's cool, man. That's cool. Yeah, we had a property. I can't remember, was it, 200 to 300,000. We basically had this like large apartment or mobile home park on a contract, about a month or two ago. I don't know. I only vaguely remember this, but I remember somebody else came in after we signed the LOI. So an LOI is non-binding. It just says, hey, both parties generally

agree. This is what we're going to do. And somebody came in and offered a couple hundred thousand dollars more. And that person could have just said, you know, forget you guys. I'm going with a person that offered a few hundred thousand dollars more because I'm going to walk with a few $100,000 extra. And they didn't. They stuck with us because we had treated them well the entire time and they liked us so far in the conversation. And we had that reputation kind of going with us. So again, it just shows like, yeah, that stuff matters. Like how you do anything, that's how you do everything. When you treat people right from the beginning in your initial offer, even in a hard negotiation, you can do things right. And people will respect that. It can go a long way. So cool, man. All right. So house was listed, got the property under contract. Let's talk about the numbers. Like what was your like initial, but what's the math look like? Yeah. So what I did, was at 555. I estimated, I went to the house and looked around as a three-bedroom. I went straight to the basement because that's where I could add bedrooms. I realized that the height of the basement was good, and therefore I could make two extra bedrooms in the basement, at the bathroom in the basement, and therefore I was able to turn it into a five. I like to do

three and a half bathrooms, so we're taking a three-one and turned into a five, three-and-a-half. Okay. And in terms of the renovations, it's around 175,000. They put a little buffer in there, made it 200,000, you know, overages. You know, things happen when you do rehab. I'm sure you know. So 555, 200K, what's 775. That's acquisition and renovation. Obviously, you've got holding costs, you've got other costs and things like that. That neighborhood is a upper $800,000 block. So, conservatively, it's 875,000 is the after repair value. So that's the numbers at a high level. That's awesome, man. I love it. All right. So the should work out. I mean, so far, I know we're going to get in this in a minute in the rehab, but does everything seem to be about where you initially thought it was three months ago? Our price is going up or down. Like, it's pretty much on track the new numbers were when you started. Yeah, I mean, yeah, fortunately, the contracts that I use, you know, I've used them for last eight years. They're the only ones I use. Again, it's based on developing that relationship

and trust. They look out for me. I look out for them. So essentially, although it's a major renovation, in terms of the stress level, it's minimal. You know, we meet once a week, and that's essentially it. And then we talk about the project, what's going on, what's going right, what's going wrong, we talk about strategy. It's just developing the key relationships with your contractor, working with them so that you can minimize your expenses. So for example, the cost of lumber is really exclaimed. Let's just put it that way. Yeah, we're able to save some money through other things. But the reason why I'm really like this particular deal is because of it, as I said before,

the neighborhood, okay? And I start, and this is really important in terms of my mindset here. I start with the end in mind, okay? I start with who is my ultimate tenant? Okay, I'm looking for what I call a tier one tenant. This is a tenant who's going to stay there forever, okay? Whoever rents this house is going to be there at least 10, 15 years. So I understand who this person is, what they're looking for, where they want to live, where they don't want to live. And that drives where I buy. Okay. So it's a beautiful neighborhood.

It's a kind of neighborhood where I think I would have no problem living there myself. It's close to subway. It's close to transportation. It's a couple of miles from the White House, a mile from the Capitol building. It's close to shops. It's all those things which, you know, it's gentrifying. okay. So it's on the path of progress. So all I want to do is to make sure I own this asset and therefore let time take it, you know, make me the beneficiary of time and therefore

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Cool, man. All right, well, let's talk about financing the money. Did you pay cash for it? Was there a loan in place? Yeah. Actually, hey, sorry, before you go there, can you explain, for those who have never heard the term burr before? I know that's probably rare here, but if there's listening to this and they've heard burr, can you explain what that is? So when we get into the financing conversation in a second, they understand what we're talking about.

Right. Burr is a famous acronym created by the one and only. The one and only. The mad, the myth, the legend, you know. And his co-host who wrote the book on Burr. Yep. And essentially it's, you know, the buy, renovate, rent, refinance, repeat. But this is a big butt here.

I put a little twist to it. Okay. And, you know, I buy carefully in areas to attract the kind of tenant that I'm looking for. Okay. So again, I start with the ending mind. Who am I trying to attract? And I buy in those areas where can I attract those? I renovate with the understanding of what the tenant is looking for.

And to renovate in such a way that it's going to attract and retain the type of tenant I'm desiring. Then obviously the renting part, which is the, it's the key. because I'm looking for zero turnover. So it's not just a matter of just finding somebody, but it's carefully screening in such a way that you get what I call a tier one tenant. And then obviously, once that's in place, then you refinance to try to recoup most of your costs back. After each project, I kind of do a recap, lessons learned, what did I learn, what went right, what went wrong, and then hopefully I can then continue some improvement.

