Real Estate Q&A Live

And here we go, another live episode of Multifamily Strategy streaming to pretty much all the places that you would watch anything live. Facebook, X, uh, YouTube, Instagram, the whole nine yards. If you have questions on any of those platforms, ask them here. Today is Q&A. Typically we go live every Wednesday at 3. In this case, I am doing a bonus live this week. Wednesday may or may not get a little busy, so I know the live will be a little shorter, so I'm opening up some additional time. Announcements, by the way, so much of our strategy here at Multifamily Strategy is based on the owner meeting. There is now a podcast called Multifamily Strategy. Watch on Spotify, anywhere else that you watch podcasts. Multifamily Strategy, where we just do owner meetings. It is just me interviewing owners from all over the country, and these are people who are further along in different places in their business, different walks of life, and we are getting their best tips and tricks, things they learned. We're talking about the thing that makes them great at their business And what I think is even more valuable, the highest stupid tax they've had to pay. When you're learning the things you don't know, you don't know. What can we help you avoid that will save you hundreds of thousands, maybe even millions of dollars? That is the Multifamily Strategy Podcast, available now wherever the heck you listen to podcasts. I prefer Spotify, but it's everywhere. All right, so diving in. What we're going to do is probably going to go for about 30 minutes, maybe an hour. As you have questions, I will answer the questions and we'll continue on in that rhythm. For those who are new to Multifamily Strategy Lives, this is one of my favorite things we get to do. We hop on YouTube, all the platforms. We talk about what's going on in the universe. We answer some Q&A. I'll be doing the same thing over on Instagram, which unfortunately is the only platform that requires me to look at it on a second screen. Everyone else's will pop up right here as an example. Here is Dylan, our good friend who was just in today's mentorship, which is also Q&A, saying what's up. Dylan, if you have more questions, I have more answers for you. Ask away, my friend. You're welcome to get us started. Things that we are working on right now: multifamily strategy, doing some massive expansion in Texas. So stay tuned for some of those plays. Um, my house is almost built there, so I will be moving there. I have found investing in Texas superior to investing in Washington. Work where you have a competitive advantage. We certainly had a competitive advantage in Washington when we got started. However, that doesn't, doesn't mean we have to stay here forever. I've traded out of some properties over here, opened up a little bit of cash, and I'm buying quite a few projects in Texas. In Washington, though, working on a 32-unit hotel conversion flip, which is very fun, super exciting. We just got all the siding stripped down. Ready for painting. I'll be there laying floors on Wednesday with Cody Davis and working on the RV park flip. We're not big flippers, but we are opening up some liquidity. That project, still working on getting the new septic in, but outside of that, collections way up. All the trash is picked up there. That was a really gross-looking park. It is now absolutely clean, looking beautiful, landscaped. We have one car that needs to be junked, but other than that, like projects are going along. Multifamily Strategy has been extremely, extremely fun for us. And, uh, yeah, absolute privilege to get to share with you guys. Uh, Luke has joined the chat. Uh, yo, Luke! We have two people who are on the, uh, uh, who are actually already in the Multifamily Strategy Mentorship Group, funny enough, uh, here asking some questions. Super excited. Uh, Troy asked, by the way, are we on Apple Podcast? I will be. It takes 2 weeks from the start of a podcast. I opened it up about 10 days ago, so we will be live on Apple. It takes longer than every other platform right now. Listen to us everywhere you listen but Apple Podcasts. I'll be on that very shortly, which should be very, very good for it. So listen literally anywhere else until, you know, probably sometime this week should start pushing out there, which will be really big for us. The first question from Dylan, I guess. Second question, what differences are there from workforce housing to student housing? I'm thinking higher turnover, different amenities, maybe more money marketing. So with workforce housing, you're looking at traditionally you're still looking at your full-term leases. So you're looking at a more standard lease. The marketing for it is going to be, you know, Facebook Marketplace, Apartments.com, all your basic student housing to be marketed specifically for student housing.. You want to look at the university that you are near and see what their dorm rates are going for. Now, something interesting with university versus doing student housing yourself, a pricing model that typically works is there is a premium for student housing because they— the universities will actually lease on 9 or 10-month leases knowing that there is an actual cycle where summer is off and students are not living there. If you can actually price yourself in a way where it costs the same as the university, but it's a 12-month lease. You get all the benefits of having an annual lease. The students then have the option to, hey, I can leave my stuff here, I can stay here over the summer, but they get a little bit more bang for their buck. Uh, that advice is from Matt Hawkins, Lumberjack Landlord, fantastic investor, does a lot of student housing. Now I have student housing projects and I really enjoy student housing, uh, but yeah, the marketing is going to be a little bit more aggressive. The turnover is— while it's consistent turnover, it's easier to plan for. You know, it goes with the school year, so you can actually plan out your marketing and your expenses. For those reasons and the stability of it, I really do enjoy student housing quite a bit. It's a great way to build your empire. And funny enough, um, that is how Sam Zell, one of the largest YouTube investors of all time, that's how he got started. Same exact thing. Student housing type of metric you look at for marketing, uh, apartments— for, uh, for marketing departments and for YouTube growth. I assume that's YT unless I'm thinking of something else because we're on live on YouTube. Um, what metric for marketing apartments and YT growth? Okay, I'll answer that as two things. Correct me if I'm wrong for what YT is. Um, but, uh, yeah, marketing apartments. Um, I am looking for excellent photos. Nothing is more important than getting the photos there. I'm looking to be— Facebook Marketplace works really well where I'm at, but I make sure that I'm on a platform that pushes it out to everything. So Appfolio, I can hit market, it'll go and push