Joe Homs interview by Shane Harder

Today's guest is Joe Holmes. Now he's a real estate investor based out of Southern California, where he has an education platform for real estate investors to learn how to do it successfully, and it's completely free. So if you're interested in either 40+ years of experience, learning how to actually invest in Southern California and find deals there, or in his training course, stay tuned. It's all coming up next. I'm Shane Harder, and I'm obsessed with becoming financially free through real estate. So let's become financially free together. All right, before we jump into Joe's interview, I just wanted to give you one little extra value add, and that would be working with us. So I'm with Greenlight Multifamily Properties, and our team together finds lots of great apartment complexes to buy, invest in. So if you'd like to be included in those, go ahead and click on the link below in the video description, and you'll get all the details behind that there. And without further ado, let's learn from Joe. Tell me a little bit about your life. Where did you get started? How long have you been doing it? You know, tell me your story.

A little over 40 years, believe it or not, I've been involved with real estate in one form or the other. A little bit farther back, this was a business that was taught to me by my father. I was literally in high school, and even before then, he was purchasing properties. Back then, really just buy-and-holds and renting them out. Obviously, as the renters moved out, He's grabbing me and saying, guess what you're doing this weekend? You're painting the house inside with me.

Amazing.

I was 20, no cell phones, no internet, nothing. I bought my first house. I was so excited at 20 to be able to not only qualify by myself but to buy a house. I moved from my bachelor pad, I called it my bachelor pad, into the house that my wife and I bought together because she didn't want to live in my bachelor pad. And about 6 months later, I was perusing what used to be a local paper here. And you said you grew up here, so you might remember the Penny Saver. It was just a local throwaway paper.

Of course, yeah.

And that's the type of advertising that was done back then. Again, no internet, no nothing, just, you know, papers.

Not in the Yellow Pages.

Then the Yellow Pages. So it was the description of the property, 2-bedroom, 1-bath, takeover payment. I go, what? What is that? You know, it's like—

So, is that a seller financing kind of thing?

Back then, yeah, kind of a little bit. And what was happening was she was getting a divorce and the loan on the property was an FHA loan. And back then, we used to be able to assume those loans, which means it stayed in the name of the seller, but we just took over the payments, which is what she wanted me to do. So, I literally took over 2 payments and, you know, I owned that property. I still own that property.

That's amazing. So you get put on the title?

I get put on title, yes.

But then the name of the loan is still in the original seller's name. So if you default, are they on the hook for that?

Yes.

Oh my goodness.

Wow. You know what?

You know what I miss about days like that is trust and handshakes. You know, people would actually trust each other and people would come through on it. It's such a cool thing. You don't really see that in today's world anymore.

True, absolutely true. I am still a man of my word. I mean, if I tell you something, that's the way it is. We don't need to have a contract together. In fact, most of the time when I'm working with buyers, we— and nowadays we have what's called a buyer broker agreement, which basically ties the buyer to me. I don't believe in things like that. I believe literally in sitting down with you, finding out what your needs are, explaining that, you know, I'm going to go through this process with you. I'm going to show you all these properties. Hopefully you, you know, have loyalty back to me so that you're not one weekend looking at something and end up writing an offer with somebody else. So I kind of, I guess, maybe a little naively assume that people are responsible nowadays and are the handshake type person, but I deal with it, you know, just whatever comes along. So purchased that property. Again, I still do own that property. It's obviously— the loan's been paid off. I didn't pay it off.

About 40 years ago.

Yes. Yeah, I paid $55,000. It's probably worth around $350,000 now. It's gone up and down in the market 3 times in my lifetime. The first time it went down, or actually went up to about $100,000, $125,000, and then the first bubble came and it came really back down to $50,000 again. And I go, well, I'm depressed. You know, I was up here. I should have sold up there, you know, but I'm a long-term buy-and-hold type person, especially if you're young. Okay, so then the next cycle, it went back up to about $250,000 around there, and then it went back down again, but only to $100,000 this time, which is awesome. I go, okay, well, at least I didn't, you know, go back down to $50,000. Third time, it literally went up to $450,000. And then 10 years ago, it went back down to 100.

That must have been 2008.

