Financial Freedom Through Out Of State Investing With Dani Beit-Or

A coat, but I have a problem. I've lived in California for 20 years. I don't own a coat. I have no coat. You think it's a joke. I don't have a coat, right? So what do you do? So I got another sweater just in case, but I'm good, right? So thank you for having me. Pleasure. Who here has been investing more than 2 years? Okay, 3 years, 4 years, 6 years, 10 years, 10 years, 10. Well, I see 1, 2, and 3. 15. Joe, you and I. Okay, you are out of, uh, you get a prize. For the day. Perfect. Okay, I got nervous. I thought maybe it's going to be someone more experienced than me and Joe, and that's going to make me nervous because they're going to put me on the spot for sure. Anyway, uh, thanks for joining me tonight. My name is Danny Bedor. I've been a real estate investor for— guys, you guys who just came, come on over. This is a friendly environment. I'm not biting anyone. Have a seat here. Right, it's okay. I've been investor for more than 20 years now. I started while living in Europe as a young engineer, living, you know, living in Europe, buying my first rental property in 20— sorry, 2002, outside a small town you probably never heard of called Phoenix, Arizona. I'm sure you never heard about it. That was my first investment. Completely sight unseen, completely different language, culture, time zone, rules and regulation, legal matters. Everything's different. At the time, 2002, so those of you who've been around, Google was still a startup, right? So there was no Zillow, no Google Maps, no MLS Online. Forget about it. Right. We did have— I remember receiving the MLS printouts, the printout of a fax of a fax of a fax. Right. Email was around, but the agents were still, you know, always behind. So you can— what is this? Okay, it's a house. So that was my first experience doing it completely sight unseen. Right. Another country. I do admit I did go to high school back east in D.C. for 2 years. So I have a little bit of a taste of the of the American life and I did know English, but that's the extent of my experience with the US is living, going to high school, graduating from a DC area high school, and that's it. I decided that for, as a young engineer, I did 3 years in the Special Forces. I finished my service. I went to have my engineering degree, started my adult life later than most of you probably 'cause of the military. delayed everything by 5 years before military and after. So I'm a young adult at the age of 24, 25, 26-ish, around that age, getting my first job as an engineer. It pays well. I make money. I'm able to kind of save up. And then the next question comes very quickly. I'm like, I'm looking around and saying, is this it? Is this what I'm going to do for the next 10, 15, 20 years? I'm looking at my parents, I'm looking at my older cousins, uncles, family friends, and what I'm seeing primarily, a lot of hard-working people with good ethics and work, working for someone, doing well at their job, progressing, promoting. But what do they have to show for all those 15, 20 years? Condo with a mortgage. And I'm looking at this and I'm like, okay, I don't know what the other way, what is the how to get rich quick kind of a scheme. So I realized I don't have that in me. At least I acknowledge that. And at the same time, I'm trying to figure out how to go about it, you know, to find my own path for that. And I know one thing, that kind of a solution is not my solution. I am not okay with that formula or that path that I'm already at the starting point of that path. Engineering degree, done. Working for high tech, done. I'm starting, I'm already 1 year plus into my work, my job. I like what I'm doing. Honestly, I got bored very quickly because I was good at that job, right? People around me were poor at doing this job. I had some skills that I brought to that job that made it easy for me relatively to my peers. And I'm unchallenged by my job, but it provides me this wealth, stability. And I'm a young guy in Europe and nobody around me is looking at real estate investing locally, real estate investing in another country over there. Investing in the US sounds like, for us, if I would tell you we would invest in real estate in New Caledonia outside of New Zealand, which is an island which is so small nobody knows where it is except me or maybe someone else. So that's how it looks for from Europe looking at the US. Anyway, I decided that I want to go about exploring that. I buy my first house outside of Phoenix, Arizona. In 2004, I fall in love with US real estate. I don't know if you had that fever problem with you, but I do still. And I decided I'm packing my bags with my wife and my bike and we are moving over to the States. And with a clear purpose of doing real estate, right? I had no idea where I'm going, no idea what I'm gonna do. I'm like, you know, I didn't have $20, you know, in my pocket like some of those immigrant stories, but let's just say it wasn't a lot more than $20, right? So I move here, I start, you know, investing, continuing investing, you know, in real estate, mainly starting to work and help others do pretty much the same, where the methodology is very simple. I live in California, back then up in the Bay Area. Real estate even back then was expensive, still nothing changed, and the rents are very low. So relatively to the cost of the asset, you need a lot of money, it rents very poorly, cash flow is terrible. What are we going to do? Let's take advantage of a nice thing called geographical arbitrage and go to other parts of the country, right? Other parts of the country at that time. Phoenix, Arizona, you buy a nice house for back then $150,000, rent it for $1,000, maybe $1,200, and for a nice tenant, a nice house is a nice community outside, you know, one of the suburbs, good schools, and let it sit and do that, right? And I am able to accomplish my 5-year plan within 2 and a half years. So that brings me over to 2006, '07, That house I bought in 2002 already did so well. I refinanced at that point once, maybe twice. I'm not sure already exactly the timing. And that refinance gives me cash to do what? Buy more houses, right? No money out of pocket. I'm buying 2 houses. Everything is working great. And if you've been on this planet long enough, 2007, things looking good, and then the 2008 crash, right? The 2008 crash hit me Big time, right? Every time I go to events and I speak and I meet and I network, if I meet someone like you said who went through the crash of 2008, say, oh, it didn't touch me, I'm untouched, I'm unimpacted by the crash, I'm like, come on, man, that's not— no chance, right? I got foreclosed on. I, you know, multiple properties went into foreclosure. I experienced a lot of issues and troubles. So much so, even today on my application on the house I'm buying, you know, interestingly enough in Phoenix again, the underwriter came back and said, wait, one of your houses, it shows it's a pre-foreclosure. I'm like, come on, this has already been done like 10 years ago and it still shows somewhere in some records. Ah, don't worry about it, it's just a mistake, right? But that was just annoying to see that. Um, so I go through the, you know, a lot of the challenges myself. But a lot of the challenges of the 2008 crash, what I go through is not just on a personal level with my own portfolio, extensive portfolio, but with my clients. So I have a lot of clients in similar situation, and I'll go into some of those nuances in a moment. And I have a lot of clients in a similar situation and they are going through something similar. And I decided it was one thing that I decided to do. early on in the crash of 2008 is I made a pact with myself and promised to myself. I said, every single client that will call me with a problem, maybe they want to bitch, complain, whine, pissed, right? Blow up at me even because I am the person who helped them or put them in that— I put them in that situation as if I did, but just— All okay. I'm going to be there. I'm going to pick up the phone. I'm going to be there answering. I'm going to be there asking questions, making suggestions, learning from them what they learned. And because I'm so deep in those problems, I probably have an idea or 2 or 3 to share with them what they can do on their end in order to help their situation. Those negative calls, I call it, lasted from 2008 all the way to 2011. They started phasing out in 2010. And kind of died off completely in 2011. Every once in a while, I still meet one of my clients from that period. Some, you know, most, most have moved on in their lives. And they say, I remember you were there. I remember you were answering, you're helping. I will never forget that for you. Even I know it wasn't easy for you. Now they say, I know it wasn't easy for you. It wasn't easy. I'm only saying it because I've seen people in similar position to myself at that period of time. And what they did, dove down. Some I've never seen, I have not seen since. Some I have seen since, and they came back as if nothing is problematic. But that was for me the way I wanted to go about it. And the reason I'm telling you about it is because for me, the crash of 2008 was my PhD in real estate investing. I had no choice, no other option but to dive deep, to check, to ask, to find out options, to navigate those really tumultuous waters, very challenging time on so many levels. Anytime you hit something like this, it hits you on a financial level, it hits you on a morale level, it hits you on a confidence level. It doesn't go, it doesn't fly by you as if nothing is there. And then everything is amplified, right? I have clients, I have people that I know, and I make a promise to be there. So all, all my life at that Those few years, it was a lot of negative calls, but they also empowered me and made me dive into the details. The reason I'm telling you is because when I came out of the crash around 2009, more 2010, I decided that I need to wipe my desk completely clean of how I went about investing before, and I'm rebuilding everything from scratch. But I'm not wiping the knowledge that I've gained. I am using that. I am leveraging that. I'm like, in my mind, if I would put in that situation that I had to go through this, I might as well benefit it on a personal level. I might as well bring it to my clients who work with us at my company and let them leverage on that and make them— help them avoid those mistakes. And this has been kind of my guiding light ever since. Now, what I wanted to do today, and by the way, sorry, I apologize. I kind of jumped right in. My style is please be part of the conversation. Ask questions, make jokes, make comments. It's okay. Whistle, no problem. Do whatever you want. I like to have it more engaging and not me speaking. We will have what I call the Q&C, not the Q&A. Q&C is questions and conversation at the end. about everything I'm talking about and other things related to real estate. But you don't have to wait and you don't have to be patient and you can actually shout out a question, not a problem. I don't promise I will answer, but you can definitely shout it out. Okay, so what I wanted to do when kind of we were communicating about this event, I said, I want to do something a little bit different that I've never done before. I want to maybe start the new year with a little bit of a kind of not necessarily motivational, but lesson learned and things you can benefit. Some of them are very— maybe it'll be even trivial for you when I outline them and explain them. I have the privilege of watching myself, but mostly my clients invest over a period of 20, maybe 15+ years. I've seen patterns of behavior. I've seen what works. I want to share those things with you so you can benefit from them as well. And by the way, if I'm skipping through something, It's only because already talked about it. Every time I get asked about what are your top 1, 2 things you learned from the 2008 crash, I probably have 2 to 3 things that are somewhat related to each other. The first one is what's called the negative cash flow. Does anybody here ever invested by design in a long-term rental and generated by design negative cash flow? Okay, okay, few. Thank you, brothers and sisters, I appreciate it. This is a special club, not a lot of people have been to that club. When we were buying in 2000, the early 2000s, the approach was let's buy as many properties as we can, putting as little money down as possible, and then yeah, we'll have some negative cash flow coming from each property by design, but Properties are appreciating so rapidly. Why does it matter if we have a— let's just say one property by design generates, I don't know, $3,000 a year negative cash flow, right? $3,000, no big deal, right? But it appreciates $10,000, $15,000, $20,000 a year. $3,000 all of a sudden looks like a joke, right? So let's put as little money down as possible. You know, buy— at the time we were doing 80/10/10. I'm sure you remember that. 5% down, no money down, $103,000. 105 leverage. I'm not talking about the, the, the, the, uh, how do you call it, the, uh, um, those bad mortgages. I forgot the name.