it out, syndicates out to all these other websites, it shows up there. But the quality of your pictures goes a very, very, very long way. People will click on that first, they'll decide they want to live there, that's how they determine where they want to tour. Get excellent photos. And if you have excellent photos, a decent description, um, away you go. Now on YouTube, there's only two things that matter. Not that I am a master of YouTube, but on our little 60,000-person channel, uh, what we have is, uh, what works: a catchy title and an excellent thumbnail. And that is most of what YouTube cares about. YouTube cares about how many people are going to watch all the way through the ads. They just want the ad revenue. They wanna get as many eyes as possible. On this channel, we choose to talk about what we think is most relevant, which is why some of my videos don't really go off very much because there's some times where I'm like, you know what, I need to share how to draft a better operating agreement. Not a lot of mass appeal, so YouTube growth will actually slow down. It's a cost of having an education channel. And one more from Dylan and then we'll dive into some other questions. Uh, Dylan, would you take lower return on a duplex knowing that it will grow and you're getting 30-year fixed? Would I take a lower return in exchange for— essentially what— how I'm reading this, would I take a lower return on a duplex, um, because I have 30-year fully amortized financing? As long as it cash flows, I would absolutely do that deal. If the lower return pays me to own it, I know that over the long run rents will go up, values will go up, especially over a 30-year term. I will buy a property on a little skinnier deal on 30-year fully amortized terms. That being said, I probably wouldn't do it on a duplex in the position I'm in today because that deal doesn't change anything at all for me. I'd rather buy a bigger property. But if you're getting started— I started with a duplex on 30-year long-term fixed rate debt. It's done very well. I am now at a point of my portfolio Uh, here, what are we at, 4 years later, where I'm renovating it. I have contractors in there right now, and I'm going to be listing it to sell in 15 days. So, um, I want to actually get all the benefits of that 30-year debt, but I did get a good deal of appreciation. I got a good deal of cash flow and helped get me started. So, uh, in your position, Dylan, I would. In my position, I would not. I really don't really have Facebook, but it's just the Do you have any official looking templates for LOIs or offer sheets? Um, I'd ask for some suggestions. By the way, we have a private Facebook page for Multifamily Strategy. We are opening that up to more people. You still have to apply so we don't have any weirdos in there. So it's a private group, but everyone watching this is welcome to that. That's Multifamily Strategy, uh, the group on Facebook. Um, letters of intent, I don't write them. I don't— I have either— I've done one and the broker wrote it for me, but I don't like doing LOIs. I form relationships with owners, and when we put together an offer, it's something I already have negotiated. I know we're going to accept. So I try as hard as I can to avoid letters of intent unless they need to happen. Now I'll use them more on businesses. What I try to avoid on offers and LOIs is actually creating a fill-in-the-blank template because everything should be custom. What we talk about multifamily strategy and what I love coaching through is how to present this to either your broker or your lawyer to get the right document drafted for you because not everything looks the same. So avoid LOIs if you can. As far as offers go, connect with the best broker and owner— or I'm sorry, broker or, uh, uh, lawyer that you can, and we'll work through exactly what it is that you need to communicate to them to get your offer accepted. All Nighter Hires here, so we officially do have a live, uh, hands full but listening. Really, really, really like to have you here. And he also says, reminder, hit the like button so we get this out to a few more people. We're probably going to go for about 30 minutes, maybe up to an hour today. I'll be getting some bonus time in because I'm gonna be laying floors on Wednesday. While we'll still go live, it will be only on YouTube., and we'll be, uh, uh, it'll be probably a little bit shorter because my time in Moses is limited. Hopping over to Instagram, see if we have any questions over there. We do not, but for those listening on Instagram, uh, feel free to ask questions. I will be checking the feed on IG as well. From Luke, would you rather invest in blue collar areas or white collar? Uh, does it make a difference? I do a lot of entry-level housing. There are some problems and benefits to both. I don't think there's a huge preference. What I have found though is when you're getting started, you typically start in blue-collar areas and work your way up to the nicer Class A properties. They typically get a lower return but are higher in passivity. When you're getting started, you want the highest possible return, so you're trying to get the stability and multiply your money. Once you hit a certain point of wealth, you do typically go for the nicer white-collar areas. So it's not really a preference thing, it's a really a how to get from point A to point B. I started in entry-level housing. I found the largest opportunities are consistently in entry-level housing, so I continue to operate there. There will be a point where I don't want to work the 85 to 100 hours a week that I work right now, and I'll probably take a step back because, you know, more than 12 hours a day, 6 days a week is— or 7 days a week is an awful lot to do. When I want some more passivity, I'll probably do some 1031ing into larger Class A. Assets. But also stay tuned because as I start to take out Texas, you'll notice an increase in the asset class that I am purchasing there versus what I built in Washington when I first got started. Austin, after you hold an owner meeting, what do you do to maintain the relationship? This is one of my favorite questions. So what do I do to maintain the relationship with an like after the owner meeting. Here's the beautiful thing with this: if it's a real relationship, just like any of your friends— I don't do, at least I don't do, a whole lot of planning on like, hey, when am I hanging out with my friends next? Is— or is— how's this relationship doing? The people I care about, I just spend time with. It's a very organic thing. And the friendships that don't, you know, just aren't serving any value for us, they start to fall off, and that's totally fine. So on owner meetings, there are some people who keep long lists and spreadsheets. You go like, hey, I haven't touched base with this person in a while, I haven't done X or Y. To me, as a relationship, what I think it looks like is just reaching out to them when there's