That's a repeat. So I don't just repeat by step back and say, what went right, what went wrong, what could I've done differently such that hopefully I don't make the same mistakes again. What I love about the Burr strategy and David, this is the point that you make in the book and you make it on the podcast occasionally is that Burr allows you to get that cycle of, I don't know how you say that, David, but basically like that learning cycle so you can learn from your mistakes

versus I'm going to buy a property, wait five years to save up money for the next property and then buy another one. And so like you're that learn, I don't know, what do you call that, that learning cycle? The learning curve. I call it like basically you're becoming a black belted because you're getting more repetition. That's what it is.

Repetition builds mastery is what I said. Yeah, exactly. So that's what it's fun about this. So typically you're going to buy it with some sort of short-term financing. Now, for those who are new to this, most banks don't want to lend on a nasty property. It's not a very common thing, right? So when we buy it, we buy it with short-term money. Now, it could be a line of credit.

It could be all cash. Could be a partner's cash. Could be a special rehab loan. It could be a hard money lender, which is pretty common, which are basically people who lend money on flips, like, but they'll do it on a burr. So what did you do for your initial purchase here? Were you able to get a bank financing or did you go something creative? Sure, yeah.

It's a three-part financing strategy here. So I have a relationship with the local commercial bank. Okay. And it developed over a period of time. So they know who I am. My point of contact, in fact, he used to work somewhere else. When then he moved from that place, I mean, that's why I met him initially. And then he moved to a different place and we developed the relationship.

Then he moved to somewhere else. We kind of followed, you know, we kind of maintained. So he knows me. I know him. He knows what I look for, and he knows that I'll get the deal done. And so he was able to discuss it with his folks down there. Essentially, they provide 75% of the acquisition and 75% of the renovations. I use a bank as opposed to a hard money. Again, it's nothing wrong with hard money. There's nothing wrong with that. But after a while, you know, you got four costs in real estate investing. You've got the cost of the acquisition. If you can buy it lower, then you make profits.

there. The other thing is the cost of finance. If you can drive your cost of finance down, you can also increase your profits that way. It's the second profit center or cost center. The third one, obviously, is the renovation, which we'll talk about. And then the cost of the exit strategy, whether you're going to rent it or whatever or sell it. So financing costs can be quite expensive if you don't control it. So I nurture and develop those relationships with these commercial banks because the cost of finance in there is cheaper. You know, talking like 6% and half a point, which is very reasonable. And so that's part one of the financing strategy. It's a commercial bank. The second part is developing a relationship with private investors.

So I've nurtured relationships with people who know me. They trust me. You know, I give them a chance to see how their money is being sort of utilized. They get a chance to see the project from acquisition through renovation and through completion. And then the third part is personal funds. So whatever's left over, I kick it in. If there are overages, I foot those bills. I don't go back to anybody else, ask them more money and so on. So it's a three-part financing strategy, commercial bank, private investors and personal funds. There we go. That's great, man. Typically, this is the case with most creative finance. In fact, I make this point in the book on investing in real estate with no and low money down, the longest book title in history. I make this case that almost all creative

deals that I've ever done and that most people I know ever done are not a one part financing strategy. It's usually a combination. Hey, I got this lender that will do this part of it. I'm going to bring in a private lender that will do this part and I've got my own cash to do this part or I'm going to use a credit card for this thing or a home equity line of credit. It's like you put together different pieces to make it all work. And so yours is a perfect example of that. That was your plan for the buy. And then of course, after you're done with the rehab and it's all rented out, you're going to refinance it. I'm assuming into like a 30 year fixed mortgage, that kind of thing.

Well, it's commercial financing. I buy this in an entity. So I buy an entity with a commercial bank, and I refinance using commercial financing, which is usually a 25-year amateurization. Okay, yeah. Again, I developed relationships with the local commercial bank, and I've taken the time to explain what I do, the business.

I make a difference in people's lives. They love the business model. And as a result, they fund 85 to 90% of the ARV on a commercial bank, a very attractive route, which is very, very unheard of, which is obviously. So again, they love my business model. They like what I do. I've taken the time to explain to them what it is that I do, taking time to nurture the relationship, such that they get the job done, very attractive rates. That's awesome, man. This word keeps coming up over and over and over today. And if everybody's listening, has noticed it, but it's relationships, right? Like, we think of

real estate often as a business where it's like math and numbers, but everything really comes back to it's so much easier and better. And the way that you're able to make all this stuff work is through relationships. Yeah, you can't do this without relationships. You can't do this as a one-man show. You can't be an island in the sea. It doesn't work. I mean, I've tried that before. I've got the gray hairs, as you can see, to show you. You know, you've got to assemble people. You've got to work with people. You've got to nurture relationships. You've got to create win-win scenarios. You've got to make it work their while to work with you. And make it work that you can get these win-win scenarios. I mean, that's been really the key to what I've been

