BiggerPockets Real Estate Podcast - 74: Buying My First Investment Property- A Newbie Podcast with Jordan, Jacob and Jeromie

Episode Date: June 12, 2014

On today’s episode of the BiggerPockets Podcast – we’re going to change things up- again! This is our official 2nd newbie podcast and it’s probably our most fun show yet. Just like the last newbie podcast back on episode 25, all of our guest today are investors who are just starting out and who have recently finished their first deal. These stories are not only helpful for new investors, but even the pros can learn valuable lessons from their experiences! Each of these investors also are working full time jobs, which is something a lot of our listener’s struggle with. Additionally, we cover everything from investing when you live in an expensive city to the importance of confidence when everyone thinks your crazy and we even get to talk to a real-life rocket scientist who’s smart enough to hack his mortgage!  You really don’t want to miss this one! Links from the Show: The New Dumb and Dumber Trailer Nextdoor.com Asana.com How to “Hack” Your Housing and Get Paid to Live for Free Books Mentioned in the Show HOLD: How to Find, Buy, and Rent Houses for Wealth by Steve Chader Fooled By Randomness by Nassim Nicholas Taleb Rich Dad Poor Dad by Robert T. Kiyosaki Drive by Daniel H. Pink Learn more about your ad choices. Visit megaphone.fm/adchoices

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They obsess over the metrics that actually grow your cash flow. Go to mind.com slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment like an investment. This is the Bigger Pockets podcast, show 74. 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, everybody? This is Josh Dorkin, host of the Bigger Pockets podcast, here with my co-host, Mr. Brandon Turner.

What's up, Brandon? Hey, not much, Josh. How's life on your end? Life is good. Life is good. Been busy, busy. We've been crushing it here on the site, dealing with all sorts of chaos,

which we'll talk about shortly. Got a little sickness in the house, which is a bit unfortunate, but it looks like it's on the men. So things are all right, man. Things are all right. What about you? Not too much. I got some exciting news that's completely unrelated to us or real estate. But I just saw the new trailer for the new Dumb and Dumber 2 movie. I saw that too last night. Yeah, it looks pretty good. Did you see it on Fallon?

I didn't see it on Fallon, no, but I saw it on a YouTube video from Fallon. Oh my God, man. when, yeah, the last scene of that trailer had me in tears. Yeah, yeah, check it out, people. I'll put a link to it in the show notes at biggerpockets.com slash show 74. Yeah, definitely, definitely check it out. If you are, if you enjoy our show, you would probably enjoy the new dumb and dumber movie. What do you say, Josh?

I, you know what? I, you know, let our listeners make their own judgments about us. All right. All right. So, yeah, listen. as I alluded to before, want to talk a little bit about what's been causing all this chaos

and that's kind of our quick, quick, quick, quick tip. There it is. There it is. Took some prodding, but there it is. All right, so today's quick tip, guys. The new redesign of Bigger Pockets is now live and available for you guys to check out and test out.

If you go on www.biggerpockets.com, log into your account. you'll see a bright orange bar at the top of the site. And there's a button on there that'll let you opt in and start using the new site. And the new site is absolutely amazing. It's cleaner. It's brighter. It feels better. It's easier to use more functional.

We've got lots of new who's-its and what's-sits. And we definitely recommend you jump on. We will be releasing this to everybody to the whole world in the coming weeks. But as an early adopter, you know, jump in and make moves. You know, the one thing I want to jump in there and just point out is to check out your post score. Your post score is kind of an algorithm, a number that shows your influence on Bigger Pockets. So you can kind of see how well you're doing. Are people voting for your post?

Are they saying good job by clicking the vote button or not? Kind of a cool feature. And you can also check out the leaderboard and see who the top five post scores on Bigger Pockets are right now. So, yeah, you can check that out on your dashboard by just going to BiggerPockets.com and logging in. you should go right to your dashboard. So yeah, check it out. Yeah, and the other really, really, really quick thing is you can actually see your profile views on a graph compared to your post score and your interactions on the site.

So ultimately, the more you engage on the site, as we always tell people, the more interest you're going to get in yourself and your profile, which as a result usually ends up in you doing more business, more deals, finding more partners, more colleagues. So jump on it. So that's it. Check out the new site. And we wish you lots of luck on that. And that is today's not so quick.

Tip. Good job. Yeah, yeah, yeah. So today's a special show. We haven't done anything like this in a long time. I believe it was episode 25 was the last time that we did something like this. Today we're going to sit down with not just one, but three different. folks. We're going to do three different interviews with brand new real estate investors,

and we're going to talk about their first deal. So this is a really, really good show for those of you who are newer at investing. But even if you're a sophisticated investor, there are actually some pretty cool things that you'll pick up as well. So pay attention. Yeah. You know, I think I like these shows a lot because, I don't know, the perspective that you get in the excitement that the new investors have, You can just tell, like, I don't know, there's just something that everybody, whether you're new or advanced, can pick up from it and glean off these shows. I know I certainly did. So yeah, definitely. Definitely. Well, so let's get into this thing. Our first of three guests today is Jordan Tibado. Jordan actually works full time on the main Google campus in the Bay Area of California. I don't know. I don't know. I don't know. Weird. All right. Well, anyway, so, Gordon's got a great story of overcoming that difficult market to jump into the real estate game in a way that those of you guys who are listening to the show might be facing as well. Ultimately, he's in an expensive area and has found a way to make things happen.

So definitely want to check it out. And besides that, he's just a great guy and very funny. and, uh, very so. I don't mind our hysterical laughing throughout the whole interview there. Yeah, he's, he's like a little standup comedian or something, man. It's, it's awesome. Yeah, you guys don't like this. All right, so let's hop in.

Jordan, welcome to the podcast, man. Good to have you. Oh, this is a pleasure to be on the Rich Dad Poor Dad Show. Sponsored our week. Oh, man. This is awesome. Thank you guys. Yes, we have, we have had a few guests, you know, say that that's their favorite book.

Really? Yeah. Just a few. Just a few. Okay. I know. It's Jackie. Well, when we ask you later, you better tell us something different. So we will get to that, though. I'm going to go over the cash flow quadrant.

Okay, good. All right, good. Well, for those of you don't know, Jordan actually brought us in to the Google campus. Me and Josh, to give a little speech on investing in real estate back a few months ago. So today, we are excited to bring him on our turf and talk to him about real estate investing. We're going to beat them up a little bit. It's not the face. That's a moneymaker.

There you go. All right, man. So let's jump into this. Enough jokes. Enough jokes. By the way, speaking of jokes, our presentation with jokes at Google, totally, I mean, it was a good presentation,

but it totally flop because the wonderful engineers at Google, don't laugh. Don't laugh. I think it started before then when we were at the Google Earth demo, and two of my friends came up and said, hi, would you guys like to try this barbecue dish? And Josh turns to them and says, that is

disgusting. And both of the guys stare at me awkwardly because I know them because they literally got up at 3 o'clock in the morning, got to the kitchen at 4, cooked it all the entire day. They saw me and you and said, oh, I'm sure they like his barbecue plate. And I bring this New Yorker here. He's like, that's disgusting.

And it's awesome. But thank God Brandon just walks in and goes, I'll try that. And I was just like, oh, geez. I will try it. Meanwhile, vomiting all as soon thereafter. It was amazing barbecue. This is going to be a tough show, I can tell. Let's talk about real estate, Jordan.

You are a novice real estate investor. Is that correct? Yes, that is correct. All right. And let's put some context here. So Jordan's working over at Google in probably one of the more expensive areas on the planet to buy real estate. That is the San Francisco Bay area. And talk to us a little bit about that.

So, you know, how'd you get excited about real estate and how did this whole path begin for you? Well, I was for the longest time invested in the stock market. And after a while, I just start figuring out that there's nothing of value I can really add to my stock investing. I mean, I can do index funds or whatever, but it's nothing else I can do. So after the financial crisis, my old man was like telling me constantly, you got to get involved in real estate. You got to buy something. If you don't buy something, you're a loser. And I'm just like, hey, I just graduated from college. I barely have any funds. I can't afford anything. And we live in Silicon Valley where it costs like $2 million for cardboard box. So I can afford. So after some time, there's a big store in newspaper that Amazon was going to be built. And building a fulfillment center in Patterson. So I looked over to Patterson real estate and I saw, oh my God, I could actually get a house for like $50,000. This is a great idea. But then I started doing more research and found out that besides that fulfillment center, there's really not

that many jobs in the area. Plus, that fulfillment center is going to be mostly occupied by robots. Nice. Jobs that they are going to create are mostly six-figure salaries. So anyone who does had that funds will be buying a house and Patterson and not rent it. And robots don't need to rent house. No, not at this point, fortunately. So then I went up to Sacramento because I have some family and friends up there and

I said, you know, this would be a great area to start looking for real estate. But before I started embarking there, I first had to decide, like, you know, how do I get involved in real estate? So I started doing some Google searches and went on YouTube. You didn't search on Bing? Actually, first I searched on Bing and then I went to a web crawler.