something relevant. So if, say, we talked about adding a roof to a property and I'm now working on said roof, I'll give them a call and say, hey, I'm glad that you suggested this, I'm implementing it right now. If you want to swing by anytime and take a look with me, I'm doing exactly the project that we talked about. Sometimes they swing by, you hang out, and that works fantastically. If you've implemented their advice anywhere in your portfolio, call them to thank them. Makes a lot of sense. If you have a new question for something they've already done, reach out to them. But I, I don't try to make it formulaic. As a relationship, it's, it's legitimately, this is someone who I like being around, I appreciate their advice. And so for the follow-up meetings, uh, follow up when you have something specific to follow follow up on. And what level of reserves would you increase insurance deductible? Um, okay, well, my deductibles are all at $20,000 because basically anything underneath that, they're going to jack insurance by so much if I actually file a claim that I'm probably not going to file a claim. So for example, last week I got a truck that drove through one of my buildings. Funny enough, it's not the first time this building has had a truck drive through it. It seems to happen with some amount of frequency. So, uh, what we're going to do is we're going to report it to, uh, insurance because they drove all the way into their own unit and it's going to be, you know, more than $20,000 to fix. File the claim, go ahead. But $20,000 is the maximum amount that I just assume is going to be out of pocket for that. So that's what I budget for as far as like setting my insurance deductibles. Lumberjack, with how Christian buys and his strategy, Small units are largely a waste of time at his size. Yeah, that's— I mean, it is more or less how it works. Um, when I first started, I would buy more duplexes. I think today, because I've moved a couple of them out of the portfolio, but I have like 9, 9 or 10 duplexes. I still have quite a few. Most of them are contiguous, side by side. Most of them cash flow really great. I wouldn't go out and buy more today. In fact, I just turned down 3 side-by-side duplexes in Texas in the market that I want to buy in that were like beautiful buildings. It wasn't— it wasn't a home run deal, but it was— it was a good deal. And I made the decision. I'm like, you know what, I'm gonna have to put together a little bit of capital for it. I would rather spend that same capital on a larger deal or save that partner for a larger deal. And so it doesn't make sense for me. But again, when you're starting, I, I would do that deal. It just depends on where you're at. Dylan, how do you get a tenant interested in housing authority? And does housing authority still pay off bad debt? So you want to work with the housing authority. Getting a tenant interested doesn't necessarily help you because housing may or may not help them. There's usually a long application process if they've fallen behind on rent. Absolutely connect them with every resource available. So connect with the housing authority, whatever, whatever groups there are in your area. There's usually multiple nonprofits that will help people get caught up on back due rent depending on their situation. However, your— the bulk of the stuff that you get from housing authority will be housing authority reaching out to you, placing someone. So having that relationship with them so they know to connect with you is the main thing with housing authority. But they will pay off past due rent in certain circumstances, though I believe what you're referring to was like during COVID I used to get like 3 months of back due and 3 months of future, which those programs have mostly expired. Luke, would you recommend to keep pushing for a coffee meeting if you had a good talk with an owner but said something along the line of, uh, this call can be your meeting? Okay, this happens fairly frequently. You call, you want to book a meeting, and they're like, oh no, let's just keep it on a phone call. Always ask for what you want multiple times. Like, if you're not getting a yes, like, rephrase it and push one more time, but don't be ridiculously pushy past that. It doesn't have to be a coffee meeting, but your mission is let's start to form a relationship. Sometimes people are busy, sometimes you didn't build enough rapport on the phone call to actually book that meeting. You don't want to get weird, but I've had people all the time who are like, yeah, you know what, I don't think we have anything else to talk about. You know, I'll have the first pass at like, hey, let's— I would love to meet with you for coffee, are you available this day? Deflecting, you're like, oh yeah, you can ask me anything on the phone. It's like, awesome. I found nothing replaces the human contact. Like, I really want to get to know the owners of my market. If I'm there on Wednesday, would you be willing to have me get you a coffee? Like, I would just ask the same question a slightly different way. Most but not every time, the second time you ask the same question in a different way, you'll just get a yes. People throw up the smoke screen. You ask the question again. It feels awkward to say no twice. They say yes. Then you have a great meeting. After that, if they still say no, phone call, stop pushing, thank them for their time, get off the phone, and then come up with another reason to call them in the future and try again. You will get farther with the people who you have coffee meetings, but don't be a weirdo is my, um, I, I think that's the, the 90-second rule on that. Sounds like Dylan and Matt are already connecting, which makes me happy. Matt's recently retired, by the way. He's going to be joining me on the podcast, uh, on our recording, uh, midday tomorrow, which is super exciting. But, um, yeah, Matt actually has time to attend my lives now because he doesn't have to go to work because he's just taken off in real estate even farther than he was, which, by the way, Matt's a lot farther than me in real estate. He has more equity in all of his stuff. So follow that channel, Lumberjack Landlord. He's in the chat. He knows more than I do. And then we have a whole bunch of people in the chat talking about Lumberjack, which is fantastic because he is fantastic. I'm trying to get caught up and find find the next question in here. Uh, check out Instagram really quickly as well. There is one in here from Austin Heath, uh, over on the IG side. After you initially hold an owner meeting, what, uh, do you do to maintain the relationship? Oh, same question that we had over on YouTube. My apologies. Uh, from Brian Eric: single family BRRRs won't get me, uh, to leave my 9 to 5. Ready for multi? Brian, that is what I found. I didn't do the single family, but I was doing the duplex BRRRs. And so I was buying them, doing the— a lot of them were heavy reno, and then I'd refinance, pull