Subprime.

Subprime. Thank you. That was a test. You passed. Um, exactly. So, so those mortgages as well. I was in the subprime. Um, but everything went, you know, by design. We said, let's buy as many as are possible. And you generate a lot of negative cash flow. Now, what happens when you prepare for negative cash flow and you show up and you end up with a negative cash flow? Nothing, nothing happened. You expected it. One property, no problem. Two properties, no problem. Three properties, no problem. Four, five, ten, twenty—it's getting to be tight. But hey, I'm making good money on my real estate side of the business. I can accommodate that, right? Cash is coming here from work. Cash is going out from those properties that I have to feed over there. There's a gap. Okay, not a problem. And it's appreciating. And then the crash came. And kind of swallowed all that concept up. And all of a sudden, those many thousands of dollars of negative cash flow that I by design was generating, I could not continue to make those payments, right? Because not only that, you know, mainly because my income from real estate dropped dramatically. Okay, so mistake number 1, by design, you know, try to avoid the negative cash flow. If possible, or try to be more conservative. Looking back, I wish I bought half the number of houses. Being even in a break-even situation, not to mention with a little bit of a positive, being a little bit more cautious about it and still having those houses, those many houses that I lost, you know, during the crash, I would be in a much better off position where I am today just because those 20 years of, you know, appreciation. But that wasn't the case. So negative cash flow was one that, you know, that I really advocate, you know, strongly to my clients to be careful about it, to be cautious about it. Every once in a while, someone definitely asks me about it. And sometimes we do consider doing it in a bigger scheme of things, right? Maybe there's a portfolio of multiple properties generating well, and then one property by design is going to generate a little bit of negative cash flow. We can incorporate it, that's okay. It's more of a controlled environment. It's more of a kind of, you know, in a responsible way. So I'm not against the negative cash flow. I'm just saying not across the board, not everything. Be very careful, be very cautious. Number 1. Number 2. Also related to the negative cash flow, high leverage, right? So just because I can go out and leverage 80/20 or 90/10, does it mean it's the responsible right thing to do? In my opinion, it is not. Again, I would rather leverage less by a smaller number of properties, but not be in that situation that I'm highly leveraged because when you're highly leveraged and things go with the, let's say the rent drops, you're again even in a more stressful situation with your properties and the cash flow. All right. I got to show you that. I got to show you something. This is just— I pulled it this afternoon as a preparation for this, for tonight. I'm going to say this. When I back then were analyzing and evaluating properties, We were doing it or like this, right? That's the form. That's the Excel that we were using or someone that I was working with was using. And by the way, guess what? The reason I'm saying it, I pulled it out from today. They're still using it. So if you're— I'll assume for a second you're all new to real estate, okay? And maybe you can't see it, but it says, you know, the purchase price and the mortgage. Insurance, taxes, PMI. Who doesn't know? Who knows what PMI means? Private mortgage insurance. Exactly. Who used? Who've seen PMI here in the past decade? Okay, there is. It's really, it's really exist. I mean, sure, it's there, but it's not a very common you know to see PMI anymore, right? But these guys still have the PMI here. Why? I don't know, when you're putting 25, 30% down, there's no PMI, right? It's below 20%, but they still have it, right? Remember, this is from today, actually from this— it's an email from December, recent December. Homeowner association management fee, total monthly estimated rent, cash flow. Who's buying? I'm not selling it, but who's buying? Is something missing here?

Vacancy rate.

Vacancy, thank you. Anything else? Expenses, they have— nope, I don't see anything on the— I don't see anything on maintenance. I don't see anything on vacancy. HOA, they actually have. By the way, they used not to have it, but they added. Maybe they heard my talk. Leasing fee, right? Okay. This is a little bit like how we were making decision at the time. I don't need to tell you probably, I think you get it. This is super superficial. This is far from being even using the word professional in this sentence just feels bad. But that's still out there. That is still out there. Now, so this is what we are using. I tossed that. That's—

No.

Okay. All those dots here are not part of the Excel. Okay, just a disclaimer. This is what we use today, right? This is— I call it the rental property business template, right? Or analysis template. Plug in the numbers. There's a whole section in the background that analyzes all the assumptions, right? All the expenses, stretches it over 30 years, how every year in the next 30 years would look like in terms of Equity, mortgage payment, mortgage principal balance, everything, cash flow, expenses, increasing, decreasing, everything there, not being perfect, but this is how we are analyzing properties today. It may look extensive. Once you do it 2 to 3 times, it takes maybe 5 minutes-ish, or maybe 10 minutes to get it, but this gives you a much better, much clearer understanding about specific properties with return, with cash flow. etc. So this is the tool I'm using today. I'm only using it to show you, this is then 2010, this is since 2010. I've probably, or we've probably analyzed, you know, when I say we, it's our agents, our clients, my team, probably well over 150,000 properties using this tool, right? We didn't purchase 150,000, we analyzed well over 150,000. Probably half of them are just me. So just to show you, if you don't have the right tool, you got to grab and make sure you find the right tool. It doesn't have to be this one, but please, please do me a favor, personal favor. Don't use something like this. Right. So this is just to show you, you know, make sure— and this is just a financial analysis. We have a whole set of criteria of procedure to do what we call the quality evaluation. Right. Things that are not in the numbers, right? The schools and the age and proximities to stuff, et cetera. So this is just one side of that equation. The next thing I wanna talk about is I wanna talk about you guys for a second, and I wanna talk about type A and type B, and we're not talking about diabetes, right?

Oh.

And not personalities, actually, Who you are. Now, some of you are, say, Type A. You are what I call real estate entrepreneurs, right? You go about working. I know Alex and Joe are like this, working in real estate, finding deals, looking at houses, working at the real estate. And that's fine and that's great. And I am somewhat of that as well. Some of you are what I call Type B. What is Type B? You have a full-time job, right? And maybe your job is demanding and you don't have time to run around properties and check them and do inspection yourself and all that time because you have a job, maybe a job and a family. I know that happens sometimes. And you are not necessarily able to allocate time, energy, attention to be a real estate entrepreneur even if you want to. Okay, so from my standpoint, if you're the type— there's nothing wrong in Type A, I belong to that group— but most of my clients are Type B. They are job, you know, people with employed full-time in demanding jobs with families. They don't have to be Type— they don't have time to be Type A, even if they want to be. They're just not— never going to happen. If you are Type B, it is okay And you can repeat after me. It is okay.

