OPM Mastery

On this weeks episode of the Invest Four More Real Estate Podcast I interview Mark Evans, DM. Mark started investing in real estate at 18 and has never looked back. Mark has wholesaled, flipped and currently owns a turn-key rental property company. Mark owns hundreds or rental properties himself and has shown that a great attitude and a drive to succeed can make big things happen. Mark has built a multi-million dollar business and he attributes much of his success to thinking big and not letting others tell him what he can or can't do.

Before I get into the interview with Mark, we have had some issues with the website recently. We switched from Bluehost (a website hosting service) to GoDaddy earlier this week. In what was supposed to be a smooth transition the site was down for almost an entire day! The shop was also not working correctly and if you tried to purchase a product you might have received a message saying the site was not secure. That has all been fixed and everything is working now, hopefully. If you find any parts of the site that don't work or give you an error please let me know and I will get them fixed. [email protected]. For all the hassles we have had this week you can get 25 percent off anything in the store with coupon code: system25.

Mark grew up in Ohio and barely graduated from high school. After graduating he was working installing gutters on houses. He me many people through his work and started to notice a few guys with really nice cars, who were having a lot of houses remodeled. Mark asked the people with the nice cars, how they got them and they all said real estate. They were house flippers or rental property owners and Mark knew he had to get into real estate. He began researching as much as he could, he went to real estate coaching programs and he learned to wholesale and flip.

It did not take Mark long to find success in real estate. He went seminars, took courses and did what they told him to do. He started making a ton of calls, talking to as many people as he could and started to make deals. He admits he did not know what he was doing half the time, but he learned on the fly. Mark loved the business and made a lot of money, but was young and not the best with keeping the money he made. After almost going bankrupt twice he knew he had to change the way he was living and investing.

After finding a lot of success in real estate, but not having much to show for it, Mark changed his path. He realized he had to create businesses that would run without him and hang around successful people who weren't just looking for a free ride. Mark worked hard to build a business, hire people and change his life. He ended up creating a business that would work without him physically there. He traveled the world, moved to Florida and still made money. Mark ended up starting a turn-key rental property company to help other investors invest for cash flow and the success continued.

Mark was very successful at a young age. He also had a few bumps in the road, but has come back stronger than ever after those bumps. When asking Mark why he has been so successful, he attributes many things.

Mark has a podcast and a fantastic website for his turn-key rental property company. You can find his here: American Wealth Builders. Here is Mark's podcast: http://therealestatepowerhour.com/.

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[INTRODUCTION]

[0:00:14] MF: Welcome to the Invest Four More Real Estate Podcast. My name is Mark Ferguson and I am your host. I am a house flipper. I flip 10 to 15 houses a year, I own 13 rental properties with a goal to buy 100 by 2023. I’m also a real estate agent. I’ve been licensed since ’01, I run a team of nine and we sell close to 200 houses a year.

So on this show, we’d like to interview house flippers, landlords and the best real estate agents in the business. So stay tuned for some great shows, if you want more information on my rentals, on the numbers, on how I buy properties, check out investfourmore.com.

[INTERVIEW]

[0:00:57] MF: Hi everyone, it’s Mark Ferguson with the Invest Four More real estate podcast. Welcome to another episode, I’m super excited today, I have a great guest Mark Evans DM who I know personally, he’s been a really good friend, really helps me out in my business in a number of ways. He’s been a super successful real estate investor, owns a turnkey rental company now, has his own podcast, does a ton of stuff.

Mark, thank you for being on the show, I appreciate you coming on.

[0:01:27] DG: Absolutely my man, thank you very much Mark, good name by the way.

[0:01:30] MF: Thank you, you know, I agree. Very cool, well yeah, we have a lot to talk about today, a lot of what I go over but you got started in real estate at a very young age. Tell us how you got started and what attracted you to real estate when you’re first starting out.

[0:01:46] DG: Great question. I started real estate investing, I was actually 18 years old, 1996, June of 96. I’m a small town buy, I come from a small town, an hour east of Columbus Ohio, 666 people in my town, no cops, no stop lights, kind of craziness still but anyways, I was not a school guy Mark. I literally barely graduated high school with a 1.8, not bragging, it’s just the reality. I had no college in my future, I hated school, everything about it, I love math class but I hated English and science and all that stuff.

At the end of the day I was sitting there, I come from a town. My parents make $25 to $35,000 a year, it’s just kind of good old hard working people, I still am amazed how well my family did, I never felt poor Mark, I don’t know if that makes sense? But I never felt poor without — like Christmas way to get socks, underwear in one gift. We were always super appreciative. Now you give kids 80 gifts and they want 150 gifts. That’s a whole another story, right?

[0:02:44] MF: I know what you mean.

[0:02:46] DG: I was literally back then, this is when lifestyles of the rich and famous was huge, form 10 years old, I remember, actually eight to 10 years old, I remember watching that show and like, “Wow, I want to be rich,” whatever that meant then, I was living in a trailer park then. I literally just decided, I started reading books when I was 15, 16, 17 of self-improvement, I used to buy those home entrepreneur magazines, I don’t know if you remember those, I’d go to the library and read them or go to the Barns and Noble back then, or little stores and just kind of read that kind of stuff and go send $7 to get a free CD or whatever.

Anyways, 18 years old, one month out of high school, had my own little seamless gutter company, I was doing a lot of work for these guys, they’re pulling up in Porsche’s with cigars saying, “Hey man, I got this other house over here,” and they’re paying me cash or check. How are you able to drive this nice car, I’m doing all the work and you’re making all the money kind of thing? I started asking them, “What do you do?” They say, “We’re real estate investors.”

I heard that probably about five times over and over and I was like, “I’m not that smart of a guy but if I hear it five times in a row, it probably means I should look at becoming a real estate investor.” I was watching a late night infomercial, Ross Whitney and I went to a three day seminar in Columbus, spent every dollar I had to go, I wasn’t a whole lot back then maybe $2,500.

That’s what started the journey Mark, I went down to Florida for three days, I drove there 20 something hours and I stayed in a hotel by myself eating Doritos and Cheetos and figuring out, I saw Ross Whitney in a room of 65 people or so, make a phone call — this is newspaper times — you picked up the newspaper, called the first cell people in the newspaper and some ladies like, “Yeah, I’ll sell you my house, I just want to get rid of it. I was like, “Holy smokes, I can do that.” That literally was the journey, that’s what started the process man.

[0:04:40] MF: That’s really cool. Most people, it’s almost probably a good thing that you didn’t go to college, you didn’t get stuck in the corporate world, the path that so many people have, it’s kind of like society tells you a certain path that you have to go through to be successful and most people get stuck on that path and they don’t see how much else is out there.

[0:05:01] DG: Yeah. 100%. I haven’t really connected with the 65 people in the room, I had a couple of connections with those people but it’s interesting you say that because a lot of the people in that room, I was the youngest guy by far in that room, probably about 10 years and literally everyone in there was like, “Let’s go to the bar,” they’re talking about going to the bar, drinking and eating for dinner, noon. I’m sitting there, I got to get to the room, I got to make some calls, I got to make something happen.

Another thing I think too Mark is the problem, people are very comfortable being comfortable. They haven’t had that life altering decisions or life altering situation to force them for change you know what I mean?

[0:05:37] MF: No, I know exactly what you mean. I was in that same boat too, when I graduated I went to college, got a finance degree, came back and worked with my father as an agent for a while, that was super comfortable, I wasn’t super successful but I had nothing that really pushed me and said, “Hey, you need to get out there and really do something big,” that came later in life and I realized, “Man, if I would have just been stuck out there in my own I probably would have succeeded a lot sooner in life than in my comfort zone.”

[0:06:03] DG: Absolutely man.

[0:06:05] MF: Very cool. How much do you think the self-help, those books, talking about your attitude affected your success in looking for those opportunities?

[0:06:14] DG: I think without it, I don’t think you have a fighting chance but I could see a car wreck and you could see a car wreck, not you in particular someone else. One of my family members, I won’t mention their name and literally they’re like, “Oh my god, it’s catastrophic, everyone’s dead,” and I look at them and, “Wow, it’s pretty amazing, only one person died.” How do you see it, it’s a very big determination I think on how you project your life out there.

As you know Mark, we have challenges every single day, I’m a huge fan on focus on data not drama. Everyone has drama but I don’t want to hear about it. I think without the great books like the magic of thinking big by David Schwartz. As a man think of… I could go on and on, there’s so many amazing books but just getting your head wrapped around this and saying, you got it made. We’re alive right? We actually have a fighting chance every single day until we get six feet under.

[0:07:07] MF: Yeah, that’s great stuff. What I did recently, I’m always reading books too, I’m pretty busy, I don’t have time to read all the time but I’ve had a hard time finding some good books lately, I just went through my library and like, “What are my favorite books?” And I just reread them, I’m rereading Think and Grow Rich right now which is just for the time it was written and amazing book. Just changes my whole perspective and attitude about things when you read those really inspiring books. I know exactly what you mean.

[0:07:34] DG: It does Mark, another thing, just to touch on it a tad more because I don’t want to talk about way too much but that book, I read every single year and every single year I learn something totally different from that book. I’m a different person, I’m at different place in my life, I might even be seeking different answers or asking myself different questions. Sounds like you’ve had that experience as well, you always discover new things in that book, it’s like, “Wow, it’s amazing.”

[0:07:59] MF: Yeah, I completely do. It’s weird because I can’t describe exactly what it is I read that makes a big difference but I just feel different when I’m reading it. It’s like, “Oh, I’m thinking way too small, why am I getting stuck on this little stuff when there’s so much bigger things to be worried about?” Well not worried but building and making things bigger and better.

[0:08:19] DG: Absolutely.

[0:08:20] MF: Cool. When you first got started calling people, were you trying to wholesale, how are you trying to get in to the real estate business in the beginning?

[0:08:29] DG: Yeah, that’s a great question. This is where I see a lot of people fail, they’re trying to learn all the strategies, the truth is, I want through Russ Whitney’s group, he was just teaching us how to buy and hold through creative financing right? That’s all I know, no more, no less. I think the problem is, people get over educated and then it creates fear, procrastination, “Am I doing the right thing at the right time at the right moment?” There’s never a right time, there’s never a right moment.

None of those stars are lining up for that. I literally only had, I was very tunnelled vision and I literally just calling people and trying to structure owner financing deals you know what I mean? So I would call you and say, “Hey Mark, I see a house for $83,000 over in the west side of town. Hey, would you be interested in renting it and/or I would call the rental ads. Okay, why are you selling the house? Why are you renting the house?” “My tenant tore it up, I evicted them.”

“You don’t want to deal with that anymore do you?” “No, I’m just tired,” but the only thing they knew right? “Let me take it over on an owner financing or lease option, back then we call it, let me at least auction it and let me be the person to deal with all the headaches.” “Oh my god, you’re like a godsend, thank you,” that’s how I got started. Yeah, I was selling the retail people on lease option.

[0:09:40] MF: Nice, how long did you do that? How quickly did you find success when you first started out and how long did that continue until you moved on to new strategies?

[0:09:49] DG: Yeah, so it’s interesting. I found success very quickly because I actually did something, to me, I wrote a book called The One Buck Deals about this but I met these two cops, brothers, making his brother and yeah, come in the office. What I discovered Mark is you know this as well is a lot of people are very good at one way and not the other.

These guys were investors, they were really good at acquiring but they weren’t good at dealing with putting the sign out in the yard, talking to tenants and selling it and all that. We actually come to an agreement, I’m talking like, this happened within my first 40 days or less, I don’t know the exact timeline but very quickly. I met these guys, I went to their office, I’m like 18 years old. I’m still amazed that they’ll listen to me or even took the conversation but what I realized is it’s not about me, it’s about them and they inked the deal and I did deals — I made money within 48 hours of that meeting with them.

[0:10:45.2] MF: Wow.

[0:10:45.9] DG: Biggest check in my life, it was like $50 grand or something like that, I almost peed my pants and I messed everything up. I messed it all up, I messed up how I posted the sign, I messed up what I said, I was so nervous and excited that I forgot to even ask them what their name was. I totally screwed everything up but made money.

[0:11:02.3] MF: But you did it?

[0:11:04.2] DG: As you know that’s all you got to do, you just got to do it, listen, what’s the worst case scenario? Call them back and say, “I’m totally sorry but I forgot your name, I was writing out the lease,” but absolutely.

[0:11:14.8] MF: Nice. What you said earlier was true, people get so engrossed in doing all these different things and learning all these strategies at once, they never do anything, they just keep learning new strategies and that happens with people I talk to and coach all the time where it’s like, “Hey, you’re a real estate agent, you’re doing flips, you’re doing rental properties, you’re doing a blog, how do I do all that?” And it’s like, “No, you can’t do that all at once.” You have to start with one thing, really master that thing then maybe you can move on to something else and expand after that.

[0:11:45.3] DG: For sure.

[0:11:46.1] MF: Cool. As you progressed in your career, I know you’ve got a ton of properties now, you’ve got another company. What really caused  you to get bigger and bigger and really grow into something really huge over the years, was there an event or was it just steady growth?

[0:12:02.6] DG: Yeah, no, I don’t believe in steady growth, I think steady growth on a very methodical way is overrated, I think it’s for the Wall Street guys that lie to people and steal from people every day because they’re just looking for incremental growth, I’m looking for massive multiplication growth all the time.

Grant Cardone always talks about 10X’ing stuff. Here is a couple of things that happen, I almost went bankrupt twice, right? On my early years because I was young, dumb. Making money and keeping money are way two different functions right? In the business of life. I started making a decent amount of money as a young kid but I had not financial mentors therefore seeking financial mentors, it’s how I discovered Robert Kiyosaki’s books.

Then got myself out of there and then that’s how I discovered how to do wholesaling mark at a high level. Because I wholesaled my way out of bankruptcy, I never filed the paperwork, I almost did. I still have the paperwork today at my desk but as that progressed, I was making money, doing a lot of rehabs, working 15, 16, 18 hours a day and I loved it. I was young, I was in my 20’s and I was at my office on day, this is a true story, October 8th, 2005 my grandmother passed away unexpectedly.