that— refinance, pull the money out, cash flow like $1,000 a month per. And I would do a few of those and I was getting a few thousand dollars, but it was not financial freedom. Like, I wanted to retire my wife and myself from the 9 to 5. There was no way to do it without scale. I think the big thing with multifamily is if it's more units, it's going to make more money. It also costs more, so your mistakes cost more. Biggest thing I would do if I am going from single family to multifamily is get amazing at underwriting, because if you negotiate a bad deal, you're set back a lot farther than doing a bad deal on a house. So no, no, when you see a good deal, and you only get that from getting reps, experience, and being around other people who are playing the game. From Nicole, uh, where are you speaking at tomorrow night? Tomorrow night, let me think. I have a lot of speaking stuff this, uh, this upcoming month. I'm going to be in Tacoma at Theory Real Estate. This is the WARRI event. I'll be on stage with Yawn and Cody Davis. I believe we're talking about creative finance specific to mobile home parks. I got to guest star in Yawn's course for that. So if you guys are into the mobile home park strategy, um, it's, uh, what is it, mhparksacademy.com. Uh, funny enough, No one bothered to film an intro for that website, so if you go to the website, it's me doing the intro, but this is Yawn's course that I had the privilege of guest starring in. But we're talking mobile homes and RV parks, and that's something that Cody and I have really got to enjoy doing, running a Union. My wife and I have been over there pretty much every weekend driving out, getting that thing fixed, and that mobile home park is looking really good. Hopping back over to the YouTube side— by the way, YouTube is probably the best place to watch and insert your comments because they all feed here on one screen for me, which makes it a little bit easier. Matt thinks I'm going to fly past him, is what he says here. I don't know about that because he's retired now. A bored Matthew Hawkins is a scary thing. That's a man who's going to buy a lot of real estate. Dylan, what's umbrella insurance policy? So umbrella insurance policy, which I have by the way, um, is just an insurance policy that basically goes over all all of your stuff. So it's just general insurance for the entire portfolio. So umbrella says, hey, I'm covering you, the individual, and all the things in the umbrella for all your stuff. Now, every building is still individually insured, but additionally it's insurance for me, uh, which is several million dollars of insurance that basically says, you know, like, we're going to insure for the things that aren't covered in X or Y, or anyone goes after you personally. They're usually very, very inexpensive. I highly recommend getting umbrella insurance because it costs you very little. If you have multiple LLCs and multiple silos in which you're doing your real estate, umbrella policy is going to be super cheap and is a very, very, very easy way to protect yourself. Dylan, what are the biggest differences between mobile home and multifamily? So mobile home and RV parks, I'm basically— you're renting a pad, so you are renting the utilities and the actual ground person. Um, you— they may or may not own the mobile or RV on the spot. In our case, we own most of them. However, I'm seller financing or just straight selling a good deal of them to our tenants to free up cash to do the septic project and we're going to flip this thing. So one of the things that you get to do is there's some flexibility on who owns the units there, and there's ways to seller finance even individual units on a property that you purchased, you know, to low money down. That's pretty cool. So you have a little bit more in the creative plays there. Uh, one thing that you're going to typically have is you just have a weird— I will call them all weird, but you have a transient less conventional tenant base. Your problems there, I've noticed there's a little bit more infighting between tenants than there is traditional multifamily. Um, consistently with my friends who have mobile home parks, uh, drug problems tend to come in cycles there. They have to be on top of it. So you just get a rougher crowd in general for a lot of those, um, because it is generally very low income and it's, it's considered an alternative living style, which means you have people who are just a little bit a little bit left of normal, uh, for lack of a better word. Uh, let's see, Dylan's looking into, uh, uh, more 2 to 4 units. Uh, not seeing like so many of them, uh, rent only cover the mortgage, not taxes, insurance. I've noticed that the larger deals that I look at typically cash flow better than the small stuff. This is my theory. I think it's because duplex, fourplex there's so much marketing with BiggerPockets and just the, the mindset of like, hey, I want to get into multifamily, but I don't know how big I can go. People think the next step is going to be a duplex or a fourplex. I think this because we're trained— like, I go to kindergarten, first, first to second, high school to college, college to job. Like, you have this— things are supposed to have a logical progression. I have found that you basically, in business, you figure out the thing that you want to do and then go do that thing. So if you want to own 25-unit buildings, go buy them. Um, but I think less people think that way, which is why I'm able to find better deals on average 12 units and above than I find below 12 units. I think it's just the amount of people who are competing. Kevin Lewis, what's a good strategy with $30K to get into real estate? There are so many ways. Just posted this on my Instagram actually, and I need to post it again because I thought of like 3 more. I posted on 8 different ways to buy real estate $0 down. If you have $30,000, you just have more money to spend and more in reserves, which is great. But you find something seller financed, low down, you can buy a good deal with $30,000, get you 10% down, seller financed. I mean, that right there gets you a $300,000 property. There's lots of places you can buy something for that. Though I'd like to see that in reserve and buy something no low money down. You can do a land contract. You can buy something with high cash flow with hard money and keep some money in reserve. There are so many different ways, so many different ways to play the game. Financial position is not a substantial piece of the equation. Now, does someone with money have more options than someone without? Of course. But you don't need money to buy deals. You find the deal, then you find the debt, then you find the equity. So If I had $30,000 and I was starting today, what I would do is I'd go find a deal of the asset class that I want to buy, the size that I want to buy, and then I would figure out, okay, is the money going to be debt or is it going to be equity? How much am