It is okay.

To go after boring real estate. All right? And let me tell you what boring real estate looks like. You buy a nice house in the suburb, you know, where the schools are okay and the middle, you know, upper middle class or middle class neighborhood, rent it out for a nice tenant. We have 2.4 kids, dog, and a cat. And let them sit there for years to come, or maybe switch tenants every two, two and a half years, whatever. And I call it the most boring real estate, right? There's nothing exciting about it. It's not student housing. It's not short-term rentals. There's no flipping. There is no renovation. Maybe some cosmetic. There's some re. The most exciting thing is why is the property manager taking six more weeks and not four weeks to to turn over another tenant? That's like really. The most exciting thing that happens. Or why did they tell me it's going to cost $300 to fix it and it ended up being $375 and they did not ask for 7 quotes for that repair? That is exciting. This is for you that are type B. This is a magic tool. This is a magic financial vehicle because here's what's going to happen. Nothing. You buy a nice house, you let it sit there, generate a little cash flow at the moment, not a lot because of the interest rate, and just sit there in the background and let time do its magic. Real estate, and I can't repeat enough, loves time. Real estate loves time, especially if you buy good or quality real estate, right? So if you're Type B, right, and you are trying to be Type A and you keep failing, or not succeeding, not failing but not succeeding, it is okay to stay in your lane and buy those boring real estate. I have done close, I didn't mention it earlier, I have done about 90 flips in my career, right? The first 70, 80 were anywhere from amazing to good to okay. Most of them were very good, few of them were unbelievably amazing, where returns are in the many hundreds ROI percentages. But at the end, the last 12-ish, what a catastrophe. Oh my God, what a catastrophe. But you know what? Even without the catastrophe, I look back and I looked at all those 80-ish properties that I've flipped. What was I thinking? I just should have just kept them and hold them. By far, almost all of them, I don't want to say all, not all of them, but almost all of them, the majority of them have done so well over the years that I'm like, what were you thinking? And I'm the one who talks about boring real estate, right? All my life. So keep that in mind. Boring real estate is completely good. It's very, very use, very doable, very beneficial. It can actually work in your favor. All right, who are here? Yeah, how do I what? How do I fund? Okay, absolutely, absolutely. Do you mind, can you hang on to that towards the end? Because that's just going to be a bit of a stretch conversation or answer. It's not like a quick one. Okay, but don't forget, right? All right, um, perfect. Okay. Who has a W-2 or somewhat W-2 job here?

Okay.

Who actually from the W-2 is thinking on transitioning from the W-2 to full-time real estate? Only one person, two, three. Okay. You guys, I want to tell you something. You guys that have a W-2 and you're thinking of ditching your W-2 or maybe. playing with the idea. You should leverage the W-2 job in your favor towards the real estate.

We already did.

Keep on doing that. The W-2 is maxed out or the real estate? Maxed out. W-2 maxed out. So, okay. So, hang on a second. So, there's always something to do. Always. There's no such thing as that's maxed out, right? I've been doing it long enough. But let's— we can talk about that too, you know, during the conversation session. And why am I saying this? Because a lot of people want to switch over, realizing or not realizing, the minute you ditch that W-2 stability, 2 things happen. One, you are unattractive to the lender. They don't want to lend you money. Maybe in 2 years when you are more stable with the real estate, or 3 years down the line, they will. Once you stabilize your tax returns for 2 years or so, you'll probably be okay. But right now, you're gonna have tough 2 years. Lenders don't want to work with you. I mean, the quality lenders with the better rates, not some of the DCSL or other loans, right? They're always around. So that's one. 2, when you have that income coming into your life, that creates a little bit of stability. Now, you're attractive to the lender, of course, that's the most important thing. But also, How about the personal pressure you're going through when you don't have that money coming in, right? So hang on to this job, think about this job in a new way, how you can leverage that job income stability attractiveness to lender in your favor in order to leverage that. Guess what? With the boring real estate, you're type B, so stay in your lane if that's okay. So I love your job probably more than you, Don't lose that so quickly and rush over to real estate. Actually, the way I like to look at it is what I call Rat Race 2.0. And my definition of Rat Race 2.0, if you really want to take it to the next level, you need to redesign your job, right? Meaning, let's say you have the ability to take another position in the company or in another company that Actually, maybe even paying you a little bit less, but giving you the ability, the more flexibility to find time to do real estate on your free time. So what the problem— one of the problems with a demanding W-2 job is we get exhausted mentally, emotionally. You know, we have other things in our lives. It's hard to finish 5, 6, 7, then sit down at 8 or 9 and start reviewing properties and start sending emails or finding the time during the day to talk to someone. It's tough, it's hard. But if you're able to navigate your position in life as an employee, right? And maybe even get not, I don't say the opposite of promotion, but just move to something that will enable you to keep the stability of the attractiveness to the lender and the money coming in. And at the same time, not exhaust you as much. You know, for example, how about you go to your boss, say, you know what, 2025, this crazy guy, this event said I want to renegotiate my terms. I want to work 80%, not 100%. So I'll work 4 days or not, and not 5 days. And then you have a full day for yourself, you know, to do real estate as an example, right? Find a way. But if you do that, that will position you in a place where you still, you know, you kind of keep the benefits as an employee on one end, but at the same time have more time, energy, attention, emotional, whatever. Maybe even taking a less demanding position so you don't have to deal with this, all those managers or whatever. And you're like, you know what, I like it to keep it simple. I have other interests in life that can advance me. I'll keep that, but I have something else going on, right? So think about redesigning your position in order to, you know, stay attractive, stay attractive on one end, and enabling yourself more time to do real estate. Any questions, you guys? Yes?

I just want to make a comment. I appreciate you saying that. As soon as you talked about the 2 things that happen, I believe that W-2, I experienced that second one being Anxiety level, which I didn't realize anxiety.

Yes, it happened. Yes, absolutely. And you know what happened? I'm glad you're saying it because what I've seen happen on the personal level and with my clients, when you get to that anxiety level, you are making bad decisions because all of a sudden you're like, I gotta prove it to myself, and you jump into maybe not the right deal for you at the time just because you also want to get things going. So that anxiety level is, you know, can lead to, let's just say, poor decisions. Yeah.

Okay, perfect.

