BiggerPockets Real Estate Podcast - Building a Rental Portfolio WHILE Working W2s by “Recycling" Their Money

Starting point is 00:00:00 Usually for these Monday investor stories that we do each week on the Bigger Pockets podcast, I interview just a single investor. But today I'm actually bringing on two. Their names are Sam Farman and Joe Escamilla. They were college soccer teammates who just found that they fit together really well as real estate partners and have been able to use that strong foundation as friends and as business partners to build a really exciting portfolio in Scranton, Pennsylvania in just the last three years. Hey, everyone, it's Dave.

Starting point is 00:00:41 And today we're going to talk to these two investors about how they figured out the sort of yin and yang balance that you need in a real estate partnership and how it's created this really positive working relationship that's helped them move from a single duplex to a six unit syndication and have even come up with their own version of the Burr strategy. that makes deals pencil even in today's environment. So let's bring on Joe and Sam. Sam and Joe, welcome to the Bigger Pockets podcast. Thanks for joining us today.

Starting point is 00:01:12 Thank you so much for having us. It's an honor. We're both longtime listeners, and we're so excited to chat with you today. Thank you, Dave. Well, great. I'm eager to hear your story and hopefully how Bigger Pockets has helped that if you've been a long time listener. So Sam, maybe you could just give us a little background.

Starting point is 00:01:28 You and Joe are both joining us today. How did you guys first meet and get into real estate? Joe and I met in college playing college soccer together. And, you know, we've been friends for a very long time, even long before we were business partners. And we actually interned together at the mortgage company that Joe still currently works at today. And upon graduating college, Joe's one year older than I am. We were both looking into ways to generate passive income. And Joe working for the mortgage company did have his job.

Starting point is 00:02:01 his hand in real estate. And I was working for a property management company at the time. So I had my hand in real estate as well. And we actually stumbled on bigger pockets and started listening to every podcast you guys put out, reading every book. I mean, I'm looking at my bookshelf above my head with all your guys' books from A to Z. So you guys go to Hobart and William Smith. You're playing soccer together and then Joe, it sounds like you graduated a year earlier. It sounds like you moved home to Long Island. Is that right? I moved back home. I immediately became licensed as a loan officer and was doing that and still doing that to this day. And Sam, obviously, I stayed in contact with him because he was in his senior year. And we just kept bouncing ideas off each other like this real estate thing.

Starting point is 00:02:48 We keep hearing about it. We know that it's possible for us to become financially free. How do we get into it. How do we partner up together? And we're kind of just trying to figure out how we can get our foot in the door and how we could do it together. Why did you become a loan officer? I kind of fell into it where I met an alumni from my school, which, you know, highly recommend trying to get a mentor and somebody that can teach you the ways of real estate and kind of teach you the ways of whatever industry you want to get into. I interned with them for a couple of years. I realized that it was something that I like doing. I like speaking to people. I liked helping people along the home purchasing process and refinancing and things like that.

Starting point is 00:03:29 So I actually got licensed before I went back for my senior year because I knew that's what I wanted to do. And I knew that once I graduated from school, I didn't want to study for anything ever again. So I was like, let me study for this. Let me pass it. And then before I go back for my senior year, then, you know, I'll be ready to go. Man, you are way, you were way more responsible before your senior year of college than I was. This is not what I was thinking about. Okay.

Starting point is 00:03:52 And Joe, what year was this? This was 2017 when I originally got licensed. Then I graduated 2018. Let's talk about deals. When you guys partnered up, form this partnership, like what was the goal you were trying to achieve? What kind of portfolio were you envisioning? So we kind of set our sights on.

Starting point is 00:04:11 Let's do a long-term rental. Let's buy a property, fix it up, get some tenants in there. Before we actually did our first deal together, I did a prime. primary residents live and flip, and Sam did his own rental property, single family investment before we did our first deal together, which was a duplex. Oh, cool. And so this, just so I have the timeline straight, we both do sort of a residential move. And then what was the first deal you did together as partners? So the first deal we did was a purchase in Scranton, Pennsylvania, where we still invest today. We did a duplex