able to accomplish. It's just understanding, you know, people, whether it be my contracts, the tenants, the financial folks, just create these scenarios whereby they trust you, I trust them, I look out for them, they look out for me. It just makes life so much easier. Yeah, for sure. Well, we talked about buying the property, you know, how you found it. We talked about the money you needed to put it all together. We talked about, you know, a lot of stuff. What comes next? Maybe like the design, like the rehab part of it? Like, where are you at with that? What's your plan with that? Okay. So ultimately, I bought the house and acquired it. Everything's coup. And then the next thing

obviously is execution. So the first step is to how we're going to transfer or transform this three bedroom one back into a five bedroom, three and a half. This is the design. Fortunately, I bought a house just up the street from here. So I have a pretty good idea what we're going to do. But the key has been the basement. How do we create these two bedrooms and create this sort of one bathroom. But what I do is I focus on five things is part of the design. I'm looking for it to create a HGTV quality home, a home that I would have no problem living there. Hopefully you'll have no problem living there. So we focus on five things, which is the, you know, obviously the kitchen, the bathrooms, functionality, aesthetics, and sort of open plan. So that's what I do in terms of

the design. So it's a typical modern design layout. And once we've got that, together, then obviously it then goes to the actual renovations. That's when you sort of get the architect involved. And they put that on paper. And then we then go to the city to get the permits and navigate through that whole bureaucracy. And ultimately, we'll get the building permit. So again, it's teamwork.

It's sort of making sure you've got a design that the ultimate tenant is going to be extremely happy with. And then working with an architect to navigate through the city such that you can get the building permit so you can actually start the actual rehab itself. So all these works are, all these projects are fully permitted. So on this project, we have five permits, which means that it's going to go through inspections as well. This is something that I have, I don't know, I've struggled with, but I've seen so many investors, myself included, like, try to get by without the permit stuff and try to, like, minimize the permit because they don't want the hassle. But

almost every time that I've tried to, like, bypass that or say, well, I don't really need a permit for this. Like, almost every time, I'm like, regardless of, regretting it later. Like, I just think it's so much better to just do things right from the beginning. I mean, that's what actually, I mean, it causes a headache. It is a hassle, right? Like, like my triplex, like, yeah, that's causing a lot of hassle now because I have permits on everything. And the county, it takes way longer. But it's just like if you want to create a sustainable, long lasting business that is going to produce wealth and passive income and all that stuff, like, do it right. It's like somebody's trying to start McDonald's. They're like,

you know what? We don't really need to have this parking lot. They know, it's permitted, right? It's like, well, how serious tell you about having the McDonald's long term? Like, I don't know. I mean, I'm not saying I'm going to go get like there are areas. Like, for example, I think in Maui, the rule is you have to get a permit if it's over five. I think it's $5,000. And I'm like, okay, well, you know, putting window shades up in my property is about $5,000. I'm probably not going to get a permit for $5,000 for window shades, right?

But if it's anything even remotely like, yeah, the county's going to want a permit for this. I'm going to get a permit on that. Because, yeah, it's just better not to be hiding things and trying to figure with around it. When I first started out, you know, that's one of the lessons where, you know, you kind of close the curtains and, you know, give gifts to the neighbors so they don't call the city on you and so forth and sort of go that route. But I've realized that, you know, it's not sustainable. At some point, someone's going to call you in and get you in trouble. And over here, they'll give you some big fines, $4,000, $10,000 if you don't have permits. So it just wasn't worth it.

And you go through delay, stock work orders and things like that. So we just go from the get-go, decide what. the scope of the project is going to be, what permits we need. And then we get the architect to come up with the design. But also, I mean, I'll talk about this about architects. What I look for in an architect is not just somebody who can draw, because I think anybody can put together a schematic. The key is having an architect that knows how to navigate through the bureaucracy of the city so that they can get the permits quickly. And that's the difference between a good architect, in my opinion, than an average architect. You want somebody who knows what the designers

or design review people are looking for and make sure that it's all in there and also has relationships within the, you know, the permitting office such that if there are questions, they know who this person is and they know that they can get the job done and things like that. So it's, is that good? Is that something, I'm finding the same thing right now. I'm working with an architect who has a good relationship with the county. I mean, we've probably sent 300 emails back and forth between me, Micah, who's kind of helping me on my team manage it, and then the architects, and then the county. So it's still a lot of going back and forth with stuff, but like they really like the architect and the architect has a good relationship with