All right, I want to give you, I want to give you a really important suggestion that I think it's real estate related but life related. Okay, I found many years ago that the skill of knowing to ask questions is one of the most important tools one can have. Okay, maybe it's obvious, maybe it's trivial, but I've seen so many people do not master that simple, not so simple, or simple skill, right? There's no, you don't need to go to school for that. You don't need to watch on YouTube. I'm going to give you a few ideas why you can do it, why you should do it, and how you can do it. Okay? So I think that I am, I don't want to say blessed, but I've never been scared in my life as a kid, as a teenager, to ask questions, never, okay? But I just felt more than maybe 15 years ago that I'm not doing it well enough. So about 15 years ago, anytime I had an important meeting, I would open a notebook digitally or physically, and I slowly in the days leading to that meeting, I would start gathering questions. I would just put questions, right? By the way, I still do that. Questions, questions, questions, questions. And then maybe a few hours before or an hour before, I gather all those questions. I review them, rephrase them, reorganize them. I found out that sometimes I come up with pretty much the same question in different versions of the question. I thought that's actually a good idea to ask the same questions in a different way. And then when I go on the meeting, I am ready with the questions. Now, here's what happens when you are ready with the questions. To a meeting that it's important for you, a meeting that you want to come out and benefit the most as you possibly can from that meeting. It doesn't matter if it's from school teacher, a boss, or something related to real estate, an attorney, an agent, it doesn't matter, right? When you come into that meeting with all those questions, you're going to— Listen, you have a limited timeframe to talk to that person. Expert, teacher, whatever. So you want to maximize that time. If you're coming prepared with questions that not only that you've gathered, but you also prep them and maybe even taking one more step further that I try to do it. I usually send the questions over to the other party the day before if I can, right? I try to do that. So when we jump on the call or the meeting or whatever that setting is, Once we finish the small talk, the conversation starts getting very detailed. We dive into the details. I don't— listen, I talk frequently with legal counsel on contracts, on everything related to real estate, simple stuff, complicated stuff. Probably once, twice a month I speak to legal counsel about something like that. I send my attorney a description of the situation, the document that he needs to review, and my questions. When he gets— he or she gets on the phone, we immediately start the conversation with the things that I want them to pay attention to in the contract or something that I'm not sure about or something that I'm missing. I'm already starting this conversation ahead, advanced. If I didn't do that, here's what's going to happen. How are you? Thank you. Nice. Okay. Tell me what's going on. I start describing. Okay. Can I tell you, you know, if I don't have any questions, he will just go, okay, let me review it and get back to you. Right. He'll get back to me. That'll probably— I lost right there 2 to 3 days. Right. Just until he gets back to me. So already until I set up the time, until I really spoke to him about the details, I lost 4, maybe 2 to 5 days instead of On a second day, we're already jumping, or maybe a third, into the relevant information conversation that I am looking for, right? So I'm already starting it a little bit progressed. For me, it became my nature to do that, right? I meet, we meet, Jessica and I, Jessica works with me, we meet with a lot of clients and we have them complete an intake form before they meet with us. The intake form already starts the thinking process, and then they come up with more questions, or they put in the intake form questions, and we can start the conversation in a more advanced position. I am blown away how many times people get on the call with me and they have no questions to ask, right? Like, I get it. I've been doing it for such a long time. I know that's usually what happens. What I'm telling you here, try to master a little bit of this skill, it will benefit you tremendously anywhere in life, tremendously knowing how to ask questions or at least prepping the questions. So when you start jump on a call, you can at least navigate it and progress the time that you have with that expert and benefit more from that situation. So rather simple, very important. Next thing that I want to suggest for you guys, especially when it comes to real estate, and I know Joe will, I'm sure you, I think you even mentioned it sometimes when maybe when we did the podcast, I can't remember. Persistence and perseverance. How many times have you, how many times have you in a transaction lost it, it came back, lost it, it came back, number of times, right? I'm sure that happened more than once. The number of times I had deals drop, come back to life, drop, come back to life, maybe 3 times in one transaction. You know, once, that's almost common, right? Twice in a transaction, I've seen that. I even had 3. I have had a closing that I was parking, you know, outside the UPS store to go and sign on the— with the notary on the selling of a property in Salt Lake, a flip property in Salt Lake. I'm parking, I get a phone from my agent, I already know what's happening, right? And here we go again, almost lost the deal yet third or fourth time, right? So that happens so many times. Be ready for it, expect it, don't fight it, embrace it and learn how to navigate that to the finish line, right? That's really important. If you have no idea what I'm talking about, You're either very lucky or you just have not done enough deals. It will happen so many times, and I'm not talking about just one incident. I'm talking about multiple incidents in a transaction, right? This can happen— why am I going far? I just made an offer 2 weeks ago on a VA assumption loan in Tennessee. Did I get the nice agent? Oh my God. That deal fell through before we even got into a deal 4 times. Okay? Right? The last thing happened, she wanted for us to use their title company. Okay. I'm okay with that. A little problem. When I research any new title company that I know, I research online if they have license, who they are. You know, I'm not expecting to find any reviews, but at least I want to see that they're licensed by the state. I look online, they're not licensed. I'm like, I'm not going to send my money to an unlicensed company. All right, I know their LLC. Here's their LLC name. I go on the business, the Secretary of State business something. I search for the LLC to see that it's registered in Tennessee. Guess what? What's not showing, right? So not, you know, I call the the insurance commissioner office and I say, hey, do you have a record? Maybe it's not showing online of this company. Are they insured with Tennessee? And the not so nice, obnoxious lady says, listen, I don't see it here, but they may be licensed in another state. And I'm like, I don't care about that other state. Tennessee. I don't see them. Let me ask you a question, dear lady representative of the commissioner, insurance commissioner in Tennessee. If I work with a title company in Tennessee, do they need to be licensed in Tennessee? She says, yes, of course. I said, that's it. I got my answer, right? I called the— we informed the agent, the seller's agent, they do not exist. And like, ah, you're playing, you're trying to bully me. And I'm like, listen, here's the deal. We are not going to send— I don't care if this whole deal blows up. Here's a title company that we know, that we work with. We don't mind working with them and sending the earnest money right now, or we are not sending to an unlicensed— and let me tell you one other thing, if you are sending clients, referring them to an unlicensed, unregistered entity in Tennessee, that's a major problem for you, my dear. Okay, no problem. We can use your title company, and we do, and we did. We're under contract. Okay, so I just want to show you, stick at it, don't give up. It's okay, you know, things will happen. Embrace it in the sense, learn from it, find a way. I'll talk about a few things related to that as well in a moment. It will happen, guaranteed. Okay, 20 years of investing. I saw— I look at my clients many times, how they behave, what they do, what's the patterns. And I've seen one thing that repeatedly comes up as a major bonus point or success for some of the investors. If they team up with another person and they come as a couple, meaning 2 partners. And when I say 2 partners, I call it the journey partner, not necessarily the property investing partner. Right? So Jessica and I, we meet here, and I'm like, okay, can we work together, meet once a week, bounce ideas, review properties, etc.? Every time I see that taking place, I already know that's going to happen. These are not tire kickers. This is going to happen, right? So if you, if you are, if you have a spouse that can fill in that gap of Really being the partner. Not many, not all spouses that I know necessarily are on the same page when it comes to it. If you have that spouse, that's amazing. If you don't, find that one friend. Let me emphasize, one friend, not two, one. If you make it a three, that's going to be complicated. Scheduling, meeting, he does show, he doesn't show. Uh-uh. Two people. You don't have to invest together. You don't have to invest together. Ideally, you are just interested in the same direction or strategy of investing. You just want to walk the path together so you can hold each other accountable for once a week meeting, reviewing properties, bouncing ideas, asking questions, checking on each other. Did you look into that? Did you look into that? Have you thought about this? And this will benefit you tremendously. If you feel a little bit stuck or uncertain, right? It's a really simple, relatively simple. Now, if you're not sure where to find that person, look around. They may be right here. Maybe when I'm done, we can do like some sort of hand raising and stuff. They may be here, right? So, and when you meet with that person for the first time, be ready already With your questions, after the small talk, start reviewing properties immediately. Right? Don't just meet for a chat. Meet to work. The chat will lead into that, and that will already progress that first date further. Right? I see pattern here. I'm trying to progress people further. Maybe I'm rushing things. Okay. So that is very beneficial from someone who've seen a lot of partners coming. Working together, they're succeeding. If you are, listen, I don't know who you are, and I'm not going to ask. You don't have to raise any hands here, right? But I just want you to be a little bit aware or weary or careful about being part of the herd and not true to yourself. Remember I told you earlier that I started investing in Phoenix, in Metro Phoenix, in 2004, 2005, etc.? When the crash came, we kind of paused Phoenix. I came back to Phoenix, continued investing there 2010, 