That was a pivotal moment to me. Okay Mark, you have money in the bank, you’re working like a maniac, you have a lot of people you work with, I just was working for everyone else too, I love what I do so It didn’t feel like work. I said, I want to do something different and bigger and I want to challenge the status quote what I knew. I’m always comfortable being uncomfortable, it’s kind of my motto.

My girlfriend then, Dina and I, we traveled to south beach Florida for one month which ended up turning into a two and a half year stint across the world. Since then, we actually traveled the world for seven years in total over the years but it forced me to stop being a micromanager, it forced me to become a better business owner, it forced me to become a business owner, there’s a lot of investors that think they own a business right Mark? They’re just high paid employees for themselves.

It’s like, if you get hit by a bus, your business is done, if I get hit by a bus, my business still continues, it might not continue as good as me, truth is, it might be better, right? I might be holding it back. There’s a lot of real variables there, I always kind of challenge myself but it forced me man, my grandmother passing — she was like one of my biggest mentors in my life, not financially, just as a great person, hard as nails. That was a huge pivotal point for me for sure to say, “Let’s live while I’m alive.”

[0:14:32.1] MF: Right, that’s good stuff. I’m curious, when you filed bankruptcy, what cause that? Was it just over spending, was it not…

[0:14:40.5] DG: I did not file bankruptcy.

[0:14:43.9] MF: Almost.

[0:14:46.4] DG: I was like 22 years old and I was making hundreds of thousands of dollars, a quarter. I was at the bar buying $10,000 tables and wasting money and just being stupid, buying “my friends”, not real friends obviously but people I was just hanging out, I was just over spending, not taking care of business. Again, it’s so entrepreneurial, I was such a just a dumb business guy. I was in business, I was just a dumb entrepreneur.

I was making money and spending money right? There’s a lot of people listening right now that’s like that I promise you and if that’s you, you have to stop it, you have to start asking yourself how to be a better business person. The truth is Mark, I think I was 23 or 24 my second time when I almost went bankrupt and I looked at myself and said, “I’m so much better than this.”

I almost felt like I was letting my parents down, letting my buyers and sellers down because I could help them sell deals and buy deals. Letting people around me down, I put the problem on them not just me. That’s how I really said, “Enough is enough,” and just really started changing my lifestyle, working differently and just getting serious about life.

[0:15:58.3] MF: Nice, that’s good. One thing I read a while back that may have contributed to that, I know it probably contributed to some of my young decisions was, I read our brain is not fully developed until we’re 25. Maybe that was part of it, especially in males for some reason, also worse in females too.

[0:16:16.2] DG: Yeah, I think I might be 65 for me.

[0:16:22.6] MF: I remember some of this thing that I did when I was younger, I’m like, “What was I thinking?” Obviously I wasn’t thinking very well. Cool, when you started your wholesale business, what are the real keys? I know there’s a lot of people who want to get started at wholesaling, it’s kind of taught as the “get rich quick scheme”, you don’t need any money to do it, there’s obviously much more to it than many people think. What have been your keys to success with wholesaling?

[0:16:46.4] DG: Persistence, I always have a saying, “you’re either consistent or nonexistent.” The problem is, everyone’s great starters, they suck at follow through, they suck at completing deals like closing the gap. My biggest thing, especially in the beginning, I knew that was a weakness for me, I was a great starter but never finished it, I was like the guy who had 80 business cards from different companies I would start in my head every day.

One, be honest, be ethical, ask questions, not a lot. But ask high powered questions to potential sellers and the potential buyers, let them tell you what they need help with, let them give you guidance on how to structure the deal and kind of take off the burden off yourself. Because when I started Mark, literally I was near bankrupt. When I I say near bankruptcy, I was living in an efficiency apartment, had no electric, no gas and didn’t pay my rent for two and a half months.

I’m literally sitting in there with a candle reading a book rented from the library, this is a true story in Columbus, Ohio. I never saw that as a bad thing, I was like chapter seven of my life right? Not chapter seven bankruptcy but chapter seven of my book. This is my time to shine, this is what you're made of now, time to show the world what you’re made of, that’s how I kind of talk to myself.

Literally I just — you just got to call, the truth is, I’m holding out the phone to show the video, the phone is your secret weapon, that’s like my gun dude. If I was going to go into battle, I’m taking a phone with me because the phone you just make calls, you stay persistent, you follow up people, you do what you say you’re going to do, you provide great service, great value. Really it comes down to just doing what you say you do because you know in this business man, so few people follow through and do what they say they’re going to do.

[0:18:31.6] MF: Right, and it’s very true. The thing you said about starting strong, so many people start strong, so many people have this grand ideas and once they run into a little bit of resistance or a little bit of trouble, “what else could I do? What’s the other business I can try? This one’s too hard.” It’s over and over again I see that.

[0:18:51.6] DG: I call it being a punk, I think you’re the biggest punk in the world if you do that honestly. I’m calling your people out Mark, I’m a punk sometimes myself so I get it. As you know Mark, right when you hit the resistance is actually usually where the biggest opportunity is at that moment. I always say when that happens, that’s where what am I made of today? Boom, you hit that resistance, you’re like, “What just happened?” I always say if you’re not dry heaving and all that good stuff at night, you’re probably not pushing yourself hard enough.

[0:19:22.1] MF: There’s a great book, the art…

[0:19:25.4] DG: Yeah, Art of War.

[0:19:28.5] MF: By Steven Pressfield, great book about resistance and pushing through it. I know exactly, I have it on my wall, it says “Conquer the resistance”, in my home office just to remember when things get tough and especially at the end when you’re about to get close to something big, usually when it gets to toughest you just got to push through it, if you can push through that, good things will happen.

[0:19:49.6] DG: Right, absolutely, I love it.

[0:19:52.0] MF: Very cool. You’ve done rehabs, you’ve done wholesaling obviously, what were the pros and cons of both and what do you prefer doing?

[0:20:00.7] DG: That’s why I have to wear a hat, I don’t have enough hair to do rehabs anymore. I’ve done hundreds and hundreds of rehabs but again, here’s why, true story. My whole entire family does construction where I’m from, that’s just what you do right? When I was 10 years old, I was in a bobcat moving gravel, moving dirt, loved every second of it, building metal studs, doing commercial buildings, building houses, by the time I was 15  years old, I probably built more houses than most people’s ever build or thought about building in their life.

That’s just what we’ve done. That’s all I knew, I took the simplest paths right at that moment and those rehabs, I could literally walk in a house and see exactly what it’s going to look like in 15 seconds, I think that was my unique ability at that moment, that was my advantage I guess if you will. The other investors looking at it Mark, they’re like, “Oh my god, the house is trash”. I’m like, “$1,500 I have this thing looking amazing,” right?

That was the unique ability, I’m not a big fan of it now because there’s a lot of uncontrollable situations, there’s overages, there’s real cost in it. I love whole selling, I think whole selling should be a part of everyone’s portfolio process every single day because there’s deals as you grow that just become too small or too big depending on where you’re at in your life an business where you just want to wholesale those out and make a fee. We just wholesaled a big deal, I think we made like $600 grand on it Mark, it was too big for me at the mall.

Actually it was too small, true story, it was too small and it was kind of scattered so it wasn’t like our core focus, I sit down with my COO Peter which you know and I said, “Hey, should we acquire in house and just hold it and/or should I sell it because I got to buy it right now?” And he said, “Dude, just sell it, that’s not our core.” Again sometimes it’s good to have that bouncing board off of him. We sold it.

I think it was like $575 grand, something like that in a wholesale fee. Commercial, apartment complex stuff. I love wholesaling, it will always be a part of my life in business for sure. Mark, where else can you literally find someone, have a conversation, ink a deal, a contract and find someone, go to the bar or go to the restaurant or go to somewhere and meet someone else that wants to buy it and pay you five, 10, 15, 20 grand or more over what you have in contract for?

It really is an opportunity for everyone that has any kind of gumption to go out and make something happen.

[0:22:12.7] MF: Yup, I’ve done a few wholesale deals this last year, I never did them before and it’s just some properties, I was planning to flip but for whatever reason I didn’t have the contractors available, like you said, there’s a huge part of flipping, the oversight, the getting in contractors and a lot of work. I ended up just selling those as they were, I made like 15 or $20,000 on each room, okay, this is a good deal, I’m okay with that. I know what you mean.

[0:22:38.1] DG: The question is, do you want a slow dime or fast nickel?

[0:22:41.7] MF: Right.

[0:22:42.1] DG: Right? I want the fast nickel because the slow dimes on a rehab project might take you 90 to 120 days, there’s a lot of factors in that too right Mark? You do the rehabs, you have acquisition cost, you have holding cost and then you’re hoping the market is sustained as you go to resell it. Obviously right now is a great time but in 2007, eight, if you were holding the bag on these types of deals, you might be in big trouble and/or bankrupt by then. I like wholesaling because there really is no risk except time risk because you’re investing your time.

[0:23:14.0] MF: Yeah, nope, that’s some great points. From the wholesaling, you’ve actually got in to turnkey rental properties, how did that transition happen and how did you get into that business?

[0:23:24.2] DG: I’ve always sold — so here’s what, I love selling to investors, the reason is, when retail sells like if you buy a house, fix it up, clean it up, do all these stuff and then resell it, you only have an opportunity typically to make money from that person one time. Yeah you might make $50,000 but I’d rather sell to an investor that’s going to buy and sell three, four, five, 10 times a year or at least buy.

I was looking at my motto and saying, “How can I create a consistent, predictable process procedures and put people in place to make these pieces manageable for myself and everyone else involved?” The turnkey just kept popping up. We did whole selling back then, hard core whole selling meaning chest to chest with other investors but I virtualized a chest to chest business, a non-virtual business if you will where my team is in palm beach, we’re doing deals in Ohio, Georgia, Pennsylvania, et cetera. For me it was just a natural transition to take the business the next level, there’s a lot of money out there sitting on the sidelines Mark as you know, they don’t want to be in the stock market.

I’m my own client, in 2005, December 31st 05 when I started traveling, I had holdings, I still have holdings and I was like, “How can I make this easier?” So I started hiring ground teams, property managers, this and that and just started building it up since then. It really is a whole another level now for sure but I think it’s one of the best businesses out there, the most consistent predictable business that I know that exist.

[0:24:54.0] MF: What do you think your biggest — first of all, tell us exactly what at turnkey rental property is to you? Because there is some different definitions out there if you talk to agents or other investors who think just a house that’s fixed up is a turnkey. What do you consider a turnkey?

[0:25:09.1] DG: We would be like the Sax Fifth Avenue in the turnkey world. We’re not the cheapest, we’re not the most expensive but we are a high level white glove service. Turnkey investing to me is buying a house, fixing it up, putting a good property manager in place and putting a good tenant in place. I always tell people Mark, “When you buy a property from us, you’re not buying a property from us, you’re actually acquiring a team. And many, many, many years of experience.”

We try to make it as seamless as possible, we don’t want you to hear all the problems that go on behind the scenes because again guys, this is an investment and you have human beings in properties, there are real problems. Having grounds teams and boots on the ground to me, that’s the difference. Like you said, it’s turnkey house but it’s not turnkey, the house is turnkey because it’s ready to move in but you have to find a tenant, you have to place a property manager, you have to deal with the issues and everything else that comes with that. There are. as you said, a lot of variables are.

[0:26:06.0] MF: Yeah, very good. You’ve obviously built a really cool team, I’ve done the same thing myself, before we get in to that though, what have you found is the biggest challenge with owning your turnkey company, what was your biggest challenge?

[0:26:21.9] DG: The biggest challenge in any business, management right? 100% management’s going to be the biggest challenge. If you want a company like say a brick and mortar company, your hardest part of your business to grow is going to be managing the people inside of that company.

Same thing with property management. Property managers are on the ground, they’re dealing with tenant issues, they’re dealing with local issues, they’re dealing with people trashing the property, they’re dealing with all those issues. Anybody in the turnkey business that says property management is not their biggest issue is not doing enough deals that’s for sure.

Once you start get clipping along going like real volume market, it’s the beast, it’s the big beast in that business for sure.

[0:27:03.4] MF: Right, okay, very cool. What I was going for before I thought of that question was, you’ve built a team up where you can travel the world, you can operate from different areas of the country, you don’t have to be there. What was the first step, who was the first person you hired when you decided to build a team and really start building a business instead of just being your own employee?

[0:27:22.5] DG: It’s a great question. Again, I always tell people, what is your unique ability? Find your unique ability and hire for everything else, you just do what you’re great at and hire for everything else. Once all those positions are filled, now you got to start asking yourself how to hire people to do your unique ability.

Mark, you kind of know my story behind the scenes. My unique ability is talking to buyers, I’m really good at it because I am the buyer. I know exactly the good, the bad, the ugly, the fears the motivation, et cetera. That was my last thing I got rid of in my company and we have three guys that do that now. What we did, my first thing, I hate paperwork. True story, I don’t know anybody that’s a good investor that’s good at paperwork.

It’s a totally different mindset, I hired a virtual — I hired an assistant, not a virtual assistant but an assistant. They took the deals to closing, they followed it up with sellers, they followed up with my buyers, they got the paperwork to title company, et cetera.

[0:28:18.7] MF: Yeah, I hate paperwork too. Taxes, when I used to do my taxes, I would get anxiety, I would just put it off until the last minute, it just made my life so miserable as soon as I start handing that off to somebody else it was like my life was so much better.

[0:28:35.2] DG: Just hand it off you know? It’s such an investment right? Everyone’s like, “Oh my gosh, I can’t afford 500 a week.” You’re in the game to make millions and you’re worried about investing $500 a week? You’re never going to make millions of dollars like that ever. I don’t care who you are, you can’t millions of dollars worrying about investing $25 grand a year for an assistant like that.

[0:28:57.9] MF: Right, many people get caught up in the nickels and dimes of the business and worrying about these little cost and they’re forgetting about the big picture and how much money, free time will make them. That’s the thing that will help you make more money is if you have time yourself, to think about the bigger picture, look at your business and not get stuck running at yourself.