them. So my question is, can people, like, what's the best way to find that architect? You just go to the county and ask them, hey, who do you like working with? Is it as simple as that? No, again, it's all about networking. I would suggest that you go to a RIA, local rea, speak to other rehabbers, other investors who are doing this kind of similar things that you're doing, find out who they're using, what architects they're using, and, you know, sort of leverage on other people's experiences. And that way you can find, who knows their stuff and a lot faster than just showing up and, you know, and just pull up the, well, not yellow pages. We don't have a yellow page anymore. I think there are, but it's more like the yellow sheet

now. It's like the yellow, they laminate it now. It's like, here. all the businesses that don't have, yeah, anyway, if it aren't on the internet. Or do a Google search and see you're a full of architect, you know. I think it's finding out from other people in your field who they use and getting some sort of recommendations that way. Yeah, all right. Well, I want to kind of start moving towards the close of this episode and I want to move towards the renovation actually phase. Like what specifically is your plan? Like what order are you doing things in? How are you finding contractors? I guess you said you have one that you work with, but kind of what's your

process look like for that? Yeah, so again, I'm sure we, we can have maybe one day when I come to Maui, you come to Washington. We can have, we can have a beer over contractor stories. This sounds wonderful. Because I'm sure we all have contractors stories. I've had the contractors from hell, you know, guys are short drunk, guys who don't know what they do in, you know, guys, you've got to fight with them every day. And, you know, I've been through all of that stuff. And I realized that you can't do this business without good contractors. So it just by happens that, really, that I met my contractors. about eight years ago, we were doing a project where my GC wasn't paying the contractor.

I was paying the GC, but the GC wasn't paying the contractor. Can you believe that? Shocking. So once I found that out, and I developed a relationship with the contractor, because all they want to do is just do good work and get paid. That's it. Nothing complicated. And all they want to do is to make sure that they satisfy what I'm looking for.

So we built that. That's how I found them. And once I realized they were good people, they knew their stuff, they knew code, they knew how to get things through inspections. I just decided I need to keep them. Yeah. Okay. And so I found out that, I think I shared that last time, one of the guys, one of the contractors was living in the Rubin House here in the Washington, D.C. area. And I just happened to find a house and re-renovated the house.

And I let him and his family move into that house at cost. And the other contractor, the same thing. I bought another house, and I let him move into that house, and he was renting it from me at cost. So I'm looking out for them. I mean, the trust, just the way that they help me, the way that they, if there's a problem, they just take care of it. And it's really a joy. I mean, this project here, it's a major renovation.

I don't go there very, maybe once or twice, once or once every other week. I meet with them every week. But the idea is that they are taking care of business. They are making sure that we're moving. ahead. If there are issues, they usually try to solve them. And if obviously I need to get involved, they'll contact me. The key is finding a good contractor, and I've kind of shared you how I found them. But once the project has gone through the design, then you actually, you know, then you actually got to do the work. And so I kind of break it down to 10 steps, really, but that's what I do.

The first part is sort of the planning before you start, you know, that's all associated with that is the walkthroughs, the scope, the strategy, the game plan, what permits we're going to use. You know, all that kind of stuff, the drawings and so on. So that's part one. It's all planning. And where's the money, you know, where's the money going to come from? What's the draw schedules? What the major milestones?

All those things are all planning before we actually start doing anything. Once we've gone through the planning stage, we then go to the demo. And obviously, per the design, we decide which walls to take out. And then after all, that's done. Then you go through kind of the roughing, what I call the roughing stage. this is when you put the frame in, the two by fours, and then you do the electrical,

you do the plumbing, you do the HVAC, ruffing, and that's pretty much where we are right now. So next week, we'll be going through the inspections. So we're going to have what we call the ruffing inspections.

That's when the city, well, in Washington, D.C., you have what we call third-party inspectors. So these are inspectors that have the same authority as the city inspector. They'll be coming over to the house

and they'll be doing their inspections of the property, checking that, everything's up to code, the electrical is up to code, the plumbing is up to code, the HVAC is up to code, the frame is up to code. All that stuff is what comes in next, and then insulation, and then after that, we then go through what we call closing, assuming that we've passed the inspection. So that's, you know, kind of, I don't know if that's too much detail. No, that's good. But that's where we are right now. Once the inspector has giving us the okay to quote unquote close it up, then we'll put the drywall in, and then we'll put the, you know, the sort of the baseballs, the trim, the doors, and then we do the kitchen,

the bathrooms, and ultimately the floor in. I stage all my homes, so the house will be staged. I staged all for my rentals as well. Yeah, tell me about that. Why do you use a staging company? Do you have your own stuff? Do you let the tenant keep that stuff or you pull it all there? What's your process? The reason is I staged it. my home is nobody stages rentals. No, nobody. I'm trying to attract a certain type of tenants. Okay, so when they come in, okay, so again, go there.