I couldn't find anything else. Then I went to the yellow pages. And then after that, I went to Google. And, you know, I went online, saw a lot of guru stuff. There's just one guru pitch on YouTube where it's these two guys who are telling you like, does anyone in your family ever die? Because if you do die, you probably could buy the real estate from them. So I realized, like, that's not the way I want to do things.

So I came across this bigger pockets website and I just started reading some of the articles. And I think every day I would read the articles, post comments in the articles. And then I just started listening to the podcast like over and over again. So I listened to all like. I'm sorry. I know. It was I, the first, the first podcast was like, it was like you two were like in your parents' basement using a ham radio, you know, and smoke signal for communication and everything.

And then gradually over time after around show 50, it started off with Brandon and Josh were both happy. And then around show 50, Brandon was still happy. Then Josh was depressed. There's only so much he could take of the show, you know? Okay, look, get to the rich dad, poor dad question. You know, what do you do with your family?

The show, the show was excellent. A couple shows that really, like, stand out for me were definitely show number one. And that show number one. With the ham radios. Marty. Marty. And his story about how, you know, he got a portfolio up to 8 million properties. And then, you know, blink of an eye, he's bankrupt and down by $2 million.

And really started thinking because during the real estate crisis, everyone was saying, okay, now the price shows so low. Just buy everything you can see and leverage yourself and everything's going to be okay. And after listening to his talk, I really started thinking, like, I need. to make sure I embark on more of a conservative model because I don't want to overextend myself. So from there, kept on listening to their podcasts and I started making trips up to Sacramento every weekend. Do you mind if I ask, I mean, Sacramento, you said you had family there, but is that the only

reason you were looking there? I mean, I don't know California dollars. Is that cheaper or what's it like there? So Sacramento is cheaper. It's a little bit more like, I'd say rural. how do you guys say it? And it's at the heart of our state's capitals. There's a lot of government job and steady employment in the area. There's also Stockton, which is south of Sacramento, but they just went into bankruptcy. There's also, you can go into Fresno if you want to.

There's all different areas, but I decided to do Sacramento first because I was kind of familiar with the area. And those areas, Brandon, are pretty similar to, like, middle. I, even though it's like West Coast, California, you feel like you're pretty much middle America. Interesting. It's very, very, very different than San Francisco. How far are you guys from Sacramento? I live in San Jose, so I'm about two to two and a half hours away.

Okay, so it's still within a decent driving distance. Yep. Which goes back to what I always say to people, there are places to invest within a couple hour drive of wherever you live. And people whine about things being too expensive, but I mean this is a good example that you actually could get into it. We'll get into exactly what you bought. They whine, really, picking on the listeners.

That's why. I mean, that's not the way to do this, man. You don't want to piss off the listeners. I mean, they're already mad enough. They have to listen to me all day. I know, you've got the DRG listing all the time, the depressed real estate guy. You know, first of all, he hates his investments. He hates his church.

He hates his job. Wow. It doesn't like his contractors. And now he's listening to you two guys cutting. jokes. It's got to be serious. It's a serious business. All right, so we're in Sacramento. We're looking there. We're going back and forth.

And what kind of got you pulling the trigger? And you know, you listened to enough of us and decided that, you know, you didn't want to hear any more hell from us. So you just did it? Yeah, pretty much. I was like, if these two can do it, I should be able to do it. So,

I just went on Zillow and I saw a listing for a house in Sacramento. I that time I didn't know if I wanted single family, duplex, or whatever. So, saw the house, it looked good. And I was contacted by the realtor. And she said, hey, do you have a real estate agent? I'm like, no. And she's like, okay, can I be your realtor? I'm like, okay. So she just loaded up ML, check the MLS, and then she just took us through multiple houses in Sacramento area. She took me to one house that looked really nice from the inside

And I was gonna make an offer on it But then a day later some guy got shot and killed in front of it So that didn't quite work out After that she took me to another house And this is in the middle of July in Sacramento which is like 100 degrees And she's like all right before we go in here You know this house is just a little bit lived in But once you get used to smell it's like a great deep house

My dad's like, son, you can go in first. I'm not going to leave the car. I'm like, okay. So I opened the door and it was just like the smell of 100 cats just peeing. No joke. No jokes, Josh. That's not what my house is. You know, I mean, Brandon, if you visit him up in Montesson, you'll smell it from the outside.

Right. And just you didn't have like birds in the walls or something too? Those are gone. I patched the holes. Petched them. Yeah. I rescued those baby birds with my own, like, gloved hands and they flew. That was good.

Anyway, I have a... No, I have a nice... Moving on. Let me ask you, let me ask you this. This is going to be the most difficult podcast yet. My question is, what price range were you looking at? Again, I don't know Sacramento, so what were you talking about here? Yeah, when I first...

started, I really had no criteria, but I was saying, okay, something like lower than, something between like 100 to 200,000. But I discovered that after looking at 50 houses. Before then I was like, oh, I want to get something for 70 or 80, and all of those are pretty much slummy houses. Another house I looked at, it turned out that right next door, there was a gigantic meth lab and like weed farm, so it didn't quite work out. So that's when I started learning, first of all, I need to get my criteria together. And then second of all, I need to get a realtor. who's willing to push back on me when I suggest that we go to homes that are just to have no curb repeal whatsoever. So I let go my first realtor and I found a second realtor and I knew she was

excellent because she would give me data about the neighborhoods and tell me like, you know, I feel comfortable walking in this neighborhood. This is a good middle class neighborhood. You should start looking here and there. This is what price ranges you should look at. So me and her started working well together and I started giving her criteria of what I'm for. And what was really nice is, you know, before you start any endeavor, they always say, you know, have a hobby plan or a business plan. And this for me is a hobby. So I created like a hobby plan. And what's great is I did on Google Docs. And this is not like a product placement commercial. If you aren't using enterprise apps, I could connect you with somebody. But anyways,

so what's really cool is I'm looking at my, my hobby plan right now. And it's like a page and a half and it's pretty solid. But then I go into revision history, and originally it said, I want cash flowing, producing properties managed by a property management company to decrease my time involved and produce a steady income which can finance my way of life. I would like to generate a monthly cash flow of $10,000 pre-tax. On one property? Exactly. So that was just like boilerplate like MBA, like first year MBA student business plan, you know? And then after time, I got much more specific to what I have right now and says, you know, I buy and manage duplexes in the area surrounding UOP law school, UC Davis-Med area, and northeast of Sacramento Airport. I screen tenants and bring in quality tenants in the neighborhood. I will purchase properties with curb appeal, and for the first three years, I will reinvest profits back into the properties.

And I went into different criteria about what I'm looking for so far as cash flow and how much I'm willing to put down. And I only got to that Would you mind sharing any of that? Yeah, my criteria is, I mean, one thing I noticed on the forums is it's a forum, so there's always going to be debate. And there's people who are on one side of the fence saying, you know, be ultra-conservative,

the other ones are saying it be ultra-liberal and henceforth. And for me, on my end, I want to buy one duplex a year. I'm not trying to build like a whole entire empire, so I'm more on the conservative end. So I do 25% down. I'm looking for curb appeal, mean that people walk up to my duplexes and they think that they're attractive and they want to stay there.

And I also want them to cash flow at least $200 per door within three years. And then my business plan goes into risk factors such as having adequate cash reserves, about taking too much risk. Because my number one thing is I don't want to hit a home run. I kind of just want to hit consistent singles. So I can stay in the game long enough. So when people are swinging from the fences and missing, I have enough cash to gobble up those properties at a better price. Yeah.

No, that's great. That's great. So talk about the within three years thing. You know, I've never heard anybody phrase it that way. Typically, they say, hey, I'm looking for a property that cash flows $100 a door, $200 bucks a door. If you're aiming for $200 bucks a door within three years, why, for other new investors who are listening,

why would the property not cash flow $200 right away? What would you do to, would it decrease or would it, I'm assuming it's increasing, so what are you doing to increase? It's a couple things. The first thing is it would be more of a check on myself. We have this tendency

because now we have real estate calculators that we can do a real-time quantitative analysis of how well our property is doing. And you kind of become like Smeagel from Lord of the Rings where all you're doing is focusing on your pressure.

COC return, my cash on cash, my precious. And all you do is you focus on that all the time. But then what you're going to do to support that number is you're going to maybe dip into your maintenance reserve, dip into CAPEX, try to charge higher rents, which increases vacancies. And you're not focusing on the key things that adds value to your property. And what are those, by the way? For me, like, I always look at it as for me to add value the property is, first of all, I got to make sure that the property that I do buy looks attractive, which is completely subjective. But, you know, it's got to look like someone took care of this property, has, you know, fresh coat of paint, the shingles aren't all destroyed, the floors are in good conditions. I also put, you know, a washer and dryer combo in my units.

