THE BEST Section 8 Housing Strategy?! with Anthony Redmond - Single Family and Creative Finance

It sounds really cool. Wow. You own properties all across the country. Yeah, I own a property in Las Vegas and I own some in North Carolina and I own one in Miami. And wow, that's awesome. And then people try starting out, they want to try and do that, but it's stupid, honestly, especially if you're doing one. Don't do that. You know, if anyone's listening to this, because every time you're literally starting out fresh.

Hello and welcome back to another episode of the Multifamily Strategy Podcast. I'm Christian Osgood, your host. Joined today by Anthony Redmond. Anthony, thanks for joining, man.

I appreciate you having me, Christian.

Dude, it's good to see you here. This is another guy who does the Section 8 strategy, and you may have at some point heard me rip on people who buy Section 8 houses in the Midwest. Well, this is someone who's actually done it, and I think you've done a really good job. So I'm excited to have a conversation with a skilled operator who knows what they're doing, who's found a niche and is serving their community for people who need housing.

Yeah, absolutely.

And you've been doing this for a while, so I'm assuming you're also making money doing it. So you're doing a good thing and you're making money doing the thing. So really excited to have you on the channel. Thanks for joining me today.

Yeah, I appreciate you having on. I think it's going to be a great conversation.

I think so. Before we dive all the way in, I'm always curious, what is your starting point before all the real estate? What is your original background and why real estate?

Yeah, I mean, that's a really good question and I get asked it a lot. And, um, Ultimately, just kind of a brief 30,000-foot view of me. I'm originally from New York. It's kind of my thing. I wear a New York Mets hat. We're going the distance this year if you follow baseball, hopefully at least. It's a long time coming. But moved to Florida, the Tampa area when I was younger with my parents, kind of grew up there and in a small town there. And overall, you're growing up in a small town and you're not in a big city like, you know, maybe New York or LA or even Miami and, you know, some of these cities where, you know, people are just hustling and bustling and it's easy to kind of get stuck in a mentality of, you know, this is what you do. You go to school, you get a college degree, you work for, you know, XYZ company or hopefully, you know, maybe a good company like Fortune 500 company and you work and then, you know, you retire and hopefully you can have some money and be young enough, uh, to when you retire, your body's still moving to enjoy it. And I kind of got stuck in that, um, in that realm, you know, in my 20s. I'm in my 30s now, but, uh, and I was kind of doing that. And, you know, you, you don't know any different. You— that's, that's all around you. That's, you know, it, uh, so finally I got a little bit out of the mindset and I went through different companies. I worked for, you know, a couple, you know, Fortune 500 companies and You know, I think in the area where I'm from, a lot of people work for Publix Supermarket. It's a, it's a great company. They're starting to grow, you know, up the, uh, the Southeast and whatnot. And great company. You can become a manager. You know, there's people that retire millionaires because of their stock. And, you know, actually, you know, myself, I kind of saw a bit of inner workings. A girl I was dating at the time, her dad was a district manager. And so I saw even if you get to a district manager level, you might be making six figures, but he literally had no life. He had half a day Wednesday and a full day, half a day on Saturdays and a full day on Sundays. And I'm like, man, this really isn't for me. So I hopped from there over to another company that's nationwide and enterprise rent-a-car and, you know, kind of worked my way up a little bit there. And same deal, you know, you're working 50, 60 hours a week. And I was always kind of interested in real estate as well. And, you know, but I never wanted to be a real estate agent. I just didn't really see that appealing to me. I guess it wasn't as cool cool then as it might be now, or, or, you know, I'm necessarily know if it's cool now, but it wasn't, it wasn't a big thing then as it is now to become an agent, and everyone and their mother has a license now. But I was always interested in real estate, but I didn't know there's all these other avenues that you can do within real estate. And finally, you know, I, I did some banking as well, and, um, you know, finally I started kind of looking into things, and I'm like, man, what, you know, what can I do? So, you know, Moving forward, I moved down to Miami, Fort Lauderdale first and then Miami. And I had a sales job for a relocation company down there. And, you know, if you're good at talking to people, really, you can do anything, right? And, you know, that's one of my, you know, biggest skills is being able to talk to anybody about anything, right? So doing really good at a sales job, but again, you know, they were open in different areas and they're wanting me to head up you know, and again, I didn't want to do it, but now I stumbled upon real estate and wholesaling real estate. And I'm like, wow, what is this wholesaling thing? You find a property, you sell it to somebody and you make a check. And I'm like, man. So this is back in 2015 before it became really, really big in like '17, '18, '19. And now everyone and their mother's doing it. And so I was like, this is my out. I came across it, I'll never forget it, on Facebook and it was for a webinar. And I was like, "This is my out." 2015, I tried it and I failed. I spent so much money on the guru that was teaching everybody at the time and I didn't have any money for marketing. And that kind of crushed me. And so I didn't really do a deal. And I think it was like $8,000 or $10,000 for the guru at the time. I say guru because as you know, there's a lot of them out there that aren't like you and I, and they're not out in the field. If you go to our socials, you can see us out there running through walls, talking to tenants.

And that's the biggest thing, right, is working with an operator. Everyone and their sister wants to be an influencer. Everyone wants to sell you something. Uh, you followed the rules, which the first rule if you want to teach is, uh, be someone who can also do. And there's not a whole lot of them. So you're actually in the field, you're the actual operator, you've done something worth replicating.

Yep, exactly.