Let's just say David is a tenant, prospective tenant, a tier one tenant. This is a tenant who pays his rent. I think David pays his rent on time. I think David takes his property. I hope David, so it's pleasant to deal with. And David's looking for a home for him and his family to stay there for a long time. Okay, so both you and I, Brandon, are competing for David. okay so i'm saying i want david you say you want david i'm going to have a product that blows you

away okay you can't compete okay brandon so when david comes into my home he sees a house that stage it looks like a model home uh it's got all the fixtures that everybody's that he's looking for his family is looking for and also remember that a lot of people i rent are section eight's uh families and the typical section eight family is very used to live in crappy houses in crappy neighborhoods rented from crappy landlords. Okay. They're good people, but that's their choice, okay? Because when you think of Section 8, you think, oh, God, they're going to destroy my house,

and da, la, and so forth. And I'm saying, no, there's a lot of good families in there who are yearning for an opportunity to live in a nice house and a nice neighborhood with a nice landlord. So I have that product. So when they walk into my home, it's like, whoa, I've never seen anything like this. and therefore you can sort of attract the creme de la creme and so on. So I can get David before you can. You don't stand the chance, Brandon.

I'm sorry, and getting David. Well, in other words, finding a tenant, a good tenant is very much like finding a good employee. Like, it's a gigantic funnel, right? There's 10,000 people looking for a job out there, and then you filter them down and you attract a really high, you know, pay a high salary, and you do a lot of careful screening. You run through a lot of tests at the very bottom. Like, you can get a really good person. But if you just put an ad on Craigslist and said, hey, job.

And then you got some guy named, you know, David to apply for it. The chance of him being the rock star that you need on your team is probably like one in a hundred. But when you have a thousand people apply for a job or whatever, like you can really get the cream of the crop. The same is true for tenants. And so what you're doing, Joe, is you're maximizing your funnel in every step. You're saying, I want to get the most people I can and the most highest quality people. into my funnel. So as I run it through the funnel, I'm going to get the best person in town to apply for my place and I'm going to find them and I have a system for finding them. And that is

just, that's just genius. Do you do all this yourself? Do you have a team that helps you with the management? Do you have a property management company that does this? Or you're the one taking the phone calls and talking to the tenants. Like what's your business like? I have an assistant. I used to do this all myself. I tried the property management route. It just didn't work because I hope I'm not going to step on too many property managers. No, please do. They deserve it. How they're incentivized is they get incentivized two ways, obviously.

One is whenever there's a turnover, they get a new fee, okay, a new security deposit or whatever it is. And also, if there's repairs, they usually get a cut of the repairs. So they get incentivized in opposite way that I want. I don't want any turnover. okay and so which is on conflict with you know many property matters again i'm not saying that they're dishonest it's just that i don't want turnover and so therefore i'm going to take the time to get the right person okay i'm going to go through the screening process which includes the landlord verifications credit verification income verification but also i go to their home the tenant's home

to see how they keep their home because what i found is that how their house is today is how your house is going to be in three months, guarantee. And you can't tell how somebody is going to take care of your home by how they dress, what kind of car they got, their income. You can't tell. You can only tell by going to their home today, okay, and see how your house is going to be. I know this is very radical, but this has been my experience. And then you're going to say, well, hold on a minute. They may be offended by you even entertaining the idea of going to their home, Okay, who gives you the right Dr. Joe to cut to my house? Who the hell do you think you are? Who the hell do you think you are?

But don't forget, I've got a product that is one in a hundred, okay? It's a beautiful house and a beautiful neighborhood. And so they want my product. It's in high demand, low supply. And therefore, I can set the bar high in terms of my screening criteria. I can still get these quality folks. Very cool, man. Well, this has been really fun.

This has been awesome. I think there's something worth pointing out, Joe, about your method and that, and Brandon, you kind of hit on it by likening it to when you're taking applications for a job. Yeah. The effort and the detail that you're putting into this, Joe, works when you're in a situation where there's a lot of demand for your property. It's a screening process essentially to draw the best people in and then identify them and pick them.

Just like if you have a job, a lot of people want, a thousand people apply for it. You need a strong screening process. this would not work as well in an area or with a property that did not have a lot of demand for it to stage a rental property. So I think as people are listening, if they're trying to figure out, well, is that what I'm doing wrong? And they've got a property in like an area with not a lot of population, let's say, maybe a rural area, not a ton of demand. Then they're like, well, how do I get more for my property? Maybe I should stage it. If two people are coming to look at it, that's not going to help you. It's very important that we recognize the key of what you're doing,