Yes. Okay, so I'm investing a lot in a certain community locally here in San Juan Capistrano, and they're condominiums. I love condominiums because I don't have to take care of anything on the outside. I mean, you know, I don't have to paint, I don't care about the roofs, I don't care about gardening, I don't do any of that stuff. I take care of the inside. So now I've gone through 3 of these cycles and it's back down to $100,000. What would you do if you were an investor and you looked at that and you've had this history? What would you do in that community? What would you do?

Oh, I would, I would buy more of them.

Yes. Yeah, I bought 10 more.

There you go. Yes.

Yeah. So now I'm in the process of either selling them because I'm older than you are. And at the end of the day, I can't take it with me. So I have to, you know, be able to kind of use it to do other things. I'm doing 1031 exchanges as well with some of the properties. So I'm going from what I would describe a C property, I'm moving that up to a B property, a condo that's 40, 45 years old. I'm buying properties locally here for about the same price that I'm selling the condo for. So to me, that's a great trade, you know, going from a B to— I'm sorry, from a C to a B property. And having something brand new to start all over again. I got my real estate license early because, again, I was a property owner. Now I'm a property manager. What is that? What do I do? You know, it's like, how do I educate myself? I mean, I, I value education, especially in real estate. It's got to be the number one thing. You know, you just have to educate yourself first before you jump into some of this stuff that, you know, people may be touting out there or not. You have to be feel comfortable with what you're doing. And that's why I think education is so important.

So tell me, you say education is really important, and I'm definitely not going to disagree with you, but for viewers, what kind of things, what kind of problems can people run into if they don't educate themselves that you've seen? You've had— you have a lot of experience in the industry.

Okay, so you're relying— if you don't have education, you're relying on other people to basically give you The truth and educate you along the way, where their motives may be entirely different than yours. If you're dealing with real estate agents, their motive is a commission at the end of the day. So, you know, whether you like this area or not, or whether you like the numbers that they give you or not, if you're not educated to figure out, you know, what's really the truth here, you're going to end up losing money on that deal. So it's very important to educate yourself and don't rely on other people to do all this stuff. I, I educate people literally all the time. That's one of the things that I have a passion for right now. I do a lot of mentoring and a lot of it through BiggerPockets. A lot of people reaching out to me. I've had 3 people today reach out to me. We're meeting later on this week and everybody's at a different stage in their real estate investing. You know, some are just starting, some are actually doing what I do, flip properties. One of the calls was a, you know, a guy that is going to get discharged from the military. And I love military people. I think they're the greatest thing since, you know, sliced bread. I have a lot of admiration for what they've done for this country. So I bend over backwards for them. And then I had another investor who's actually flipping property call me and he wants to know if I want to partner up with him. You know, so I've got the, you know, the range of things.

Have you done that in the past? Have you done some partnerships?

Oh yeah, I have partnerships right now.

Okay, cool. So you're pretty familiar with that arena?

Yeah.

Is it— have you— I'm sure if you're doing it now, that means you've had good experiences, but you probably had some bad experiences too. Is that— would that be fair to say?

Correct. Yes. Okay, so I had really kind of one bad experience. I'm a quick learner.

Okay, so without mentioning any, any names or anything like that, what, what, how did that— what was bad about it? What, how did that play out?

Okay, so, um, a business partner that I still do have today, him and I own, um, 2 or 3, no, 4 properties right now together. It was a buy-and-hold situation, and we decided together that we were going to flip a property. He was experienced in building cabinets, kitchen cabinets and stuff, so he said, I'll tackle that. You take care of the rest, Joe. So the painting and flooring and all that stuff was on me. It literally took him about 5 months to build the cabinets for the kitchen. And if you know anything about flips, the game is to in and out as quick as possible. And then the market was headed down.

So not only is your value going down, but you're also paying, you know, probably some degree of interest that you don't really want to be paying on—

Correct.

Was it a hard money loan?

It was a hard money loan.

So you're getting hit with your interest pretty heavily as well as depreciation. Oh man, that's a tough one.