And now you teach it and you know—

yeah, exactly. And you're able to teach it and you're able to teach it really well because you, you do it right. You've been there, you've done it, and you still currently do it versus not. And there's a lot of those out there that don't, you know, and they sell you on the flashy stuff. So, you know, 2017 came and I was living in downtown Miami and I was like, listen, this real estate thing's really got to work. I kind of hit rock bottom and a lot a lot of different areas, you know, my life. And I was like, this is it, like this real estate thing's got to work. And at the time too, it was funny, I had 3 choices. It was doing this real estate wholesaling thing, uh, back then it wasn't called, uh, it was dropshipping. It wasn't Amazon. Amazon wasn't a big dropshipping thing, but it was dropshipping. Or I also had a mentor helping me to kind of trade stocks back then too, more so options. And I was trading off of, um, it was E-Trade, and I was trading Scottrade off of my phone while driving. I had, I had the tri-county area of South Florida, so Palm Beach, Broward, and then Miami-Dade. So I'm driving on, you know, 95 in traffic, and I'm trying to, you know, trade options from my phone, um, on there. This is before Robinhood and stuff. But then I realized that myself in 2017, you know, you can try all these things and be mediocre at it, or you can go all in on one thing and become really good at it. You know, and like anyone else, you know, I read the dad rich book, Rich Dad Poor Dad, and, you know, a couple other things. And then I realized, you know, 90% of millionaires are made in real estate, and that's tried and true. And I said, this wholesaling thing's got to work. So I am, you know, my 9-to-5 sales job, I had that. And then I started driving Uber and Lyft at nights in Miami so I can build up marketing dollars. For wholesaling, you know, because at the time SMS wasn't as big as it is now and some other things. And at the time back then, it was sending out the postcards and the letters. And you know, those things were, you know, not as cheap as they are now. They were, I think, $1 apiece back then. I think I was doing yellow letters versus postcards because it was a little more— it was— everyone was doing postcards. And another thing too, I started to do— everyone was doing single-family houses. I was doing duplexes, triplexes, and 4 units. So I was doing multifamily but residential. Gotcha. Gotcha.

That's where I got my start when I was a, when I was a broker. I started in the duplexes and I ended up choosing to scale larger. But yeah, I've been there and that is That's a first step for a lot of people. You're like, wait, I'm only competing on— if everyone's going one way, right? You go over a couple lanes and you're like, hey, there's an opportunity here. So, and I think you were a little ahead of the curve there. That was right around the time BiggerPockets started going like, wait a second. Yeah, all of our single-family stuff works for multi. So you're just, just ahead of the curve.

Yeah, exactly. And it worked out kind of well too, because— and the reason why it worked is because You know, you run comps on single families and you can run comps. And then nobody really, like you said, BiggerPockets started coming out and nobody really knew how to, at least in the wholesaling space, right? How to run like cap rates and stuff like that. And if you found out and figured out how to run a cap rate and stuff off of a duplex and a triplex, the people that were buying them, the investors, they know, right? They're looking for a cap rate. But the guys that were like me and just trying to start out and just trying to start wholesaling, they didn't understand it. So they didn't know how to do it. You know, so back then I was able to find duplexes and triplexes and, you know, base it off of a cap rate. And, you know, back then I was selling a 12% cap rate, you know, on a duplex or a triplex to an investor in, you know, Miami or, you know, Broward or, you know, South Florida. And that was really good. I think now it's funny, you look, you look forward, I think now they're selling out like 4% and 5% cap rates in South Florida there. So, you know, it's, it's funny as, you know, other countries, you know, fail and people get their money out of the countries, they're overpaying and they're overpaying in South Florida because they don't care. So it's a lot of reasons and that's a whole nother thing. But it made it a little easier for me at the time to offload a duplex and market to the duplex because they weren't— or the triplex— because they weren't getting as many marketing letters as the single-family, you know, owners were getting, hey, I want to buy your house. And so it created a little niche. And so, you know, but I do want to make note on that because it's super important. In 2015, I spent $10,000 on a guru who showed a course and showed flashy stuff. And I'm like, man, this is great. Even had— I'll never forget— even had on the video Josh Altman from Million Dollar Listing, which everyone kind of knows now. Back then it was still a newer show, on it with him. He wasn't in the course and everything, but he was on the, you know, the initial video to get you to come in and buy it. I failed at that because I focused on all the wrong things. You spent too much money on the course and then you didn't have any money for marketing. The second time when I succeeded, I went ahead and, you know, I drove for Uber, you know, from maybe 7 to midnight, 1 AM, you know, saving marketing dollars to send out 3,000 or 5,000 mailers. And it's funny, you know, driving on the, you know, driving on 95 in South Florida, if I got a call from a mailer, I was pulling over, I was taking notes on a yellow pad. You know for sure you're answering that phone call. And, but I was able to do that because then I then hired, I saved up and I hired another mentor. This one I call a mentor versus a guru. Just happened to find him at a real estate investor association's meetup. And that person was more hands-on and they were actually doing it kind of like you and I do versus showing the flashy stuff. And that person I learned from, ultimately fast forward, that person became my partner because I started doing so many deals and it just made sense overall, you know, but from there, 17, started flipping, you know, doing wholesales and whatnot. And then Miami got a bit oversaturated as far as that. So then I started to hop from there, like 2019 or so. I started to do it virtually and virtually started to become a big thing. You know, again, I think I was a little bit ahead of that curve, you know, because people were only doing it in markets that they were in. But I started doing in Houston, Texas, wholesaling. And then, you know, shortly after Houston blew up and I started doing it a bit in Memphis because I heard you can buy houses for, you know, you can— there was these cheap houses in Memphis. Ultimately stopped in Memphis because I learned it was very block by block, you know. But yeah. And then, you know, a couple of years later, I started buying rentals and partnered with someone that I came across that lived in Memphis and, you know, then started investing and buying rentals and stumbled upon a Section 8 rental I bought in a portfolio. And, you know, fast forward, you know, before you know it, we own over 200 units together and the majority of them are Section 8 housing.