Joe, is you're starting. You said you start with the end in mind with high demand. areas where a lot of people want to live and then you're providing them with the best property you possibly can, right? You started by picking a location that has a lot of demand. So everything you're saying after that starts to make sense as you create the best property that you can. This would not work if somebody was in an area with not a lot of demand, not a lot of population, not a lot of good jobs. And they went overboard and an over rehabbed a property made it really, really nice and then staged it. And then two people applied to live in it. And neither one of them was a tenant that you would necessarily want. So I just kind of want to highlight this is why we started off by saying the

area that you pick matters so much and that you really want to start with the end of mind. Well, yeah, good point, David. The other thing I like to add to that is it's a business, okay? Every business has customers, okay? Whatever it is, whatever it is. So you understand who your customer is. Okay. Who are these people? What do they want? Where do they, you know, what do they want from my product. Whatever it is, okay? And you start there. And then you create a product that meets their needs. Okay. So even it doesn't matter what market you're in. If you understand who your customer is and you have a product that meets their needs, you'll differentiate yourself from your competition. And so that's essentially what I'm saying here is that I've tried, I've had houses in

okay neighborhoods. I've had houses, all types of different houses where I did minimal rehabs. I've done all that. But I realize that to get five, 10, 10, 15, 20, year, tenants. Okay, that's what I want. Okay, I've got to have a certain type of product. Because I understand who these people are, what they're looking for, what they don't want, and what they're yearning for. And therefore, I systematically decided to create that. And therefore, I'm targeting them. And they are attracted to my product. And so once they come into my houses, they don't want to leave, especially when you throw in the, which we'll talk about next time, you know, the bouquets of flowers, the Mother's Day gifts,

the Christmas year, free vacations, all that stuff. You don't stand a chance, Brandon. And once they come into my home, they're not leaving. They're not leaving, especially to go to a guy called Brandon, who they don't know. They don't know what kind of landlord he is. If he takes care of his property, something goes wrong. You know what I'm saying? I mean, you put yourself in that position.

You say, okay, who are these people? What do they want? And how can I satisfy their needs in such a way that it's almost like a firewall against your competition? Yeah, that's such a unique way of looking at landlording that a lot of people don't. Most people, I think, in the world, look at landlording as how do I get the most money out of the least effort and put in like the dumpiest, crappiest product? And it just, it might feel good in the short term because you're like, oh yeah, I can get almost the same rent out of doing, you know, this, you know, I can use plastic toilet parts instead of metal and I'll get the same rent. Great. But the long term, it just doesn't work.

things break, the tenant leaves early, they don't last long, they trash the property, everything just works. And every way you're looking at this from a long-term perspective. Again, like we'll talk about, I'm sure, more next time as actual rental process and who the tenant is. It's going to give you a much better landlord life for everyone involved. Oh, my goodness. I mean, I recommend that everybody spend a day in a landlord-tenant court. because you'll see there all kinds of scenarios, disaster horror stories, and all the results of failed relationships. Which is what I do.

Every three months I go down there just to see what's going on. Well, I used to go there before COVID. It's an eye-opening about what other people are mistakes or other people are doing. And therefore, I learn from those things. And, you know, you hear some cutting-edge stories that, whoa, I've never heard that one before. and so on. So it's something which I do. It's a business.

And it's having a product which we all know real estate is a perfect vehicle to build financial independence. We know that. However, if you're taking a long-term view, you've got to have people that's going to take care of your assets. Yeah. Okay. And otherwise, you'll be a burnt-out landlord and you'll be stressed out. You say, oh, this Brandon guy who's talking about real estate, he's lying. you know, because this is not how I'm seeing.

This is not my experience. You know what I'm saying? Or Dr. Joe's lying because I had some tenants and they ran me ragged, you know, and so forth. So it can be a vehicle if you have the right asset, the right tenant and you treat them well. And you can then realize the true power of real estate. All you need is a few of these things and you're done. Nobody wants to invest in a high powered expensive race car and then have a crummy pit crew and driver taking care of it. that's a good one.

Is that an analogy, David? Yeah. Weird. Yeah. All right. So, so hopefully, you know, this has been helpful to the audience. It's a different way of thinking. I get it.

It's probably radical for a lot of people, especially when you talk about Section 8. I mean, the rent here at this house is going to be $5,462. Wow. That's the rent. Okay. And there is no way that a market renter. is going to stay there for more than three or four years. Because they're going to buy their own house.

They're going to buy a house, yeah. Okay. But for a voucher holder, they're not going to be buying an $875,000 house. It's not going to happen. Yeah. So their perspective is, I want a place where my family is safe. I want a place whereby I can be part of the community. I'll be a place whereby we can set up roots.