11, 12, 13, 14. We started phasing out. It's gotten to be a little bit expensive. Numbers didn't work well. We moved on. Okay. I've— people came to me after in 2015, 2016, 2017, 2018, etc. When they went to Phoenix, And invested there, and a lot of those Californians did it because it was comfortable. Or my favorite sentence ever: My friend invested in Phoenix. And usually when I ask, when did your friend invested in Phoenix? The answer is, oh, like three four years ago. It was probably seven, but they only remember three or four, right? That's a different market. You can't go to Phoenix. By the way, I love Phoenix. Don't get me wrong. I'm buying another one in Phoenix as we speak. But I'm not— this is not me saying Phoenix is bad. I'm just saying, what, you're going to invest in an area just because a friend went there? Just because 2 friends went there? Do you think necessarily they've done their homework properly? Maybe they followed the friend who followed the friend who followed the friend. You get the drift, right? You get the friend. Um, so don't do that. I mean, absolutely go to that market if it makes perfect sense. I'm not saying don't go to Phoenix. But don't go to an area to invest in just because of a friend of a friend or something like this, that maybe something that took place several years ago. That for me is not a very smart move unless you did your homework, you analyze, you evaluate it, you came to the conclusion this is the right market. By all means, go to that. Don't listen to me just because I've been doing it for 20 years. I could be wrong, or even in a in a tough market like Phoenix, you can find an opportunity. Hey, I just found an opportunity in Phoenix. I kid you not, right? So this is so rare for me to buy in Phoenix. I'm so excited about it. But it's just because I was able to find a unique opportunity. I cannot find good opportunities in Phoenix these days, right? Not for my flavor. My flavor, not your flavor, my flavor. So just be aware of that. If you are a beginner, if you are inexperienced, if you are stuck for whatever reason and you're not sure— and I'm, I'm saying if you are an active investor and you're working and you're operating and you're grinding it, good for you. This is maybe less relevant for you, although it is. But if you are somewhere stuck, I'm maxed out, I'm not sure about this, I'm not sure about that, and you are Not sure, even if you're experienced, find that mentor, find that person. He's sitting right here, by the way, right? Tap into that, this resource, another resource, pay a fee, maybe take for lunch or a coffee or something. Find that person. So many times we are stuck in our mind about a challenge and we need either to have a conversation with an experienced person. Ideally, or join some program and let that experienced person to start poking holes in your ideas and helping you remove those mainly mental obstacles, right? Mainly mental obstacles. I'm not saying all obstacles can be removed. They're not, right? Some of them, many of them are there. And when you find that resource, it will benefit you, especially if you're stuck. And if you're not stuck, you're actually doing okay, that guidance, mentor, coach, whatever you want to call it, is going to be very beneficial for you because it can be— that person can be a validation on things you're already doing. And we always have doubt, right? We always have doubt. Is it the right thing? I'm not sure. Maybe I'm missing something. Even if you're grinding and you tap into your mentor, coach, whatever you want to call it, and you just have that conversation and you say, I got to run a few things by you, and that person knows to start asking you questions or point out a few things, guess what? You're going to elevate your game, right? Even if that person tells you, you know what? I would not do anything differently. You're actually operating really nicely or really correctly. That also helps with the confidence. So keep that in mind, find that person, it can be so beneficial for your game whatsoever. I really want to give you the kind of, as I'm kind of starting to wrap it up, I want to give you my 2 golden nuggets, secret sauce if you want to call it. They're so, so simple, So so simple that most people can't follow them, right? And the reason most people can't follow them is because they don't understand they're so simple and there's no right there's no hidden agenda behind them. If I have to say what are the two most important things in real estate is this quality long term. Let me repeat it because it's difficult quality long term. Buying quality and keeping it for the long term. Now let me tell you, I'll explain that a little bit better so you understand why I'm saying those 2 things. I'm saying buying quality, and for me buying quality is buying this nice house in the suburb, in a good area, good schools. That for me just screams boring and quality. A lot of people, especially investors, are very attracted to the opposite, right? They go to that area and they find that instead of $300,000, $250,000, $300,000 nice home where we are in the— out of, you know, obviously outside of California, they buy the $125,000 home. That house is not necessarily in the best community or area of town, and maybe it's a bit older and a little bit broken And then guess what happens? On paper, amazing. And by the way, I don't dispute it. On paper, that $125,000 home cash flow-wise will probably do better than my quality boring house in the suburb. Probably on paper. In reality, very likely that it will have issues holding tenants. So you have more turnover. And then some of those older homes, anytime you have something breaking, many times it's not replacing a water heater, but first of all, we have to bring it up to code, right? And then replace the water heater. The elevation, the strap, the expansion tank, all of that, you know, fun stuff, right? Same with the roof, same with other things, right? So all of a sudden, that $800, $900 repair, it's actually close to $2,000. And when that happens with the water heater, it's cheap. With the roof, different story. Okay? Now, I am not saying for a moment that you cannot make money, good one, with those lower-end properties, what I call not so quality. Yes, you can. However, you got to be ready. I call it the noise, the level of noise in the system. In the nice quality houses that we like to— that I like to buy, There is definitely noise in the systems, repairs, vacancies, sometimes evictions, not too many, you know, miscommunication with the property manager. It's going to happen. That's the noise in the system. When you buy the lower-end properties in a more, let's say, older property, tougher neighborhood, the same noise in the system will happen, just louder and more frequent. Louder and more frequent. So you're not escaping the noise, you're just experiencing it more. If you're ready for it financially and mentally, you'll do fine. The problem is that most people, most Facebook-era investors, they buy the quality house I'm talking about, but it's actually the lower-end property. That's their expectation, that's the reality, and guess who's not to blame? You. The last person to blame is me, the investor, who invested unwisely or in the wrong property, and then I end up with a problem. And then if there are problems, it's got to be either the agent is terrible or the property management are crooks or the vendors are terrific. It's never me. I am perfect, right? I never make mistakes, right? This cannot happen. All my Facebook friends are having just a blast of equity and ROI. Amazing, right? If you are ready financially, mentally to that type of the lower-end property, you'll be okay. Okay, not my flavor. Done tried that, done that, not anymore, right? But don't expect the nice house with the nice tenants who work and can easily qualify. And sometimes there will be issues with that on that lower kind of less quality type of property. It's just going to happen, right? So be aware of that. That's number Number one, the number, that's the quality. So quality and what's not so quality, right? The second thing, long term. For me, long term, I'd say 5 years is okay, preferably 10 or more, because here's what's going to happen if you hold it for 10 years or more. You're probably statistically going to have some downturn in every 10 years almost. COVID kind of shuffled everything a little bit. But historically speaking, once a decade, you know, there is some sort of an economical downturn. Not, you know, not the crash of 2008 is a little bit different. But besides that, almost once a decade we have something. So here I am, I buy a property. 3 years later, it, you know, it crashed. You know, the market crashes, right? Oh my God. By the way, Let me tell you my story. I bought a property in Orlando in 2005, September of 2005, for $180,000 in a good part of Orlando, you know, not the high-end part of Orlando, Orlando, Florida, right over the East Coast, right? And that property with a tenant inside, that property for $177,000, $180,000 in 2005. In 2009, it went down from 170, 180-ish to 84,500. That's more than 50%. Not someone else's story. This is my story, right? I'm not repeating some other somewhere that I heard. My property. I still own it, right? That property. Okay. When that happened, I mean, I'm now in 2009. I'm looking at zero. I'm looking this, uh, like, I freak out. I'm not gonna lie, I freak out, right? I'm not freaking out in the sense that I'm losing my mind, but I'm, I'm devastated. I'm like, what have I done? I'm, I'm kind of, you know, punching myself, like, you know, you know, like, what have you done? What a mistake, etc. And then I get it out of the system, I persevere, and I'm like, first of all, shut up, right? Second, What was your plan? This is a true conversation. Me, myself, and I. What was your plan? Hold it long term. Did you buy a bad property? No, I didn't. Right? So what are you going to do? I'm going to hang on. Okay. By the way, have you noticed something happening interesting with the rent? Yes, I did notice. What's happening there? Super stable going up. Not you know not shooting up going up. Interesting. Okay, so I hang on to that property. 180, 84,500, 365, 370-ish now today, right? Depending on on the if Zillow is on a good day or a bad day, right? So so that's where that property is. I follow the same advice I gave you. I told myself, shut up, right? Did not use the F word with myself, and just let let's write it. So what I mean by riding it, I just, I bought quality. I went into— there is a financial, you know, situation going around. I'm hanging on to the property. Be patient. So happens that at least so far, every time we had a downturn, rents did not crash. They actually went up or at least stabilized, which is nice. I don't know if it's going to repeat that behavior in the future, but it did happen probably 4 or 5 crashes back. And I just hang on to it. So, if you are buying long term, you're inherently hedging against downturn in the economic times. You're just hedging just by keeping quality long term, you're hedging, built-in hedge. And if it's 10 years, and you were thinking you will sell it in 10 years, and exactly in 10 years, there is a downturn. What What do you do? That was the real question. What do you do?