I bringing to the table? How much do I need to put together to close on this deal? I believe anyone listening to this, if you had a deal where you were absolutely sure it was going to make a million dollars, you would find a way to raise $300,000 to close it. That's how I got started. You know, I was so sure I was going to make a million dollars. It ended up making $2 million. I raised $300,000 for that. I bought out all the investors. I still own that building today. Luke, do you have a trust for your whole portfolio? Um, how many properties did you start to protect your properties? Um, I do not have a trust that's set up. That's something that I'll probably be doing here in the next year or so. I do have a holding company that has its own set of insurances, an umbrella policy over my portfolio. My holding company is a very hard-to-find hidden LLC that's filed by another holding company that's owned by someone else that I'm a signer for. We have what's called a circular LLC. So you look at one LLC and it's filed for by two other LLCs, both of which the partner filed for the other person's LLC. So you have a signer and a filer. It is impossible to figure out who owns what in the legal system. There's all sorts of stuff that you can do for asset protection. Do not play defense until you play offense. Buy something before you focus on protecting it. Too many people worry about all the different structures, they spend a bunch of money, they forget to do the part where they buy the stuff. Buy the properties and then protect them. Don't protect properties you don't have and then figure out how to buy them. Oscar, when you take on a private money/hard money loan, it's a 30-year period, long-term fixed-rate debt. For how many years are you paying the interest, uh, on a loan out of 30 typically? So for me, um, well, private and hard money is almost never going to be 30 years. Now we have some seller finance notes which are seller financed which are 30 years, but most of them are going to be— I bet 5, 10, 15-year balloon. If you're using hard money, you're usually going to have a 2 or 3-year balloon, if that. They're usually very, very short. Um, I— if it's going to be hard money, it's usually high interest and it's interest only because it's going to be a bridge between that and your long-term financing, or if you're selling the property, your flip. But that's typically how that's going to work. 30-year is less popular in, uh, 30 years can be very rare for private and hard money loan, very, very rare. If they come up, um, you know, follow the rules, long-term cash flowing fixed rate debt, make sure that you're getting paid to own that property. But more often they're shorter term, they're going to be interest only for those terms for those type of products. Looking through the questions here, got one from Edmund. When using hard money, do you use it for a down payment or the senior debt? Uh, when using hard money, you use it for whatever you need to use it for. Uh, for example, the hotel conversion we're doing, 33 units, uh, 13.5% hard money. They funded 100% of the purchase and 100% of the reno. I bought it for $1.6 million, stabilized it's worth about $3 million. I'll probably sell it closer to $2.5 million. All in, we're going to be— because we, we borrowed the renovation cost— all in, we're probably going to be all in around $1.9 million. Uh, so there's $600,000 of projected upside in that if we sell significantly under market value. We actually could get more on that, but conservatively we'll make $600,000. It's about a 6-month hold. Um, but that's like, that's what I'm looking at with hard money is can I cash flow it. I've also used hard money just for the down payment on a 10% down deal. So we bought a deal that was seller financed, 3% interest only for 15 years, and then I came in with a hard money loan to find the down payment money And that money was, uh, I believe it was at 10% and a 2-year debt product that we just refinanced out of. Don't ask why I get a trust. It's just another level of protection. There's things that are in the trust that There's so much on asset protection and I don't want to get too into it. And here's why I don't want to get too into it. It's not relevant for 99% of people who are listening to this right now. I want everyone to focus on this channel. How do I buy this stuff? And then get together with your lawyer and your team and work on the asset plan that works for the way that you set up everything. How are your LLCs set up? Are they in parallel? Is there a holding company? What is the insurance thing versus the trust? All of those things become important, but for 99% of people who listen to this, you're not there yet. If you have a couple of duplexes and a house, you have not built enough of an empire to even bother protecting. Now, that doesn't mean do stupid math on it. Insure your stuff, do the basics. But you are focused on build phase, focus on build phase. If you've already stabilized your portfolio and optimized it, you bought the real estate that you needed to buy, then you go like, oh boy, we do not want to start over on this because we have already built the empire. Now you can do all the asset protection things and that you can spend money on it, but the money you're spending on it is cash flow. So awesome networking going on here, which makes me very happy. Uh, here's a good question. Just submitted an LOI for 48 units through a broker. They're sending it to the seller but also asking to know what my portfolio is and personal financials. How would I respond if just beginning? That is a question that comes up a lot. I think this is so important. One, build as much— this is why the relationship thing's so important. If you have a relationship, and this isn't going to happen every time, like this one's through a broker, there's not much you can do. But if you have the relationship, you get to bypass a lot of this stuff because if there's trust, you can operate on, you know, on the fact that they're already invested in you. On this, submitted a letter of intent, which means there's not already a deal accepted. Um, you're putting together a first offer, it's through a broker. What I'm looking at here is like, one, when you communicate with them, as confident as humanly possible. This is what I'm offering, this is what works. Less is more for those. If they do get back and they want to do a full review on you, there's a couple of options. One, you can just tell them, I'm starting, this is my plan for the deal, this is why this is going to work. I've done that. Another thing you can do is if you already know that you're planning on bringing on an equity partner, you can talk to the people who may be your equity partner and just let them know, yep, it's me, I'm also going to have an equity partner. And here are some of their financials and experience. You can just find a more experienced investor on the equity side. I have done that too to close deals. I was