I just make it feel that there's value being added to where you're staying. Because I feel like a lot of people see duplex and they say, oh, the rinser's. low on this and I can just increase the rents. But by doing that, that sends a cascading effect where now your tenants feel like, well, you didn't really increase the value of the property. You're not giving me any other services. You're just squeezing more out of me. So I don't really feel like this is a good deal. And then going back to the three-year thing, I learned, and this is a new mistake, I didn't do the best of due diligence when I was checking the rent role because I inherited one tenant who just signed a new lease for three years, which locked his rent in. about $100 below the market rate. So in about three years, I'll get to where I should be. I mean, I'm still cash flowing fine. Right now, my cash flow on that duplex after all of my expenses, but this is not including depreciation.

Cash flows at about... But he's pulling out the calculator, by the way, folks. Yes, of course. About $350 a month. Cool. So once that lease expires, I might be able to increase the rent. But also for me, it's having tenants in there long term who are happy and pay run on time. And being that that tenant is consistent, I'll probably, I might just keep his rent the same way it is right now.

Hey, really quick. So right now you've got this one duplex, correct? Yeah. Okay. And both sides are rented. You're not living in half of this thing, obviously. Okay. That was my question.

Nice. I was wondering, originally you said having a property manager managed this for you, but that sounds like that's changed, correct? Now you're doing it, is that right? Yeah, it's changed. Okay, so tell me about that. I mean, like, why did that, why did you decide to manage yourself from, and that's a long distance? A lot of people are scared of that kind of thing. Yes, exactly. And this is kind of a side story, but my aunt was a property manager, my apartment complex I used to live at. And when she took over, she just increased the value the whole entire apartment complex by getting all the riffraff out of there and bringing families

there who were college educated and hardworking people. And it created so much value in the apartment complex that she never had to actually put out a rent sign. She already had referrals coming 24-7. Then she left and the landlord put in this guy who was a three-fingered man. He literally had three fingers. And he would close his property contracts at Home Depot's parking lot at night for some odd reason. And after time went by, I used to, you know, watch cops on TV, but every day at the apartment complex, all I had to do was just open my door and get some pizza and sit and relax and watch the fights break out and the cops come. I mean, the cops are coming like three or four times a week. So what I learned from my aunt was, you know, the value of good property management.

And if I'm going to contract out a property manager, if I don't really know how to be a community manager myself, then what can I do to be able to assess the needs of this? Yeah, no, that's awesome. Well, I agree with you completely. And I think, you know, it's all too easy to say, hey, let's, you know, let's just hire somebody who's a professional, which I, you know, you should be able to do and count on them. unfortunately, and this is just a point of fact, and some property managers aren't going to be happy about it, there's a lot of property managers who do an absolutely awful job. And I think it's so important for investors.

I'd say if we had an industry where 95% of property managers rocked it, then it'd be easier to say, you know what, you don't have to worry about it. Just go find a good property manager. and you're good to go. But I think that's just not the case, and that's unfortunate. So ultimately, you kind of have to learn the business if you're going to go and hire somebody because you've got to know what they need to be doing. I really truly believe this. I mean, again, if the industry had a better quality property management, I don't know, program, training, national something certification, I don't know what it is, but

perhaps we'd be talking about something else here. I think the problem is that most property management companies are run by, you know, people. And there's no training other than, I mean, there's no training, right? Like, so just like if you go to McDonald's, you might have some really good employees, but you might have some really terrible ones because there's not a whole lot of training that goes into a minimum wage worker. This, you know, it's that's the problem with it. It's not like, I mean, even real estate agents have. There is McDonald's University, Brandon.

Okay. Excuse me. There is not property management you. Yeah, exactly. Have you tried making a double double. It's pretty tough. That would be in and out, my friend. Oh, excuse me.

See, I don't go to be talent anymore. Yeah, yeah, yeah, yeah. I want to ask you, from your perspective now, having done this, you bought the duplex and your cash phone really well. I mean, you're really like off to a really good start. Actually, I guess I have two questions. I want to hit both of those. One of them is, do you have any advice for newbies that are,

your shoes a year ago or two years ago, who want to get started, who live in an expensive area like you live in. Do you have any advice for them? And then my second question is, what do you plan on doing next? You said one duplex a year, but what's your long-term goal? Okay, gotcha. Yeah. My advice is, you know, before you initially think, okay, I need to go out of state, try actually just looking at some properties in your area or the surrounding areas. Yeah, it might take you an hour and a half or two hours of drive there. But in the process, you're going to learn a little about the business so that if you do decide to go out of estate, at least you know some of the lingo and you can at least keep the property manager accountable to what's going

on. I just like having the ability of being able to drive my property and check on it whenever I have to. And you can listen to the podcast in the car. Look at that. Exactly. And then before you pull the trigger, I always suggest look as many houses as possible. Don't fall in love with the first one because it's so easy because you think like, oh, this is the best deal of all time. But odds are, if there's so many deals out there, then there's no real deals. That's a tweetable topic right there. A little bit of wisdom from Jordan over here. I'm just curious, you know, it sounds like that realtor thing was kind of a mistake.

Were there any kind of key mistakes that you made that you might want to share where other investors could kind of take a lesson and learn from where you messed up? Yeah, it's better to set up your contractor's network before you need it. I got referred in from a family friend who's a home builder. That friend referred me to a handyman and he was able to take care of law work for me. But then as it came about emergency repairs, I did not have a system set up for a handyman to take care of that work. So one time on Friday at like 1130 at night, I got a call that a sink fell and I needed to get a fixed. So I contacted one of my handymen to go fix it. But I realized that I did not have a system set up for that. So if I would have set my system beforehand, I wouldn't have to take that call at Friday night at 1130. Well, and if you live in like Podunk Montessano, Washington, even if you do have that set up, you know, Brandon has things fall apart on the weekends and still has to take care of it, even though he has a network because they don't work on the weekends, apparently, where he lives.

So, I mean, and I'm, and I'm poking fun. but at the same time, it's legit. I mean, this is something that you kind of have to think about. You know, if you're buying properties in areas like that, you know, you really do have to think about the repercussions of, you know, hey, how do I get maintenance handled at any time, any day? That's true. Yeah.

Do you have any, like, resources that you've used that have helped you in your real estate investing? Oh, yeah. The best one for scouting would have to be nextdoor.com. It's a social network for people living, in certain zip codes. So what you have to do is have a zip code and address and you enter it, and then this allows you to gain access to the social network for that area.

And you don't even have to live there to gain access to it. So I joined my social network for my duplex up in Sacramento, and what's best about this is this is an unfiltered view what's going on in your neighborhood. Because if you go in Zillow, if you go Trulia, you talk to some of your realtors, they might try to put lipstick on a pig

and what's going on. This will show you any gritty of issues that are happening in the community, or if this community is on the up and up and they have strong neighborhood watch. So it's a way for you to keep tabs on your community without you being physically present. So let me ask about that, because I use next door from my home area, and it's great our local police department posts all sorts of alerts and the neighbors will warn each other of things, do yard sales, you know, help each other with referrals, things like that. But it typically is a closed network. So, you know, if you do not live in the area, you have to verify your address in order to do it. So are you just giving the address of the property that you own?

Or are you using it prior to even getting in? So there's two ways of doing it. I use one for my neighborhood. I live in Willough Glen. And then for the property you own, what you do is you contact customer support and you tell them you own a residence in this area. And they'll just say, okay, register with a different email, and we'll give you access to that area. Nice. That's a really, really good advice. Yeah. That's awesome. Yeah. And then the other one is Asana. It's project management software. And I taught my contractor how to use it. What I do is I tell him, okay, part of our system is anything under $300.

What you need to do is go into Asana, take a picture of what you're going to repair, take a before and after shot, write down what you did, and then attach an invoice to the Assangellas. Sona task and then assign it to me. Interesting. And so what's great about this is you can create multiple file folders for each property. So if I'm going to do due diligence and I'm going to try to sell my property, I always believe the best sellers are the ones who are transparent. So hopefully if someone wants to come by my duplex, I'm going to share with them Asana and show them all the work that's transpired on this property.

So there's a record. So it's pretty nice. That's a really good idea. And that website is Asana-A-S-A-N-A-com. It's a pretty good project management platform. Definitely recommended checking that out as well. Cool. All right, Jordan.

Where do you see yourself, man? You're kind of inching up with property a year. Do you see some cap? I mean, you started with this plan of what was it like 10K? I feel like a month. Right. Right. That's what I was thinking about.

Are you still looking at that long term or is that kind of, you know, Haired down a little bit. You know, right now, I'm still going to go for that one duplex a year. The 10K goal is appealing, but I have to figure out how I'm going to get there first. I start with duplexes because I look at it as before you go into apartment complexes or anything else, you should at least know how to manage small two-person dwellings and then from there sort of level up to the commercial and go for apartment complexes. Fair enough.

Well, listen, there's no wrong way to do this except to do the three. going to do illegal stuff and bad things. Exactly. You know, I mean, so everybody's got their own path. Yeah. And we, you know, definitely appreciate you sharing yours with us. And hopefully at some point in the future, we'll have you back and we'll get to do, you know, a bigger and better show. Before we run out of here, let's do this.

Famous for. First question of the famous for. What is your favorite real estate book? Buy and Hold by this gentleman who I can't remember right now. This is horrible. All right. Let's call buy and hold. We'll come back to it.