So Section 8 is something that I've settled on as a huge piece of my portfolio. And I've over the years, specifically because of the Section 8 rental standards, I buy a lot of rentals that are specifically I, I do the math on if I could get this to Section 8's FMR, we make a lot of money. And so I'll actually base my just market rate rentals off of deals where I'm like, if I buy this and this has a good chance of getting at or above FMR, I can offer this to people in need and the general market. It helps me set my pricing. I hit my pricing, and we've made millions and millions and millions of dollars doing this over the last few years. Section 8 and understanding how to use these is huge. Now, I have had a tendency on social media to rip into people doing single-family in the Midwest for Section 8. You're buying in Memphis, single-family, Section 8. I like a lot of the way that you operate, and it is different than a lot of people. The people that I rip on primarily are the guys that you see online, and you've already talked about them. They're the ones who are standing in front of the boat, the yacht, the supercar, the mega house going like, I buy hundreds of these with no effort at all. And I'm like, okay, so then why do you have 17 cars? That's— you only buy that crap if you have active income to write off, right? You don't, you don't need 7 or 8 Bentleys and a yacht. If you're buying real estate, typically what you do when you get a bunch of money is you buy a decently nice house. You have maybe one nice car, maybe. I have a Tesla Model Y for my wife and I don't even have 2 cars. And then you go out and you buy more real estate when you have more money. That's what a normal real estate investor does.

They—

if you love real estate, you usually buy more real estate. That's usually where your money goes. So with someone like you who is an operator, what does it look like to do single-family Section 8? How do you set your rental standards? And how do you balance— you're renting to Section 8 tenants, but you want to provide a quality rental in your community. Like, you want to be a positive influence on your community and you want to make money and you have a tenant base that, you know, some of these people have credit scores that are unbelievable. Like, yeah, I just saw the last one I saw that we declined, but I think their credit score is like 460. I'm like, how, how do you do that? It's hard to do. It's almost— you also have to make an effort not to pay things.

Yeah. You absolutely do. Yeah, I mean, so it's different in different markets, right? So it's funny, it's funny you say that because the first Section 8 property that we bought, we bought a portfolio. So we bought 16 townhouses in a community of like 66 townhouses. And now we own like the majority of that community. And then we came across one. There was one in there that was a Section 8 tenant. We didn't know it until after we closed ultimately, and we're like, man. And then I saw it and was like, man, a Section 8 tenant. Like, I knew there was paperwork that had to go along with it. And I'm like, Jesus, like, ugh. And then they were a bit under market rent in comparison. The rent was low for the retail ones that we had in there, but they were still under market rent. And funny enough, like, I went and I went and visited a friend in Miami shortly after we closed on it, and we went out on his boat and then we, we hung out. We came back at like midnight and we were hanging out on Biscayne Boulevard. If you know Miami, it's like the main strip. And we were at a food truck in a parking lot just chilling. And Miami doesn't sleep. So midnight, you know, we're having a bite, hanging out, talking. And it's, and it's funny because I look across the street and I'll never forget, you know, there was a Taco Bell and a Wendy's there, and they had up a sign, and the sign says, "Now hiring $15 an hour." And we were talking about whatever, and, you know, and he's Cuban, so he's very loud and boisterous, and I love that. I wish I had that type of energy. But I said, "Isn't it funny that, you know, these places can't find anybody for $15 an hour?" You know, this was, you know, a few years ago. And, you know, he's like, bro, you know why? And I'm like, no, why? And he's like, because people that typically worked there, they would be making too much money at $15 an hour and they would lose all of their government benefits. I was like, wow, that's interesting.

Yes.

And yeah, and, and he owned a couple rentals in Miami himself. And then we got to talking and I was like, I was like, what do you mean by that? And he's like, generally. You know, they get XYZ benefits. They get, you know, food stamps, they get their power bill paid for, they get government assistance, Section 8. I was like, what do you— I think it's funny, I just bought a property that's Section 8 tenant. And, um, and he's like, yeah, he's like, if I wish I, you know, can go back years ago, I wish I would have rented to Section 8. And then so he began to educate me a bit on it. And then I went back and, you know, to Memphis, and I told my business partner And I said, I think this is something more we have to look into. And I said, and here's the pros of it, you know, yeah, it's got some cons on it and whatnot, and we can talk about that. But ultimately, at that point, I was like, I think we're on to something big here. And then so I dug into that one rental and that market rent. So touching on your market rent, fair FMR, which is fair market rent for people listening who doesn't realize, and fair market rent is set forth by HUD, which is the government. They're over all Section 8. It's, um, they set the fair market rent for every zip code in every city across the country of what they would pay typically for Section 8 housing, what they pay us, and it's different all over. Um, so I went back and I said the fair market rent for this property, it was rented at $650 at the time, was $950. I filled out one form, I found the one form. And by one form, filled it out, I sent it in and boom, I got approved. I just upped that person's rent from $650 to $950, $300 extra a month, $3,600 extra a year for that one unit. Now, most people realize you can't do this. So the owner prior never raised that person's rent since they lived in there. I think it was like 7 years. They kept it the same. And I said, holy shit, James, that was really easy. And then so from there, I dug in and we bought another one and I figured out the program and then started renting to them. And so the reason why we do single families versus complexes or multifamilies or whatever, because it's different in different areas, we learned that Memphis is a bit more like the Wild Wild West in comparison to a lot of cities. So like, it's a big city. And with big cities, and I think Memphis, I mean, I heard this stat, I don't know how true it is, but I can see it being true is like, you know, 34 or 35 years running, it's like leads the— it's like number 1 in cities across the country as far as bankruptcies. Right. So I can see that. And when you have that, you're going to have super low credit scores. And like you said, we get some credit scores in and we're like, you know, holy shit. Like, you really have to put in effort to get a credit score this low. Like, like, wow. Yes. You know what I mean? It's like, how do you— how do you even do this? I didn't know it goes that low.