Yeah. So we priced it too high. I told him it's a little bit too high, but again, he's a 50/50 partner, so I needed to listen to him. I guess now I don't, but I'll tell you why. So anyways, top of the market, we weren't getting any offers. We were dropping the price, but the market was doing this. So we're up here and the market doing this until finally I said, Enough is enough. 8 months into it, I dropped it down here. We ended up losing around $80 grand, so $40 each. But believe it or not, the next project we did, we made that back up. So it's, it's not like the end of the world. Big teachable moment. Huge. Anytime I take on a partner now, I have total control over the deal, whether they put 50/50 or not. I'm the expert. I take total control. Um, our Our transactions where I partner up with somebody always take on a different form. If it's a partner that I know can do 50% of the work or assist me with 50% of what needs to be done, then that's the way I will split it. If I have a partner that just basically, they just want to throw some money to say that they're a real estate investor, at that point— You're not going to do anything. Again, it depends on how much they're going to throw into the deal. If they're going to throw all the money into the deal and just hire me to do the expertise of, you know, fixing the property up, hiring the contractor, selling at the end of the day, then I take a smaller cut on that type of deal. Okay, so it just really depends on each person.

Great. And where are you finding your deals today? I mean, it sounds like you started in Southern California. Are you still— and you said you also invested quite a bit in San Mm-hmm. Is it still all in Southern California or are you going other places? Everything here.

Cool. Everything here.

But didn't you hear that there's no deals to be had in Southern California?

I hear that all the time. That's awesome because the last deal we did, we actually found it through kind of a wholesaler. He was a lender in San Diego. He came up to look at a property with his client and there was renters in there and the client wanted to refinance the property. They literally walked into a hoarder house.

Oh.

And the lender said, no, the bank is not going to give you a loan on this. Okay. So what do you want to do? Well, I guess we can sell it. Oh geez, we're not gonna be able to get much, are we? So the lender went back to San Diego, Googled flippers in Orange County and found me and my website, called me up, says, hey, you want to look at this property? You want to buy it? And I said, yeah, absolutely. So we went out there, gave them an offer and they accepted it. We just ended up closing on that property, I believe yesterday. We ended up making, I think it was $40,000 more than we had originally anticipated because the market is pretty hot right now. We did go look at a property on the MLS a couple of days ago. And again, that type of property you walk into as a normal buyer, you'd literally walk in and walk back out. It was a probate sale. It was a total mess. I mean, really, really bad inside. Just really bad. Really, really bad. Those are the properties we pick up. And even off the MLS, I have agents calling me and saying, hey, I've got this, you know, are you interested in it? And fine, that's fine. I mean, even if they want to double-end the transaction, which means they're representing the seller and the buyer, which is me, it's fine with me. I'm looking for the deal, okay? Because that's where I'm going to make my money, is the deal.

Sure. So about how much of your, your personal business comes from real estate investing versus acting as a real estate agent?

I'd say the majority, the majority comes from my fix and flips. You know, I do represent buyers and sellers as well, and those are people that I've met through either my meetup group that I have every month or BiggerPockets, a lot of them from BiggerPockets. Just literally sitting down with young people and listening to what they have to say, you know, trying to buy maybe some fixers for them, things like that, that at the end of the day they're going to, you know, put a little bit of money into it and still have some equity into the property. I just sold a place, a 3-bedroom condo in Santa Ana, And the guy wanted to basically house hack the other 2 bedrooms. So he got his payment down to about, at the end of the day after the 2 renters are kicking in, about $500. I go, you know, sign me up too. It's like, you know, where do you get those deals? Yeah, they're out there. You just have to look for them.

Yeah, I lived in Hawaii for a number of years and I know a few people who house hacked their home. It's so common out there. And especially in the countryside when you get out of Honolulu. And there's so many people I knew that, you know, they would just rent out their top floor or their bottom floor of their house, and, you know, they're living rent-free. You know, there's lots of stories like that. It's kind of amazing.

Mm-hmm.

Great. So you've been doing this for 40 years. That's a lot, lot, lot more than me. And what would you say to somebody like myself or somebody that's just getting started? Maybe they're not even started. Maybe they're just thinking about it. Maybe they heard about real estate flipping or just real estate investing in general as a good place to put your money. What would you say to them as somebody that's trying to get into the industry? Good tips to get started.