Starting point is 00:04:46 Burr, where Joe, myself, and Joe's fiance actually drove down and did some of the work ourselves, partially to save costs, of course, and partially for fun. And we renovated the kitchens on both sides of the duplex, had a contractor redo flooring, did some really nice epoxy countertops that we found like a DIY kit to do. And we actually did a really nice job. There's some great before and after photos that we have of that duplex that we renovated. And that we were able to able to actually rent it out for, at the time, top rent for a three-bed, one bath on each side and start generating some decent cash flow. And of course, that was in April of 2021. We were working with a pretty solid interest rate at the time. And that's when, of course, you know,

Starting point is 00:05:33 the real estate market was really heating up. Well, first of all, why Scranton? Because neither of you live there. You didn't go to school there. What attracted you to the area? Yeah, so I think Sam was the one that originally found the Scrant area. And kind of the reason we landed there was because we both lived in very expensive areas. The whole New York, tri-state area, even Connecticut and New Jersey is just so expensive. And the taxes are very high. Not to say that you can't make money in that market, but it might be a little bit tougher or you might need more capital to put a 20% down or a 25% down payment if you can't go a low down. down payment option. So we thought to ourselves, if we can go into a market that is not too far from us where if there's an emergency, we can drive out there and be there in three hours and also saving up that 20, 25 percent down payment that a lot of investor loans require, then we could do more deals at a faster rate. Whereas in New York, if we wanted to save up 25 percent of a six, seven, eight hundred thousand house, it's going to take much longer, obviously, than this duplex that we bought at, I think it was

Starting point is 00:06:41 like 120 or 140 range. So that was the first part of looking for just a new market that we can make our money go faster, the velocity of our money turn it over quicker. And then from there, as we found that area, we realized that it had a strong price-to-rent ratio, where the ratio of the rents that you can get in a property is relatively high compared to the actual price of the property. So that ended up allowing us to find more properties that cash flowed. Right.

Starting point is 00:07:10 And I mean, that all makes a lot of sense. I think finding markets that just work for your lifestyle is the number one thing. You know, most people don't just like look at the entire United States and say like, I'm just going to throw a dart or, you know, just pick the most optimized place. But you had clear criteria about what supported your lifestyle, what supported your strategy, and went out and found it. All right. It's time for a break.

Starting point is 00:07:35 We'll be back with more of this week's investor story in a few moments. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10.

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Starting point is 00:11:08 This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. Welcome back to the Bigger Pockets Real Estate podcast. You know, during this time, Joe, 2021, obviously the market was heating up, but it was also super competitive. So was it hard to find deals? Because at least in a lot of the markets I operate in or that I was studying,

Starting point is 00:11:34 it was, you know, you were making these offers sight unseen, you were waiving contingencies with that, is that what it was like in Scranton? Yeah, we really had to kind of be patient because it was so competitive. I think we made offers on five or six properties before we closed on our first one. And we were getting into bidding wars with other investors, other buyers that were looking at the same properties we were. So we kind of had to be a little bit creative and, you know, we didn't waive inspections just because, again, we were newer investors and we knew that, you know what? we're not handy enough. We're not contractors. We're not going to completely waive an inspection, but we'll do it for informational purposes only, for example. So let us get an inspection.

Starting point is 00:12:14 We will not nickel and dime you over every little thing, but we just want to make sure that what we're buying is not a lemon. It's not something that's going to crumble on us in the first couple of years. Yeah, that's a good tip. I've done that even still since the pandemic. If you want to be competitive in an offer doing a, I call it like a yes-no inspection where it's just like you get the option to bail out or you buy the property as is. And sellers usually typically really like that kind of thing and will allow you to stand out even if your price point is, you know, similar or even less than some of the other offers. So that's a great tip. So this deal, it sounds like it went really well. Can I just ask Sam, like what'd you buy it for and do you still

Starting point is 00:12:55 loan it or what's the deal with it right now? So if I remember correctly, we purchased it for 127,500. That's very specific. I think you remember. If I remember correctly, I need remembers. I can't remember if I, anyway. And from there, we put about 30K into it and we refinanced at 188, I think. From there, we held it for about two years.

Starting point is 00:13:24 It was cash flowing after that refinance. We did a very nice job on the renovation between the three of us going down there and then our contractor that we met through that deal. We then held it for two and a half years and then actually sold it at 250 and 1031 exchanged it into a four unit that we still have today. Oh, wow. That's awesome. So is that what you did right after?