Hold it.

Nothing. Yeah, hold it, hang on, be patient, right? So, hang on to that property. There's nothing wrong. So, quality home, long-term, if you are trying to overthink it or overanalyze it, you're working too hard. Just wanted to share, by the way, am I allowed to give a little gift? Is that okay?

Okay.

So this is just my, you know, my plans for us for 2025. Just want to share with you, we launched in last year, we launched what we call for our clients an ecosystem to honor self-managing their properties. So we use property managers. We're now offering our clients a better environment to manage their properties. Remember, that's all remote in other states. We started working On hybrid, we call it hybrid and MTR, midterm rentals. We have 2 already operational, 3rd one is being renovated. Just had good news today that one of those got, you know, one of those insurance claims, they moved out, moved in a few hours ago. So that was nice to do it for a month with a possibility for extension.

What's MTR?

MTR, midterm rentals. And I can definitely expand on that if you want during the conversation. Section. I'm doing— I've done a subject-to. I told Jessica, I've been investing for 20 years, always steered away from creative stuff like subject-to and assumption loans and all of those. I'm on my 3rd or 4th deal of those type of deals as we speak. And I told her just this week, it took me only 20 years to build the confidence to do those type of deals, right? I think I'm ready. Okay, so right now I'm I did a subject to in August. I am on contract in Tennessee for a VA assumption. I have 2 other VA assumption and subject to kind of in the works. I am in Phoenix on one that is seller buyback, seller leaseback with an option to buyback, praying they would not use that. I'm still under contract, praying they won't use that option to buy back in 2 years. And if they do, that's okay too. I'm still making money, but I'm hoping they won't. So finally, I can share with you, I'm ready to do more creative deals. And I've started doing those. So yeah, that's— so I want to do more of those. By the way, it came out of pure necessity. The interest rate is really tough to cash flow, right? I know you know that. So it came out of pure necessity. And we are Hopefully going to see more because we have a large buying power. We are able to tap into packages and kind of work with our clients to buy packages. So I'm hoping we'll do more of those. So that's kind of in general what my plan for 2025. If you, if you like my style of speaking and sharing, right, and you just want more of that, There is definitely a YouTube channel with well over 400 videos, a lot of content sharing, sharing, sharing, sharing. I'm not very good with sales pitch. I'm good with sharing. So that's very much my style online, offline is the same, podcast as well. You can definitely continue to consume more content. If my talk is not really your flavor and style, tough for you. What can I do? You're stuck with me for tonight. There's nothing much I can do about it at the moment. I can only apologize, right? I'll buy you a beer after. Okay? Please don't leave me a bad review. I don't even know where you put reviews, but just— okay.

Right there.

Thank you. I'll get you a large one. Okay. Just briefly, Simply Do It is my company. You know, Jessica here works with me. We do all 100% long-term investing. Out of state, primarily single-family duplexes, sometimes triplexes and fourplexes. I've personally done land and commercial a little bit, and tax liens and tax deeds and different things over my career. My bread and butter has always been that residential properties, you know, out of state, long term. We have metros and agents that we vet and train, and property managers that we vet and train and properties that we vet and train— not train, sorry, just vet. Very active in Greater Nashville, St. Louis, Kansas City, Birmingham these days. We do have activity in Dallas-Fort Worth, Tampa, Houston, and Atlanta, and working on a package in Florida literally today. When I told you we are practicing those questions, remember I told you about questions? We just finished a document of 24 questions That we already sent to that builder that we're going to meet with and review all those things. This is exactly everything I'm saying. I'm practicing. I'm not just here to share. I'm going to skip that. Okay. A little gift for you if you want, only if you want. I have a very easy common sense with a lot of nuggets and wisdom ebook. You can get that, plus over the years I've just accumulated a lot of links and resources that I use, that you can use. We have about 90 of them. Some of them are podcasts, some of them are sites that you know, some of them I'm sure they will be new to you. So it's a list of 90-ish different resources as real estate investors. And we created a curated out of the videos on YouTube because there's so many, We just picked the best 7 or 8. All of those, if you sign up, go to simplydoit.net/simplydoits, gifts with an S, and put the code. It does cost money. Put the code simplydoit10, right? You will get that back in your email. We had a glitch with it last time I was talking about it. So if something happens, you just let us know and we'll make sure you'll have it. So no problem there. And that being said, I think we'll start with— we're okay to start with some questions. We have 2 that I promised to respond to. You want to start? Remind me your question. You know, you have to come up with 10 to 20% every single time, but you're not going to get that return for quite some time. So is the problem getting funding or getting the down payment for the next day or both? I would say down payment. So the problem is the down payment?

Yeah.

Okay. But funding is not a problem? Or let's assume that's not an issue at the moment? Okay, okay, okay. So there, there's many ways how to go about getting— so what's your main question for me? What I'm hearing is like, I use my resource, my, my funds, I bought one or two or whatever, I'm tapped out, but I want to proceed, right? So I want more money the down payment for the next one. Okay, for me, the easiest way— first of all, not necessarily the, the best way, but the easiest way— is to see if you have available resources at your disposal you can tap into. For example, maybe you have equity in some of the properties you already own, but you don't want to let those beautiful interest rates from 3 years ago by refinancing but you still want to tap into that equity. Is that available even a little bit to tap into? Maybe 3 properties, you pull, I don't know, 30, 30, 30, whatever. Is that doable? Do you have equity in houses? The 2 that I have the most equity are sub-to with seller finance. That's okay. Okay, but do you have equity in that sub-to? Okay, so you don't want to touch— I understand fully, you don't want to touch the current mortgage for many reasons. But do you own that property?

Yes.

Okay, you can do a HELOC on an investment property. There aren't many resources, but there's few that will give you a HELOC or a HELOAN. Anybody knows what a HELOAN is? Heard the term? HELOAN is a nice terminology for, uh, basically second mortgage, right, in simple terms. One second. So HELOC on your— let's just say that those 2 properties have— you can pull $30,000 each and that's sufficient. I don't know. So HELOC is an option, relatively easy. The problem with the HELOC is that that will burden, put more financial pressure on the existing home. And now let's say you don't have enough cash flow to cover the HELOC, or maybe you do, right? Remember the negative cash flow I talked about? You got to carefully measure that. Do we have enough? So let me put it this way. Maybe let's just say in one of those houses you have $100,000 in equity and you can pull $70,000. Okay, just for a moment. That doesn't mean you need or should pull $70,000. Maybe you should only pull $30,000. Why? Not to put too much pressure on the high leverage negative cash flow I talked about earlier. for that reason exactly. Okay, so be careful with the HELOC. You don't necessarily need to maximize it because you're jeopardizing everything else, right? So you may want to measure that. Option 1, HELOC. HELOC. Option 2, option 2 is, do you have a retirement account? Yeah, I just started a self-directed IRA. Self-directed. Do you know you can use financing with self-directed?

I see.

Okay, so let me just make sure I bring everybody on the same page. If you have a retirement account from an employer, usually when you're employed with that employer, you cannot change that, touch that retirement account. But if you left that employer or just left or about to leave, you can actually convert that retirement account to what's called self-directed. Okay, self-directed, you're the boss, you're deciding what to do, and you can invest that money. By the way, again, I'm doing it myself in real estate investment. Okay. You can pay the penalty. You can pay the penalty, you can, but you don't have to. You don't have to. You just have to go through the hassle and trouble of converting it into a self-directed. By the way, you can also use it, do self-directed yourself without going to a third-party custodian. Not a lot of people know that. And when you're self-directing that, you can go and invest in real estate. There are at least one, maybe 2 specialized lenders, because those are non-recourse loans that will let you borrow, get a mortgage for self-directed, you know, money, right? Prepare for 40% down, not 30% down or 20%, and with the rest of the mortgage. So you can convert and you can get a mortgage. Okay. Should I continue for more options?

Yes. Yeah. So I was asking about cross-collateral.

Cross-collateral.

Like in her situation, if she has assets.

Yeah, that's a good idea. But cross-collateral will probably— from my experience, no conventional lender will do that. only private money. Private money typically are not looking for long term. So if you're looking for short-term loan, that would work. If you're looking for long term, right, more than 2 years, that can be challenging. That has been my experience. I could be wrong, and that's a good point. Maybe there's a way to use cross-collateral in a better way. I have not found a conventional lender that will allow cross-collateral. Please correct me if you know something else. But for like quick flips, For quick flips. Absolutely. For short-term investment, absolutely. Long-term would be more challenging. Okay, um, more options. If you have a stock portfolio, right, you can borrow against the stock portfolio, borrow money and use that. Okay, that's another one. If you have equity in your own home, you can use HELOC. That's the easiest HELOC from all the HELOCs on your own primary residence. Again, just because you have So much equity doesn't mean you need to tap into that. If you're tapping all those options, the next one will probably be maybe partnering up with someone who has the funds but not the time, energy, or they have the fear. And you can say, I'll be the one running the show. I have my experience. I can find deals. Let's do it in a way that maybe even you bring the mortgage, they bring the cash, or some sort of And then you partner up with that person. There is a— anytime you're looking, you're going after the conventional financing and you're trying to do— be creative with the down payment, know this: the lender will question any funds coming into your account that has not been there for the past 2 statements. So that means if that person wants to partner with you, the first trust they need to do Put the money, you know, in your account for 2, actually 2+ months, 2 cycles of statements in your bank account, and be very confident that you're not going to take off. Okay, so that's a trust level that is there. You just have to make sure, because if the money comes in the day before closing or the month before closing, the lender, no matter what you tell the lender, it's my mother's, it's my brother's, it doesn't matter. This is borrowed money, borrowed money on a conventional mortgage, disqualifying you immediately. Okay, they are so strict, it's unbelievable. Okay, what they want to trace down all the way to the root. So they'll go, they'll go to the root. I mean, if you tell them you sold stocks, show me. If you tell them I got— they'll go as far back as far because Regulatory-wise, you cannot, it's not what you tell them. Their working assumption, you're borrowing unless you prove me otherwise. And proof is not your word, okay? Sorry, not me, just those jerks, sorry. Okay, you had a question. You forgot your question? Yes, you answered mine. I did answer?