[0:29:17.7] DG: Yeah. Can I just add one thing Mark? This is a huge piece, we were asking about growth and all that stuff earlier in the show, probably one of the biggest things, you just kind of said to spark a peace forming. So many people, there’s actually millionaires we talk to daily but they’re so scared Mark, they have the crappiest life because they’re so scared to spend money right? You can be 60 years old with a million dollars in the bank but if you don’t have the means or the wherewithal to make more money, you are in big trouble.

What do you do? Put the money in the stock market and pray every day? If that’s your marketing strategy or your business strategy, you’re in big trouble, you’ll never be freed every, you’ll never have like a real amazing life. For me and you guys and like us Mark, we figured it out, we can always make money, its’ not about making money, it’s about making change. Like growth and all these other opportunities that exist. For me, I’d rather have a hundred grand in the bank knowing I can make another hundred grand next month.

Where I’m going with that is cash flow is key, not cash. The person with the million dollars in the bank or in an IRA or 401(k) or whatever, you need to put that money in an environment that’s generating you seven, eight, 10, 12% a year and then you just live off of your interest for the rest of your life. That’s really where the opportunities exist for people that are scared to death. It’s a scared millionaire, it’s a very scary place to be Mark.

[0:30:44.6] MF: That’s a really good point and when I first started making decent money, it bothered me because I’m making this money but I didn’t have anything to show for it, like you said, when you're younger, you’re spending all your money, you got a family, you got a house, you got cars. And it’s lie, “Well sure I’m making good money,” but it’s almost worse than not making money because you feel like you should be saving it to show for it.

Once I started getting cash flow and buying rental properties, I’m like, “Hey now I’m actually doing something with it, I have this money coming in whether I’m working or not,” that’s one reason why I bought my Lamborghini. “Hey, I have this money coming in, I don’t have to stress and worry about finding the next deal or the next job,” and I think what you said about having a million dollars in the bank is a great point, I know a lot of people who have this big chunk of money saved up.

It almost gives them more stress than if they didn’t have it because they’re worried about losing it, they’re worried about ever investing it, it’s like they’d probably be better off if they didn’t have that money and they had to go out and make more and drive and start something from scratch.

[0:31:45.7] DG: I agree 100%. I think drive and goals and all the — what are your potential? I’m not living up to attempt on my potential every day in my head that’s why I tell myself. That’s my driving factor, what your saying is like, I don’t want millions in the bank, I want millions in properties that are paying me millions a month. It’s just a totally different way of seeing things.

[0:32:08.0] MF: Yeah, no, that’s really good stuff. I really like that, very cool. So, we’ve talked about how you got started, the rehabs, the wholesales, the turnkey properties. If somebody wants to buy a turnkey property, where are you guys focused, what kind of deals do you guys have right now for turnkey properties?

[0:32:26.6] DG: Again man, I’m all about boots on the ground and structure and teams. Boots on the ground, that’s management contractors et cetera. I’m in the Midwest, I’m in the Midwest where it makes sense to have deals. Columbus, Ohio, been there 19 years where in Cleveland, Akron as well as Atlanta, Georgia and Atlanta’s huge but the key is this like, I always look at markets where I can get a double digit return. Net return not gross return and then all of a sudden you netted out you're like four percent.

I’m looking for areas, again, everyone’s looking for different things. If I put a hundred grand in and I’m getting 12% return, I make $12,000 a year. I don’t care if the property goes to million and I don’t care if it goes to zero. Do I want it to go up? Yes, am I changing my lifestyle if it goes down? No. That’s why I don’t invest in hyper structure markets like San Diego, buy for $500 grand and pray and hope that you can sell for $650 next month. You might be able to do it next day but the problem is, there’s a cycle and I’m buying for cash flow. We’re in the Midwest man, 100% Midwest.

[0:33:31.6] MF: Right, very good. Yeah, I have bought a turnkey property with you guys in Cleveland. I know exactly what you mean, there’s a ton of people in California, New York that they tell me about these deals and they’re trying to squeeze a penny of cash flow out, a $500,000 property. I’m like, “That’s crazy, do you know how much risk is involved if the market goes down? You’re going to be paying money out every month to own that property too.” It’s crazy some of the things going on in other areas.

[0:34:01.9] DG: It is great, how is your investment with us going? How involved are you in all that?

[0:34:06.7] MF: I haven’t done anything. It’s been good, yeah, I bought it with my IRA and like I said, I’ve never been to Cleveland in my life, I never — I saw pictures of the property, that’s it. The checks come in to my account and I see that and that’s all I do.

[0:34:23.5] DG: Cool man, yeah. That’s kind of what it’s about right? White glove service, having a structure, I would say 99% of our clients will never ever, ever go to the houses, personally talking about structure real quick, I don’t build houses, I haven’t been in closing or house that we’ve purchased since 2005. December 31st 05 when I started traveling, that was a huge fear for me.

Now, honestly, it’s more structured and more systemized process than it’s ever been because I’d get emotionally attached to real estate, I actually love real estate for what it can do. I’d convince myself to buy deals I shouldn’t have bought back in the day. Now it’s just all numbers and data, not the drama.

[0:34:59.7] MF: Nice, one thing I wanted to talk about before, I forgot about it too, was you talk about numbers and data and being a math guy and I’m a math guy myself and so many successful investors I talk to, this seems like they’re engineers, they were IT guys, very math, analytical oriented. When you’re running your business whether it’s turnkeys or wholesales. How important was it knowing the numbers, looking at the data to be successful?

[0:35:26.0] DG: I’m a KPI guy, Key Performance Indicators, you only need like six, seven of them in total. For example, in the beginning, obviously, Mark, it’s very easy right? Contractor for 30, sell for 35 plus five. Very simple. I’m not the guy going down to the penny. Someone’s trying to figure out down to the penny what they made or didn’t make, I actually just made $12 more grand while they’re trying to figure out where the extra two cents went.

I was more like, that’s a unique ability that we have in our business, we have high profit margin business. For me, your key indicators, your KPI’s are very ultra-super duper employment for growth. Your data will give you direction, right? What I mean by that just to talk about that for a second. All my buddies back in the day, 2005, six, seven, they’re making crazy money in California, Miami.

They’re all calling me up, “Mark, this is where we’re at, we’re making millions, come on.” I’m like, “Dude, I’m perfectly fine, my team’s crushing it, we’re going well and I’m not going anywhere.” Guess what happened, right? They all go BK because the market crashes, my business actually flourishes because the market’s crashing so people are just unloading properties for pennies on the dollar so we’re buyers. The reason I was able to do that is I’m paying attention to real numbers. Not what you say or someone else says but like my real, real numbers in house.

[0:36:46.6] MF: Nice, that’s something I think is probably one the most important things being an investor with this rental property flips wholesaling, it’s looking at the numbers, you can’t just buy a property and assume someone’s just going to buy it from you for a profit because it’s a property, you’ve got to look at the numbers, know what it’s worth, know what you have in to it, really dig in to the numbers and then that’s when you can become successful in real estate.

[0:37:12.3] DG: Absolutely.

[0:37:14.1] MF: Very cool. Besides the turnkeys, the flipping, you also have your own podcast and you’ve written a couple of books, tell us about that?

[0:37:22.7] DG: Yeah, that’s right, I’m a podcaster on real estates with Realestatepowerhour.com, it’s a show we do, actually we’re moving to daily here shortly. It’s a show I try to do once a week and just talking about, honestly it’s not about strategy or structure, it’s more about mindset, growth. It’s very high level, it’s real estate related obviously, talking about how to build a team, how to build a buyer’s list, how to do this things and then every innate bestselling books on Amazon which is cool.

Why that’s cool Mark for me is 100% of our net profits go to charity. All of our book sales goes to charity, I work harder on books than I do my business. But it’s awesome to be able to give back, I call it full circle giving, I’m able to take my knowledge, transplant it to you guys via book, you read it, you got, create success and then we get back to charity together, it’s a pretty cool piece.

[0:38:11.3] MF: Nice, very cool. All right, well yeah, I think those are all the questions I have, we’ve covered a lot of different topics, is there any other advice you want to add for somebody who is just trying to get in to the real estate business? Do you have any advice for someone who is just starting out?

[0:38:27.0] DG: Yeah, quit now, if you’re a quitter just quit now and save yourself a lot of time right? The truth is you got to be ready to go balls to the wall. You can’t let people tell you what you can and can’t do, if you abide by the rules, you're in big trouble and I’m not saying break rules and do illegal stuff but I’m saying, if you’re very easily persuaded, “Don’t do this, don’t do that, you can’t make money doing that,” and you actually listen to them, you’re in Doomsday.

It’s typically Mark as you know, it’s the people that care about you the most, tell you what you can’t do. Yet when you're a little kid, I just had a baby boy about four and a half months ago, when you’re a little kid they’re like, “You can do whatever you want, you could be an astronaut or whatever.” And now when you get old enough to actually pay your own bills, they’re all, “Be safe be careful, that seems scam-ish.”

I would say just pull up your big boy pants or big girl pants and just get out there and do wholesaling and find a great mentors, now I’m not just two but I have three and I typically have two mentors a year and I know Mark you have mentors as well. These pieces are very important because you have to have mentors and you have to find out a passion and just stick with it. Don’t bounce around, that’s all I can say, just stay focused?

[0:39:44.2] MF: That’s great advice and something else you remind me of Daren Hardy who write Success Magazine and has a bunch of different programs and I was listening to his CD’s the other day and he said, you always hear people talk about professional athletes and like, “Oh if I had the talent they had, I could do that or was as fast as them, I could be making millions.”

And the truth is, they don’t want to admit that those guys worked harder than anybody else, it wasn’t just talent that got them there, it was hard work and determination. If people realize how much hard work and determination they put in to it, they would realize how much else they could do in their life if they did that same thing for themselves.

[0:40:23.1] DG: Dude, I was up at 2:30 this morning working, right? I don’t even need to work, I want to work. We work, we love what we do right? The lights are on early morning, I’m cranking, I’m ready to go and it’s not even for me, again it’s all about what my potential is, I can help more sellers, I can help more buyers, my team can make more money.

I’m working for everyone else now dude. I know you do the same thing, you have kids, you have a spot like — we’re in it at a high level, I want to make money, that’s another great tip. I’m sorry I’m running off on tangent because I just talked to a guy this morning at the coffee shop, he said, “Oh man,” because I have a Rolls Royce, right? A Phantom or whatever.

He’s like, “Oh man it must be nice.” I said, “It is nice.” I’m not bowing down to your limits, I’m actually going to say, “Yes it is nice, you got a problem with it?” “Man you know, that’s kind of crazy, you should be giving more to charity.” “How are you judging me?” People that judge people that say they don’t judge people is always amazing to me. I’m like, “Dude, listen, you’re holding yourself back.” This is like a late 30’s, early 40 guys.

We’re talking and I’m like, “Dude, your mindset of me being successful based off of what I have is holding you back from being super successful yourself.” And he’s like, “You’re right.” You take that conversation and change it, if you see things differently, your outcome will be such — it’s just day and night, I can’t even explain it.

[0:41:46.5] MF: yeah, that’s a whole another conversation but you're right, if you see someone with a nice car, a nice house and he’s like, it must be nice or man, they got lucky or how they get an inheritance for that. You’re basically telling yourself you don’t want that stuff and it’s bad.

[0:41:59.7] DG: Exactly.

[0:42:00.7] MF: You’ll never get it.

[0:42:02.4] DG: Put on their dream board right? They dream board because they watched the secret, they have the Ferrari, the Lamborghini, the Rolls Royce, the mansion. I’ve had all that stuff before I was even 30 years old because I wanted it and I got them. I’m like, “Okay, that’s cool, I don’t want that, I like that.” I’m finding my path every single day like everyone else. You’re 100% correct. Like you pull up in a Lambo and your market, people are probably like, “Holy cow, what’s going on?”

[0:42:23.9] MF: yeah, I have 100,000 people in my town so yes, there’ snot a lot of them around but if you're using the right way, you can do a lot of good. People will talk to you, it’s really a fun thing if you do it the right way and you share what you have.

[0:42:39.2] DG: Yeah.

[0:42:41.6] MF: All right, if someone wants to get a hold of you, wants to listen to your podcast, what’s the best way to contact you, to get in touch with American wealth builders too?

[0:42:51.2] DG: Yeah, I have two sites, Therealestatepowerhour.com is a great podcast show, we get rave reviews on it all the time, a lot of great stuff there. I’m not selling anything, they’re just straight content. Kind of same thing you do Mark, just provide great value and great content to the listeners.

And then Amercanwealthbuilders.com, we got a great free report over there talking about who we are, what we do, how we do it in all that. You’re more welcome to check that out. Just in the comment box, let us know that you heard me on here on the show here. I’d love to give you guys props and always appreciate your support Mark as well.

[0:43:22.4] MF: Cool, no, thank you and yeah I’ll provide links to both those sites and the write-up I do for the podcast. Yeah, I think that’s all I wanted to talk about unless you have anything to add?

[0:43:32.8] DG: I have lots of to ad but we both are busy guys, we got stuff to do though, we’re going to be here for 10 hours.

[0:43:37.5] MF: I know. Well thank you so much Mark, I appreciate you being on the show, of course we’ll talk soon and yeah, have a great rest of the week.

[0:43:45.3] DG: Definitely, thank you Mark, have a great time guys, enjoy.

[END]

On this episode of the Invest Four More Real Estate Podcast, I interview Darrin Gross. Darrin is a commercial insurance broker, rental property owner and podcaster as well. Darrin started out as a traditional insurance agent, but saw the potential with real estate investing after working with several real estate investors. Darrin started investing in properties himself and then moved his focus from traditional insurance to real estate investor insurance.

Darrin talks about why it can be tough for some real estate investors to get insurance. Usually it is not tough to get insurance on a couple of rental properties, but most insurance companies do not like to insure more than four properties and many do not like to insure flips at all. Traditional insurance agents are no trained to deal in investment properties, because most consumers will never flip a house or own a rental property. It is not surprising that many insurance agents do not have great insurance options for real estate investors.