Starting point is 00:13:47 You basically did a refi out and then used that to build the portfolio more? Exactly. So like any Bigger Pockets podcast listener, will be. became absolutely obsessed with the Burr method. The concept of recycling your money from one deal to the next really spoke to us. And we refinanced at 188,000 and then took our cash out and used it to buy a triplex in the same area, which we still own today. And we actually took a hard money loan out to do the rehab on that triplex, whereas in the first one, we financed it ourselves. Great. And Yeah, this was a great time to do the Burr method in 2021, made a lot of sense.

Starting point is 00:14:30 If you're not familiar, Burr stands for buy, rehab, rent, refinance, and repeat. And it's just a really great strategy if you want to do value-add investing where you buy something that's really not up to its highest and best use. It sounds like you guys bought a duplex. So it was in decent shape, but needed 30 grand of work. You put in the work, you increase the value of that property. And then you can refinance some of the equity, or hopefully in the best, all of that equity out of the deal.

Starting point is 00:14:57 You get to hold on to your property and you get to use that money elsewhere, which is exactly what Sam and Joe did. It worked really well in 2021. I think it still works well, but you might not be able to get 100% of your equity out like a lot of people want to. So you guys got started an interesting time because the market was still super hot in 2021, but a year later, things, you know, started to change gears pretty rapidly, started to see interest rates go up.

Starting point is 00:15:24 How did that affect you as new investors and how did you adjust to the new climate? We kind of just stayed conservative with our numbers. We told ourselves, interest rates are going up. Everyone's staying on the sidelines. Conversely to what you said earlier, Dave, there was so much competition in 2020, 2021. Now we kind of saw all this competition get sucked out where we were the only offer on a property. And that kind of gave us, we found more leverage with the sellers because we would make offers with escalation clauses where the seller has to prove that they have another offer higher than

Starting point is 00:15:59 hours, which will allow us to then come up to that price point. And we were realizing that these sellers didn't have any other offers. If we can still find properties that cash flow at high interest rates, when the rates come down, we can refinance and even have more cash flow on top of that. And me having a lending background that I'm able to run those numbers and see what it looks like at future rates to show, all right, it works now. It's going to work even better when we're able to refinance and cash out at a lower rate. Super, super good advice here. One, first and foremost, being conservative with your numbers makes sense all the time, but particularly in these types of high interest rate environment.

Starting point is 00:16:39 And the second thing I want everyone to think about is that there are pros and cons to every type of market. Back in 2010, everyone says, oh, it's so great, you know, everyone should have bought then. It was super hard to get a loan back then. You know, if you look at 2021, you say, oh, I should have bought them because appreciation was crazy. Well, it's super competitive. Now, interest rates are very high, but there's less competition, and you have more leverage in your negotiation. So you really just need to be thinking about the reality of what's happening on the ground and just adjusting your approach based on what's happening. So that's really great. I do want to ask, though, I would imagine as a new investor, this must have been pretty jarring,

Starting point is 00:17:18 because at least for me, the first 10, 12 years I was investing. I never saw a situation like this where the climate just changed so quickly and sort of like all the rules sort of got rewritten. Was it daunting or were you confident that you could keep going as an investor? It was definitely scary because I was dealing with it on both ends. I was dealing it with my day job. Rates are going up. So now our business is dropping that way.

Starting point is 00:17:42 That's true. And I'm also dealing with it as an investor where these margins are getting slimmer and slimmer. So it was definitely scary, but we realized that if the biggest investors are still buying today, they have to be finding a way to do it. The people that are sitting on the sidelines are usually the people that haven't done a deal yet or maybe have done so few deals that they're just scared to get in there. We're like, we're kind of just wanted to jump in and see what we can do. So it was definitely tough, but at the same time, at no point did we tell ourselves that we were going to quit. We knew that we were going to push forward no matter what. We had that mindset. We had that goal.