Right.

But in comparison, you know, we have students elsewhere that are in smaller submarkets and they have Section 8 tenants that have credit scores, you know, some are better than mine. And so I think, you know, again, that varies. So when it looks like credit scores and different stuff like that, you know, and how you qualify the tenant, I think we look at a bigger picture versus just denying off of a credit score.

Ultimately.

But yeah, if you can come in and then, you know, get that fair market rent and it always increases every year as long as we've been doing it. And even if you have one unit that you're just raising at $25, you know, and we have units we raise $25, we raise $300 or $400 depending on where they're at, if they're in there when we bought it, you know, you're getting anywhere from, you know, $1,000 extra a year per unit to a few thousand extra per year. You know, per unit. And that's just a big upside of doing it. And if you're doing it the way you're doing it, you can— I mean, you can come in, buy a portfolio, raise the rent, and sell it off of a cap rate. And, you know, and forced equity, right, is what it's called. And, you know, make a boatload of money doing that too.

Now, one of the reasons, arguing the other direction, this is, this is what I found in commercial. Commercial, the one advantage you have— this is 5 units and above— is that your valuation is based primarily off of your performance on the property. So if you find a deal like that, and let's say you— over the course of the year you do— say you buy 4 25-plexes and you find all of them have an opportunity like this. I just bought a 25-plex where rents were at $550, FMR was at $850, signed a paper, instantly $300 per unit extra revenue. Let's just do it on 125-plex. So you got 25 units times $300, $7,500 a month in cash flow. That's awesome.

Yeah, that's incredible. Where else can you do it? And the regular retail, typically, you know, correct me if I'm wrong, typically a regular retail tenant rent each year, a typical increase is like 3%.

Yeah, 3 to— depending on where you're at in the country, anywhere from 2 to 5%, market dependent is typically what you're looking at, with 3 being the national average. It sits right around 3. I think last time I looked at it, it was like 3.1 is the average increase.

Exactly. One thing I want to touch on, though, the point that I was making as far as then we started to buy single families because we did buy a 6-plex after that, we did buy a 4-plex, and then we have an 11-unit, which is actually right next to a hospital.

And we're still—

Oh, nice. Yeah, we struck on that one. We're still developing that, but we're not going to put Section 8 tenants in that one because we learned that by our 4-unit and the 6-unit and then that townhouse community that we had, you know, we learned the hard way, just like anyone else, you go through it, right? Operator, you know, through trials and tribulations that if you have one Section 8 tenant that has an issue, if you put them in, let's just say a 4-unit, Now you might have 2 Section 8 tenants that have an issue. So if you have one problem, that one problem leads to other problems because let's face it, the majority of them don't work. So what are they doing all day? They're hanging out, their friends are coming over, whatever. Now it's different by different markets, right? Again, you know, some market— the markets that you, you know, invest in, you can get away with the multifamilies. Here in Memphis, we can't. So we learn real quick, and then from there, all we do is buy single-family houses because if you have one problem, problem. If it's domestic violence or whatever the case may be, you got one problem, it's not messing it up. Because at the end of the day, Section 8 tenants are just regular people like you and I, and the majority of them are— they're doing good, they want to do good, and they have kids, and they don't want to raise their, their, their kids around maybe someone else, you know, that has problems or domestic violence issues or things like that. So, you know, we stop that real quick. That way, if there's one problem, it's one and it doesn't lead into multiple problems. But again, it's different.

I think you touched on something really important as you get into larger cities. And I've invested in Seattle and I've invested in Central Washington. I've invested in the Dallas area and in small markets around the Dallas area. The smaller markets traditionally, traditionally are going to have an easier tenant to do multifamily on. You tend to have these family-oriented communities. The culture there matters. If I was doing Section 8 and I was offering this in, say, downtown Houston, it's an area of Texas that traditionally you have— it's like you had mentioned, you have good neighborhoods, bad neighborhoods, you have, you have a lot of different demographics, you have higher crime rates. Your Section 8 population is going to be rougher, and people who have time to sit around all day, especially in port cities. Yeah, there tends to be more drugs. We saw this in Seattle consistently. You have a 12-plex in the city of Seattle. I had a 7-plex.

Okay.

The amount of break-ins that we would have, like I had to— I could not use the little door locks, you know, the ones you clip on the door. Oh, yeah, yeah, yeah.

Boxes.