And I just want to rent from a good landlord. So once they come into your home, the whole pride of rentership, the whole, at last, we can be safe. settled. At last, my family can, you know, at last, at last, at last. And if you treat them well, because just having a good house by itself, if you're a crappy landlord, at some point, they're going to say, I love the house, but this landlord is a guy, he's not right. So they'll leave or they'll look for somewhere else. But if you take care of them and you're a good landlord, then they usually stay. You know, what one thing that comes of mind that's happening a lot in

today's market is a lot of landlords are selling their properties because their properties have gone up in value so much. And that's a hard thing for a tenant who, let's say you're living in a place for three or four years. You're raising your kids there. And then all of a sudden, boom, landlord just says, well, sorry, you got 60 days. Get out. It's just an abrupt thing that a lot of tenants fear that they're going to be kicked out of their place. I'm wondering, do you do you, and I'm assuming you do, but do you let the tenant know, like, look, my plan is to hold that I want you here for 20 years. Is that part of your kind of marketing efforts? Oh, yes. I tell them that, look, I'm going to be the best land.

you've ever had. Period. I tell them up front, you know, I'm looking for the greatest tenant in the world. Is that you? If that's you, we can do business because I'm the greatest landlord you'll ever find. So I set the expectation right for the get-go. And so once we do that, I tell that, yes, I'm looking for a family that's clean, quiet, responsible, pay the rent, and it's looking to stay for a long time. I tell them my longest tenant is 24 years. That's how long my longest tenant is. And I regularly get 10, 15, 20 year 10 regularly. So to a family who's looking for stability, this is music to their ears. This is something that they never heard of. And again, that's what differentiates me from maybe from you. Because I understand the needs of this family is.

And I'm trying to articulate in such a way that they get it and they say, yes, this is the guy I want the rent from. This is a house I want to be a part of and so on. Awesome, man. Well, appreciate you telling your story today. I love the strategy. For those who didn't hear it the first time, you know, you got a little bit peak of it now. But go back, definitely go listen to episode 356. Is that right? How's my memory? All right. And we're almost out of here. But the last thing we want to do before we close up shop, let's get to today's. Famous Four. The Famous Four is the part of the show where we ask the same four questions every week to every guest. I know we asked them of you before, Joe, so we're going to throw them at you again.

Maybe they've changed. Question number, uno, is there a favorite or whether current or all-time real estate book in your life? I think last time I talked about the real estate millionaire, a millionaire real estate investor, sorry, Gary Keller. That was a good, that's a very good one. Right now, I've just finished a book. It's called Real Estate Investing Gone Wrong. I don't know if you've read that one. I have done. Real estate investing gone wrong. It's by Phil Posterjewski. Oh, yeah. I'll butcher his name.

Something like that. Essentially what it is, I like to learn from other people's experiences. Okay. And essentially what he's done in his book is this sort of catalog, 21 case studies of projects that have gone wrong, real estate projects that have gone wrong for whatever reason. And it talks about that. And he also talks about, you know,

what mistakes did they do and how they could correct those mistakes. That's a really good book. That's the one I'm reading right now. Okay, very cool. What is your favorite business book? Several. I mean, what I'm reading right now? I just finished, really, is, yeah, it's a wealthy gardener.

I don't know if you read that one. Oh, yeah. I'm actually got it right back here. I love that book. Yeah, John Sephoraic. That's a really good book. Again, it's about lessons learned. This is a wealthy gardener who's essentially sharing his wisdom to his younger prodigy and about

life's lessons and so that's a really good book. It's very fast. It's like a hundred personal development books and business books all put into one. Yeah, I love it. It's a good book. Okay. What about some of your hobbies? Hobbies.

I'm going to try to do more travel. Okay. My goal is to do more travel. Hopefully we're going to go to Dubai this year. We're also going to go to Ghana this year, you know, schedule permits, COVID permits. So travel really do nothing. How about that? There you go.

Hobbies, do nothing. Just do nothing. Just sit there. Just do nothing. I think relax. Spend all the time, quality time with family and friends. You're not doing nothing.

You're recharging. You're in a pit stop because you yourself are a high performance machine, Joe. Yes, I've recharged it. All right, man. Well, this has been a great. Last question from me,

what do you think separates successful real estate investors from all those who give up, fail, or just never get started? I think last time I said fear of failure. Fear, fears last time. I think this one is also, I'll say, focus.

You know, lack of focus, trying to do too many things at one time. I can't do self-storage. I can't do mobile. I mean, I can, but I don't. I choose not to. I decide I want to focus on Big Cityboro, which is what I do. I know very well. And, you know, so the idea is to, I think lack of focus really is one of the things that people,

that kind of differentiates successful people from, I would say, unsuccessful people. It's really good. We have a saying on my real estate team, or I have a saying and I make everyone listen to it, that there's two light sources. There's a light bulb that fills a room with light. And that's the kind of person that does a little bit of everything. So whenever you need something, they have some capacity to help. And at times in life, you do need that generalize your light goes everywhere. And then there's a laser beam, which is just focused light. You take all that light that spreads everywhere. You put it in one location and it can drill through, you know, iron if that's what it takes. So, Whenever people are having trouble, I often ask, are you being a light bulb or a laser beam? Is that why you're not able to get over your obstacle? Yeah, I think so. But I think focus, master something. Once you've mastered that, then you go on something else. You know, then you master that, then you go something else.