Starting point is 00:18:20 And we just kept our head down and kept going. Well, good for you. What, Sam, have you guys bought since rates went up? What kind of deals are you looking at now? So we still work in the small to medium-sized multifamily space. We did buy one short-term rental, which we bought and sold already. Oh, didn't go well. It's not that it went poorly. It was just didn't go great. And we decided to take our of money and reinvest into what we're really good at. And now we buy typically properties, the last three properties we bought were a four unit, a six unit, and a four unit. So that's the level we're hovering around now. And like Joe said, I mean, we just continue to use that conservative analysis approach. We know that if a deal works now, we'll be able to make it

Starting point is 00:19:05 work later. And the biggest, I guess, task has just been we analyze so many deals because at current rates, not many work. So it's almost the opposite of 2021 where you get so excited because you find one that works and you find another one that works a couple days later if you don't get it. Now it's the opposite where you find so many that don't work that when you find the one that does, you're absolutely thrilled. But that's the job, right? I feel like, you know, I think that is the job of being an investor, is being patient and being diligent and working on that every single day. because if it was just super easy to find deals all the time, everyone would be doing this and having the patience and discipline is what sets people apart for the people who actually go

Starting point is 00:19:53 and buy deals and scale a portfolio and those who aren't able to do that. I'm curious how you're financing these deals because are you guys both still working full-time? Yes, I am working full-time and Sam as well. Okay. And so how are you financing these deals, these multifamily deals through your W. or ordinary income? At first, we started with financing it through our savings and our W2 income. Again, going back to partnership, you can save up more when there's two people versus just doing it by yourself. And then as we started to run out of our own capital, because we're not money

Starting point is 00:20:29 trees as of yet, we started raising money from friends and family and did our first syndication where we bought that six unit that Sam mentioned. We just had so many people coming up to us and saying we love what you guys are doing. We want to get involved, but we just don't have the time to learn about it or we don't have the time to deal with it. So Sam and I came up with the idea of, all right, if people are coming to us anyways about how they can get into real estate, let's kind of do a little bit of a crowdfunding syndication where we pulled money together and we bought this property for our passive investors while we're managing it ourselves. Of course, we have a property management team that's the boots on the ground, but we're making all the day-to-day decisions

Starting point is 00:21:11 for that company. Before we get into the numbers, and I do want to ask you about the numbers, tell me about the decision to syndicate. Because everyone, it sounds so cool to raise money from outside people, but you guys had a cool thing going, right? Because you have this partnership. You've been working together. You've known each other for a long time. Were you concerned about bringing people in, Sam, like into this partnership that was working? I mean, it does complicate it, right? Of course. It definitely makes things difficult. And it definitely increases stress, I would say, right? Working with other people's money, not just your own. And you really want to do right by them. But I think we were really confident in our abilities and still are really

Starting point is 00:21:51 confident in our abilities and our understanding of the market that we invest in, that it felt like a no-brainer, almost. We wanted to set clear expectations with our investors saying, hey, here's what we're looking to invest in. Here's the return that we're expecting, but obviously not promising. Nothing's guaranteed in life except death and taxes. But at the same time, this is what we're looking to do. If you're out, that's fine. We'll come back to you in a year or two when, you know, when things are continuing to go well for us. But if you're in, this is what you should expect so that there's no surprises later on. There's no people complaining later on. Again, we might run into that, but we'll deal with it. And we know that we've protected ourselves enough that we've set those

Starting point is 00:22:35 expectations so they know what they're looking for here. It's a great approach. As someone who invests passively in syndications, I was actually talking about this and BPCon. I love when people are like, this might not go well. Because that's the only honest answer, right? That's the only honest approach to real estate. You can't tell people that this is going to be perfect and great.

Starting point is 00:22:57 And I would much rather work with people who are straight up about that and be like, listen, this is our plan. We have a good plan. We know what we're doing. But things can happen that are. outside of our control. And that sort of realism, I think, is really important because sometimes people approach me with deals and they're like, this can't go wrong. I was like, oh, it can go. It definitely can go wrong. Don't tell me that. So I definitely appreciate that approach. I think it's

Starting point is 00:23:21 hard for new people who are raising money to take that approach. But I think that the humility and the honesty is super important. It's time for one more break, but stick around to hear more from Joe Escamilla and Sam Farman. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Funrise flagship fund.

Starting point is 00:23:54 Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10. The portfolio features 4,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought-after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the

Starting point is 00:24:29 Fundrise Flagship Fund. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build. The property management and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been

Starting point is 00:25:11 trusted partners with BiggerPockets for over a decade, and if you want to learn more, visit BiggerPockets.com slash retirement. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy. all the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now, you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10.10. The portfolio features 4,700 single-family rental homes spread across the booming

Starting point is 00:25:48 sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team. of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. Tired of traditional

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Starting point is 00:27:41 So this is a five unit, you said, Sam? So it's actually a super interesting property. We purchased it as a five unit and rehabbed it into a six unit. Oh, cool. But now it is currently a six unit that is fully rented in the same area that all our properties are in. in that Scranton, Pennsylvania area. Cool.