It may be tough to get insurance on real estate investments, but not impossible. Darrin tells us that getting insurance on a few rentals is usually not very difficult. When you need insurance on many rental properties it can be much tougher. You may have to look for commercial insurance polices. With a commercial insurance property you can put multiple rental properties on the same policy. Not only can putting multiple properties on the same policy make the accounting easier, but it may also be cheaper than having individual policies.

How much money can you make with rental properties?

If you can find insurance on fix and flips, Darrin says that many times you will be getting a builders policy. With a builders policy you will get asset coverage, but in some cases you may not have any liability insurance. So if someone gets hurt in your property you may not have any coverage from your insurance! You need to make sure you know exactly what your policy does and does not cover. With one of my recent flips we had the copper stolen out of the home. This was not covered because my policy did not cover theft! If you have a policy that does not cover liability you may want to consider getting a general liability insurance policy to cover your personal or company's liability.

Darrin Gross can help you get insurance on your fix and flips and make sure you have the right coverage in place. I can tell you that I am going to look in depth at my costs for insurance on my flips and make sure that I have the proper coverage in place. Darrin also has a great program for investors who are doing ten or more flips a year.

Darrin stresses that you need to make sure the people you hire to work on your property are insured. It is even better if the contractors will add you or your company as an additionally insured on to their policy. That means if the contractor does something wrong and someone decides to sue the contractor and the home owner. The contractors insurance policy would defend the home owner as well as the contractor.

When you own rental properties or flips you have to make sure you have the proper insurance in place and you are not paying too much. If you are interested in talking with Darrin about your business you can sign up for his free flipping insurance report here. If you listen to the episode he even gives out his cell phone!

Reminder: I am having a live rental property webinar today (Wednesday)! Be sure to sign up here.

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Earlier this week I posted an article about my goals for 2016 and how 2015 went. On this episode of the Invest Four More Podcast I go into more depth on my goals and what I want to achieve in 2016 and why. I also talk a lot about 2015 and what I learned from the last year. People see my success on the blog with my rentals, flips, real estate team and cars, but it doesn't always go perfect! I had a lot of setbacks in 2015 and I am making a lot of changes going into 2016. The good news is that I had a lot of success in 2015 as well. If things always went the way we planned them, life would not be nearly as interesting and the wins would not be nearly as sweet.

I am not going to rehash everything I said in my goal article, but I will touch on a few topics. I had some really big plans in 2015. I was successful in some ways and not so successful in other ways. I had big plans to reduce the amount of time I spent flipping and that was a huge bust. I hired some new people and thought everything was set up for success, but it did not work. This was partially my fault for not having better over-site. I also did not buy as many rentals as I wanted too and my real estate team did not sell as many houses as we hoped too. However, I still bought five rentals and we still sold 127 houses in 2015. So while I did not hit 7 rentals or 200 sales it was still a good year!

Here is a link to my goal article that goes into much more detail on 2015 and 2016.

I have been setting specific and aggressive goals for over three years now. Every since I started setting goals I have seen massive amounts of success and I have been a happier person. The great thing about goals is they give us a destination and a target. If not have no goals, you have no idea what you really want in life. If you simply want to "be comfortable" or "be financially secure" that does not mean much. In fact those broad statements mean almost nothing. Being comfortable could mean having a roof over your head to some people and to others it might mean having a 100 million yacht to sail around the world in.

If you want to be comfortable, what does that mean? Does that mean you have $5,000 a month coming in without working or something completely different? You will never be comfortable if you never define what comfortable is. On another note, I think being comfortable is a horrible goal to have. Who wants to sit around all day being "comfortable"? The most fun and memorable things in life come from being extremely uncomfortable and experiencing new things.

Too many people also rely on the start of a new year to make goals and resolutions. For goals to be successful you have to think about them and review them all year long. Not just one time of the year. Most people make resolutions, never write them down and quickly forget about them a couple of weeks later.

In order to keep your goals fresh in your mind and motivate yourself here are a few tips:

Here is an article with much more information on goal setting.

Whatever you decide to do in 2016, make sure you give it your all and do not give up. It is much better to have tried and not reached your goals than to have not tried at all. I know my biggest regrets in life involve not trying or being scared to do something, not things I tried to do, but was not as successful as I hoped. This episode as a lot of information on goal setting exactly what I am doing in my business and how I am going to make 2016 awesome. I hope you enjoy it!

I am having a sale at the Invest Four More shop. Everything is 30 percent off until January 1st! Use coupon code: newyear30. Invest Four More shop.

I am also having a live rental property webinar next week. Be sure to sign up here.

LEAVE A RATING AND REVIEW FOR US OVER ON ITUNES

[00:00:59] MF: Hey everyone, Mark Ferguson here. Welcome to another episode of the Invest Four More Real Estate Podcast. Today I'm gonna be talking about my 2015 going through some of my goals I had for the year, if I accomplished them or not, what I can do better, what I can do worse. And then also talking about my new goals for 2016, what I have planned for the year, what I want to accomplish, what I hope to accomplish and just go through exactly what I've done and exactly what I wanna do for the upcoming year.

Goals are so important, especially for anything business wise, success. So many people kinda of float through life. They don't have goals, they don't really know what they want, and then they wonder why they don't ever get what they want, but they don't even know what they want in the first place. So I mean that's really the first thing you have to do if you wanna be successful, is define what success is to you. And that doesn't mean being comfortable or being happy. Those are things that would be great, but you're not defining anything.

Happiness, comfort levels, it's all different to every single person out there. So you have to be as specific as possible when you're defining what you wan out of your life, what goals you want, what you want to accomplish. I talk to a lot of people, you know, in my coaching programs, through comments, through emails, and a lot of people have this vague idea that they want success, but they don't know what that success is. So I mean that's the first step in being successful is knowing exactly what you want.

If you wanna get started in real estate and be successful in real estate, you can't just say, "Oh you know, I wanna be successful at real estate." That can mean a thousand different things to a thousand different people. Narrow it down; do you want to buy rental properties, do you want to flip houses, do you wanna be a real estate agent? Once you figure that out, how many houses do you wanna buy as rentals? How many houses do you wanna flip? How many houses do you need to sell as a real estate agent?

You need to be specific on what you're doing, what you're striving for, as long as it gives you a great idea in your head of what you wanna do, where you wanna go, but you can then work backwards from those numbers to figure out what you have to do to get there. If you just say, "Oh I wanna be successful in real estate," you have no where to go. There's no way you can build a plan around that. But if you say, "I wanna buy five fix and flips and sell those houses as well in 2016," you know exactly what you're trying to do, exactly where you're trying to go.

Then you can say, "Okay, so that means I need to buy about one every two months. I mean I can skip one month, I need to get them repaired in such and such time, I need this much money for down payments, repairs, I need to find this financing. It gives you a way to build a plan, start working backwards so you can find success. As far as the type of goals I make, I make very aggressive, very challenging goals. And I think people make the mistake of making goals that are easy to achieve, they know they can achieve.

So for example, when I first started buying rental properties I bought one my first year, at the end of the year. I bought three more the next year. And that's when I really started to get serious about self-improvement, about setting goals, about really being as successful as I possibly could be. And I thought to myself, "Okay I bought three this year, so I can buy 30 in 10 years. That seems like a reasonable goal. I bought three this year, three more for the next 10 years. Hey, I'll be in a good position, have lots of cashflow coming in, be financially stable. Awesome goal."

I then went on to read many, many books on self-improvement, took Jack Canfield coaching, explored and learned as much as I could about success. And I figured out my goal to buy 30 rentals, it was easy. I mean I'd already bought three, already knew I could do that, you know the status quo going, "Keep going along at the same pace I was and I could accomplish that goal." So it was not challenging me at all. And I realized if I wanted to get ahead in life I really wanted to keep building and improving, I had to make a more aggressive goal.

So that's where I came up with my plan to purchase 100 rental properties basically in the next 10 years. By 2023, and at that time it was 2013 when I made that goal. That goal really helped me improve the way I looked at things, helped me buy properties faster, was really cool to write about on the blog, and it just set in motion so many events, it helped me do more faster because I made an aggressive goal. I had to figure out new ways to buy properties, new ways to get more money, just so many different things came from that goal that improved my business.

And it was really good too, writing out an entire article for that goal. Because for one thing, it was published out there for everybody to see so I had to be held accountable for it. I couldn't just make this goal, keep it a secret to myself and then if I didn't accomplish it or if I didn't work at it, no big deal cause nobody ever knew about it. It was something that was out there, the public knew about it, my readers know about it, and people could see my progress and how I was doing also what I was doing to improve on things.

So that was an awesome way to be held accountable, to make sure I was working towards that goal and doing everything I could do accomplish it. So if you're setting goals, one thing I suggest is try to share it was somebody. Whether it's your spouse, your family, friends, co-workers, tell them what you're trying to do. Usually they'll be excited, they'll encourage you, they'll help you reach it, and if nothing else, someone else knows about it and if they discourage you and say you can't do it, then hey that just adds even more motivation to prove them wrong and do it anyway.

So try and share your goals. I know it's tough for some people, they're very personal. It's kind of scary to put yourself out there and have other people criticize or judge what you wanna do in life. But it'll help you get there faster and it really is worth it. So writing about it was awesome because I was accountable, plus I had a very precise plan in place of exactly what I wanted to do that I could always look back very easily and see what it was.

So always write down your goals too, whether it's in a notebook, whether it's online in a blog, an article. Or on your computer, write down your goals. Make sure you know what they are. It's so easy to forget about them. If I don't write things down I forget about it very quickly. There's some study or some statistic where if you come up with an idea, a brand new idea, and you don't write it down, it takes about 15 or 30 seconds to forget about it. So I try to write everything down because with my brain it's usually about 10 seconds and I forget about what I'm thinking about.

So make sure you write stuff down, especially goals, so you remember what they are, remember what dates you wanna accomplish them by, you remember the details and why you're excited about them too. That's very important. So by making this goal, by writing it down, by sharing it with people, really pushed me and motivated me to accomplish it, to do more, and make things happen faster.

So last year I bought five rental properties, which puts me behind on my pace to by 100. So if you read my article, my plan to purchase 100 rental properties, I do a year by year break down of how many houses I wanna buy each year to reach that goal. So I start out with, I think it was five or six the first year, then seven or eight the second year and then slowly bump that up cause I assume in the later years I'll be making more money, have more cashflow coming in, I can buy more properties.

So I'm a little behind on where I'm supposed to but I'm still, I have 16 rentals now and if I think back to my original goal, which was to buy 30 properties in 10 years, I'm already more than halfway past that goal and I'm only the second/starting the third year of that plan to purchase 100. So by making that bigger goal, by forcing myself to be challenged, I'm way ahead of where I would've been if I had a smaller goal that was easy to achieve.

So please, don't be afraid to make big goals, don't be afraid to challenge yourself. I hear from people who say, "Well what if you fail, what if you don't reach that goal then it makes you feel bad about yourself and you get discouraged and it's worse off than you would've accomplished that goal?" And I don't believe that at all. If you don't reach a goal it's not a failure, it's - a goal is simply a tool to be used to help you accomplish more.

So say I don't reach my goal to buy 100 houses. Maybe I buy 80, or maybe if I only buy 60. Am I gonna feel bad about myself? No! I would've doubled what I thought I could buy in the beginning if I only had my 30 property goal. I did twice as good by having that big goal than having the small goal. Why would I be mad or disappointed? I bought twice as many houses because of that goal, even though I didn't reach it. And that's the way you have to look at goals. It's not failure or success, it's how much did it help you do more than you thought you could do in the beginning?

I mean I almost thing it's a bad thing if you accomplish all your goals, because that means you didn't make aggressive enough goals. They were too easy, they didn't push yourself, they didn't challenge you. So there's many books on this, many different opinions, but my thoughts are if you can make your goals so that you almost reach them, almost get there but don't quite do as much as you hope to do, that's perfect. Because then you're working hard all year long, trying to accomplish all those goals all year long, don't quite get there so you're pushing till the end of the year to reach them.

And they're close enough that you know you think you can reach them, or at least you know you have a chance even if it's an outside shot. But you've got a chance to get there, so you keep working hard to get to those goals. If you reach your goals in October and November, a lot of people say, "Oh, I reached my goals! I'm successful. I did everything I wanted to. I can take these last two months off." And if you take those two months off, it usually puts you in a bad spot for the next year, you lose a lot of the momentum you gained from the previous year.

So don't be afraid to make big aggressive goals, don't be afraid not to hit those big aggressive goals, because in the long run you're better off than not having reached those goals. And make sure you write down those goals, make sure you tell people about them, get encouragement, get motivation, and have accountability for what those goals are. Okay, so that's probably enough talk about goals. I have a lot of articles, a lot of different resources for goals on my website if you wanna learn more.

So what did I do in 2015 and what were my original goals? First thing I'm gonna talk about are my rental properties. So I did a write up on the same subject for 2015, my goals for 2016, you can find the blog. I also did the same thing for 2014-2015, and I did another one for kind of the end of 2013 if you wanna see those articles. But for rental properties I wanted to buy seven in 2015. That was my goal at the beginning of 2015 was to buy seven rentals.

Right now I have bought five so far, so that's fewer than I was hoping to get, but there are some definite positives in buying those five rentals. For one thing, that's more than I've ever bought in any other year. So buying five rentals in one year, I think that's a pretty good accomplishment, I'm pretty happy about that. But also, one of those properties was a duplex, so I bought my first duplex in 2015, which is two units. So technically, if you wanna look at it as units compared to rental properties, I bought six units in 2015.

And then another thing is I have 10 flips in my inventory right now that I'm working on. Two of those flips could become rental properties, I haven't decided for sure yet. So one of them I actually bought during the summer, I purchased it for about $100,000. When I bought it it was an occupied REO, so I bought it through HubZoo, it's an auction. It was occupied, I talked to the people who were living there, they said they're the previous owners, they'd like to stay if possible, rent the house back.

So I thought to myself, "Okay, cool. I can buy this flip, possibly rent it back to the current occupants. I've got some other flips going, other repair jobs I'm working on, so I don't have to get it finished right away. I don't have the resources to finish it right away. I can rent it to them, hold it in my inventory, maybe at the end of the year I will get them out, sell it next year and make some money on it." So I talked to the tenants, who ended up renting it for $1,100 a month, haven't don't any work to it, haven't had to really spend any money at all. So they've been renting it.