Great question. It is exactly what I do literally all the time. I mean, again, I'm meeting with somebody this afternoon. It's an hour at a coffee shop. What is it that you want to do? At the end of our conversation, I send out a series of about 8 emails. They start from, I've never done anything in real estate, maybe you ought to look at these things, okay? And they end up with a little bit more sophisticated stuff talking about LLCs, land trusts, things like that. Those, those are way more sophisticated items that as you become a more sophisticated investor, these are tools that you need to use To protect yourself. I don't know if you're familiar with a land trust, but that's one of the items that I use here. A land trust is basically a document that I use to record title to the property with the county recorder. None of these properties are recorded in my name. Why would I do that? Because anybody could sit down and go, hey, Joe Homs, and see how many properties he owns. And, you know, they find out that I own a bunch of properties, and if something happens, they want to sue me. Okay, so they can tie all that stuff together. In a land trust, you can title it whatever you want— 123 Main Street. They usually use the address, you know, 456 2nd Street or whatever. And that way it never ties it into anything else that I'm using. In the land trust itself, there's a document, and in the document says beneficiary. So the beneficiary of that means the owner, the actual owner of that property. That is my LLC. Okay, so then I've got privacy protection and it rolls right into liability protection as well. Okay, each one of those properties is owned in a different LLC, so I don't tie up all my assets basically under one LLC. They're all tied up differently. So again, coming back to your question, I kind of went off tangent there. Education is really number one. I can focus you in on a particular subject that you're interested in— fix and flips, wholesaling, buy and holds, note investing, any of those. But you really have to pick what is interesting to you. I can't do that for you. And like I tell the people, I'm happy to teach you what it is that you want to know. I'm teaching a wholesaling class on the weekend, and no charge. I don't charge for any of this stuff. I just want the deal that they get, I want the first deal. Okay. I think that's a fair trade. I'll teach you how to do this wholesaling stuff if you bring me back your first deal. And then after that, you can sell it for whatever you want. You know, doesn't matter to me.

Yeah, that's a great deal. Cool. So if you had to pick from all of those different different categories, what's your personal favorite?

I've always loved fix and flips. I love fix and flips because literally you're in and out as quick as possible. Your liability goes down tremendously. Buy and holds are something that, you know, you have to deal with until you sell the property. And, you know, you have to deal with tenants. And, you know, I don't know if you noticed, but California is really getting strict on landlords. And so you have to, you know, deal with all those issues as well. You know, but like I tell people, it's, you know, you deal with the issues that are presented at the time. You know, don't run out the door with your hair on fire, you know, because you think it's the end of the world, because it's not. You just have to learn how to deal with that issue.

Sure. A minute ago you just talked about the using a land trust and basically dividing all of your properties into separate LLCs. For somebody who has no idea what you're talking about, my understanding is that what you're doing is essentially protecting each one so that if one person has a property, they can't essentially go after all of your other assets and the, the other buildings. Is that correct?

That's correct. Yeah, that's totally correct. So let's say I have 10 properties and each of them are worth $100,000. Okay, if I have one LLC that is in charge of all of them, then if something happens in one, they can sue me on all of them, all the assets in that LLC. If they're all separated, they all have their own, then the only thing I'm at risk at is that $100,000, not the million.

Do you do that with flips as well? 'Cause I've heard of people that do it with everything.

Yes.

Yeah, you'll do it with flips as well?

Yes.

Cool, that's very interesting. Yeah, I've heard people have different opinions on that going back and forth on dealing with the hassle of it versus dealing with the reduced liability. And it's kind of a sliding scale. I think it's— one thing about real estate I think is so interesting is that there are definitely right ways and wrong ways, but a lot of it ends up being opinion and risk tolerance and— things like that for each individual person. And for— I think that's a beautiful thing because it makes the environment just as diverse as the humans that live in it. Is there anything that, you know, viewers could help you with, um, with your business? It sounds like you really like getting wholesale deals. Is that something that could be beneficial?

I love looking at wholesale deals. Um, you know, that's fine, send me as many as you want. However, I deal in Orange County, California. So that's where I'm looking. Every once in a while I'll go out to Riverside County, which is the next county over. Every once in a while, not too often, LA, and really the southern portion of LA. I don't like to go any farther than that. I've been doing this for 40 years. I really don't need to, you know, venture off someplace else. A lot of people ask me, well, Joe, do you invest out of state? And I go, absolutely not. Why would I do that? It's like, I'm already an expert here. If I went out of state, then I'd have to be an expert there, and I'm not there. And honestly, I mean, kudos to people who invest out of state. I just could not do that. I could not handle that. I'm pretty Type A, and I need to be able to see and control everything that I do. And for me to invest someplace else and to trust somebody else with what I'm doing here, I'd be just like— literally, I'd be just like everybody else. I'm I'm more of an advantage dealing with stuff that I know here as opposed to the next guy that maybe is not as experienced as I am here.