Starting point is 00:28:00 So tell me the business plan because it's basically when you're a syndicator, when you're a GP, a sponsor of a deal, you usually go to your potential investors and say, here's the plan. So it sounds like finish out the six unit was plan number one. What was the rest of the business plan? The rest of the plan was that we actually purchased this property completely vacant. So we knew it was very easy to turn over.

Starting point is 00:28:25 We didn't have to kick out lower than. and market rent tenants or try to raise it on them. So we felt comfortable enough that this property is vacant. We know that we can get it leased up at specific market rents. And again, we're running our numbers conservatively. So while we're finishing this six unit after closing, we're going to list the other units on the MLS, get it leased up. And then in this stage of the process, now that we have it fully leased up and rented, we're looking to do a refinance because we have a high interest rate that we're then looking to lower. Sam, what kind of hold period were you telling your investors?

Starting point is 00:29:01 Like, how are they going to get their money back? So we discussed a typical hold period of about three to five years, depending on market conditions. Now, all the people who bought into our syndication, we've given them voting rights to decide on the company's decision as a whole to either sell, refinance, basically any sort of equity decision that needs to be made. the company gets to vote and the majority will rule just like any other company. Wow. And so, you know, with the refinance coming up, I mean, it's a no-brainer, of course, to lower the rate. So that shouldn't be too difficult of a vote.

Starting point is 00:29:38 But in the event that it comes time to sell or we get a really good appraisal and we want to do a cash out refinance for investors, that all, of course, go to a vote as well. Sounds like a great plan. I've done a handful. I've done a good amount of syndications now. I've never gotten the chance to vote. It's usually just give us your money and then wait five to seven years, hopefully. Yeah, hopefully.

Starting point is 00:30:02 Hopefully you get it back. We wanted to kind of give power to the people, so to speak. It was part of the pitch and saying like, hey, we want you guys to be a part of this. Now, Sam and I are responsible for the day-to-day operations. We're not going to send out a vote and say, hey, do we do the porcelain toilet or do we do this other toilet? Like, it's not every little minute thing, but for the big decisions, of, hey, do we cash out by selling? Do we cash out by refinancing? Do we roll it into the next deal? And for the most part, people are like, yeah, let's roll it into the next one. Let's keep it going

Starting point is 00:30:33 because they see the power of it and they love the fact that we're giving them a say in how their money goes. That's awesome. Well, sounds like you guys got a great deal and are taking a really good approach to raising money. Again, it sounds great, but it's a big responsibility. And it's always good to make sure that you're doing it with your investors' best interest in mind and, you know, putting yourself in their shoes to make sure that, you know, you understand their perspective, especially if they're not in real estate and making them feel comfortable. So, that's great. Shifting gears, Sam, you know, you mentioned earlier that today's Marcus is sort of like forcing you to get a little bit creative. Are you guys still doing burs as you, you know,

Starting point is 00:31:14 move into 2025 here? What else are you working on? We've been calling this process a delayed BIR, where we don't immediately go into a property and gut rehab and change everything. But if, you know, the properties we've been finding, specifically the last two four units that we purchased have really great bones. They definitely could use some cosmetic updating, but currently the tenants that are in there are paying good rent, close if not at market rent. The property's functioning well. It's cash flowing.

Starting point is 00:31:49 and there's no need to go in there and mess anything up. And so as these tenants move out, we've already seen it in one of the four units a tenant moves out. We go in there, we do the rehab, we re-rent at ideally a higher rent price now that they have a brand new unit. And eventually, as rental turnover happens, we will renovate all the units in the property and then go to refinance and cash out the equity and repeat the process. Dude, this is exactly what I've been doing this year. Oh, amazing. I was talking to Henry Washington about it.