Yeah. I couldn't use lockboxes because the second I put a lockbox on a door, the homeless would find it, know it's vacant and break in.

They do. Yeah, yeah, yeah.

I would never do Section 8 in Seattle personally because the government doesn't care. The people don't care. The drugs are rampant.

Right.

And, and it's going to infect your property. Absolutely. I found in like small town Texas the fun— and here's the fun math of multifamily. So if you're in like small town Texas, you're in a— I invest in Stephenville, Texas. It's a dairy town that has a booming college. So you have a ton of young kids, you have a ton of family. And they're farming community families, traditionally, you know, all-American grass-fed beef families and football and rodeo. Nice. In a town like that, the math gets fun. You have that $7,500 per month that you add instantly through Section 8. Multiply that by 12, $90,000 a year on one transaction in a market that trades on a 6 cap. So you divide that by 0.06. That's not bad. So we take $90,000 divided by 0.06. I'll run out my calculator here.

You make $1.5 million the—

like within 2 months of buying that property. Now a bank's going to want you to season it for a year.

Right, right, right.

But next year you made $1.5 million. I did that deal seller financed. I signed the paper. And a year later my net worth goes up $1.5 million. It's hard to do in single family. But to your point, you have to know your market, the opportunity in your market. It doesn't matter if you make $1.5 million, if you end up with a building that has two competing gangs in it, drugs, and two of your tenants got murdered.

Right, exactly.

Yeah. Which I've had. I've had, I've had tenants get murdered in, in Washington State. And guess what? It was in one of the buildings that had Section 8. Wasn't a Section 8 tenant, but it was someone who he inherited in a rougher building in a rougher area where the rents are lower. And you do have in a higher crime area, you increase your risk of horrendous things happening and it infects your property. One gang member moves in, now all of his buddies move in. Now you have tenants who are getting harassed or trapped in there. You know, like it can scale out of control. Yeah, I love what you're doing in Memphis, Tennessee. You're isolating yourself based on what your market's doing. You're saying, hey, we're going to take the— the biggest problem tends to be the people here, so let's spread out the problem, reduce risk. We have less variables and we can control one property at a time. That is a business model that makes sense to me.

Yeah, versus exactly like, you know, condensing that all into one area, right? Or obviously multiple at this point, but like you know, all in one, it's spread out throughout. And, you know, and you sprinkle it into, you know, good areas that generally you can find good deals, that there's good retail, there's homeowners that live in there versus, you know, you know, versus renters. And then you generally don't have problems like you just, you just don't. Now, can you do what you're doing as far as it's one purchase you just forced your equity and then all of a sudden, you know, you know, you're making that million, million and a half, you know, in your net. No, but we just do it on scale with properties. Right. So, you know, we're, you know, I make— we probably make 5, 7, you know, probably 5 to 10 offers a day, you know, on properties here. And, you know, we're buying 5 to, you know, maybe 7 of them a month. And we just do it on scale. And the reason why— so our model's a little different than yours because the reason why we stick here in Memphis, we've had outlier areas, right? We've had Louisville and we just got rid of it. We had far east Tennessee, that one was in Section 8, but we had Mississippi— no, not Mississippi, how's the other city down there? I'll think in a minute. But we realized that let's just do the market that we're in. We have, you know, our home ship, right? Our office is here. We have all the connections here. We built out this whole thing here as far as banks, appraisers, like everything, like everything that's unique. Yes. You know, don't forget, like appraisers, like, you know, they're a dime a dozen, like real estate agents. So when you find a good appraiser and then you find a good bank, and the bank will use that appraiser or appraisers, right? You can create your own roundtable of appraisers, and that way they're always being used, right? Because you can have an appraiser that doesn't know what they're doing, just like a real estate agent, come in and kill your deal. So we're like, let's just stick to this market, just scale it here. And that's kind of what we did, ultimately. And, you know, like, at the end of the day, it's funny because, you know, we get a lot of things online, you know, I'm sure you do too. Like,, you know, social media, oh, you know, slumlord and this and that. And I actually take pride in— yeah, like, like, I mean, you know, just like your properties, like, you know, these tenants, like, I mean, they're going into— now we're not into them for like $200,000, right? But they're going into $200,000 properties, right? Something they would never be able to buy. You know, and, and so they're getting a really great quality house. Not all of them are $200,000, but at the end of the day, they're getting a good quality house. We make it, you know, maintenance-free or as maintenance-free as possible at the end of the day. But I mean, tile and, you know, not bad carpet, right? We really don't do carpet, but like tile and just different things that, you know, that they wouldn't otherwise have. So like when people say, oh, you know, on some word, you know, call you some word and stuff online. Or in person or whatever, or they make jokes. When they say, I'll meet someone out somewhere and they'll ask what you do and, you know, basically do rentals, and then they'll ask a little bit more, what kind of rentals? Airbnb? No, not really, I've done that thing. You know, rented Section 8 tenants. Oh, so you're a slumlord, huh? No, not quite, jerk-off. You know what I mean? And because there are slumlords out there, but Yes. They're— the thing with Section 8 is you actually do have to keep your property up in pretty good standards because you have to pass that inspection, right?

I mean, yes, every time you place a tenant, every year, every renewal, you have to be able to pass the inspection. And beyond that, you make more money if you don't have vacancy. Like, I don't want turnover. Even with Section 8, their voucher can get them into a better property.

They're gone.