And can you give me like a— can you give me a little like a walkthrough on one of your favorite deals in the past? And if I'm listening to you correctly, I mean, I think what you're saying makes perfect sense. You can have a competitive advantage in one place, or you can go somewhere where you have no competitive advantage.

Correct.

So common sense, go with your competitive advantage.

Correct.

Go with where you know what you're talking about.

Correct. Yeah. So about, I want to say about 8 years back, my daughter graduated from college. She got a degree in something else unrelated to real estate, and she came to me and says, I want to sell real estate with you. I said, really?

It must have been like a psychology degree or sociology or something. It was. Absolutely.

How did you know that? That's like, wow, you must be reading my mind or something.

I must be. I don't know. I just find that I've run into a lot of people with degrees like that that are very hard to get an actual job in that field, and then they end up going and doing whatever else. So that's really all where that came from.

Wow, that's awesome.

Actually, no, I read your mind.

I'm a psychiatrist. So talk about timing. 8 years ago, what was We were, you know, down here starting to go up. Perfect time for somebody, you know, brand new, young, to be involved with real estate. At the time, I was listing probably 15 to 20 properties a month, okay? And all these were from the relationships that I had with flippers and stuff. They were buying at the courthouse steps. They were giving me the property to sell. I mean, I was so busy that I did need the help, so it was great that she got involved. So she got involved doing that. About 2 or 3 years later, her boyfriend at the time— they're now married— said that he wanted to talk to me about flipping properties. And he says, you know, can I use your money to flip properties? And I said, well, it doesn't kind of work like that, you know. I need you to go grab a tool belt and a hammer, and we'll find a project, and you and I will flip the property. So that I can teach you from the ground up how to do this. So found a property, rehabbed it ourselves, ended up making— he was at the time making about $45,000 in a sales job. And if you know anything about Orange County, if you're not making at least $100,000, you're not really kind of living. You know, that's unfortunate, but that's reality. So the first project we did, we ended up selling, we made $80,000. Wow. And I said, "Oh, that's pretty good." And he said, "Ooh, that's pretty good." He calls me a few days later and he goes, "Hey Joe, I just want to let you know I quit my job." I go, "When's the next one?" So we did, I think, three flips together, him and I, and then him and my daughter and myself formed a corporation, and we decided to up our game basically. So we started to hire contractors because. Him and I couldn't do everything.

Sure, there's a certain point where you just, you, you're going to limit the amount of deals you can do.

Yeah. So my daughter takes care of all the marketing for our property and all the design. She's really good at designing, you know, stuff. My son-in-law takes care of the contractors, which is the biggest headache in all our deals. I supply the money for them. We all 3 are actively looking for new properties to flip. You know, literally every day. So that's kind of our business. It has been for the last— I believe we've been doing it for about 5 years now with them. They do full-time. I was with another broker and he had to close down the office. My daughter was with us as well. He had to close down the office because he got sick. And so I told my daughter, because I told her when she graduated, she got her license, I told her Go back and get your broker's license. Because at the time, if you haven't had a college degree, you didn't have the 2-year requirement that's required now. So she went back and got it. I mean, crying, you know, I just got out of school, I don't want no more school. But anyway, she got it. And 3 years ago, we opened up this office here. I made her the broker of the office because, you know, what the heck do I want to be the principal broker of the office? You know, that's What she got her license for as well. So she's the principal broker of the office. My son-in-law is a broker. I'm a broker. We have about 20 agents. I've hired all of them. All of them have come through BiggerPockets, literally one-on-one meeting. Hey Joe, can you have coffee with me? Hey, by the way, I'm thinking about getting my license. What do you think about that? I think it's a great thing. When you're done, come back, talk to me. We hire them.

Very cool.

Yeah, very cool.

Anything else you'd like to add?

I'm a workaholic. I literally work 6 days a week. I only take Sundays off because my wife makes me take Sundays off. Usually end up going to the movies, watching something, but pretty much a workaholic. I've got an online automatic scheduling system that And I think you used it as well.

Yeah, I use Calendly myself as well.