He's Googling it, folks. He's Googling it. All right. What about business book? What's your favorite business book? Hold by randomness. Okay. I've never heard of that.

What is that? This economist, or this day trader basically looks at stock traders and businessmen and says, you know, it's maybe 30% skill and then maybe 60 to 70% luck. And some of us, what we like to do is create a narrative of why things transpired in our past, but actually some things are unexplained.

Interesting. Cool. Cool, man. What about hobbies besides cracking jokes? I really like him. Big into meditation. I also enjoy barbecuing and hiking and all other typical San Francisco hippie stuff. Nice. Nice. Nice. That's awesome. All right, my final question.

What do you believe in your experience sets apart successful real estate investors from those who never get off the couch and do anything? People who are aware of their own emotional climate, understanding their highs and their lows, understanding when they don't have a full picture of what's going on, the people who are self-aware are probably the ones who are going to do the best in real estate. That's insightful, my friend. Deep.

That's awesome. That's awesome. Well, Jordan, listen. We definitely appreciate having you on board. Thank you. Thank you so much. We appreciate having you as a member and all the support that you give to Bigger Pockets. And we wish the best of luck to you going for it. Thank you.

And thank you guys for everything you're doing. Your website's amazing. Thank you. All right. So where can people find out more about you? You can find me on BiggerPockets.com, Jordan, Tibido. And that's where I usually lurk around. So go ahead and reach out to me.

Cool. All right, Jordan. Take it easy, man. we'll see you around. All right. All right. Take care. I'll see you.

All right, everybody. That was our interview with Jordan Tibodeau. Of course, we encourage you guys to come and say hi to Jordan on the show notes at BiggerPockets.com slash show 74 and ask him any questions you may have or just congratulate him on getting that first deal handled. And of course, if you want to ask him your favorite Google questions, I know he'll be happy that I'm putting this in here and he'll be glad to answer them. But we've got a lot of ground to cover today. So why don't we move on to the next interview with Jacob Allen. Brandon, maybe you want to

take this one? Sure. All right. So Jacob is a brand new investor from North Carolina who just flipped his very first house and he's got a ton of good lessons to share with us. Jacob actually reached out to me a long time ago and we kind of connected through his flip and now I'm really excited to bring you the interview. Because, you know, honestly, a lot of flippers end up losing money on their first house, but not so with Jacob. So we'll talk all about that. Awesome.

Cool. Well, with that, let's bring him in. Jacob, welcome to the show. Thank you guys. I appreciate it. Good to be here. Awesome, awesome. Well, Jacob, you and I got connected a long time ago and you were talking about getting

into real estate and talking about kind of a lot of different options you had. And then you reached out to me, you know, kind of throughout the process a little bit. We stayed connected. and now you've actually done your first deal. So that's what we want to talk about today. That's a really sweet story, by the way. I know it is, isn't it? I love to see people like beginning to end.

I love it. It was kind of like a match.com kind of thing. Exactly, right? There you go. Awesome. All right. So, all right, so first of all, let's actually start way earlier than that. Why real estate investing?

Like, how did you get into that idea? A couple of reasons. I mean, I guess those TV shows are always kind of a good kicking point for people. Just sitting around Saturday morning watching those. But I mean, I'd save some money up for my job for the past, you know, five or six years starting just work. And I wanted an active way to invest in my future, I guess. I didn't want to just throw everything in a 401k and just sit there and let it, you know, just let the stock market be as volatile as it is and just up and down, up and down. And, you know,

I wanted to be active in my retirement. So, I mean, real estate always kind of interested me. My dad was a contractor growing up and I was always kind of hanging around his jobs. And it just, I mean, I guess the flipping show is coupled with that. It just interested me. And I thought that it just made sense. The numbers made sense. It just, it was just an easy concept. And you're a CPA, right? That is correct. Yes, sir. So the numbers are something that you obviously pay very close attention to. Yeah. And there's a distinction here. You say CPA and people automatically assume you're a tax guy. You know everything about tax. I want to make it clear here that I'm an auditor. I know nothing about tax. My tax advice is worthless. So auditors, I don't call it. bother me, right? Exactly. Exactly. There's several people on the forums that are more than qualified to give you tax advice anyways. But I just wanted to make that disclaimer. Nice. That's good. That's good. Cool. So you're doing the CPA thing. You're interested looking into real estate and, you know, after

weeks of holding Brandon's hand and going to campfires together. That's right. You decide that you're going to do some kind of investment and you find a deal. And why don't you tell us what that was? What was the first deal? It wasn't quite that easy. I mean, first of all, I mean, I did a lot of... No, come on, it was that easy. You paid me, you paid Brandon $997 and you had the answers, right?

You're right. I logged down to bigger pockets, upgraded to pro, and that was it. I mean, it just fell in my lap. But no, no, no. I mean, I had done some research and, I mean, I tried to, I guess the pressure these days is pull your team together and all that good stuff. And I got a real estate agent. And I guess we kind of went to work trying to find houses. And I probably, I mean, we probably looked at 20 houses before I found this one. But it worked out perfectly because my contractor

that I used on this first flip, his wife is my real estate agent. So they kind of worked together. And I could just give one of them a call and be like, hey, let's go check this house south. And they'd be like, yeah, sure. So it's kind of a team effort. We just went over there and we check houses out together. you know, that's kind of how we found the first one after, I guess it took 15, 20 houses to check out and, you know, the rest of history. So, so what was that first deal? It was a flip, right? It was a flip, yes, sir. Okay, so why did you decide flipping and not, you know, another avenue? That, that is a good question. Um, flipping, it just makes more sense to me. I just, I just can't wrap my head around buying holds. I just, I can't, I can't, I know both of you guys are multifamily guys. And I just, I cannot wrap my head around having a tenant and getting calls. from them and constantly having, constantly having the bothering me about stuff. I just, I cannot get my head wrapped around it. I just, I want to get in, fix it up, get out. I can't fall asleep at

night unless I have at least three phone calls about toilet. Hey, didn't you have a call this morning, Brandon, about something? What were you complaining to me about this morning? Oh, this morning. I got a tenant that, who's giving us some trouble. I'm going to have my second eviction coming up here, which I'm sure we'll be talking. Yeah, it's terrible. Anyway, so we officially filed, I think, no. But we found out today. We looked at her original application at work. she worked and we thought it was a nursery and we found out that it wasn't a nursery. It was a pot growing farm because that's legal now in Washington. Absolutely.

That explains everything why. So there's a tip for everyone listening is don't just call the place of employment and ask, you know, if they work there. Find out what kind of job that actually is. Can you discriminate against pot farmers? I don't know, but I think so. I'm pretty sure you can. I probably would have. Let the chess fall away.

But anyway, all right. So you got this, you decided flipping was the way that you wanted to do it. And you still had a full-time job. You still have a full-time job despite this, correct? I do. I have a job that I enjoy very, very much. One of my boss, or my boss, I guess, my direct boss, he's a really good friend of mine. I mean, we play golf on Fridays and all that good stuff.

And I mean, I just really enjoy working there. And, you know, he's very flexible with my time. So, I mean, as long as I'm getting my stuff done there, I'm, you know, flexible to take off Friday afternoon if I need to or something like that. that definitely helps out with the real estate side of things. I concur. I concur. And no, Brandon, does not get to go on Fridays? Sorry. Okay, well, how much did you pay for this thing?

We paid $51,500 for it. It was kind of a deal where it did come on and off the market, I guess, probably two or three times. And it just fell into my lap one day. It just happened to be perfect timing. And, you know, there was multiple offers, kind of a highest and best situation. And we ended up with it with the best offer. All right. So you got it for around 50.

You're in North Carolina, correct? Yep. That's correct. Okay, cool. And what kind of condition was this thing in? It was, I mean, it was a total piece of crap. I mean, this thing was. How do you really feel?

It was, it was a gut from head to toe. I mean, the good thing it had going for it was, I mean, it's your classic three-two brick ranch. I mean, this thing was, the outside was solid. There was no problems. I mean, it was solid. no cracks, no nothing. It was a sheer, just fully inside cosmetic rehab. It was just a complete gut job. There was, I mean, everything you can imagine wrong with the inside was wrong. All right. Do you know what year it was built? I'm just curious of what an age that was.

1972. Okay. All right. So you got this first deal. You got this big old piece of crap. And were you prepared for that or were you hoping you were going to get the carpet and paint flip here? I mean, we all hope for that, but that doesn't really exist, does it? I mean, I've not yet to find one. Yeah, likewise. But, yeah, I mean, it was, I had, my contractor played a huge role in this. He kind of held my hand through it, I guess is a good expression. But he really instilled confidence in me to go ahead and, you know,

we could do this for the number he was saying. And he even put a clause in our contract that we had that he would pay for any overages over the contract amount. He was that confident in his numbers. Wow, you know what? That is friggin' brilliant. Brilliant. That is... Isn't it? That I think everything I do going forward is going to have that closet there you go. I'm glad I, if I could provide one tip, that's one for you today. Well, that, I mean, seriously, I don't know, Brandon. Have you ever heard of a contractor doing

something like that? That's pretty confident right there. Yeah. Yeah. And that helps actually, a buddy of mine. I've been talking a lot about that lately. How if you are going to do a major remodel, it's actually a lot easier to estimate those numbers and be confident in your numbers because, like, you know that the sheetrock's getting remodeled or getting redone. You know that the, you know, flooring, every bit of it's getting redone. There's a lot fewer surprises when it's a gut job.