Yeah, exactly. Absolutely. It's, it's an open market and they have options. Vacancy is ludicrously expensive on top of that. And this is what I love about the business model. This is the last thing I'll say on Section 8, but you, if you do this right, you can provide above-market spaces at slightly below-market prices to where your tenants, regardless of their income, can qualify to live there. So you're giving them a better place than they can afford to live, notably better. You give quality housing You do your best to stack the deck for quality people. You really get to do a good thing for a community. And I think if you're not getting any hate for this online, you're not trying hard enough. If you have scale and you get resistance, that is the biggest compliment. When people are like, oh, slumlords, because you're providing housing, I'm like, well, what do we do? We eliminate bedbugs. We, we remediate mold. We provide quality housing. We provide it with subsidies. We end homelessness. Yeah, I'm like, good. These are all people that we're not competing with. Then you're not going to clean up your town. We'll do it for you and we'll make a bunch of money doing it. But we get a feel good. Like, I get to go to bed at night being like, wow, we actually made this little corner of town better. There's two things that you said that I want to make sure no one missed. One, hyperlocality. When you can use the same teams, the same banks, the same contractors, the same you save so much freaking money. Yeah. Every time you do a new market, it's essentially effectively it's a new business. You are starting a brand new business.

It's not that you can't do that.

Yes, but I invest 99% of my money is invested in Moses Lake, Washington, Grant County, Washington, Mason County, Washington, Erath County, Texas. I have 3 markets. They run like 3 businesses. Yeah, I buy enough rentals in each of those areas next to each other where I can directly influence market rent, which again, based on our math earlier, makes me a lot of money when I can influence rent. Absolutely. There's so many ways to make money. The people who go, hey, I'm going to invest all over the country, I'm just going to look at every deal— the shiny object mistakes people make— it very, very, very expensive. Don't make that mistake. Another thing that I want to make sure that we hit before we end on— you went through one thing in this where you said, I went from one job to another job to another job. I tried wholesaling, I've tried flipping, I've tried Like a lot of people. Yep. You've a lot of flavors to get to where you're at today. Along the journey, the most expensive time you start anything, and this ties right into opening a new market, you know the least when you're starting, you make the most expensive mistakes. Like it just costs more when you're newer because you don't know what you don't know.

Yep.

In your journey, what is the most expensive stupid tax been where it's like, wow, I didn't know this? And it could be, it could be emotional, it could be monetary. Doesn't really matter. I've had both. But for your business, what do you think the most expensive stupid tax has been?

I guess the biggest cost and like, you know, you really hit the nail on the head. People don't realize. I just want to touch on that too, because it sounds cool. It sounds really cool. Wow. You own properties all across the country. Yeah, I own a property in, you know, Las Vegas and I own some in, you know, North Carolina and I own one in Miami and— wow, that's awesome. And then people try starting out, they want to try and do that, but it's stupid, honestly, especially if you're doing one. If you're doing something like you're doing, it's going to make a little bit more sense because ultimately if you're buying, you know, 60 doors or whatever, a complex, that's essentially a business in itself. So it makes a little bit more sense to do that. But if you're doing, you know, a one-off or whatever, or just, you know, small units in this, It like, don't do that, you know, if anyone's listening to this, because every time you're literally starting out fresh. And here's, here's the, you know, you asked the, the costs on things. Like, you are starting out new in business, so the biggest thing is when you're doing this is your contractors. You're going to get hit over the head because you don't know who's good, who's bad, right? Uh, we bought one in, um Cincinnati. Well, just outside of Cincinnati, Ohio. Yeah. And it was through an email. I got a cold email from someone. I never— it was like very, very first, like my first wholesale deal. My first wholesale deal, I never— I couldn't tell you what the guy looked like. It was through a text message. The deal was done through text. I closed it through text, you know, and I never met the guy, never heard from him. And this one we bought, it was Cincinnati, Ohio. I got a I got an email, bought the property, had a retail tenant in it for a couple of years. That tenant then moved out and we're like, we're going to go up there and just, you know, take a look at it and maybe we'll start buying in this area. And then we went up there just to, you know, we had nothing better to do and thought it'd be fun and cool. And we went up there and we were going to get this thing Section 8 ready ourselves. And then we're, you know, we're a day into it and we're like, shit, screw this. So then we set up like 14 contractors to come through the next day to give us bids. And you know, when you do that, 5 of them show up and then, you know, 3 are outrageously priced and then the other 2 might be okay. But, you know, you're going to run into, are they going to show up for the job? Then you have to give them too much of a draw. So one of the biggest things is— so then ultimately with that property, we said, screw this. We got it. We got it ready to go on the market. I found a really good realtor. We sold it. And that's when we started selling stuff and then honed in on Memphis. And again, here's the reason why is because we built everything here. So when you go to the new markets, the biggest thing that we found is necessarily one of the biggest things is starting your new business. So what's the cost of that when you are doing, when you're buying rentals? Yeah, okay, they might be rent ready. I don't care what any guru— there's this one, there's one, and I'm not going to mention any names on here that does Section 8 out there. And like, he, I mean, he swears up and down to his students and people on social media, I buy these properties and you don't need to do squat. To them and then move somebody in. I'm going to tell you right now, that's bullshit. Like, and you know as well as I do, like, I don't care how good the property looks in a picture, you're going to need to do a little something to it if you're doing Section 8 ultimately, because there's going to be something that fails an inspection. So I think the biggest thing is contractors, finding a good contractor. That can be your biggest expense. You go into a new market, you might, you know, I just, one of my students had this happen. They got a referral on a contractor. They, they gave the contractor too much draw up front and the contractor went ghost on them. So I think ultimately your contractors are going to, maintenance men or handyman or however you want to, you know, word it, or that person's going to be, is going to be like your bread and butter. They're, they're going to be your eyes and ears. So like finding a good one of that, again, referrals is a good one, but then also kind of, you know, diving through referrals and just kind of vetting them out and then just kind of handling them. If they're asking for like half of the price up front of their bid to start it, that's like a red flag, you know, and too much time, you know, newbies don't necessarily know any different and they give them that and then that person's gone and they're on to the next person to do that. And we've lost a lot of money, not necessarily making that exact mistake, but with bad contractors. Ultimately, I think that's probably number one.