It's actually a two unit property, there's a family who lives upstairs, and their son and his family lives downstairs. And we did a six month lease, so I figured at the end of that six month lease I'd re-evaluate things, figure out a plan from there. That came up November, and I decided, "Okay, I'm gonna raise the rents, if they move out, fine. I'll get the house fixed up a little bit, sell it as a flip. And if they agreed to the rent increase, then I'll do another six month lease and I'll either try and sell it as a rental property with tenants in place, or I might just keep it as a rental."

So we decided to raise the rents to $1,300 a month, and they agreed. So we have them on a new six month lease term and I'm currently deciding if I wanna keep that property as a rental, which would add two more units to my rental properties and put me at six total properties bought in 2015 or if you're looking at units, that'd make it eight total units bought in 2015. Or I might sell it as an occupied rental, long term lease in place, $1,300 a month."

If I did that, I'm thinking I could probably get probably close to $150, maybe $140,000 for it with out doing too much work at all. Pretty decent profit. So I'm trying to decide where I wanna go with that. My hesitation on keeping it as a rental is a little outside of the area where I normally buy rentals, neighborhood with lower average prices where if prices go down, if we see a decline in the economy, those neighborhoods usually see the biggest decrease in prices. So we'll see what I decide on that one.

The other issue with that I'll touch on real quickly, is we've had a couple leases ending in November, December round this time of year and it is noticeably harder to rent properties over the winter than it is over the summer/spring. So what we have been doing is putting a couple six month leases in place, just so when it comes time to renew their leases in case the tenants wanna leave, we're renting them in the summer, not in the winter because it is really obvious that it's much easier to rent properties in the spring/summer than it is in the winter right now.

Alright, so the other property I bought in 2015 as a flip is another up-down duplex. It could be two units that I plan on flipping, but now that I'm thinking about it I'm like, "Man this would be a pretty good rental property too. I bought it for $125,000, it probably needs 15, maybe $20,000 work and then it'll be a four bedroom, two bath. When I'm done it could be two bedroom two bath on each level so really the rents could range from probably 14-$1,500 as a single family up to 16-$1,700 as a two unit property.

So I'll see kind of what I wanna do on that. We'll have to look at that closely. So I may flip that, I may keep that as a rental too. If I did keep it, then I have my seven properties. And I'd actually have 10 units I bought in 2015. So we'll see what happens with the rental properties. I'd say it was a good year. My goal for 2016 is to buy 10 more rentals. So again, I say I like to be aggressive, I bought five this year at a minimum, but possibly more depending on what I decide to do. So 10 I think I can accomplish in 2016.

One thing I'm doing to work on that to make it happen is I'm thinking about refinancing eight of my current properties with a national lender. There's some lenders out there now who will do fixed rate mortgages, 30 years, rates 6-7%, so little higher rates. But doesn't matter how many mortgages you have, doesn't matter you credit, the debt to income ratio, they're looking at the property. So I've been running into some problems with my local portfolio lender.

I hit $2.5 million dollars in loans with them, and they're starting to back off a little bit on how much they wanna lend to me. So if I can refinance eight of my properties, it'll put me well below that figure, probably be easier to get more loans with that portfolio lender and I can also take out quite a bit of cash if I do that refinance and still cashflow on those properties. So that'll make it easier to buy more properties in 2016, have that more cash available.

The biggest issue I think I'm gonna have is not paying for the properties, is gonna be finding the properties. Because in Colorado our market is still going crazy. Very hard to find cashflowing properties. But I have explored different markets. I may - it's gonna be tough but I've really been thinking about investing in a different market, finding an agent, contractors, great lender down maybe in Florida, all the types of different areas I've been looking. So we'll see how that goes.

Alright, for my flipping. In 2015 I ended up doing nine flips. In my original goal was to do 10. So I mean I wasn't too far off. But I could've done a lot more. My plan was kind of to really try and reduce the amount of flips I did in 2015, which I did do. But it wasn't because I was doing a lower volume, it was because it took so long to fix up the properties I had. So I hired a project manager, full time employee in 2015 to try and speed up my flipping process. And it has not gone as well as I'd hoped. Things are still going very, very slow.

So 2016, making a lot of changes, doing a lot of different things to really speed up the time it takes to rehab my properties. It's just a huge roadblock that's holding me back. So that's one of the main things I'm gonna focus on in all of my business for 2016 is speeding up the rehab process. So with my 10 flips I have now, I've got two under contract, so I have to close next year, 2016. My new goal is to flip 20 houses in 2016.

So I know that's a huge goal, that's a really big goal. If I happen to keep those two properties as rentals, that'll make it an even tougher goal. But I think I can accomplish that if I really focus on the rehab process, really focus on getting that timeline reduced and just really hammering out a system. Because if I can fix that, if I can make my repair process faster, I can sell properties quicker, I can buy more properties, I can just do so much more.

Because I know there's a couple properties in the last month that I haven't gone after, that I haven't tried to buy, that could've been flips, because I've got so much going on. I'm just not in a position to buy more flips at this moment, so we'll see what 2016 holds in store. But if I can flip that many properties, that'll give me even more money to buy rentals and that will also help in purchasing more rentals, speeding up that process.

Alright, so for my real estate team, my goal was to add a couple of agents and sell 200 houses in 2015. I did add two agents to our team, that was nice. Really great people. One is very new, just started. The other one's been going about six months and he is selling quite a few houses, has 300 contracts, having quite a few closings. The other is off to a little bit of a slow start, but has been doing awesome lately. So that's been great.

Another new agent that we hired in 2014 has just been doing awesome. He made over $100,000 in his first year in the business. Just had an amazing year, and he's been just great, so he's going places. So the team has been doing really well. We have 10 people on the team now, seven licensed agents if you include myself. A couple of those are assistants who don't do a lot of selling, but they're still licensed. But we only sold 127 houses in 2015. So that's way below my goal of 200, but there's a lot of reasons that happened.

The biggest thing is back in 2012, even 2011, we were selling close to 200 houses a year because of my HUD listing contract. I mean we sold I think 170, 150 just HUD homes one year. So that was huge part of our business, was the HUD Homes REO properties. Our market is really hot, like I've said over and over again in Colorado. There are almost no foreclosures here, which means there are almost no HUD Homes, no REO's coming up for sale.

So the percentage of houses sold by me versus the team, I am selling much less now and my team is selling much more, which is how I want it to be. I want to be able to focus on the blog, on my investments, and let the team really do most of the house selling. So even though that number is much lower than our 200 house goal, our prices have been going up, so the average house sale is way up. We made really good money because the house values were up, because the team was selling more, and I was selling. So it really wasn't a bad year as far as the team goes, even though it might look that way on the surface.

For 2016, my goal again, sell 200 houses. So I'm just gonna keep making that goal until I reach it. That's my thoughts. So there's a few things we're gonna do to get there, most of them are already in place. We have our website Fergusongreeley.com, which is a local website for Colorado. We've really been working on running some articles, trying to build that up. So hopefully that will create some more leads, in fact it already has. We're doing a lot of work on Facebook, so really focusing on Facebook because of the cost of advertising and the ease of use of Facebook. Facebook's been a great tool for our team.

And then we always do weekly trainings, try and give our agents as much support as possible. We really focus on training, support, and giving them the tools to succeed. So I think we can hit that 200, even if I don't sell a bunch of HUD Homes myself, which I don't see happen because of my market. But I think the rest of our team could really pick it up and do awesome on their side.

Alright, flips, rentals, the blog is another thing I wanna talk about. So I had some goals for Invest Four More for 2015, didn't reach them all, did reach some. I wanted to get to 300,000 views a month by the end of 2015. And it's funny because in July I almost got there but then traffic actually went down a little bit the last half of the year. Hard to say why in the Internet world, but decreased some, but we're almost at 300,000. I don't think we'll quite it it, but still, really close, really happy with the way things are going.

I want to implement a new real estate agent training program, which I did do. It's been a lot of fun. I really like talking to agents on the coaching calls, really like hearing the success stories and seeing how I can help them become successful. I started a podcast, so that wasn't even one of my goals. But we ended up starting a podcast, as you know, as you can hear right now. It's been a lot of fun, it's hard to measure what I podcast does for your website or your blog.

But I get so many people show say, "You know I hear you on the podcast, I love listening to the podcast," so I know people like it and I can see from the numbers I'm getting quite a few downloads. So it's been fun talking to other investors as well. So every time I interview someone else I usually learn something myself. So even if nobody listened to my podcast and nobody cared, I'm still learning so it's been a success.

Started a new forum, so the forum is a little tricky to get started. So many people are using Facebook now and social media to keep in touch that forums I think are kind of losing a little bit of their luster. But the forum's still been a great source for people to talk to me, get in touch with me and then also we have our Facebook page, Facebook group I started. So all types of different things we've been working on.

I still have my Complete Blueprint program which has been doing really well. I think that's one of the best investing programs out there if you're looking to get into rental properties or flipping. It comes with coaching calls from me as well, just awesome product, people really love that one. And then I also started a new coaching program, kind of higher level, more personal one-on-one coaching that's been going pretty well. That's brand new, you won't find it on our website.

If you're interested at all, you can always send me an email, [email protected]. I can tell you a little bit more about that one. So the blog's been going great for 2016. I wanna get to 500,000 views a month, I dunno? It's hard to set goals for a blog because it's not just about traffic numbers, it's about making sure you have good content, making sure you're connecting with people, not just high volume. I don't think 500,000 will be a good number.

I am also working on a new book, so I've got five eBooks I've published. I'm trying to make just an awesome out of this world rental property investing book. Just kind of putting everything I know into it. And it's not just gonna be an eBook, it's gonna be a real book on Amazon. You know, something you can buy and have delivered to your house. So I'm working on that. That should be available the first part of the year at some point, I'm hoping.

And then I'm also working on a book with J Scott. So if you know J Scott from 123flip.com, of Bigger Pockets, he's on there a lot, he's had a couple bestselling real estate books and we are working on a collaboration right now. A new book we're gonna write together, which should be out at the end of the year, kind of towards Thanksgiving, maybe a little sooner than that. That should be really awesome, so that's gonna be ton of fun.

Alright, so I'm sure I'll think of some more things to do on the blog next year, I always manage to, but I really, I try to focus on writing great articles, putting out good content and helping people as much as I can. And so far that's worked out pretty well. Got over 400 articles now that I've written, so keep adding to that.

Alright finally, some personal goals that I don't talk a lot about what I'm doing personally as far as income or things like that. But I do talk about some of my personal goals like buying the Lamborghini in 2014 was a goal I'd made at the start of the year. Really awesome seeing that come to fruition, buying that car. I still have it, I still love that car. I bought it for $126,000, May of 2014. I think right now it's hard to value a car like that, but it's probably worth close to $200,000 right now just cause the car market has gone nuts, especially for anything Lamborghini, Ferrari, really been crazy.

So I didn't buy any new cars in 2015. I didn't really plan to buy any new ones either. More about real estate than the personal side. But I do have some new goals I'm gonna make for 2016. Try and put those out there, hold myself accountable. One of them, I really wanna buy a 1980's Aston Martin V8. That's been a favorite car of mine since I was a kid. I know it's not the most popular car, most people might even not have a clue what they look like. But super cool car to me. Very rare. They only made about 200 a year or less. So that's one of my goals is to buy one of those in 2016. So we'll see if I can get that done.

And then some just other funny cool goals that I have that I don't really have a timeframe yet, but at some point in my life I'd love to restore an old plantation mansion type house. I've always loved old houses and I think it'd be cool to restore an old house that's kind of dilapidated but has a history behind it, needs someone to come save it. And at some point I will have a car dealership in my life. I'll see when that'll happen but I figured the best way to buy a lot of exotic cars and experience a lot of cars is have a dealership so you can buy and sell them and really experience a lot of different automobiles.

The easy part will be buying, hard part will be selling cause I have a hard time selling my cars. I love them too much. Alright, so that's what I've got for 2016. It should be an awesome year. 2015 was a really good year, a lot of fun, a lot of successes. Some things didn't happen quite like I wanted, but still a lot of fun and I just remember to keep pushing, keep improving myself, have fun with life. If everything was easy it wouldn't be nearly as fun, that's for sure.

I love Jim Rohn's quotes, "Don't wish life were easier, wish you were better." So if you come up to struggles, challenges, and keep wondering why things happen so bad to you, why everything keeps falling apart, remember you can change things. You have the power to do things differently, you have the power to rise above all that junk and negativity, so you can become better at what you do, better businessman, better person. Life becomes much more fun.

So don't wish life were easier, wish you were better and can deal with things better. That's my advice for this podcast. Alright, thanks a lot for listening. Really fun show. We'll have a lot of new stuff going on in 2016, more guests, more solo shows for me. And yeah as always, leave me feedback. Love to have any reviews you have on iTunes that helps me out. And have a great New Year.

On this episode of the Invest Four More Real Estate Podcast I am going to talk about my history as an agent, investor and some challenging situations I have had to overcome. I became an agent right after college in 2001 and although it was nice working with my father, it also presented some challenges and may have stunted my growth in some areas. As an agent, a fix and flipper and a rental property owner I have run into some unique situations and some very frustrating situations as well. Some of those were my fault and some completely out of my control. On this episode I discuss some of the more memorable mistakes and situations I have been in like buying a meth houses that then burned down, having flips involved in lawsuits for over a year, hiring mistakes and trying to complete the rehab on a flip myself.

It is hard to pinpoint the biggest mistake I have ever made, but I think not buying rentals properties sooner was one of the biggest. I have lost money on fix and flips, I have hired horrible contractors who cost me a ton of money, but I could get over those problems. I can’t go back in time and buy more rentals! I am happy that I have 16 and that is more than I thought I would have at this time when I first started, but I would be much better off if I had bought more sooner. I also never took advantage of low money down options as an investor. By the time I learned about a hard money refinance into a conventional loan, I already had 10 mortgages and could not take advantage of that technique. I bought my first personal residence at market value in 2002 and did not sell it until 2009. I could have been buying properties as an owner occupant and turning them into rentals that whole time with very little money.