I mean, yeah, we saw every inch of this house when we got done with. I mean, the walls were completely open. You could see all the way through the house from one end to the other. I mean, yeah. So, we knew where we were getting into when we got into it. Nice. All right. So what did you guys end up putting into it? We put in right around 60 into it. I mean, that was, that included the roof too,

I guess. I didn't, I mentioned just interiors. but that included the roof, new windows, flooring, I mean, everything. New kitchen cabinets. We even put a deck on the back. Did some, you know, put a fence up. I mean, basically everything you could think of. And you had this one contractor. He did the whole thing that he, like, general contracting it?

He was a general contractor. He was, I mean, he had a bunch of subs that he hired out, obviously. But, I mean, I just solely dealt with him. He was kind of like my intermediary. He just, he, I solely dealt with him. It saved me a lot of time and a lot of headache of having to talk to a lot of contractors and go out there and find all these different guys. And presumably he did a good job, yeah?

He did a good job. He did a good job. Yeah, I was very happy with him. Did you mention how you found him? I, how did I find him? Well, if you would listen, you would have known. He didn't. I think I actually found him just online.

I was just like I think I Googled one day just like general contractor or flip or general contractor rehabbing or something like that. For somebody who had specific experience rehabbing a complete health. house before and I just kind of ran across him. And how did you vet him? How did you check him out? Yeah, I did references and all that good stuff. He gave me, he gave me three or four references and I called all those guys and he checked out. And I mean, I did a background check on him and all that stuff too. Really? Yeah. Really? Tell me about the background check. Well, I mean, it wasn't like an official background check, but I googled them and, you know, did everything you can do from your home computer

to check someone out and all that good stuff. Gotcha. I mean, so I bet you, I bet you 99. percent of people when they're hiring a contractor do not do anything. I mean, I don't. Yeah, when you're, I should, but I don't. When you're trusting someone with that much money and that responsibility, I think you owe it to yourself to, you know, do the minimum at least and get on there and take them on a group or something. Yeah, and like lawsuits are all public, you know, public records. So you can find out if anybody's ever sued your contractor. Yep. And that's really important thing. I don't know why it's never thought of that before. So, I don't know. Yeah, he actually, he actually gave me the number of another, he dealt with another real estate investor in the area who he

had flipped a house with the floor. So I actually got to talk to another investor and figure out how they worked together. So that was big. Nice. So how'd you finance this thing? Was it cash? Or how'd you at least finance the contracting side, the repairs? It was the whole thing I financed with a line of credit on my house. So I guess it was cash, a really low interest rate. So that, I mean, we can talk about how long I held it in a little bit. But that was big because I got a really, really super low interest rate on this line of credit for my house. So that played a keeping cost down. I really want to dig in that real quick because I know we don't have a lot of time, but I don't think we've had anybody else on the show that specifically has done that strategy of using a home equity line of credit.

And that's one of the things. Yeah, I'm a huge fan of that. I've done it, I think, once or twice. Let's talk about that. What does that even mean for those people who are brand new with that concept of a home equity line of credit? Basically, any equity that you have in your house, you can use this collateral to obtain a loan to finance anything pretty much. I think there are a few restrictions on what you can finance with it, but you basically take the amount of equity that you have in your house and they'll loan up to a certain percentage on that value. So if your house is worth $150,000 and you have it completely paid off, they'll loan you up to 70 or 80% of that value of that value.

So they'll loan you up to, I don't have a calculator in front of me, but they'll loan you $120,000 at a lot of banks you're doing at prime, which is 3.25% right now. A lot of banks do prime plus one. So you're getting a good chunk of money at 3-4% interest, which is really, really hard to beat. Yeah. Yeah, for sure. So you put in 60, you bought it for 50. What do you end up selling this thing for? We sold it for 154-9.

All right, so you made 44-9. Yeah. Plus or minus. That's what the flipping shows would have you believe, correct? Yeah. There's nothing else that goes in there. Yeah, nothing at all. No, I mean, there was a few other things.

I mean, we ended up having to put city water. We hooked up to city water that wasn't that I didn't include in that number. Because we actually had it under contract twice. The first time the guy wanted city water is part of the deal. So I agreed to do that. $7,000 later, he backs out or gets cold feet. So I'm stuck hooking up city water. So that ate up about $7,000 in my profit.

Gotcha. All right. So take away city water, your holding costs and everything else. What do we end up with on this puppy? We ended up netting. I mean, after closing costs and real estate commissions and all that good. stuff that I mentioned that we ended up adding about 11 grand, which I mean is, it's, I mean, it's not a whole run by any means, but I mean, for my first deal, I feel pretty good about it,

you know, and making any money on this size of a job, I feel pretty good about it. Yeah. And what would you, what would you have done differently, if anything? What, you know, was there anything that stands out or did it go pretty swimmingly? If I would have done, I mean, I think I probably wouldn't have been a little bit more tried at least to have been a little bit more active on the job and been around more. Just because I think we ran into some issues with inspectors towards the end about just kind of quality of work. So I wish I would have been around a little bit to, you know, maybe, you know, oversee some things and have some of the subcontractors redo a few things. But, I mean, overall, I think it went pretty smoothly.

Nice. Oh, that's great. That's great. Now, when did you wrap up on that? We closed. This is probably two, about two weeks ago. go. Okay. I don't know when you guys plan on air in this, but that was, I mean, I guess April 20th around there, somewhere around there. Gotcha. Gotcha. And do you have anything else in the

pipeline or what's working now? I'm actively, actively, actively looking. I desperately want to get into another one. Yeah. I mean, stuff, it just seems like stuff is flying off the shelves here right now. The market is super hot. And you're in Raleigh, right? That's correct. All right. So if there's any wholesalers in the Raleigh area that have a good deal that they want to send? Tech Jacob Allen. There you go. There you go. There you go. Nice. Well, what would you want to do another rehab? Well, presumably you don't want to obviously bind hold because you don't like that. Yeah, rehab and I definitely want to stick with rehab and well, I think I want to keep the scope of work down a little bit next time maybe. I mean, this was this was a really, really, really big job. And I'd like

to get the scope of work down if we can. But, you know. How long did it do? take? It took, the rehab itself took about, probably about three or four months, somewhere in there, but we had, you guys are going to like this, we had, we had some vandalism on the house. That set us back probably a good month, a month and a half. Wow, what, what happened? We were, I mean, we had drywall up, we were painted, we were, we were probably within a week of finishing. And someone, I guess, someone came in through, I don't know, I don't think the police ever determined where they came in, but they came in and they took a crowbar or something, some kind of blunt object, and they just knocked holes in the drywall throughout the house, like every three feet.

That was just homes everywhere. They put gang signs all over the walls. They busted up my kitchen cabinets. Wow. I think they took some copper from some kind of some piece of equipment from the AC unit. Who did you piss off? I don't know. The call that day that I got that morning was, that was like a punch to the gut for sure.

Oh, my God. Is there insurance that covers that at all? There is, yeah, absolutely. I had, I had, it's like vacant home. It's just like a builder's risk policy that you hear about on the forums and read about. But they covered pretty much everything. I think it was about $15,000 worth of damage. And they covered everything up to, I think I had to come out of pocket like $1,000.

So I came out all right. It just set us back about a month and a half because, I mean, all the subcontractors already out on other jobs and stuff at that point. So it's kind of hard to get people back in, you know, finish the stuff up. Is there anything? pretty sure the answer is no. Is there anything you could have done to have avoided that from happening? I mean, I don't really, I don't really see how. Prevented that from happening. If somebody wants to get into a house, they're going to get into a house. I mean, it's not really much you can do.

I mean, I could have had a flashing security light, I guess, in there or something like that that might have scared him off. But I don't know. I have thought about getting some of those security systems to put inside. Just like a motion detector, making noise. Pitbull. Hey, pit bull. Didn't we talk about that in one of the shows? We had Amanda Hahn on the show back on one of the early ones. You can write off the dog at the business expense. There you go.

She's your tax. She's your tax pro. There you go. She has my tax pro. So, yeah. Oh, that's great. I want to know, like, my last question, I guess, kind of of the set is mistakes.

Like, did you have anything that you, like, flat? I just say, we did this wrong. This was a mistake. Other than paying a little bit too much for the house, I mean, I don't really see too many glaring mistakes just because I wasn't that involved in the rehab. I mean, I had a GC doing everything for me. I know a lot of rehabers on the website, on bigger pockets and other places you'll see. They like to get in there and they hire all their GCs out.

They might even do someone to work themselves. But, I mean, I was so hands off on this. I just kind of showed up and approved the work and, you know, answered phone calls and chose paint colors and all that good stuff. That's the fun part of things, I think. I hate the dealing with the subs. I hate that part. I don't have a general contractor, but if I did. I mean, it costs me more money, but I think it was well worth it.