just on a deal where my partner actually needed me as the more experienced investor because they're like, I have the money, I— they will not lend to me because I don't have the operating experience. And I came in and I was like, I can throw some money at this as well. But in addition to that, I have a couple hundred units, a property management company. I was a broker for 2 years. I worked at CoStar for 4 years. I have professional certifications in real estate development and commercial finance. Like, um, I have the resume that they need to do this. And so we partnered up with— I'm like, you got the money, I got some money and the resume to knock it out, join forces. That's where equity partners start to make sense, when you guys both bring something to the table the other doesn't have. Those are all different ways to do it, but you could bring on someone who can hit the requirements, or If that's not on the table, honesty is the best policy. Just answer very, very confidently. Let them know this is exactly where I'm at and this is what this deal is going to do for me. Uh, here is the game plan on how I'm going to operate it. Edmund, when it comes to renovation cost, How would you underwrite for that? Uh, for example, how would I know if $80K renovations is too much or too little for a specific project? You're always going to want multiple quotes from contractors. Number one, most important, uh, get multiple quotes. Everyone says to do it. Most people, when they get started, are going to accept the first bid they get, and you're wrong, and I'm sorry, and it's going to cost you money. But I can tell everyone that, and of everyone who listens to it, this video is probably the people watching this live afterwards, a lot of these get about 500 views, uh, there might be one or two people that actually heed those words. Uh, that is the way that you do it though. When you're factoring renovation costs, you come up with a number that you feel is reasonable for the project in your initial underwriting. But once you're under contract, you get an actual contractor in there, you walk the property, that's part of your due diligence. Best asset protection is to conduct your business morally and ethically. Ethically? Yes. And even then, you can get absolutely hosed. I have had, I've had my share of lawsuits, unfortunately, uh, and I have won all of them by a landslide for two reasons. One, people who sued me couldn't afford to win, uh, but two, if they could, I was also just very, very, very absolutely correct because we operated morally and ethically, and it saved us. Does not mean that you don't have to spend money and go to court, but It does mean that you're probably going to win. Best place to get a hard money loan, um, it's going to be market dependent. Hard money lenders, professional ones, market for money. So Google your area, hard money lending, real estate lending, you'll find them. Go to meetups, they're literally everywhere. They sponsor every event. There's always 2 or 3, uh, the hard money people. That is how they do their business. The best money typically is going to be private money where you find your own investor. It'll usually be much less expensive. Hard money lenders make their entire living on making a spread on other people's money. Borrow money from people or create some fund and lend out on that profitably. They take the spread. That's how they make their money. That's how most hard, like, private money works. Or they're professional lenders who have a bunch of their own money, and it's like a family firm, and there's also that. Um, also typically more expensive. If you use your own investors and raise your own capital, it will take you a little bit more time, you have to be a little bit more skilled, and the capital cost will typically come down. I personally do private capital that I raise myself at 9%. Uh, when we borrow hard money from hard money lenders, I'm borrowing at about 13.5% right now. Can you explain how you get an equity partner with seller or partner? So an equity partner is going to be a a partner. So there's— you have a deal, it needs to be someone who's bringing something to the deal that you don't have, and you need to be bringing inherent value, which is nice when you have the deal because you already start with like, I have the deal. If it's seller financing, you negotiated the finance, I have the deal. Let's say it's 90% financed, I have the deal and I've already arranged 90% of the money. I'm only after the last 10%. Okay, you bring a lot to the table. In addition, I'm going to play the lead role in managing this asset. My roles are not very clear. I'm looking for someone who has, one, the 10% down, two, if I need it, some additional real estate experience so that we will be able to refinance this at a future date and/or just close the transaction. Um, but yeah, for an equity partner, um, how you get an equity partner is you bring value and you, like, you generate a deal, find a deal, communicate the opportunity And it is— that is the easiest piece of all of real estate. Finding the deal, negotiating the deal, that's the part that takes skill. Uh, once there's a deal on the table, the money just seems to magically appear. It's a little bit of networking and you will find that, uh, that equity partner. From Dylan: What websites do you use to find rents of an area vacancy, uh, so low, like nothing listed in heard Rentometer. Uh, boy, that's not amazingly well written, or I'm bad at reading. It's one of the two. Um, however, what websites do I use to find rents? I'm just going to answer the first half of that question. Um, uh, Rentometer actually is pretty decent, but as you get more rural, of course, data starts to decline a little bit. Rentometer is based on past rent comps, which means if rent is trending up it's a little bit in the past, so it means a little bit lower than market rent. If you're in the very, very, very rare occasion where you're in a town where rent is going down, the opposite would be true. But typically Rentometers would be a little bit lower than market rent. Then you look at the places where they list things for sale, uh, or sort of actively for rent. So you're talking like Apartments.com, uh, RentPath, those sort of sites. And I'll look at what are they listing as market rent, knowing that there's a difference between asking rent and actual rent. And so those are going to usually be a little bit higher. So if you come somewhere between like a Rentometer or, uh, you know, any of the rental data sites and what you're seeing online for asking on the listing sites for similar units, it's usually going to be somewhere right about the middle of those. So just take the average, roll with that, you're usually pretty close. If you want to verify it, ask a property manager or other owner in your market. Uh, oh, that was a suggestion for a, uh, lender. Here's a good one. Got declined for credit card today. What should my next steps be? Um, I've