Yeah.

Oh, okay, good. I didn't know that, okay, yes?

Hi, concerning solo IRA, I have a— I have an IRA that was from, uh, was it— it was money that was given to me by my ex when we got divorced 10 years ago.

Okay.

It's not a lot of money, it's like $33,000, but it's something that I could hopefully tap and use for something, right? So I'm considering converting to a solo. I'm just not exactly sure how I can do that. From what I understand is once How much time I have if I give money to you, for example, for an investment, how quickly I have to reinvest? I know I have to put that money back into the Solo IRA, right? You can't just take it out forever. You have to take it out for a period of time and then re-put it back into—

What do you mean re-put it? Like, uh, first of all, thank you for giving me money, but what do you think about— what do you mean by giving back?

I took out $20 grand to invest.

Okay.

From what I understand, that money has to go back.

Okay.

That $20 grand has to make its way back in.

Okay. My understanding is, and the way I am also exercising that money, so the way I look at those self-directed accounts, I call it a third arm. Okay. Why? Because it's similar to the two that you already have, but it's a little bit weird, right? It's kind of, what is this, right? We can use it, we cannot use it. Okay, so for me it's just a little bit like a third arm, right? But hey, 3 arms, that's good. So, um, the money— think about it this way. When you buy, let's just say you buy a rental property and you use the self-directed money as a down payment. From that point on, anything related to that property in and out has to go either back— rent is coming in going back to the self-directed account. You pay some expenses, mortgage, whatever, has to come out of that account, right? So that's why I'm saying it's a third weird arm because it's you but it's not you.

Okay.

So it doesn't have to come back immediately or with a timeframe. You just need to understand in your boxes, this is a box for the self-directed. Money related to this activity has to come from this. Come out from this account for this activity and go back to that account for this activity. If you have another property, this cannot go like, you know, cross-mingling or something like that. Separate firewall between those 2 and everything that comes from that property, sale, rent, whatever, flows back into that self-directed account, enriching that self-directed account, benefiting you through that account. Okay? You cannot tap into that for the day-to-day. This is a future benefit when you start tapping into the account at a certain age later on. Make sense? Perfect. Okay. Yes, guys, I told you to learn how to ask questions. You're not really doing your homework.

You've been in this industry for 20-plus years.

Yes.

So, where we're at right now, what would you say is your top area of focus right now? Meaning like, okay, I'm doing Section 8.

Okay.

Fix and flip. What are you targeting?

Okay. So, the question is, I'll repeat, what am I seeing these days or what are my main strategies these days based on what my interpretation of the cycle of real estate we are in. Okay? Okay. So first of all, I think it's really important to remember, first, there's always opportunities. There's always opportunities. Sometimes, and that's what we work on a lot, is we take this property that we say, okay, this looks interesting, but it's not good enough for our standards or something is missing. Can we turn it around and make it an opportunity? Right? Maybe not, but we will try. I'll give you an example in a moment. Um, so remember that, right? Second, every market and every niche is different, right? What I'm seeing in Austin right now is very much different behavior than what I'm seeing in St. Louis. Very different, right? So I cannot box them all together. I got to make sure I understand that. And this is me saying on single-family homes. If you are apartment building investor, maybe you'll agree with me, but you see things differently. Okay. Personally, what I've kind of been focusing for the past year and a half, mainly because of the interest rate, is how can I— like, for me— So, we work with a lot of investors and our investors, one of the things that's really important to them is to have somewhat of a cash flow. Very realistically, $100, $150, $200 a month cash flow. They do not have high expectations. And when I say $200 a month, I mean realistically, not beautify, not worst-case scenario. We don't do worst case and we don't do best case. I call it, when I showed you my Excel a second ago, my approach, and this is how we train everybody, realistic case scenario. And a little bit conservatism, a little bit cautiousness. Okay, when we go through the realistic, that means there's cash, there's rent and property taxes, insurance, vacancy, listing fee, everything. I want to hit that $200 or more, so we spend a lot of time vetting out properties. Now If I'm able to find a property— so here's, let me give you an example. I was able to find in a city called Clarksville, Tennessee, which we have many properties in, this property that is VA mortgage of 3— I can't remember, 3.5% maybe. Been sitting on the market for good 90, 100, maybe even more days, not really moving. Price is being dropped. And I put an email. I have my own template that I keep polishing. I said, I said to the, to the, to the agent, I'm willing to pay full price for just about full price if— and I already knew what the mortgage is and the VA and the interest rate in it— if your seller is willing to do a VA. So much so, I wrote a guide about VA assumption because I know most people don't know what What it means, they know there is a thing called VA assumption. Most people, agents and sellers, do not really understand what VA assumption is. They just heard you cannot, you can, you're allowed, you're not. All BS of hearing, many don't know. So I have a guide that I created just by researching it. And I always say, by the way, if you want, I'll send you that guide or I send the link. So I can educate them and let them help them educate their client, right? So I need to educate the agents, to educate the client, to come back with an answer. Sometimes I do meet people that are knowledgeable. And my offer was this. They were asking $315,000. I said $310,000, seller finance— sorry, VA assumption, or $295,000 conventional mortgage. I'm sorry, but that's not me saying— that's the current interest rate, right? I'm never to blame. I'm always blaming the markets, right? That's my offer. 2 offers in same one. And then I add the following: by the way, I'm willing to work with the seller if they want to stay for— to rent it back for a short period of time or long period of time, okay? I'm willing to work with them. I am an investor. And something like maybe some other thing, right? Very short, very specific. You know, I even show them what will— in my email, how much money the seller will walk away with with a VA. Sometimes I show them with a VA, that's how much they'll walk away with. With conventional, you know, they walk away with $15,000 less or something like that, or $20,000. And I send it. I have sent, uh, let's just say in the past 3 weeks, I think out of 10 such emails, only 10. I got responded, you know, maybe 8. 4 responded back. 4 responded.

Me too.

I got me too. I'm like, what? What's that? What did I find? I don't know. It never happened to me. 4 responded back. One, I'm under contract, right? And then she liked the idea that they want to rent it back. And then we start negotiating on the leaseback. I start with $2,800. I know it's crazy, but I want to test the water. Like, wow, you crazy! I say, okay, well, $2,200 will be— and I'm like, I'm pushing, you know, $2,200. Well, $2,200 will work, but they want not 6 months, 9 months. I'm like, okay, I'll do it one way. I'll do you a favor. 9 months, I'm okay with it. So $2,200 a month leaseback, VA assumption low interest rates, and all of a sudden this deal that was okay to begin with turned out to be really good. Okay, so I'm looking for those deals. It requires a lot of time and attention and research, and in order to present that— the other one that I got a response, I just told that guy that, uh, he, he told me, listen, I'll work with you, I'm so desperate, my seller won't budge. Seller won't budge, I can't do anything with it because they're just— oh, that's okay, moved on. Third one, HOA is not allowing to lease. I can't remember what happened with the fourth one, right? So, I got good responses. Every one of those deals require a lot of time to— to get to one, I probably look at 50, right? Send so many emails. So, it's very, very, very time-consuming. But, when you— if you really get to where I'm getting, the ones that I'm able to put together, Are pretty good. I mean, much more than your average. So, I'm really going after those transactions in order to generate higher cash flow. So, that's avenue 1 that I'm still ironing out. Like, this is not for me even something that I'm ready to pull out. I'm just testing the water with my own money to make sure when I go to my clients, I have more, you know, I've been through the, through the, you know, the kinks, right? That's one.

2?

Did you see that I wrote hybrid and MTR? Anybody knows what a hybrid rental or MTR rental is?

Midterm rental.

So midterm rentals, everybody heard about the midterm rentals? The most known midterm rentals. So midterm rentals, like it says, it's not the STR Airbnb and it's not the long-term rentals. But it's very similar to the Airbnb. Why? Because we buy, furnish more than Airbnb. The reason we furnish more than Airbnb, because many times the Airbnb are vacation short-term rentals and people don't cook, they order in, they don't need all the— in an MTR, that's a family that's going to come in and live there for months, 2, 3, 4, 6, and 9 or more.

Right.