I want to be you, Jacob. Yeah? Yeah. That's my goal in life. the flip house is like you. You know, it's, it's not that glamorous. All right, I got, I got my last question. And then, then we're going to go to our, our famous, famous, uh, famous quatro here. All right. Yes. All right. So what, what advice would you have for other new investors who are about to do their first deal? You just experienced it. So what would

you tell somebody who says, hey, I want to, I want to get out there and do it? Um, first and most importantly, I think is probably just to have confidence in yourself. I mean, you're going to have a lot of people telling you this is a terrible, terrible, terrible idea. Don't do it. You're going to lose all your money. I mean, if you find something, you know the numbers work, you've done your research, just go for it. I mean, get in there and just get after it. Nice. Well, listen, man, so I know this is going to air probably after this happens, but rumor has that you are getting married this Friday.

That is correct. This Friday is a couple days from now. You know, I'm looking forward to it. It's been a long time coming. Well, congratulations to you and you're soon-to-be wife. And when this thing airs, hopefully your honeymoon is going well. I'm looking forward. That's what I'm looking forward to the most, going to spend a week in the Bahamas. Sounds good. Josh, I think we should crash his wedding.

Where is it going to be? You guys are more than welcome. You guys are more than welcome, too. That would be awesome. I want to be Owen Wilson. You can be a vet's Vaughn. We'll crash that. All right.

Final part of the show, which we want to ask you is the Famous for. These are the questions we ask everyone, and so we're going to fire them at you. What is your favorite real estate book? Oh, this question. Yeah, I'm not much of a reader. I have read Rich Dad, Poor Dad. I have read Richest Man in Babylon, so I guess, I have read four-hour work week.

I'm kind of like Brandon. I'm on like Page. That's Josh. That's on like Page 27. I've read that book like seven times. don't insult me. Oh, okay. Yeah, I think I'm only on page like,

I think I only made it to page like 40 or 50, so I'm doing better than jobs. Some of us have to work. Yeah, some of you have to be responsible. You can't just sit around leisurely reading all day. Yeah, I really enjoyed Rich Dad, Poor Dad. It's one of the few I've read. So if I had to choose one, yeah.

Right on. That'd have to be it. I'll get in line. All right. What about your favorite business book? Favorite business? I'm not even going to ask that. Eh, Buzz, next.

All right. What about your hobbies, man? Since we know you don't read, what do you do with your time? I'm a big sports guy. I like anything sports related. I like to get outside. I like golf. I'm a big baseball guy, football guy.

Who's your baseball team? I've grown up playing baseball my entire life and I don't have a baseball team. I don't know how that's possible. There's not really anybody in North Carolina or South Carolina. Oh, wow. Yeah, moving on. Okay. I love baseball.

Who's your team? Yeah, I'm not sure. Let me quiz you guys real quick. All right, let's hear it. Are you guys, I've always wondered if you guys are sports guys because you never really hear any of that talk. I mean, it's kind of all real estate related on here. I once scored a goal unit basket in a game in high school.

Gold unit basket. And he's 6 foot 12. 6 foot 12. That would be 7 foot. I'm 6'5 and I played basketball for like a week in middle school and, you know, it didn't work out for me. And the five footers were. picking on him the whole time.

There you go. I mean, you guys are, I mean, I'm a Mets fan, I'm a baseball guy. I'm a Knicks fan, sadly, you know. It's so sorry. It's pathetic, you know, maybe one day they'll turn it around. But, uh, I'm a Seahawks fan in Seattle. Yeah, I mean, Seahawks and Seahawks and Broncos are in the Super Bowl this year. Yeah, Josh, how'd that go?

Do you remember that, Josh? Who won that? Who won what? The Super Bowl? Anybody remember the score of that? I don't remember. That's what I thought. That's what I really don't remember.

but I, you know, whatever. Can we finish this up? You can't flip this interview on us. Brandon, what's the last question? Final question of the show, at least of this segment of the show, we're going to bring on, you know, more guests. But last section of this is going to be, what do you believe sets apart successful house flippers

from those who give up or those who fail or never get started? Well, from my expert opinion. Yes. From my numerous, numerous, numerous experience. I'd probably, I mean, like I said earlier, it's probably confidence in your, I mean, just confidence in your numbers, confidence in your research, just taking action and just doing it.

I think is, I mean, if you can get to the point where you can, where you can get out there and force yourself to do it, I mean, I think that that's the biggest step that you can take. So I think if you can do that, you'll be all right. Awesome. Jacob, where can people find out more about you? I'm on bigger pockets. I hang out on bigger pockets quite a bit.

I try to, you know, spend a couple weeks. Yeah, try to contribute as much as possible. And I mean, other than that, I mean, I don't have a, I'm not, I don't have a fancy website or anything like that. We'll link to your profile in the show notes. There you go. There you go. Awesome, man. Well, listen, thanks so much for being on.

We appreciate it. And if anyone needs to reach out to you, we'll point to the profile in the show notes. And thanks so much for being on the podcast. Sure. Thanks for having me, guys. I appreciate it. Awesome. Thank you.

Take care. See you later, guys. All righty, guys. That was our interview with Jacob Allen. if you've got any questions or comments or just want to leave him a virtual high-five. The show notes can be found at BiggerPockets.com slash show 74, and you can leave Jacob a quick note there. But why don't we get on to our final interview of the day with Jeremy Haman?

Brandon, once again, I will defer to you in the introduction of Mr. Jeremy. So why don't you take it? All right, glad to. Jeremy Haman is a real estate investor brand new from the Minneapolis area. And he became interested in real estate, actually, because he stumbled upon bigger pockets through my personal Facebook wall. That'll make a lot more sense in just a moment. Nice. Yeah, but a couple quick things about Jeremy that are cool. Number one, Jeremy is no kidding. He is a rocket scientist for a job. That is his job. He's a rocket scientist. And two, I've known

Jeremy longer than bigger pockets has been around. So you'll hear both these things a little bit more in the interview. So let's get to it. Yeah. And you'll get to learn some dirt on Brandon. So that's going to be the fun part. All right. Let's do this. Jeremy, welcome to the show. Good to have you here. Thank you.

Thanks for having me. Yeah, good to have you, man. Yeah, well, Jeremy and I actually know each other from high school. So this is really exciting for me because Jeremy is one of my good buddies. Oh, really? Jeremy. You know Brandon from high school, do you? Uh-oh.

I have to admit, yeah. You might have to share a story or two with us. There are no stories. Oh, there's stories. Money buy stories. And I'm paying. Me and Jeremy were in, what, math league together. Yeah.

We used to compete and do math tests every Saturday together. Not against each other, but. And donuts and pocket protectors. It was a great time. It was a great time. Hey, Jeremy, you got to dig up some pocket protector photos of Brandon from the back of the day. I'll see what I can find.

Please, please. No, seriously. I will do anything. I will do anything. Anyway, all right. Well, listen, man, it's good to have you. Glad, glad you joined us. So you were a newbie real estate investor, huh? I am, yeah. And what exactly inspired you to get into the game? You know, it's kind of funny. We already mentioned

that I knew Brandon beforehand. And I was actually following some of the things that he was doing as far as blogging and writing online. And so kind of followed him to BP, reading what he was writing and more for the quality of the writing. But as I read, just got drawn more and more into real estate by some of the things, the ultimate guide to tenant screening and stuff like that. And my wife and I had been talking about getting a house at some point in the future. And the more I read and the more I got involved at BP, the more it seemed like investing was a good way to go and really would set up a lot of options for us in the future. Nice, nice.

Well, that's cool. I'm glad you followed me over from probably Facebook. I think we've been Facebook buddies forever. And yeah, got you into BP. So we sucked you in. It's a dangerous thing. I actually find that quite often. And not just like people I know in high school, but just in general, people tend to get like sucked into real estate because it's so like, I don't know if it's just appealing or what, but there's just something that resonates with people when you talk about real estate investing. So it's nice to see that it worked for you.

All right. Well, why don't we just start at the very beginning? You said you wanted a house. So what did you end up, what did you end up looking for and how long did that kind of take to find? Sure. So we were trying to balance wanting a place to live as well as having an investment property. So it seemed like to us, a multifamily property made a lot of sense. So we kind of started our search for a duplex. Two units kind of seemed more manageable for our first time into real estate. And so we found some, an agent was recommended by a coworker and started working with him to search for properties. And now you're in the Minneapolis area, correct? Correct. Okay. Okay, cool. So what was the market? like when you started searching? So this was about a year ago, a little over a year ago, and the market was pretty hot then, especially for what we were looking for. It was really hard to find anything that was on the market for more than 24 hours. Some of the houses that we looked at looked like they were straight out of a horror film, basically.

Nice, nice. That is a problem with a lot of multifamily properties. I don't know why that is, but I noticed that a lot of the larger multifamilies. I mean, like smaller multifamilies, but, you know, a lot of times larger houses. They tend to just look like they came from the Adams family or something. Like my ugly purple triplex, same way. All right. Yeah.