Yeah, it's like, it's awesome. The only thing is, you know, I'm thinking it's like, well, I'm giving control over to my calendar to other people, but you know, it's fine. It really is. I mean, I'll see something pop up every once in a while and it's like, oh gee, I got an appointment at 9. I thought my first was at 11, but look, something popped up. Whatever, you know.

Calendly saves me a lot of time. Yeah, and that's the bottom line for me. And I, yeah, I don't— I would be lost without my calendar. Absolutely.

Yeah. So, yeah, yeah. So I'm passionate about, you know, mentoring, teaching young people. What am I going to do with this knowledge at my age? You know, I, I don't, I don't, you know, fault people who charge for this service or education that I give for free. That's up to them. If they can sleep at night, that's up to them. I don't, and there's no reason that I should. You know, my dad gave back to me, and so I just have to give back to other people.

So for people that want to get some kind of real estate knowledge, or they maybe want to use you as an agent, or maybe they've got— they're a wholesaler, they're looking to offload some deals on someone, or they just wanted to, you know, maybe reach out to you, what's the best way to get in contact with you? Is it through website, through BiggerPockets, Phone, email?

All of those. My website, you know, it's my name, joeholmes.com. That pretty much links you to anything related to me. I've got investor information in there. I've got 401 and IRA information in there, self-directed accounts that we didn't talk about. So different ways to, you know, fund your deals. BiggerPockets is awesome. It's great. You know, I've got—

You're very active on there.

Yeah, I've got Kind of a unique name too. So you, I mean, you can go on BiggerPockets and just put my Homs, my last name, and you'll find me right away. It's you know it's not like it's Smith or anything like that. So those are the best sources, and again, those have all my information on on those those basic two websites. My my website and BiggerPockets will have everything that you need to get a hold of me. And then you know just let me know what you what you're looking to do, how you're looking to do it, and if I can help you in any way, I'm fine. I can do that.

Sounds great. Joe, thank you so much.

Okay.

All right. All right, guys, just a little bit on my main takeaways from this interview with Joe. So I have 4 main points, but I'll start with number one. So you don't need to spend $50,000 on real estate education. Joe and others like him, I'm sure there's a lot of people in other states as well that will offer their advice, their help completely for free to other real estate investors to help them get on their way. Obviously, all he asked— I get hiccups. All he asked in that is that people he teaches wholesaling to will send them their first wholesaling deal. So he'll get first priority to one of those deals. I think that's a really, really fair and very cool thing that he offers. If you're interested in wholesaling at all or flipping or any of that, highly suggest you take a look at his link, see what he has to offer there. It's a really cool opportunity he's got. Second, really cool story with his son-in-law. He went from $40 grand a year to $80 grand in his first deal. That's pretty cool. And then he quit his job. So even cooler. So he's a great example of a success story. And then as you probably heard from the interview, how they went on to form their brokerage and really just pushed forward on real estate investing full-time from then on. What can you learn from that? If you are a beginning investor, just go ahead and just do your first deal. And if you're going to do it, if you're in that position, reach out to Joe because he's got free real estate education he will help you with. Very cool opportunity there. Again, third main point. I thought this was interesting because Southern California has been branded— well, all of California has been branded as a place where you can't invest in real estate because it's too expensive right now. Joe has made his entire living investing in Southern California. And I think that's a great example on how to invest in a more challenging market or what people, some people would consider a more challenging market. But I love his perspective on it. His perspective is that he has a competitive advantage in Southern California. So if he's got a competitive advantage in Southern California, why would he give up that competitive advantage and go try and invest somewhere else? So I think that makes a lot of sense. And one, the last thing, point number 4 that is not on the video, He gets a lot done through his networking channels. Networking, as a lot of you know, is very important. If you don't know that because you're not doing it yet, highly suggest you get into some kind of a networking group. He has a meetup group of, I think, 1,700 people that he regularly networks with. Through them, he gets deals, he finds other investors, he basically finds the connections he needs to make his business work and thrive. And I think that's really, really cool and a really inspiring and smart message for everyone. So that's that about Joe. As for our next episode, it's going to be with Andrew Tashian. Now he's a commercial real estate broker based out of Los Angeles. He sells large office buildings. He will walk you through some of those main core principles, the main things that you need to do to be competitive in that world. So I think that's going to be a very important lesson, something that I'll learn a lot from.