What about you? My highest stupid tax was— I think this touches on kind of that market-to-market thing— jumping out of the core business. I bought a resort, seller financed, made a ton of money. Foothills of the Olympic Mountains on the water. I talk about this on a lot of pods. Nice. Beautiful. Cabins with hot tubs in the woods, creek runs through it, 12.5 acres. I mean, the thing's one, one of a kind, beautiful resort, and it makes money. And we bought it for a good price. I think we bought it for about what it was worth, but seller financed. Great deal. Problem is, huge distraction from my core business. I'm a value-add multifamily guy. And so what happened is my PM company took off. Multifamily strategy, over 2,000 students. Takes a ton of time because I will always coach it. I'm always the coach and I'm in the field. I'm doing the thing. So I do the things I coach. I do just like you.

Yeah.

I'm not willing to compromise on those, which means I have a lot of time between the podcast, the YouTube channel, the Instagram, the teaching, the coaching, the buying, the operating, the PM company. I don't have time to run a resort that has 8 employees. That has its own tax filings every month, that has its own business. I have to learn Airbnb short-term rental. It's not my business. It made money, it makes money, and it is the biggest distraction from my core business. Had I not bought that, I would have— I absolutely believe this— I'd have twice as much multifamily today if I didn't have to spend all the time figuring out how to run that resort.

And that's really important to That's really important that you said that because that touches back to like when I got started, there was 3 things, right? Dropshipping, let's trade stocks, or let's do real estate. And you can do all of them, but you're never really going to be good, right? So jump on one and get really good and let it be that thing and run with it. And versus like a shiny object syndrome, you're like, just because you can buy a resort, like, should you buy a resort? It sounds cool and everything, right? But you know, you earned, you know, you kind of got away from your core strategy and it kind of bogged you down. And I think that's exactly it, you know, too, that that's a, that's a big one, you know, because while, you know, oh, Airbnb, you know, and a lot of people listening, right, you know, oh, Airbnb, everyone's selling me on Airbnb, it sounds cool. And then, and then you're doing this and, you know, maybe you have 2 rentals and you're doing your strategy or doing a strategy similar to me, but then you try to do Airbnb If you just double down on one thing and then go all in on it and just become really fucking good, like, you can make a lot of— if it works, you can make a lot of money. And don't let any— it's like tunnel vision, right? Don't let anything else distract you outside of there. I think that's a really good lesson.

What came out of it for me is, is something that I ask myself on every single opportunity, every business, because all the businesses need to interlock. I'm open to starting a new business, but it needs to enhance my current business. I bought a sales and marketing company a while ago. It made sense because I already had systems that I needed this stuff for. It plugs into multifamily strategy, it plugs into direct plugins to your core business can make sense. But I always tell myself every time, just because it makes money doesn't mean it makes sense. There's lots of ways to make money. There's tons of ways to make money. That's really— I don't, I don't mass market. So for me, I do, I write about 12 offers a year. My strategy— your strategy makes sense, but I don't write 12 offers a day. That's not— that's not— I'll do in a, in a day what you do, or I'll do in a year what you do in a day. Totally different strategies. It would be stupid for me to do your strategy, and it'd be stupid for you to do my strategy, right? You're good at your system. You have something that works. Exactly. It's become easy for you because now, why would you jump out of your lane when you don't have to?

So Right.

If you're thinking on a business adventure, this is for any listener. Just because it makes money doesn't mean it makes sense. Make sure that it makes sense.

Really good. Yeah. Just because it makes money doesn't mean it makes sense. And that's what people ask, like, you know, how long you've been— you've been doing this forever, right? No, not necessarily. As far as buying it, like, how did you get to over 200, you know, you know, doors ultimately? And, you know, they're single-family houses, right? So it's 200 houses, you know, over that.

Just like so many transactions.

That's insane.

Yeah, it is.