Yeah. Okay, so the market was super hot. And I remember you calling me or maybe we Facebooked and you just said like every time you looked at something, it was gone immediately. For those people that are listening that might have the same problem because this is, I mean, across the whole U.S., people are seeing this in their areas. I mean, what do you recommend for kind of getting over that? Yeah, so we tried to be really responsive.

Anytime we saw something come up, we'd contact our agent right away, try to get a booking in within 24 hours, if at all possible. And as we went that route for a while, we ended up putting in an offer on a house. It was one of multiple offers, and the house ended up going over asking price, all cash. And so we kind of realized at that point we just couldn't really compete for what we were looking for and where we were looking for it. So we decided to make a few changes. We stepped back a little bit and expanded our search area and applied for some cooler markets, able to look at a few more houses. So what was your original range and then what did you actually expand to? Because I think a lot of people find themselves in the same situation. And it's always nice to hear what other people are doing. So what did you do? Sure. Yeah. So our original range was kind of 150 to 175 and we limited to our favorite kind of neighborhoods in Minneapolis.

And as we just started looking more and more at these houses, we realized what we wanted in those areas was out of our price range. So we increased our range as much as we could. We went up to 200K and then we broadened our search to include St. Paul, the neighboring city, as well as a few suburbs. Okay, so you went from, you know, a few proximate neighborhoods to say maybe what, a half hour hour away? Is that about a fair assessment? Yeah, about a half hour. Okay, okay, right on. And ultimately, I'm guessing that helped. That helped a lot, yeah. Okay, so tell us what you found and how it all went down. So by this point, it was a little later in the year. We're looking at Thanksgiving and Christmas.

And as we're looking at these houses, we're just noticing a lot less competition. Things are staying on the market a little longer. We're also viewing houses. in below zero weather. They probably had something to do with it. But we ended up finding a few that we really liked and decided to put in an offer on one in particular. And it went through right away. We were able to close on the first offer

that we put in at this point. Nice, nice. And on the cold weather, isn't that kind of the norm up there? Maybe like nine months out of the year. Okay. Okay, just checking. All right, so you guys closed on the deal. What were the numbers?

Do you mind sharing that? Sure. Yeah, so asking price was $195. and we offered $190 as well as seller paying some of the closing costs. Okay. And this was a duplex, right? Correct. Were they both rented when you purchased it?

And did you have to kick somebody out or what was going on there? Yeah, so the upstairs was rented. The second unit was rented. The seller had kind of made a deal with the tenant. He was trying to have access to the property so we could fix up a lot of the stuff. And so he had given her half off rent in order for her to stay. Before that, she had been planning on moving out. And so when we took over, we offered for her to stay in the property but had to bump rent back to market value.

And so she stayed for 30 days and then decided to move out at that point. When she left, what were you asking for rent for that unit? For that unit, we were initially looking at $900 a month. And we ended up actually were just over $1,000 for that unit. We were pretty conservative when we were first looking at the properties. Okay. So you're getting $1,000. That's today, right?

you're now getting $1,000? Yes. Okay, cool. So how long, when she left, how long was it vacant for? Two weeks. Oh, that's not bad at all. So any tips for finding that first tenant? Yeah, we referred to your ultimate guide to screening tenants.

We used that a lot. Yes, nice. Yeah, and we used Craigslist for advertising. We also used Postlets. It's by Zillow. And that kind of blasted out to a lot of different sites, and both of those were helpful. We had a lot of leads come in from both. And the nice thing about that is both those are free.

Yeah. I think a lot of people think you still have to, like, put an ad in the newspaper and maybe some areas you do but i find in my area the newspaper is just dying very very quickly we went from seven days in newspaper down to three day a week newspaper and just because in in a year from now we won't even have a newspaper like that's how fast it's dying in my area so yeah Craig's list is where most of our leads come from and a few from zillow as well you know brandon old man johnson falling off his trailer isn't really news anymore yeah speaking of that actually i look back okay our local newspaper has this is a really random story but

like it. Anyway, our local newspaper does a section where it's like 100 years ago, what was the top headlines? And so it's kind of fun to read that like every week. I try to check that out. And a hundred years ago, I read this like a week ago. It said the top headline was a gang of hoodlums. I think it was hoodlums I used was making their way down by horse from Olympia down to my area. And I just thought that like that was the main headline was there was a gang of thugs. It was thugs and hoodlums or something like that. It was great. And unfortunately, by the time the people read, they would have already been there. They were all beaten up and robbed. So anyway, that was really random. But let's go back to, okay, so $1,000 a month that's where you're getting. What is your mortgage payment on that thing? So our mortgage comes to $1,2,000.

Okay. So that's including. Oh, go ahead, that's including. Taxes, insurance, principal interest. Okay, so you're roughly spending $280 plus the utilities and such for living there. Right. Cool.

And that's obviously a lot cheaper than if you were to go and buy a house or whatever. Right. Our rent before this was almost as much as the entire mortgage. Wow. Wow. So that's my favorite. That's why I recommend.

And that's why I wanted to get you on the show because I love, love, love that strategy. I mean, I did it with my first rental property was a duplex. And I mean, my numbers were a lot smaller. I think my first one was $60,000 and rented for $500 a month. But still, like, I was able to live for, roughly free. I had to pay maybe a little bit in utilities. So definitely, definitely is a good way to go. Yeah. Yeah. Well, so tell us, what's it like, first of all, living in a property with a tenant. I think that's one of the things that a lot of people worry about. I personally know I wouldn't want to do that, but, you know, a lot of people don't care. And I still recommend it. I think it's a great option. But what's that like? That's because you're old, Josh.

Wow. You just insulted, like, you know, more than 50% of countries, so whatever. No, only you're old. Everyone else is still young. Okay. I got you. I got you. Yeah, so tell us about it.

Yeah, so it was a little bit of a concern, but, you know, the places we'd been renting, we had, you know, either neighbors upstairs or next door anyway. So it wasn't a huge shift for us. And I think what really made the difference was screening the tenants well. we got kind of lucky but we ended up with tenants that would probably fit in well with our friend group as well as being our tenants and so it helps a lot just knowing that we can trust them and they're happy to be there too. Gotcha.

And have there been any issues that have come up at all and has there been any awkwardness at all or everything's been pretty good, pretty smooth? Actually, just recently, just this weekend, we had our first major issue. The toilet upstairs had a leak. The flange broke. and so we had water rotting away the floor. And so we're in the middle of doing basically a remodel, tearing out the floors, which means our upstairs tenants have no bathroom.

And so they're now using ours for the next few days. Oh, fun. That could be awkward. Yeah, that's weird. Would you say you are friends with these people now? I mean, like, do you guys associate together or hang out together? Do you try to keep it, like, separate? It is getting more and more combined.

They've only been in for about a month, maybe a month and a half. So, you know, we haven't had dinner together or anything like that. But we see each other and we stop and talk. And, you know, these last few days kind of sharing space a little more hasn't been as bad as I would have thought originally. So I guess the advice when picking a tenant who's going to live in a building that you're living in as a landlord and maybe a two, three or fourplex might be something like find somebody that not only is a good tenant, but find somebody who also you could potentially. That you want to live next door to it. Yeah, I think that's great advice. I mean, obviously, there's fair housing laws. You know, you don't want to be discriminating. Of course.

I was not insinuating such things, but yeah. But yeah, I think that's a good idea. I mean, that's one time that you can actually choose your neighbors. There's a very few opportunities in life you have to choose your neighbors. But that definitely gives you the ability. So it's just another benefit of owning those small multifamily properties. Right. And I think another thing that helps a lot for us,

this is short term. Our goal is to save up, look for a single family home in the near future and then move out and rent out the second unit. So we figure anything for a few months or a year, we can handle that, no problem. Do you think you can get a thousand for your unit or more or less? What are your thoughts on rent on yours? Yes. Our original guesses were kind of 900 for upstairs and a thousand for ours. But now that we're in it, now that we've done a little marketing, we're obviously getting over a thousand upstairs and we're probably guessing like 1,200, 1250 for the unit we're currently in. So that'd be a pretty sweet deal then.

Yeah, it'd be fantastic. I move out and get some cash flow. Nice. So where are you headed? You know, you got the first property you're in there. What are the next steps? Are you planning on getting a home outside of this investment property? Or are you going to stay there and pick up the next one?

Our next home will be a single family home just for us to live in. And maybe, you know, further down the road, three or four will be investment properties. but our plan is to have a place for our family separate from the investment and go from there. Gotcha. Right on. Yeah, you know, I recommend the small multifamilies for people all the time is a good way to start, but I don't think it's a good way too. Like, and I wasn't totally kidding earlier, Josh, when I said you're old.

What I meant by that was like you're established, right? You have kids. Oh, yeah. I'm not going to live in a duplex. You're not going to go back to that. But people who are just starting out, like, I talk about in real estate a lot is the need for sacrifice. Like you have to sacrifice if you want to sacrifice if you want to. especially if you want to invest with creativity.