So, I mean, I'm not saying just be stuck on one thing. No, it's just that sometimes people do too many things at one time. Yeah. And because they're doing too many things, it's very stressful as well. It's a lot of wasted energy. And you get into that sort of shiny object syndrome. I'll try this today. I'll try that tomorrow. I'll try this the day after and never really master anything. That's exactly right. Brandon and I talk about the bridge building analogy and that's what

you're describing. You try to build too many bridges like trying to download 20 movies on your computer at one time. You just end up with no movies. At a very slow computer. All right. Last question of the day, Joe, where can people find out more about you? Oh boy. Last time I came on this show, I had 450 people on Instagram. We now have 13,000. I've still nowhere near where you are Brandon and David. But you can reach you on Instagram. You know, what's it called? D.R. Joe, Joe Asamoa.

You have a very educational in a great way, educational Instagram account. Like, I think everyone should follow you. It's phenomenal. That's why no one's following you, Joe. Put some pictures of your butt up there, and you'll get a lot more followers really fast. I don't know about that one.

Unbutton a couple buttons on. You're making a deeper V. Yeah, there you go. Deeper V. Hey, guys. Yes. Well, so I'll say this. This is a great point as to why the number of followers someone has is not an indication of how valuable they're going to do.

Right? Because Joe's, you're giving people meat and potatoes that is really going to change their life. And you have 13,000 followers versus the person who just shows some Ferraris and Lamborghinis and they have a lot. But that doesn't mean it's good for people. Yeah. So I'd love for people to follow me on Instagram or Facebook. They can reach me also on my website, JoeASMO.com. But also, every Wednesday, I have what I call a Wealth Wednesdays, where it's pure education where I talk about different subjects.

It's a real estate. We're going to talk about appraisals today. Last week we talked about, finance. And it's just I'm trying to help people replicate what I do. As far as I consider, the pie is big enough for everybody. It really doesn't matter if I share what I do with the audience here. It's not like you're going to satisfy the needs of the, you know, you're going to solve the housing crisis. It's not going to happen.

But if you help people, usually good comes back to you anyway. So that's what I'm trying to do is to share what I do, help people, provide content, quality content without a whole lot of fluff. I've been through cycles. And so I know how cycles play out. You know, once you, a recession is very humbling because you find out if you know what you're doing. And you can't let the market bail you out because it won't bail you out. Yeah. So, right now everyone, everyone looks like a genius right now.

Wow. Yeah. Yeah. Yeah. But once the tie turns, then you'll find out who's been swimming naked, as they say. So, yeah, so that's how people can, I love for, if anyone's in the Washington, D.C. area, you know, connect with me. Info at joeasamoa.com. Info at joeatsamoa.com.

But also, if they can bring me some deals. I love to do some deals. But I love to help other people and show them how I do what I do. Perfect. I love it, man. Well, thank you for joining us today. I can't wait to get you back here in a few months. We'll talk more about your other episode. Yeah, awesome, man. I appreciate it. Thank you very much, guys. I really appreciate it. Thank you very much again for inviting me here. I'm looking forward to coming back. Thank you. Thank you. All right. That was our episode with Joe.

What's up, David? What did you think? High performance man himself, Joe is killing it. Yeah, and I think he gave a lot of really good advice on just strategies that work for well over time, right? This isn't the whole guru, get in, change your life by buying a rental property. Yeah. So give all your money. This is really the get rich slow game, the boring, predictable, but very difficult to mess up strategy. And you know, one thing we did talk about today, maybe we'll talk about it more next time. I don't know when we bring Joe back on to talk about the after of this property. But what's cool is that like I don't, like in my opinion, like we're not fixing the low income problem in America right now, the low income housing. There's just not enough housing being built for low income American.

And so eventually the government is going to have to do what the government does. It's like step in. and they're going to help. I believe that Section 8 over time will expand. I believe more and more people are going to demand housing as a right. And I believe we're going to see more and more of that. I mean, as a result, I think our tax money is, you know, tax are going to go up and whether or not, you're for that against it, doesn't really matter. I just believe that is where we're headed. Is that a lot of people 10 years from now, 20 years from now will have their housing paid for by the government. So what I like about what Joe is saying is he's basically getting in on the ground floor of what I think is going to be a tremendous opportunity over the next 10, 15, 20 years,

and that is getting the government to pay rent. So I'm a big fan of this stuff for that reason as well. I think that's a very wise perspective that you're sharing, Mr. Turner. Well, thank you. I'm a wise guy. That's what my friends always say. Wise guy. All right, let's get out of here. Let's get out of here. You want to close up shop? This is David Green for Brandon Wise Guy Turner. Signing off. You're listening to Bigger Pockets Radio. So 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.

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