On the plus side I did not know as much about rentals back then and what a good rental property was. If I had bought a lot of rentals before the real estate crash, I may not be in as good of shape now if I didn’t buy for cash flow. Had I bought for cash flow and bought great deals, I would be in better shape now even with the real estate crash.

I flipped houses with my dad since I first got my license. I took over the business in 2013 and really ramped things up since then. My dad and I ran into a number of situations with our flips.

Speaking of doing all the work myself on a flip, I still find myself doing too much busy work. I pride myself in delegating and maximizing my time, but once in a while I get stuck doing little things that I know someone else could do better and faster than me. It also took me a while to embrace delegating tasks and feeling comfortable letting go of control of everything. I have to spend time training my staff and making sure they know what to do, or I can get into trouble. But if I train people right, check up on them once in a while and pick the right people it makes my life so much easier!

I have a couple coaching programs available for investors looking to avoid the mistakes I have made or learn from the success I have found. The Complete Blueprint for Successful Real Estate Investing is an awesome program that comes with conference calls with me and email coaching. Shoot me an email for a discount code at [email protected]. You can also email me about another mentorship/mastermind program I just started.

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[0:00:58] MF: Hi everyone, it’s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four More Real Estate Podcast. Today, I’m going to talk about my history as an agent, an investor and some of the biggest mistakes, biggest losses I’ve had as an agent or investor, how I learned from them, how I change things from what I learned and then if those really affected me in a bad way or if it’s actually a good thing that help me achieve more and get farther faster because I made those mistakes.

Because I think learning from actions is probably the best way you can possibly learn to do something. Especially if you lose money, it engrains in your head never to do that again, that’s for sure, it’s much easier than reading a book or hearing stories about what other people are doing, if you do it yourself, boy will that teach you a lesson. So I’d like to get started right away, get going, I’ve got a lot of information to cover, should be pretty entertaining I hope for you guys. The first thing, I’ll give you a little bit of history about how I got started.

I got a degree in finance from the University of Colorado at Boulder and I graduated in 2001. Couldn’t really find a job that I wanted so I went to work part time for my father who had been a real estate agent since 1978. As I worked part time, I realize real estate was pretty fun especially because he flipped houses occasionally and I really like the flipping side of it.

So I ended up getting my license, becoming a real estate agent and to be honest, the first five years of my career, I didn’t do very good as an agent. I didn’t sell many houses, I didn’t really build up a network of contacts or people. I like the flipping side but the agent side were just kind of, you know, I didn’t really put my all into it, I didn’t focus on it obviously, didn’t do very well for me because of that.

So some of the things I really learned starting out working with my father which I might add, many people think that was an absolute huge advantage to get into the real estate business and it was as far as learning to flip but it’s also kind of a crutch where I didn’t have to do it all on my own, I had someone I could kind of rely on, work with and I knew if something went bad, it wasn’t the end of the world.

Where if I would have gone out on my own right away, didn’t have any help and have someone else there. I think I would have been much more successful much faster than actually working with someone like my father. He was awesome, did a great job helping me out but at the same time, it didn’t push me like it would have if it was on my own, if I knew, I failed miserably, there was no one to blame but me and no one there to help me out.

So in those first five years, I really focused on online leads as an agent, I focused on internet, on email, I didn’t want to call people and it did not work well for me, I was trying to follow in my father’s footsteps how he sold real estate but at the same time I wasn’t willing to constantly call people, constantly follow up with people which is what you really need to do to be a successful agent.

So I love the flipping side, I love doing that, we had a lot of success on that side but when I really became successful as an agent was when I found the world of REO, HUD homes and listing foreclosures. That’s really when I started to go out on my own, I started to set goals, really started to plan my life and career and things just took off as soon as I did that. I remember, I kind of accidentally set some goals, I was annoyed because I wasn’t making as much money as I thought I should, I didn’t think our team structure was setup right.

I was kind of blaming everybody else for why I wasn’t making as much money as I thought I should. I wrote down this long list of what I would have to do, how many houses I’d have to sell, all these things I’d have to do to be as successful as I wanted to be on the team structure, I was trying to prove that the team structure wasn’t fair to me which was very near sighted, it wasn’t a good attitude to have at all. I came up with this absurd number but I’d have to sell a hundred houses to make what I thought was really good money and be really successful which at the time just seemed absolutely crazy to me.

I wrote that down and shortly after doing that kind of accidental goal list and this business plan that I thought was absurd, I started to get into REO and HUD and the way that happened was, a BPO company randomly called me, Broker Price Opinion Company and asked me if I want to do a BPO. I had no idea what a BPO was, no clue. I’m like, “What are you talking about?” And they say, “It’s a broker price opinion, you drive by a property, do a short report, pull up some comps and we’ll pay you $50 for it.”

I was like, “Alright, I got plenty of time right now, so I could try this out.” Back then it was 2006 or 7 I think, they faxed me all the instructions, they didn’t email it to me, it was faxed. Got the instructions due to report, sent it in and they sent me my check a couple of weeks later. I’m like, “Wow, that wasn’t too bad, it didn’t take me a lot of time.” So I really started researching BPO’s and the REO world. And after researching it, I thought, “Man, this is the business for me, it’s all done through mostly email, it’s task oriented, I don’t have to call people all the time.”

Really just blew my mind. I’m like, “This is what I’m going to do,” and then in the back of my head I thought, “Hey, I’m an investor too, we’re buying flips. So maybe I can just buy some of the bank’s properties directly as an investor too and do even better.” Now after getting into the REO and BPO business, I realized, that was a huge conflict of interest and you can’t buy your own REO listings but at the time it seemed like a good idea.

So if you’re thinking of becoming an REO agent, HUD agent and thinking it will be a good source of deals for yourself, it is not. It is actually the opposite because I’m not allowed to buy any HUD homes, I’m not allowed to buy any REO’s from certain banks, even if I’m not the listing agent, this just flat out not allowed because they figure it’s a conflict of interest.

But moving on, I started calling banks, got way out of my comfort zone just called up banks, cold called them, asked them, “How do I start listing properties for you? How do I get into this business?” And a few of them told me, some places to sign up to management companies that used to sell their REO’s. I started signing up with every company I could and within a year, I think I had sold 15 REO properties that first year and my second year I sold 50 and the third year I sold over a hundred REO and HUD homes.

My crazy plan that I thought was absolutely absurd, ended up becoming true and working out. The thing I learned about that, always set goals, always make a detailed plan, if you don’t have a plan, if you just wing it, it’s really, really tough to become successful. I don’t think you should over plan, I don’t think you have to have every single detail planned out before you start something but you do need to have an idea of what you want to do.

If you’re in sales, how many sales you want to make, how much money you want to make, you’ve got to have some kind of idea of where you want to go if you want to get there. If you’re just winging it, just floating in the wind, you’re never going to be very successful. So I learned that goals, making a plan and focus helped me tremendously become successful.

While I was doing the REO side, our flipping business declined a lot because I was not spending time on the flips, there were times I was working 12 hour days trying to handle all the REO work, it was a ton of work doing the BPO’s, the inspections, I was doing almost all of it myself. At some point, I realized I had to hire some help, hire an assistant, things got much easier and later on after I built that business up, got it kind of, you know, some assistance in place where they can handle the busy work, then I started focusing on the flipping, on rental properties later on.

That’s another thing I learned too was if you try and do too many things at once, it’s very hard to succeed at any of them. People see me flipping houses, they see me running a real estate team, they see me with rental properties, they see me writing a blog and all of a sudden, they want to do all those things at once from the very beginning and it does not work that way, it’s going to be almost impossible to succeed if you start four different businesses at once.

How I build up my business and my success was building one business at a time, once that business became successful, you put systems in place, hire staff, delegate tasks so that you have more time. Once you have more time, then you can focus on another business or another investing opportunity. So when I was trying to do flips and being a real estate agent at the same time, kind of just not focusing on either one, neither one of them did, was really successful like I wanted them to be.

Alright, moving on to some other losses, mistakes I learned about. When my father and I were buying flips in the beginning, I’d say 90% of our properties, we bought from the public trustee, the foreclosure sale at the court house steps. When you buy those properties, many times you can’t see inside of them, you don’t have tile commitments, you don’t know if you’re buying a first, second lean, many different things come with buying to court house steps, it’s a very risky proposition.

You have to have cash right away to buy those properties. For the most part, we did very well buying those properties but once in a while, we ran into some issues, some problems. I’m going to talk about a couple of those problems and things we learned along the way buying from the public trustee. The first one we did, which was not our fault, we had absolutely no way to foresee this happening.

We bought a house that appeared vacant, we always drive by, look at the houses first, we could peek in the windows, totally vacant, ended up buying at the trustee sale, open up the house, get it re-keyed, it’s vacant, open the garage and boom, there’s a brand new BMW in the garage. We’re sitting there thinking, “Alright, that’s kind of cool but at the same time why is there a BMW in the garage? This is not a good thing, you can’t just take a free car you find. There’s got to be a reason it’s here, it’s probably not a reason that is good for us.”

We did some research, found the previous owners, we realized after talking to them that that car was theirs and they thought they still own the home even though it was sold into foreclosure sale. After doing some more digging, an attorney or a paralegal had convinced them that the foreclosure was done wrong and if they sued the bank, they would get the house for free.

All their debts would be wiped off even though they hadn’t made payments for over a year and they would get this house for free. Long story short, the filed a lawsuit against the bank like the day before the foreclosure sale, it never showed up on the title documents that we pulled, it was never recorded till after the sale, we had no way of knowing what was happening.

They sued the bank, they went to court, there was absolutely nothing for this lawsuit to stand on, completely frivolous but it took over a year for the court to even look at it. As soon as they looked at it, the judge said, this is worthless and threw it out immediately. But it took a year for them just to look at it and that entire time we had to sit on this house, hold it and we couldn’t work on it, we couldn’t do anything, we had to wait for the court to look at it.

To speed the process up, we hired our own attorneys because the bank did not care, they had already sold the house, the foreclosure sale, they had no motivation for this lawsuit to go quickly or move forward, we had to hire our own attorneys, to try to make the process move forward quicker and that cost us money. In the end, we got the house, we sold it but I think we ended up losing some money on it because of this lawsuit that came up.

Not really mistake, not really something we could have prevented but it’s just a lesson we learned about the trustee sale that nothing is guaranteed there. You never know what’s going to happen and you have to be very careful when buying from the courthouse steps. Another fun story we had happened to us was a house we bought at the trustee sale, this house is occupied and after we bought, well yeah we purchased the home, went to the occupant, we always offer cash for keys, we say, “Hey, if you move out by such and such date, we’ll give you a few thousand dollars. If it’s clean and good shape.”

We try not to evict people, try and make a smooth transaction, we did that, came to an agreement. We noticed a few things after we bought the house, actually before too I think. At that time we didn’t think about it. One, there are cameras all over the outside of the house, security cameras. Now I know if I see that, the first thing that pops into my head is drug house. It doesn’t mean that it’s a drug house but that’s the first thing that pops into my head.

We noticed that when we went to the house to sign documents, we noticed it smelled weird we thought it was just cigarette smoke but this was about 2003, it was a long time ago. Long story short, a few weeks later, we look in the newspaper and the headline is, meth house busted. And I was like, “Oh that’s crazy, there haven’t been too many meth houses,” and we didn’t even really know what meth was at the time, barely.

Looked into it a little more and we realize, “That’s our house that we had bought.” What happened was, the owner went to a gas station, filled his car up with gas, took off without paying, there’s a cop like right there in the gas station, he followed the guy home, the guy walked into his house, left his door wide open, never shut his door, the cop walked up, walked into the house because it was an open door, caught them cooking meth right there in the house.

Not only were they smoking meth, doing meth, it was a meth lab. The story gets even better. The guy goes to jail, we didn’t know how to deal with this, we never dealt with a meth lab, we were just learning about how dangerous it was, I don’t even think even the government and other agencies new how dangerous it was back then. The guy went to jail, he had the nerve to call us and asked if he still got his money, and I’m like, “No, you did not get your money.”

Then, a week later, we looked in the newspaper again and there is a house that had burned down and yes, it was that same house. It turns out the friend of the owner broke into the house, I don’t know if he’s looking for drugs or what and for some reason he lit a bed on fire in the basement, it spread to the upstairs, the entire house caught on fire, had to be torn down.

After that happened, we were interviewed by the police, they thought that maybe we had set the fire because we knew it was a meth house and that was — wanted to collect insurance money. They realized very quickly that wasn’t the case, they caught the guy who did it. Six months later, the insurance company paid us, we got the house rebuilt, because it was a brand new house, we were able to charge a little more than neighborhood prices and I think we made a little money on that deal but it taught us a lot about what to look for when you’re buying houses.

Video cameras, every time I see video cameras now I think, “Oh I wonder if it’s a drug house?” When you walk into a house and you can smell something weird, it’s kind of a chemically pungent smell, “This might be a meth house, I probably should not be in this house, I need to leave.” Smells kind of like cigarette smoke but more chemically, it’s really hard to describe.

We learned a lot about meth houses, about the legal process and getting interviewed by police. It’s a situation where it’s hard to avoid but knowing what I know now, a lot of red flags would have been set off after talking to the people, after going in the house, smelling it, all of those things. Something I could watch out for at a later time. One more mistake that we made at the trustee sale, this is definitely on our hands, we could have made some huge differences.

There’s a more expensive home, a house that we were bidding around $200,000 for the trustee sale. We had not seen the inside of it but the outside look nice. We assumed the inside would be pretty nice as well. We had a bottom dollar of I think it was 190 we were going to bid. We’ll bid 190, that’s all the higher we can go, assuming the house is in average condition, maybe needs updating, we’ll be okay.

What ended up happening is, we hadn’t bought a property for a while, got to the sale and people were bidding it up, we thought we’d go a little higher. I ended up bidding 200,000 for it, still thought we’d be okay, once we talked to the people, got into the house, it was not nice at all inside. They smoked inside, they had not kept it up, public record said the basement was finished and it was not finished, it was unfinished. That was a weird situation. We ended up losing money on that deal because we paid too much, it needed too much work and we didn’t stick to our price.