Insane accomplishment. Once you create it, it's literally like a conveyor belt, right? And you just keep, you know, you just keep feeding the machine and it has all these different, like you said, transactions, right? So like, am I writing offers? No, I have a realtor that's doing it for me. I text him, I say, hey, you know, or my business partner, I text him. "Make an offer on XYZ for this price and this," and they go back and forth, right? But then it goes into a CRM and then we have follow-ups on that so they're not forgetting to do their job and then title and then all of that stuff. But renting it, then refinancing it 6 months down the line or whatever the case may be, and then rinse and repeat. And once you build out your strategy, man, you just feed that machine and you can really run. That's how it's easy to go from if you're going to do my strategy or yours or, you know, for anybody listening, the hardest part is just figuring out your strategy and then building that out. And once you do, you can literally scale. You hear about— I'll never forget, like, you know, it's a goal of mine, obviously, but there's a, there's a guy who's been around for, you know, a very long time here in Memphis. He owns a title company. He owns a bunch of other stuff. I think he's an attorney. He closed one of our deals a couple of years ago. And I remember going into the office when we didn't have a set title company at the time. Now we have like a set team inside of a title company, like everything, you know, gets done. And I remember going in there and sat down and signed some closing docs and just asked him, and, you know, he has, he had over 2,000 rentals here in Memphis. Like, I'm like, my God, and they're all single-family houses, you know, like Jesus, like 2,000 rentals. Well, he just figured out a system that worked really well with him. And he's old school too, right? So like, and before I started doing it, my business partner James, you know, he had a bunch of rentals on his own as well. And similar with this guy, and they were just a bit old school, like they were going around door to door. They had runners going to pick up, you know, cash or money orders and just— and, you know, this guy had runners on the inside loop of Memphis, the outside loop of Memphis. But the point of that is he built a system that worked for him that allowed him to get to over 2,000 rentals. And I remember him telling me that like he owned all of them outright. Like, so I mean, man, you just do the math on something like that and it's just insane. But he found what works and he built it and he stuck to it, you know. And then that can lead to other avenues down the line if you want to that plug in, right? So then now he owns a title company and some other stuff, but like you said, they all kind of plug into what he's already doing and it makes sense to, you know, to do those businesses.

It absolutely does. And if someone wants to learn your model from you, uh, they really resonate with that, like, hey, I think single family makes sense for my market, I want to build my own system, how would someone find you online, connect with you to learn from you and your program?

Yeah, so, um, honestly, like, there's so many people out there that put out different stuff like buy my course, buy my course, and we were so against this for the longest time, do a course.. But then we had people started to come to us, especially in Memphis, that kind of knew us and like, teach us what you do. And, and, you know, the first set of students that we had, one of the first, there was 3 guys and they had 2 doors for like a year and they came into the office. We went through some stuff and they went from 2 doors within 1 year to 42 doors, you know, literally a year later. It's really awesome to see. And that kind of gave us a lot of fulfillment as well. James and I, you know, helping others out. So we're like, shit, we're going to put together, you know, let's put together something and kind of make it real, but do it different than like other people do. And so we bought some other courses out there just to see what others like are offering and stuff. And ours is again a bit different. We're not super pushy on it. If you go to a lot of these other people, that's all they're trying to push you. And you see ads left and right. We're not, but we have it for instances like this. So if anyone wants to, uh, literally you can just go to, you know, my Instagram or find me on social media, Real Estate Ant. On Instagram it's _realestateant, and, uh, on my profile page there's a link. And, you know, I think right now, uh, I don't even know what the price is, but ultimately we give you everything that we have, all the documents. We bought one course and this guy, again, it saddens me, but, uh, bought his course And literally the lease that he's given in the course is one that you can get off of legal templates. Actually, most of the documents that he got that you get in this course and he's charging a pretty penny for it, you can get off of legal templates. So that pissed me off too. Like we spent $20,000, $30,000 on our lease. We constantly update our lease. Like right now we're doing an in-office meeting with, with our team this week and we're updating a lot of stuff. So like that new lease that we're, you know, different lines and stuff that we're updating. You know, our attorneys update, we put that in the course, we update it, you know, so you get everything that we have. And, and, you know, I don't know necessarily when you come across this, but, you know, as of now, um, you know, and for the foreseeable future, we also have you come out, you know, expenses are on you. But the cool part is you actually, once you complete the course, you know, aside from doing live, we hop on lives with our students once or twice a month Open Q&A. It's not just some prerecorded shit. Here's how to do seller finance and hope you understand it, right? You can actually come to Memphis and for 5 hours you meet at our office. We start here, we'll go over some stuff, we'll go over your goals, things like that. And then literally we drive to properties and you might be in 10, 15, 20 properties and we just go and show you the field and show you what it's like. And, you know, what we do maintenance-wise, what we don't do. You might walk through some that are tenant-occupied and, you know, see some good tenants and bad tenants, whatever the case may be. And that's ultimately how I really started to learn. You know, when I started to do wholesaling, I needed someone that was more hands-on versus just a video. Here's how you do it. Thanks. Thanks. You know, I'll never see you again. And, you know, so that's what we offer and that's kind of what makes us stand out because I told James, listen, we're not obviously doing this for the money. You know, obviously there's a cost to it because if you just put stuff out there for free or super inexpensive, people don't take it seriously. But if they pay for it, right, you got to have some skin in the game. It goes to that, you know, ultimately that, you know, you're going to kind of take some action on it, or at least hopefully. So, you know, we put something out there that's worthy that you actually learn on and are able to, you know, aside, you get Discord access to us where you can text and ask all that questions and other students as well. But like I said, we're on all social medias, Real Estate Ant, you know, Instagram, Real Estate Ant underscore in the beginning. And yeah, I mean, I'd love to see you and help you out on there.

Yeah, that's awesome. Thank you so much for sharing. If you guys haven't had a chance yet, you've already made it all the way through the podcast. It's been 50 minutes. Like, subscribe, share with a friend, drop a rating on the show. We appreciate it.

Massively.

This helps us get this owner meeting out to more people. And ultimately, that's what I built my whole portfolio on, was meeting other owners who've done something that I want to do. So if you resonate with this, reach out to Anthony. If you enjoyed this episode of the podcast, you want more of this, you want me to meet more owners for you, go ahead and like, subscribe, and we'll see you guys on the next episode.