been declined for credit cards too, by the way. I have an 18— or, uh, 815 credit score. Uh, sometimes you just— you have too many inquiries, you've opened too many things. In your case still, and you're 18 years old, there's going to be stuff that you just don't qualify for. It's, it's realistic. Um, first thing I would do, you'll want to be able to have the option to use credit whether you choose to use conventional credit or not. It's good to build. I would find a card with a lower barrier of entry. Usually it's through the bank that you already use, but get a card and just start spending a little bit of it, probably no more than 10-15% of the limit. Set it to autopay, never pay interest on that thing. Just use it, clear it, use it, clear it. Small transactions like getting gas or groceries, and your credit score will build very, very, very quickly. A simple way to do that, but tried and true. I've built quite the credit history. Today, the stack of cards that I have to run my businesses is probably about that thick, and I do not pay any interest on any of those cards. And I also gave my camera the symbol that tells it to zoom in when I did that, so I will try to fix that here as I go. Uh, Robert, question: are you seeing more pain, AKA seller motivation, in the multi, uh, market now in your area? Uh, it's actually slowed down a little bit. A lot of people are in a holding pattern right now. I'm not seeing a ton of pain in the markets that I'm actively in, but I do tend to invest in tertiary markets that have higher cash positions. So this stuff's like— I'm not going after stuff that a lot of the syndicators trying to go after, and they're the ones who are really getting getting hammered right now with these sustained higher interest rates. So notes are getting called, things are getting hammered, but it's really more of the core markets that I actively try to avoid. All-nighter. As a contractor, I prefer my clients get multiple quotes, uh, that way after the job's done I can compare and know how my competition is doing. Yeah, um, it's great if you're a contractor, it's great if you're an investor. Everyone should always get multiple quotes, and it does not mean go with the lowest quote. It means just like get multiple quotes and understand what the cost is. If you have 3 people and all the quotes come in around the same thing, you, you have a lower chance of getting ripped off. And, um, not all of them, but it take— a lot of contractors suck, more than half, uh, significantly more than half. And so you need to build a team of people who are good, because there are great contractors out there, they're just harder to find. And once people have them AKA Christian, I have enough real estate in my portfolio to keep 2 contractor teams busy with only my portfolio, which means they don't take on new clients, which means that great contractor is now off limits to you as the new investor because they will not take you on because they have one person they already like working with who pays them on time that has enough business to fill their entire team until they expand. They're stuck. So it does take time to find the best people. Because the people who've been playing the game longer probably already have those relationships. Just something to know when you're new. It's not that every contractor sucks, it's that the contractors who aren't already busy are usually the ones who aren't nearly as good, and they're going to be the ones available to you when you start looking for new contractors. Which is why those owner relationships mean so much, because if I refer a contractor to you, they may work with you. If they don't have my reference, I know neither of my teams will. No, as an engineer, some contractors definitely try, uh, to gut you out of cash. Oh yes, it is bad. All right, and hopping over to the Instagram because I owe you guys a quick check over here. Let's see if I miss anything. Uh, where are these questions being asked from? Uh, so we go live on Instagram, on YouTube, Multifamily Strategy on YouTube. Uh, we're on X, which formerly known as Twitter, uh, on Facebook and on Instagram. A vast majority of these though come through the YouTube channel Multifamily Strategy, but we try to stream, uh, multistream to just about everywhere. And that's the only question that I've missed so far, it looks like, on the Instagram side. So Instagram, thank you for joining us and hanging in there. I'm going to jump back to YouTube questions and we'll press on. I also love there's a bunch of networking going on in this chat. This makes me very happy. Everyone's sharing some contacts, contractors, lenders. That's pretty cool. I'm reading through right now as the chat evolves. Not seeing a lot of new questions here. We may be entering the end of the livestream here. I got one more question, but I think we'll start the wrap-up here. We're at 47 minutes in. It's been a good one so far. If you guys have more questions, then absolutely ask away, but we'll go from there. Oh, we have one from Oscar here. Where do you advise to go to find a great accountant to help us save on taxes for real estate? Also, who does the bookkeeping, uh, the accountant? So I use, as does Matt the Love Tech Landlord, I use a gentleman named Paul Langworthy. Um, he is fantastic. That is where most of you will end up because he is the best. Uh, that being said, I have used multiple accounts. It's really hard to find the best one. I would network with the people who own in your market and figure out who it is they're using. You'll notice there's a trend here. That's always my answer for like, how do you find everything? That's why I'm so happy with the chat right now, because everyone's sharing their contacts with other people. We're actually like building a community within this chat, which is awesome. Um, but that's where I would go. Um, I'm looking for an accountant that owns real estate themselves because they're going to think like an investor. There is a huge difference there. If your accountant says, I don't own real estate, they will not do your taxes the same way that you want them done. I guarantee it. There's no possible way that they will do it because they just don't think like that, wired differently. Um, but that's basically what you're looking for, account— someone who has a team that understands what you're trying to do, understands your business, is in the business themselves. That's going to help. Uh, as far as bookkeeping, uh, my accountant actually specifically said, yeah, I can do your bookkeeping and it's going to be too expensive and you'll want to use someone else who will get the information to me. So I connect the two together I have a bookkeeper who I may or may not keep, um, who's done a pretty good job. And then I have an accountant who's been excellent. In between the two of them, I get all the documents in and we file our taxes, uh, very close on time. For about 30 different LLCs, I'm doing pretty good. I