We learned, come up with a price when you’re bidding at auction, do not let emotions get in the way of what you’re bidding, don’t let other bidders get in your head, be firm with what you want to pay. It’s much better not to get a deal than to get a deal you lose money on. Not only does it tie up if you lose money but it ties up your financing, ties up your contractors, it’s a much bigger loss than just the dollar amount you lose. It’s time is opportunities by other property, we learned to always stick to our bidding amount we come up with before the sale.

Alright, those are most of my trustee sales. After doing that for about eight years of 90% of our properties being bought at the trustee, we switched to buying from the MLS. We kind of transitioned, we didn’t just switch right away. Now I took over the business in 2013 from my dad, I run everything now, everything I buy almost is from MLS. A few things I’ll buy off market from auction sites but I don’t even go to the trustee sale anymore. I can get almost as good a deal from the MLS and it’s so much less riskier than buying from the trustee sale, you get title, work, you get title commitment, you can usually see the property. There’s a few times you buy auction properties when they’re occupied, you can’t see them but it’s just been so much better and so much nicer buying from the MLS.

Alright, moving on to the next subject. 2010, I started buying rental properties. I bought my first one in December of 2010, however, I had wanted to buy rentals for years before that and I knew that was the best way to build passive income, the best way to really build for my future. Flipping is nice but once you flip a house, it’s done making you money, that’s it, it’s more of a job than an investment. The same with being a real estate agent unless you can set up your team with agents to sell houses for you.

And so I think one of the mistakes I made was I procrastinated for a very long time buying rentals. I did not work hard to save money for a very long time. It was just very tough to get that mental toughness to just make yourself do it. Give yourself a deadline, “I’m going to buy a property by this, I’m going to do it and just go for it.” When I bought my rental property even though I’ve been in the real estate business for almost 10 years, they don’t teach you anything about rental properties as a real estate agent. It’s completely different than flipping houses.

So I really had to learn from scratch what I was doing. My dad had owned some rentals but they weren’t great cash flowing properties. So I learned everything from scratch, did a ton of research and figured out what I wanted to buy and when property came up, I’m just like, “Hey, I got to do it, I got to buy it,” I bought that property and once I bought that first one, it just kind of — a light clicked in my head, a sense of relief came over me like I was really building for my future, I had gotten started and it made everything else so much easier.

Take some time to build up money and cash flow to buy more but I just wish I would have bought rentals much sooner. Even if prices were a little higher, I would have bought them the right way with cash flow, I would have been just fine. I know many investors around here who made it through the housing crisis just fine with their rental properties because they had plenty of cash flow, they didn’t over leverage them and yeah, that’s one thing I still I wish I would have bought rentals so much sooner.

That’s something I learned, I can’t change the past and one thing too I never did was I bought a personal house for myself in 2002, I didn’t even buy it below market value really. I paid full market value for it, I didn’t take advantage of what I know now as far as buying below market value as an owner, occupant. I can put so much less money down, making repairs to the house and then either selling it or turning it into a rental after a year. You can live there for a year, satisfy your owner occupant period, then rent it out.

Or, if you want to sell it, you can live there two years and if you sell it for a big profit, in most cases you won’t pay any income taxes on that property. There are many things I could have done with my own personal house using owner occupant status to make a lot more money, to get started quicker on the investing side. Again, they don’t teach you anything about that stuff as a real estate agent, they only teach you how not to break laws, a little tiny bit about how to sell houses but nothing on the investing side.

If you’re looking to get some help, some tips on getting started, my complete blueprint has a ton of information on that, on getting started with less money down on using those owner occupant rules to your advantage. Alright, I’ve got 16 rentals now, I’m definitely trying to make up for lost ground and my goal for next year is to buy at least 10 more. I’ve got some plans in place to make that happen which I’ll be sharing on a blog here in the next couple of months but that’s my goal.

Alright, moving on to another subject, I’ve got a lot to cover I told you. In May of 2015, hired one of my contractors to be a project manager, handle all my flips from my rehabs and my flips on my rental properties. I did that because I was doing almost all of that work myself, I was getting behind, properties weren’t being fixed quick enough, I was not keeping tabs on my contractors well enough. Things were slipping through the cracks.

So I thought, “If I hire someone else to do this, they can do all that, take that off my plate, I can focus on other things and the flipping business will run even better.” The person I handled was a contractor I had used before and he also had corporate experience managing. 30, 40 people, I thought it was a perfect fit, really cool guy, really liked the guy. We had some lunch meetings, I light up my plan, told him exactly how I wanted things to go.

We agreed on a salary, he became a full time employee, had a bunch of properties to work through, some rehabs, I thought things would be awesome. Fast forward to December now, 2015 and things have not worked out how I planned. Properties were getting done even slower, costs are even higher than they were before. It’s just not been a good fit and part of that is my fault.

Whenever you hire someone, whenever you bring someone on to your team, it takes a lot of hands on training, a lot of hand holding just to show them exactly what you need exactly what you want done. You can’t assume people can read your mind, you can’t assume they know everything you know. I think the biggest mistake I made was, I thought I laid out things well in the beginning for what I wanted, how I want things to work but I didn’t have follow up meetings weekly or biweekly or twice a week meetings to just make sure everything’s on track, make sure we have the same thing to hit.

I kind of let him do his own thing, figure out things himself and I hoped with his experience that it’d work out well and he knew what I wanted. I really wanted, I had a vision in my head of using multiple subcontractors for different tasks and properties, moving them from property to property, getting things done very fast that way. Instead, we kind of used the one contractor or a couple of guys working on a house from start to finish doing everything. That process just takes so long unless you have a massive crew working and where we’re at now is the same, using one or two guys for each house.

Don’t have many guys on our team at all, I have house that’s sitting, that need rehab, that have been there for months and it’s just not what I envisioned. Part of that is my fault, part of it is maybe the project manager, it wasn’t a good fit for him. So my lesson was, I really have to set things up, keep tabs, put a system in place for how I want things run before I just hire someone to do it. You have to make sure you have a clear vision, a clear idea of tasks, of what has to be done, you can’t just hire someone and hope they’ll figure out themselves.

Coming in to 2016, I’m working on building a new plan, getting specific systems in place, meetings in place and a new complete revamp of my rehab process to hopefully speed things up. I have 10 flips going right now, only four of them are close to being done, a couple of them are done and then six are being worked on. It’s going to be a long time until those are done unless something changes.

Definitely going to make huge changes, that’s one thing too, you can’t be afraid to change things up if they don’t work. Can’t be afraid to talk to people, can’t be afraid to hurt feelings because it’s your business, it’s your livelihood and you need to have people working for you that are on the same page, know what you want and you have to be clear on what you want too, you can’t just assume they will know what you want.

Alright. Another problem, speaking of 10 flips, that I had the end of last year, then end of 2014, I had 10 flips at that time too. I had so much money tied up in those properties that I did not have much money left over to buy rentals and invest in rentals. I think that’s one reason I fell short of my goals in 2014 for buying rental properties and the same exact thing that’s happening in 2015. I’ve got 10 flips again, I had 11 last week and its tied up all my money again and I thought I could do it, I thought I could handle that many properties because I hired the contract manager and that was probably another mistake with buying too many properties and putting too many things on his plate at one time.

I should have ramped up slowly, made sure its systems were in placed first before I went crazy. Definitely focusing on selling properties right now, getting them ready to close and not buying a ton of properties at the moment. Alright, another really good lesson I learned, this is back in 2006, piggy backing off the flipping side and hiring, delegating work. I was working with my father at that time, I wasn’t doing a ton of real estate work. On occasion I would do some painting, repair work, light fixtures, all types of different things and the flips to make some extra money.

So I decided it would be a really good idea to buy a flip myself, do all the work myself to save money, make a huge profit and learn the entire process of rehabbing. I will say one thing, I learned a lot about rehabbing, I learned way too much by rehabbing. I wish I could forget. I think that project took me six months to finish, I was working so hard on manual labor, on doing repairs that I sold almost nothing as far as an agent.

Made almost no money on that side, we didn’t buy any more flips because I was focusing on working manual labor and not on the big picture items, buying more properties. And in the end, it took me so long to do everything, our market started to decline more. I think I lost money on that deal. Not only did I waste six months of my life. I didn’t make any money on it but I did learn a lot of things. That’s one thing you know, even though it seems like a total waste of time, a total failure, it still teaches you a lesson, maybe something more expensive lesson that you want it to be but it teaches you something you can learn for the future.

The things I learned from that process for one, I don’t ever want to do the work on flips again myself. I can hire people to do it, I can hire contractors to do it, it’s a better use of my time to have them do the work because I can focus on acquisitions, I can focus on big picture of my business, not the day to day tasks.

The contractors will work faster. I am one guy, I had my friend helping me for a little bit but if I would have hired a crew of contractors who knew what they were doing and had experience, they would have had it done probably in a month, maybe a little longer. If I would have made money on the job even though I would have paid them more money, we would have had less holding cost, less carrying cost, the market price probably would have been better and let’s face it, they would have done a better job rehabbing it than I would have because they had more experience. They weren’t learning as they go.

But that really kind of opened my eyes to a lot of things about how I need to run my business, look at the big picture, don’t be afraid to delegate tasks to other people and the less I do busy work, the less I’m working inside the business, the better I do and the more money I make. I’m thinking about big picture, I’m thinking about ideas, I’m thinking about how to improve things, not stressing about getting work done. Too many people get stuck inside their business whether it’s flipping, whether it’s being an agent, whether it’s the Mom and Pop Store, whatever it is.

Someone who starts their own business, they feel like they have to do all the work themselves to save money, they feel like if they don’t do the work themselves, it won’t be done right. Ultimately, the business does not do well because they’re not focusing on the big picture, they’re not focusing on making money on seeing where their profits and losses are, they’re not seeing where all the expenses are coming in. They’re focusing on doing day to day tasks.

They feel like, just because they’re working and spending their time at the job that it’s going to be successful. But when you get in to business and you see some success, you realize it’s not because you’re the one doing the busy work and you’re the one inside the business doing the books or serving customers or whatever it is, or doing the manual labor on a flip is because you’re outside the business, you are seeing how everything’s running, you’re seeing where there’s weak points, where there’s strong points, you’re seeing where you’re making more money, less money.

You’re looking at the big picture and you’re letting other people do the busy work, the task inside the business and by paying them and freeing up your own time, you will be much more successful and make much more money than getting stuck inside your business yourself. That was a big lesson I learned and really helped me turn my career around. I think I made $28,000 a year where I flip myself. It was a tough year, that was not fun.

I learned a lot and things obviously have turned around since then and been a lot more successful once I started thinking about big picture, goal setting, planning and not just working. All right, that is everything I have right now for this episode, there’s obviously been many more mistakes I’ve made, many more lessons I’ve learned along the way, those are some of the biggest ones I want to talk about for right now.

Another one I will say is I took Jack Canfield coaching after I became very successful in REO and started buying rental properties. That really opened up my eyes to not limiting myself, what I thought I could achieve, what I believe I could achieve. As many of you know, I have a Lamborghini Diablo right now that I bought about a year and a half ago. If you would have asked me three or four years ago if I would ever own a Lamborghini I would have laughed at you and said, “Yeah right. That’s not for me, that’s not for people like me. That’s for super rich people, maybe when I’m like 60 I’ll be able to afford one.”

I’m 36 now by the way, and after taking the coaching, I just realized that I was hurting myself so much by not believing I could achieve those things. One thing I knew that would really help my business was by taking over everything from my father. He ran the real estate team, he handled a lot of the flipping side, the finance side and not only was I paying him a huge portion of my commissions, a huge portion of the flip profits went to him, I had no control over what we were doing.

There were many properties I wanted to buy that he didn’t want to buy. Many things I want to do in our real estate business, many people I wanted to hire that he didn’t want to do. He’s much more conservative than I am. So doing the coaching really convinced me, I remember the first time my coach said, “Hey, what would make the biggest difference in your life right now if something changed?” I thought, “If I ran the business myself, that would make the biggest change.”

I immediately said, “But, that’s impossible, I couldn’t do that, that’s too much work.” As soon as I said that, I realized, “Oh wow, I just really killed any chances I had of taking over the business by saying that,” and it really put a seed in my head about what I needed to do, what would have to happen for me to really take over. It was a long process but over time, things worked out where my really good friends started to work for me who had corporate background, talked to my father about the business. I was really stressed about that.

“What’s he going to think if I say I want to buy him out and take over?” And when I finally talked to him, he’s like, “You know I’ve been waiting for you to ask me that for years. I don’t want to do it anymore, I’m so glad you said that, I really want out.” So everything worked out so well but it was so scary and such a huge massive thing that I didn’t even want to think about it or try to undertake it a couple of years before that because it just seemed impossible.

But I learned, even if something seems big and impossible and huge, that doesn’t mean you can’t do it if you just take it step by step, you believe you can do it, you plan it out and you just work through the process of doing it. There’s obviously some hiccups, some hard parts and legal structure, some accounting structure that took a lot of time. But we did it, we got through it all and we’re both much happier after doing that. So I guess that was another lesson.

Jack Canfield was an awesome coaching programming and speaking of some coaching programs, some of you may have seen some emails come through if you’re on my email list.

Seen some webinars I’m doing, I am creating a new mentorship mastermind coaching program. It’s not a beginning level, “how to get started in real estate” type of program, it is high level, how to build your business bigger, better, badder as fast as possible based of what I’ve learned even Jack Canfield coaching, I’m doing time management, just anything I can help people with, that’s my focus. It’s very hands on, I spent a lot of time on it. If you’re interested, I’ve got a link to some more information in the article for this podcast. Please check it out.

You can always email me too, [email protected]. If you don’t know how to spell Invest Four More, it’s InvestF-o-u-rM-o-r-e.com. One final thing, everyone always ask me, what in the world is Invest Four More mean, even investors and I completely understand because I don’t expect people to know that. I came up with that name as a play on words for getting more than four mortgages. When I first started the blog in 2013, I figured out how to get multiple more years with my portfolio lender, I want to tell people how to get more than four mortgages, it wasn’t impossible.