Starting point is 00:32:23 We were calling it like the opportunistic burr. Okay, I like that. Delayed burr sounds better. But it just works right now. It's just like a real, it's not as sexy as like doing a burr and getting 100% of your equity out within six months or whatever. But it works. Like I'm able, not in Scrant, but in similar markets, you're able to buy something

Starting point is 00:32:45 it's like, I don't know, three, four, five percent cash on cash return today. But they're not even at market rents and it's not even at its highest and best use. So once you stabilize it, you could get that cash on cash return up to really solid 10, 12 percent. It might take you a year, though, like you were saying, where you wait till someone moves out, then you do the burr and you might not be able to refinance immediately. But it is a really, in my mind, low risk way to do it because you have cash flow immediately. and you have tenants. And so then you're not putting yourself in a situation where you're banking on this one big

Starting point is 00:33:21 construction project going completely right and the appraisal that you get after that burn. Exactly. And it goes back to patience and also delayed gratification. Yes, you can go in and try to flip a property or say, I'm kicking out all the tenants and I'm going to renovate everything. You know, there's people that are in the position to do that. They can handle the holding costs. They can handle the construction projects.

Starting point is 00:33:43 we're telling ourselves that we're realizing how much vacancy is the silent killer to the real estate game. Oh, 100%. It's insane. It's really insane because you run all these numbers. You can have the perfect numbers. But if you upset all your tenants and they all move out, then your numbers don't mean anything. So we are of the mindset of like, all right, these tenants are happy being there. Sometimes we get the information of this has been a tenant here for 25 years.

Starting point is 00:34:11 That person's probably not going to want to move anytime. soon. So we're going to keep them in there. They're paying market rent. Even if they're a little bit under market rent, they're happy. They're going to stay. While they stay, we'll do cosmetic upgrades to the other units. And we're always looking for properties that just need TLC. We're looking for for good bones, but ugly guts, the shag carpets, the purple walls, the pink tile in the bathroom, maybe even a carpet in the bathroom. That's a good one to look for it. But it has the good bones. It has the good exterior siding and roofing and stuff like that. I love it. This is exactly what I've been doing. I have yet to found many people who are taking this exact approach, but I think it makes so much

Starting point is 00:34:53 sense. And the low risk, I think still pretty high upside to it is working really well in this type of market. I think it's just important to know that you have to be a bit patient, right? You're not going to see that immediate cash out within the first six months. But as long as you're in for the investment and in the real estate game for the long term, it's a very powerful strategy. I totally agree. But I also just want to add that like patience is always the name of the game in real estate. And these periods of time where you could do the quote unquote perfect burr like in 2021 to 2020, like that is unusual or you know, even looking back, you know, in 2010, 2011 where you could get, you know, on market 15% cash on cash deals. That is unusual.

Starting point is 00:35:41 The majority of the time, this is the kind of stuff that you need to be doing to make money in real estate. And that's okay. Like, it's still, in my mind, way better than investing in any other asset class. It's just like readjusting your expectations to what normal real estate investing conditions are. Absolutely. I have one more question before. I forgot to ask you guys. You guys said that later in your partnership, you specialize.

Starting point is 00:36:03 So, Joe, what do you do in the partnership? And Sam, what do you do? We started to kind of organically place ourselves in. to these specific roles where me with my background in lending, I'm more the analytical brain and I have a little bit more of a conservative approach looking at how our taxes affect us and our write-offs and things like that. Whereas Sam is more of the deal finding. He'll run the numbers that we can then review together. He's very good at writing up emails to our investors, writing messages to our team members that are the boots on the ground. Like Joe said, we kind of

Starting point is 00:36:38 joke that if I was doing this by myself, I would buy every deal good and bad. And if Joe was doing this by himself, he would buy nothing. And then the two of us together, we buy only good deals. Even out together. Yeah, exactly. Yes, exactly. Great. Well, thank you both so much for being here. Congratulations on starting a portfolio during an interesting time in the housing market and on building a successful partnership. That is such a valuable thing, as you're just talking about, to have in this industry. If you all want to connect with Sam or Joe, we will, of course, put their bigger pockets profiles and contact information in the show notes below. Thanks again, guys. Thank you, Dave. Thanks, Dave. If you all like this show, don't forget to leave us a review on

Starting point is 00:37:21 Spotify or Apple or share it with a friend who you think would learn something from our conversation with Sam and Joe. We'll see you all in a couple of days. Thanks again for listening. Do you ever notice how every passive investment somehow turns into a very active lifestyle? active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value, in the best markets across the country, without making real estate your second job?

Starting point is 00:37:49 That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade, thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more.

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