think I'm probably gonna have all my taxes— I did my extensions today. I should have taxes filed first week of May, so I'm only gonna be running about 3 weeks behind And for all the questions here on secured credit cards, even though not directly real estate, I can't answer that question. Uh, that basically means that they want to see X amount of money held in an account so it's backed by cash. Uh, they'll— they need you to have that money, you know, they hold it in a Separate account, the money is basically on lockdown and it backs the card, so it is secured. So they know that they essentially, they can't lose money. But it is another way to build credit with a secured credit card. They're like, well, if you fail to pay, we can always pull from the cash from this account. So that's, that's how they put those together. It's a, it's a starter card essentially. Well, there's a good question for Danny if she was around, my wife. But what do you think about brown wood cabinets? I think they look old-timey, but they are everywhere. Uh, nice wood cabinets are fantastic. They can go well with some aesthetic. Right now it seems like everything is painted, and that seems to be what the trend is. But you just want stuff that looks good, that will hold up. I don't worry too much about the latest trends because trends change. So right now, yeah, wood's kind of out. Um, it'll, it'll come back just like everything. If you have great, healthy, good-looking cabinets, keep them. If the cabinets look worn and beat up, go ahead and replace them, which would with whatever is standard. Uh, typically you can find them at Lowe's or Home Depot. Or if Matt Lumberjack Landlord is still in chat, um, Matt actually sells, uh, cabinetry that is awesome and landlord-friendly. So check that out. If Matt's in the chat, he can post a link to that. Uh, but he can actually hook you up with some, uh, some good kitchen designs. And if he's not here, hit him up on YouTube. He goes live every Sunday. Or on Instagram, Lumberjack Landlord. Matt Hawkins, Freak of Nature Investor. That's it for the YouTube questions here. Do a quick check through our friends over here on Instagram, see how that's going. And if there is nothing else, then we will call it an adventure for today. Ah, Lumberjack's still here. You can do kitchens for $2K to $4K. Thanks for hanging out. Matt, they have nice stuff. I need to utilize that. My friends do, and Matt is a, Matt has some really cool stuff. I mean, I have some really cool stuff. If you guys are designing kitchens, reach out. And Dylan, wholesaling front, yep. Basically the last 3 lives, I feel like the topic has been basically like, Matt's amazing. And that's, that's basically what everyone needs to take away, is, uh, if you want to find vendors, ask the owners. Like, your owner meetings are the most important thing that you can do in real estate, period. And then Matt Hawkins is awesome. That's my takeaway from the last 3 lives that we've had. This is something that I am jealous of. Now, my wife does so much in my business She runs all the contractors, which is crazy. She pays all the bills, which— I'm not kidding, the stack of cards is like this thick. She knows every bill, where we're at. I did the symbol again. I need to stop doing that. That is on me. However, um, yeah, if you have a wife who's like an accountant, or you have a spouse who is able to help you in the business, it is life-changing. Uh, Troy, that is, um, that is a wonderful thing to Treasure that, having a wife who knows tax. I, me and my wife both did not know tax when we started in real estate. Hands down, my least favorite and hardest thing for me to do is keep up with the bookkeeping, the receipts, and tax laws and all the changes that they make every year. It is really hard for me and it's not fun. And, um, a large inspiration today of why I started this live, uh, because we don't usually go live on Monday, but I have to work on tax, and since I don't feel like doing that I went live to procrastinate. What do I think of concrete floors? I think that they are porous, they stain easily. I think they're, I think they're another thing that probably falls into the category of trendy. On the plus side, as long as they're level, they're very easy to lay other flooring over. So if you have concrete floors, you can use them. But they're not— I don't typically like anything concrete. I don't have a lot of reason for that. I just don't— I think there's— well, on a noise reduction thing, there's better things that are less porous, less breakable material that you can do. But I also think that the look is just not something that's going to stay in. But it's fine because you can lay straight over the top of it basically any floating floor you want. Oscar, I know you go for a 1.5 DSCR on deals, but that But if it meets a 1.25, would you still give it a green light? Yes, if you have a path to get it to 1.5 DSCR. Uh, if I have a deal that just like there's no way it's ever going to be a 1.5 DSCR, at least not in any reasonable amount of time— and I'm talking like 6 to 12 months, like we're gonna get this thing 1.5 DSCR— it's just not a deal that I want to do. It means that we have more work to do on the deal and it's not going to cash flow where I want it to, where I'm comfortable that I can buy it never lose it. Good question. That is it for the questions. We're at 55 minutes. Target was to stay just under an hour. I think we are nailing it. Nothing new on the Instagram side. So everyone, thank you for watching the live. Again, uh, interviewing Matt on the podcast tomorrow. That episode will probably drop early next month. But, um, check out the Multifamily Strategy Podcast. That is the owner meetings. Owners all around the country, the best and brightest real estate investors that I've ever met are all on this podcast. We're interviewing people. I'm right now, I'm filming like 4 of these a week, so we're building a catalog of these. But every single week we're going to have a new owner meeting out. Multifamily Strategy Podcast, it will be on Apple. It is not there yet. It is everywhere else. So check us out on Spotify or anywhere else outside of Apple that you watch podcasts. Do me a favor, support that podcast. I'm making that for you, and we're having a ton of fun. But those owner meetings are going to change the way that you do real estate. Uh, so listen up, download, save it, listen wherever you watch podcasts. And last announcement, we are this close to Northwest Action Summit, my event in Portland. Well, it's technically in Vancouver, Washington, but very close to Portland, Oregon. Beautiful hotel, fantastic catering, A-list of speakers. I'm really excited about this one. Ton of focus on creative finance. If you are looking for somewhere to go this summer, May 3rd and 4th, Northwest Action Summit. Link is in the comments on the YouTube video. Uh, would love to see you there. Snag a ticket and we will talk to you all on the next episode.