Now, the most known story about midterm rentals is the insurance claim. Okay, what is insurance claim? You got an insurance situation. I don't know how many of you met or know someone who've actually had that problem. I personally know 3 or 4 personally, and the insurance has, you know, by the way, Palisades, those are people that are now renting, and who's paying for the rent? The insurance company, for those who have rent and that type of coverage. Okay, so the insurance is paying and they are paying premium because they're paying based on the value of the property, right? So the people from those fires are probably getting $20,000, $30,000, $40,000, $50,000 a month in rents because it's based on the value of the property. They're not paying $5,000 on those houses, right? Because they're supposed to maintain their similar lifestyle.

Okay.

So, for example, one of our MTR properties today at 11:15 Atlanta time, we got a— someone approached my guy in Atlanta who's doing the fieldwork and said, I have a septic backup situation, insurance, whatever, what we call crappy situation in my house, and I need a house. At 12:15, everything is locked, signed, done. And they move this afternoon. Okay, I haven't double-checked that they moved, that they're scheduled to move this afternoon because something happened. The insurance is paying. This is a house that cost $420,500 with everything, with a little bit of renovation, tiny, tiny bit, and all the furnishing included. And when I say furnishing, utensils and barbecue and everything, because people have to live there. Washer and dryer and everything. The rent is $5,200 a month. Okay, that house on a long-term rental, $2,200, $2,300, you know what, $2,500 maybe, maybe nicer. It's a really beautiful house, right? So why am I doing this? Because I am, for the past 2 years or so, really putting a lot of time and energy. How do I generate more cash flow for our properties because it'll be— it'll make my life easier selling properties and my clients more, you know, appreciative of that. So that's the MTR. The reason we call it hybrid rental and not MTR is because our model is the midterm rentals focus, but in between one MTR tenant to another, we want to bring Bring in the short-term rental. We want to bring the bridal event. We want to bring the baby shower. We want to bring the the student who needs to do a student film. We are not bringing the adult film industry, right? Some do. We are not. I think it's too much cleaning. So, but we are really see the the MTR concept made me start looking at a property as All right, this is not an investment property. This is an asset that I need to maximize occupancy. Okay, and it's a juggling act between short-term type of short-term and the MTR. But we are very clear, we don't want to be in the hospitality business, right? That's not a— that's a— for me and my partner in Atlanta, it's a, it's a grind that it's unpleasant. I don't know if someone is doing the short-term rental, if you're enjoying it Oh my God, you should be property managers. But if you are, you know, like me, that you don't like that, that personal flavor, then supplementing with the short-term rental while we're focusing on the MTR, and we have continuously improving our MTR marketing efforts to access those resources. And we had a Falcon NFL player for 6 weeks. Coming from training camp, insurance incident multiple. He just told me today that on one of the houses someone is finally vacating after ten months of they came in for six months. They're vacating finally after ten months. We already assume that this person will extend beyond one month. We added another property over the weekend, a short-term rental person that came in. She told him. She has some— she's from Florida. She came in for a specialist, some sort of an allergy, anything. The minute he said came in from Florida, had some allergies and needed some special— I don't know, something special. I told him, call them up. Call that couple that only rented it for the weekend and say, we will work with you if needed to buy additional filters, to buy additional air filters. you know, water filtration, something, they'll pay for it, or we will find a way how to mitigate it. But we will work for you to make this out in your favor if you stay multiple months. So I wanted to extend an understanding, but also I have seen there is a whole category of medical housing in the sense that specialists that are converting their properties, adding filtration and Higher level of air filtration, water filtration for special situations. Those pay top dollars. Like for me, maybe that's not the case of a top medical situation, but I wanted to lock in that tenant. How do you think a tenant who's suffering from allergies traveling away from home for specialists? My guy reached out to her and said, "Let me find a way how we can work and make make this house work for you." Right? How mind-blowing! And we will. And if we would even invest a little bit more. if it secures that kind of a tenant. That make sense? Yeah, sure. What percentage of those are traveling doctors? We are, there's a whole category of traveling nurses and we are, I'm not saying we're not looking into that, but that's not our, for us, I want the family, listen, I want the family that have just been through some problem in their house in Irvine. I'm talking about over there, but I'm not looking for the nurse. I'm looking for that stability of type of a tenant that are having some issue insurance-wise, and it doesn't have to be a travel nurse or a doctor. At the same time, I'm definitely, you know, marketing to those group because if they show up and they're interested, I mean, I'm okay. I'm not against it. It's just not our focus, right? Main focus. Okay. Yes. Data on for the MTR. There is none so far that I was able to locate that already came up.

I meant year-round.

Not enough properties, not enough time for me to even say, here's where— here's what we go, right? And we had a very slow December, January. Not sure what's happening. Not just us, you know, our little community of MTRs in that area. And today, locked in. Okay, so everybody's happy. How are you marketing to those groups like the insurance companies? How much money do you have? So I've been building the marketing channels for the past 3, 4, or 5 months extensively, right? And I spend hours, hours searching, finding, mapping, reaching out, right? This is such a grind, unbelievable, right? So, it is, you know, this is not a new thing, but it's a very immature niche, right? So, for the right price, I'm willing to sell it, right? But just you and I, we can't say unless you're paying for everybody at least 5 digits. How do VA assumptions work?

How? VA assumptions.

How do VA assumptions work? Okay. All right, so VA, first of all, is a person who's a VA, got a loan from the, you know, through the VA, right? Now, in the VA, it's allowed by the program for someone else to assume that loan. However, it used to be, to my understanding, only a primary residence could assume the loan. My reading, my research showed that not too long ago they said no, no, everybody can assume even even rental properties, right? The problem is a lot of people are not aware of that change. So the only person who, my understanding, cannot assume a VA loan is another VA. Okay. Now what? Other person has to be a No, no, no, no, that's a misconception. That's a miss— that's a very known misconception. So actually, another VA cannot assume the, the current VA. They have to file, they have to get their own VA. Now, with the VA, there are some many, many challenges on that. Number one, unfortunately, it's at the lender's discretion. So the lender that I'm going through, I need to file, I need to, to do an application, they need to approve it. To approve me, they may come back for whatever reason and say unapproved, right? So I have an— I have in the contract saying everything related to this transaction is contingent upon that approval, and even my inspection period only starts after I get the approval, right? The problem is the VA is notoriously— those lenders, not the VA— notoriously known to take their time. So for From what I've been reading and talking, you can expect it to last 90 days closing. 90 days. Nobody likes to hear 90 days, but it is what it is. I'm okay to do it in 30. It's not up to me. I cannot commit to 30 or 45. It's a VA lender discretion and they have to go through their process. Hopefully they won't take as long, especially nowadays where probably they're not as busy. as other times. So, um, now the tricky part that a lot of the VAs, the VA or the agent don't know is that when you are a VA, there is an eligibility budget. Okay, there's so much VA that you can use. When you are— when I'm assuming the VA mortgage, I'm actually using part of that eligibility. Eligibility is based on years of service and different things. I don't even know the formula. So So it's not like a fixed number. So if I am assuming a person on a VA and they leave that budget with that house with me, next time they're going to go and buy, they're going to have less of eligibility budget. However, that is not necessarily nickel and dime, meaning maybe they have $600,000 in their eligibility budget and I'm taking $200,000, they still have $400,000. So that's not necessarily a problem. One call to the lender and they know exactly where they stand. So it's not that mystery. Only they can call and find out. So once I'm assuming it, when the assumption takes place, this shows up as my mortgage on my credit, not the VA. The VA is completely away, right? They are no longer connected. Anything that happens on that day of changing ownership, from this day forward, I have another mortgage to my name. All the terms stays the same. Exactly. What's the balance on that day? That's my balance. What's the rate? That's my rate. The number of years? Exactly, right? It only— it's the mortgage. We're just switching it from this person to this person. Done. That VA is no longer liable. And by the way, that's one of the reasons I like this VA assumption more than a subject-to. On a subject-to, you may still have some sort of connections one way or another to the current— even listen, when I did the subject-to, I have so— I'm blown away how many documents I have from that person, like unbelievable, and I'm still not sure I have everything. Yes.

So at what point will their eligibility come back? Whenever you refinance or what?

I think that— I'm not sure, but I think the day I'm removing that mortgage, that's back to them. That's their eligibility budget, you know, goes up, right? Okay. You guys, thank you very much. It's been a pleasure. Thank you very much, Joe and Alex, for having me. Don't forget to put the reviews. Right? Reviews? Just kidding.