If you don't want to put a ton of money down, which I'm going to ask you about that in a minute, but if you don't want to put a ton of money down or you sometimes have to sacrifice a little, and that's a good way to do it is by living in a duplex maybe for a year. You can always move out, and a lot of people don't know this, but when you move out, you don't have to go get a new loan. I mean, that loan is your loan for 30 years

if you get a 30-year fixed mortgage. I mean, you could do that. Essentially, you could just move every year, pick up a new one. That's actually how I acquired my first four rental properties I have, I think. were all properties that I lived in, and every year I'd move to a new property and just keep that one as a rental. So definitely is a good strategy. But going back to the financing thing, how did you finance this property? Yeah, so we did a conventional mortgage. Five percent down was an option that we

had through the mortgage company we went with. Nice. And so that's what we did. And then we also had the opportunity to pay our mortgage insurance up front as a one-time fee. So it would have been roughly $120 a month had we not done that. And so upfront, it was, $1,800 and then it's just done. It's covered. Really? I never heard about PMI. Never heard of that before. And tell me about the 5% loan that you got. Was that like a FHA or something like that? Or was your bank just offering really good financing?

Yeah, it wasn't an FHA or anything like that. It was conventional. It was just a great deal through the mortgage company we went with. That's cool. It's nice to hear that those loans are coming back again. I mean, for a long time, they didn't have anything that was less than 20% down. But I am hearing that a friend of mine is looking for their own house right now as well. And he's telling me that they told him I think he needed, I think it was 10%. This mortgage company told them, but it might have been like eight. But yeah, and still conventional.

But I'd never heard of that pre-paying your PMI so you don't have to pay it monthly. That's fascinating. Yeah, I've heard that a couple times. Very interesting. Well, that's what happens when you've been around. Yeah, that's what happens when you're old. No, that's cool. Well, the importance of that, of course, is like you found a lender that would do that for 5%

5% down, a lot of people go to one bank and they go and ask, you know, what can you do for me? And they say, well, we got this loan product here, 25% down, you can have a house. And they're like, oh, I can't afford that. And they leave. They just don't even consider going to multiple places and asking. And I mean, this is proof that if you shop around a little bit, you can find a great mortgage. How did you find your mortgage company? Well, I was going to ask, you know, yeah, how much shopping did you actually end up doing

on this thing? Did you just get lucky? We had a fantastic agent. He really did all of our recommendations. So he recommended three different companies. We went with all of them just to get quotes, and this one came back as the best. Okay. And that's also a really good tip right there is to get multiple quotes.

I'm actually doing that right now. I have three of them on an investment property. And that way you can kind of shop around. You can kind of turn it around. This is something Jimmy Moncrief talked about on the podcast we had with him a while ago is turning around the idea of, hey, I really need a loan to offering banks. Hey, I've got, I'm a good borrower who wants my business. It's just the mindset kind of twist that you can do.

you can sometimes get better terms, better rates than 5% down apparently. So very cool, very cool. Well, I guess it's probably, I mean, kind of covers the topic. Anything else you want to add in there, Josh? You know, I mean, ultimately you're new at this as the first deal. Is there anything that you would share for other new investors, anything that you might have wanted to know that you didn't learn from bigger pockets or anywhere else that you've kind of gained through your own experiences that you share with folks?

Yeah, I think probably the biggest lesson I learned was just that sometimes you have to move forward, even if you're kind of afraid or unsure. You know, going into it, a big fear of mine was that we'd get this house and I would have missed something or made a mistake and, you know, everything would be downhill from there. And there were a few things that went wrong. I mentioned, you know, the bathroom rehab we're doing right now. Another one, we bought the property. We had an insurance policy in place. But when they sent out an inspector, they noticed we had asbestos siding. and they decided that they could no longer insure our property.

And so that was kind of a hassle. It took us about a month to sort through that and get a different company that could insure us. And things like that, I mean, they're just going to come up. So you have to be prepared and be prepared to act in spite of those fears. Yeah, that's good advice. I've had that exact same problem with, I have asbestos siding on a couple properties.

And the siding, there's nothing wrong with it, but some insurance companies, you know, they don't want it because if a little kid goes and takes a sandblaster to it and then it hails the fumes, you know. They don't want to be reliable. But there are companies that do insure it, and they're not that like any more expensive, at least in my case they haven't been any more expensive,

just you've got to find the right ones. Yeah, with that, why don't we touch on the famous four? I mean, I think we're going to ask all of these, the famous four, so why don't we do that real quick? Famous for. The first question we want to ask is, what is your favorite real estate book? I'm going to go with the crowd here and say rich dad, poor dad.

I just really like the whole mindset of being, you know, financially intelligent, I think it's brilliant. Nice. What about business? Brandon tells me you're a bit of a genius, so I'm curious what your business book would be. I think this one's a little bit different.

I'd actually say drive. It's about what motivates people. A lot to do with people and leadership. I had somebody else recommend that book for me like this last week. Yeah, I feel like that's come up before. Maybe. Yeah, someone told me about drive. Anyway, cool.

All right. What about hobbies? Are you, in fact, a genius? or you're a rocket scientist or something? I am a rocket scientist. Oh, shut up. Are you serious? I am.

I wouldn't classify it a hobby. It's more of a job. Nice. That's awesome. Okay, so you're a rocket scientist by trade. What do you do for fun? For fun. Travel for free.

I spend time with your family. And yeah, my latest hobby is travel hacking. Nice. I'm using frequent flower amounts to travel the world for free. Sweet. Jeremy is like, Jeremy is like super good at like he's always like sending me emails like do check out this offer right here you can get this you know 60,000 points on this card I'm like so like I've accumulated

like 120,000 points in the last six months just from his recommendations. Jeremy we're going to talk to. Yeah he's the guy I told you you need to talk to. Oh, well it's perfect. Yeah. Now you know each other. I'm struggling with this. So I'm all desperate to start travel hacking and I don't have the time to sort it out. So I'm going to pick your brain. Awesome. I'd love to help. Cool. Cool. All right. Well, my final question is in your experience, I mean, obviously you're new at this, but from what you've seen, what do you believe sets apart successful real estate investors from those who maybe never get started, never get their first deal? And what do you think it is that made you successful in getting your first?

I touched on this a little bit already, but I think just being willing to act, you're not going to know everything. You're never going to be fully prepared. So if you're conservative and just learn quickly, move quickly, be willing to take action. I think that's going to make all the difference. The first one's the hardest. Just learn from there. Nice. Great advice. Cool. Awesome. All right.

So where can people find more information about you? Probably easiest placed on the forums, bigger pockets, forums. Perfect. Cool. We'll point to your profile, of course, in the show notes. Fabulous. Hey, man, thanks so much for being on the show. We appreciate it.

And I will look forward to getting some of those blackmail pictures of Brandon from one of who is 15. Although, I've got one already. I've got a picture of him in a Mohawk. So, you know, I'm just holding that one. Yeah. You hold on to that. election. All right. Jeremy, nice talking to you, as always. We'll talk to you soon. Thanks,

Brandon. Thanks, Josh. See you, man. Thank you. Bye. All right, everybody. That was our interview with Jeremy Haman, the rocket scientist turned real estate investor. Not quite sure why, but that's all good. No, I get it. I totally get it. Even rockets. So that should be like the new slogan, even rocket scientists. Invest in real estate. Invest in real estate. There you go. That'll be our t-shirt. Yeah. All right. So just to make this point one more time though if you've got questions or comments for jeremy or for any of these other guys do jump on the show notes at biggerpockets.com slash show 74 and be sure to leave a comment there yeah also if you guys are interested in learning more about that strategy that jeremy used to get started i wrote

and i'll link to it in the show notes an article it's super in depth called how to hack your housing and get paid to live for free and it kind of outlines that whole basic strategy so i will link to that in the show notes. And also, I included an entire chapter on that in the upcoming Bigger Pockets book on Creative Real Estate Investing, which we talked about a few weeks back. And that is coming out soon. So keep an eye out for it. Yeah. If only I could get past page 27. Yeah, you read that and then it's coming out. Yep, yep. No, we're definitely excited for that to come out soon. I know it's taken a little while to get this release since we announced it, but it's going to be worth it, just like everything else that we tend to put out. But with that, why don't

we wrap this up? As always, we want to invite you guys to come and join the Bigger Pockets forums, jump in, start engaging, build your network, check out your post score, you know, and on the new Bigger Pockets site. And, you know, start making things happen, doing deals, finding partners, financing people. You know, Bigger Pockets is not just about the education. is a whole heck of a lot more happening. And it typically happens for those people who are active and who engage. If you think creating a profile is going to do anything for you, you are deeply, deeply misguided. So you have to have to have to actually participate in the quote, social of the social network that is bigger pockets for great things to happen. And we encourage

you all to do that because we've got just more success stories. And we've got just more success stories. we can talk about as a result of people doing that. Finally, jump on Facebook, Twitter, and Gplus. And last but not least, if you have not yet left us a review and rating on iTunes, we absolutely would appreciate it. So until next week, get out there, make moves, crush it, and we'll see you next time. I'm Josh Dorkin. Signing off.

That's not fair, dude. You can't do that. Too late. It's mine. Don't do it. 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.

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