Invest Four More, the number spelled out, is a play I’m getting more than four mortgages with rental properties. All right, cool. Thank you guys very much for listening and if you made it all the way through, I appreciate it. I would love some feedback on the podcast, leave a comment, shoot me an email, if you prefer these kind of one on one solo projects for me or if you like the guest format better.

I really appreciate all the support I’ve been getting lately and yeah, I will talk to you guys next week, thanks a lot.

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On this episode of the Invest Four More Real Estate Podcast I talk to Marco Santarelli who owns Norada Real Estate Investment. Marco has invested in rental properties for many years and started when he was 18! Marco has invested in many states across the United States and explains what he looks for in markets, how he got started investing and why he started a company to help other investors invest in rental properties from a long distance.

Marco started investing when he was 18 years old by buying a condo, rehabbing it and renting it out. He also became a real estate agent and tried to make a career of real estate. Marco found that being a real estate agent was not his cup of tea and he left the real estate business completely. After a couple of years, Marco realized he loved real estate and had to get back into it. He started investing in real estate again, but this time he focused on investing and not being an agent. Marco bought many properties after attending a real estate training seminar with mixed results. He made money on some, lost money on some, but learned a lot!

There are many real estate training seminars available for potential real estate investors. Marco took part in one of the more expensive programs and while it helped him get started he had mixed feelings about the system. The system was over $20,000 and while he was able to profit from the program and it got him investing, he saw many people join up who had no success at all. He was also not fond of their sales tactics and thought they over sold what they actually taught. In the end Marco helped many of investors in the program buy houses that cash flowed, because the program was not working for them.

Marco offers some great advice. Before you spend $25,000 or $30,000 on real estate training, buy a house instead! If you are interested in real estate training programs I highly suggest staying away from the expensive programs that are more about signing people up, then delivering results. If you really want help and training, I offer programs that are taught by an experienced investor (me) that are much more affordable.

Marco invested in many different cities including Detroit. Detroit was thought to be a great market to invest in before the housing crisis with urban renewal all over the city and a strong economy. Houses were very cheap as well and it appeared as if you could not lose when investing in real estate there. Marco learned you could lose, when the housing bubble burst and Detroit was one of the hardest hit cities in the country. Houses that were worth $20,000 and renting for $600 a month, could no longer be rented for anything and were basically worthless.

Now Marco looks at the economy and housing markets much closer before investing. He stays away from markets whose economies are based on one major industry. As an example he talks about South Dakota where housing prices skyrocketed the few years, because of the oil boom. Now prices are plummeting because oil prices have dropped and there really is not other reason to live in South Dakota (just kidding).

Marco runs Norada real estate investments, which sells turn-key rental properties all over the country. Marco still invests in the same areas of the country he helps other investors buy in. Marco has built strong relationships with lenders, contractors and property managers to provide true turn-key properties. A turn-key rental by Marco's definition is already repaired, rented, managed and provides cash flow the moment you buy it.

You can reach Marco on his website Noradarealestate.com

LEAVE A RATING AND REVIEW FOR US OVER ON ITUNES

If there are certain topics you would like covered on the podcast please let me know! Please leave a comment below or email me [email protected]. I would love to know if you prefer the guest format or me discussing my experiences solo.

[0:00:14] MF: Welcome to the Invest Four More Real Estate Podcast. My name is Mark Ferguson and I am your host. I am a house flipper. I flip 10 to 15 houses a year, I own 13 rental properties with a goal to buy 100 by 2023. I’m also a real estate agent. I’ve been licensed since ’01, I run a team of nine and we sell close to 200 houses a year.

So on this show, we’d like to interview house flippers, landlords and the best real estate agents in the business. So stay tuned for some great shows, if you want more information on my rentals, on the numbers, on how I buy properties, check out investfourmore.com.

[INTERVIEW]

[0:00:58] MF: Hi everyone, it’s Mark Ferguson with Invest Four More. Welcome to another episode of the Invest Four more Real Estate Podcast, I have a really great guest for this show today. Marco Santarelli who is with Narada Real estate investment.

Marco has been investing since he was 18, took a little break and got back into it again and he actually runs a turnkey rental property company now. So Marco, thank you for joining the show, how are you?

[0:01:25] MS: I’m good Mark, thanks for having me on, I appreciate it.

[0:01:29]MF: Oh yeah, no problem, I appreciate you being on the show. I always like to tell the story of how people got started investing, how they got into the business. You got into it very, very young, tell us how you got started, what made you want to get in to real estate and how did it go?

[0:01:46] MS: yeah. If you want to go back to the very beginning, I kind of knew as a teenager that if you really wanted to create wealth, you had to do it one of two ways. One is through building a business and I had a few uncles who were self-employed, they had their own businesses and I saw that they had a certain level of wealth.

My family was not wealthy in any way, shape or form, in fact my mother had to work two jobs for many years just to help pay the bills and pay off the mortgage and do that kind of stuff. The other way to get wealthy was through real estate. Again, we didn’t own anything but our own home but I saw other people had real estate. I just knew that that was the way to go. When I turned 18 and I could qualify for financing, I just took the plunge and jumped in.

Quite literally I just bought a town home, an end unit, it needed some work so I bought it. Gutted it out with the help of my uncle who was a carpenter. W fixed it up, I put a sign in the yard, start taking applications. I eventually leased it out, managed it myself and looking back, the whole thing was very much textbook. I didn’t know what I was doing when I started because I didn’t take a course to read a book, I just jumped in and thought yeah, this is probably not hard. Everything worked out well and I kept that property for years and it generated cash flow.

My biggest regret with that first investment was selling it. If I look back, I probably bought it for about 40 or $50,000 and today in that market, that property’s worth over $400,000. So I would have had a free and clear asset worth about half a million dollars that’s still generating positive cash flow. That’s one take away is buy and hold and if you’re in a good market, stay in that market.

But that’s how I got started, that was my first property and then I got the bug and from there I bought another property, it was a condo and then I got my real estate license and sold real estate for a few years and I really didn’t like that, that’s not what I wanted to do but as time went on and then as 2003 rolled around as you probably remember, real estate was on fire all around the country and everybody, it seems like everybody and their dog was getting into real estate.

So I went back into real estate after taking some time off, I took two years off prior to that, not knowing what I wanted to do because I was the fallout of a .com bomb. That didn’t work out unfortunately. I didn’t want to go back into the corporate world and I thought, well, I love real estate, it’s really what I like, that’s what I want to do, I decided to become a real estate investor. To make the long story short, I can dive into more details if you want but effectively, over the course of the next two and a half years, I accumulated a high water market, 84 units. I got a jump in and do this, I did.

[0:04:41] MF: Very cool. I’m curious, there’s a lot of real estate agent as well as investors who listen to the podcast and being an agent is great for some people, other people not so great. What was your take away on trying to be an agent, what didn’t you like about that side of the business?

[0:04:58] MS: Well, to be blunt, I felt like I was chauffeuring people around in the back seat of my car. It’s not exactly that way, it is a service based business and you have to look at it that way but effectively, when you’re a real estate agent, you are self-employed. You’ve created your own job. And so if you don’t get up in the morning and generate leads and go to work, you’re not going to pay the bills. You have to keep generating new business in order to have those transactions close so you get a paycheck and commission and you can keep going.

The smart real estate investor will realize that, “Okay, I’m living in a transactional business and the only way for me to break out of that in other words to get out of the rat race is for me to create passive income.” And that’s the key, if you can get out of the rat race regardless of what you do, even if you like it, that’s okay. The only way to true financial freedom is to generate a passive monthly income that meets or exceeds your monthly expenses.

Once you’ve done that, now you’re literally financially free and you could do whatever you want, whenever you want. That’s the key, you just have to reinvest some or all of the funds you make into income producing assets. Obviously my favorite’s real estate. That’s the key.

[0:06:15]MF: Right. Makes sense. When you were an agent, were you still investing or were you just focused on being an agent?

[0:06:25] MS: I wasn’t selling real estate for too long, I think I was licensed for about two or three years and sold real estate for that period of time. I had a small business on the side, so I was kind of moonlighting, I was doing two things at once. What I did is I did take whatever commissions I made and reinvested it into my businesses and I took some of that, including commissions.

You can get creative as a real estate agent. As long as you disclose everything, you can take your commission and apply it towards your own purchase as part of the down payment. If you want to do it that way, you could do it that way in the right market right?

[0:07:04]MF: That makes sense. Okay, very cool. So then, you took a break, you got back into the real estate business, how did you get that many units so quickly? What was your plan going back into this real estate business?

[0:07:18] MS: Good question. Financing was pretty easy back then, I have to give a lot of credit to the grossly over subsidized financing that was available back in the early 2000’s, thanks to the policies of the government at the time. You know, Fannie Mae and Freddy Mac being government sponsored entities, they’re really backed by the government so they’ll take and buy loans but they made policies so simple back then that you could almost literally fog a mirror and qualify for financing.

In fact it was crazy, you could, at one point you could get up to 130% of the purchase. Purchaser re-fi but it was crazy. Financing wasn’t hard, there were a lot of ways to get financing not just through conventional but even through portfolio lenders. I did take advantage of commercial loans because some of the properties that I was buying were small apartments.

With commercial, they don’t look at how many loans you have or how many loans you have on your credit report. They look at the property first and then they look at your credit score and your ability to meet barely minimal requirements. Commercial financing wasn’t hard and then the third thing I used was some creative finance, I worked with sellers who were able to carry the financing for me for a short period of time.

They’re not there today but they were able to carry the financing for me to the point where I either resold the property or refinance the property and put new financing on it. Financing was pretty easy back then, it wasn’t all that hard.

[0:09:11] MF: Right, I know what you mean, I remember those 120, 130% loans and I kind of looked around and asked other people, does this seem like a good business? Should I be doing this? I guess we kind of found out how it all worked out a few years later.

[0:09:28] MS: Yeah.

[0:09:29] MF: Very cool. Properties you were buying, was your goal at the time to hold them long term or you buying them kind of to add value to them and resell them, what was your plan at that time?

[0:09:44] MF: For the most part I was just buying to hold but I did make a lot of mistakes and I did lose money on properties because I didn’t do what I preach from the top of a soap box today to all our clients and that is, do your due diligence. Make sure you know what you’re buying, confirm the numbers, do your inspections, understand the neighborhood, not just the property. A lot of investors are pretty myopic, not all of them but a lot of them. They’ll get so mesmerized by a property and how beautifully it’s been renovated or maybe it’s new construction.

But they’ll be mesmerized by this property and the numbers really makes sense to them. But then they don’t look at the bigger picture, they don’t step back and take a look at the rest of the properties on the street and that neighborhood and the demographics of that neighborhood and maybe the schools and crime rates in that area and then step back even further and look at the big picture.

“Oh okay, well, it’s in a suburb of a particular market, what is the economy like there? Their jobs, does their job grow? Is that a trend that’s increasing, decreasing?” You got to look at the fundamentals to give you an extreme example, couple of years ago, we saw “huge opportunities” in north Dakota. You just couldn’t find housing. People were literally living in tents because there was such a shortage of housing.

Well the North Dakota market is what I’ll call a one trick pony, it’s heavily based on oil and gas that should something happen like oil prices plummeting down to $45 a barrel like it is today, what would happen in that particular market? It’s very similar to other markets like Fort McMurry up in Northern Alberta Canada. It was crazy expensive how real estate skyrocketed, a shack became an eight or $900,000 property.

When the economy turns or you have an incident where you have oil prices dropped 40, $45 a barrel. Well guess what? Pink slips start going out and all of a sudden people lose their job either temporarily or permanently, the demand for housing goes down, the demand for rentals goes down, and then prices follow. And so you can’t be in those types of market. I guess the point I’m trying to make is, don’t get mesmerized by the property without looking at everything and verifying everything.

That’s how I lost money because some of the property that I was buying were in war zones in Detroit, you could buy a 10, $20,000 house that would rent for $600 plus a month and it’s great while you have a tenant that’s paying but if they’re on sub cities or they work part time or maybe they’re unemployed and they’re making their income from miscellaneous type of jobs or drug dealing, whatever, things happen.

So what you see on paper as far as your pro forma and what you expect to make at the end of the year is not reality. That’s what you’re hoping to see but again, you got to be in the right place, the right market, right neighborhood with the right property and the right management team, that’s kind of what we preach all the time. I made those mistake early on more than once and I learned the hard way.

I ended up firing my property manager and doing my management myself and that was really hard, I learned a lot from it but I came to realize that the ultimate solution for someone who is investing from a distance is to have a very good full service professional property manager because you live and die by that property manager.

[0:13:43] MS: Right, great advice. That is interesting how you said that Detroit is another one of those places where it was very heavily auto industry. When that collapsed, everything collapsed there. Just because you can buy a house for five or $10,000, doesn’t mean it’s a guaranteed win. When you looked at it a couple of years ago there, just tearing down houses because they were basically nothing. Great advice. I’m curious, were you investing in one market, multiple markets, where were you buying properties at?

[0:14:16] MF: At the time I was investing in Michigan, Florida, Georgia and Las Vegas. I was looking at properties in Phoenix but I never ended up buying anything in Phoenix, those were the four markets.

[0:14:31] MS: What made you pick those markets at the time?

[0:14:35] MF: You’re going to think I’m kind of crazy, but in the beginning, I was just kind of just following the lead of what other people were doing. I kind of knew better but I didn’t really stop to put my thinking cap on and really think it through all the way. I just saw other people having success and I just followed through with it. I did have some success for a while. Not all of my investments worked out the way I wanted them to. Most of them were fine but some of them, I ended up losing money on.

I’ll kind of actually go off on a tangent with your question here a bit just to kind of help answer why I picked Detroit as one of the markets. Back in — this is kind of how I ended up starting our company, Norata Real estate Investments. Back in 2003, it was around June, I got an email, out of the blue, I don’t even know how I got on this list but it was from Robert G Allen and if that name rings a bell or for maybe your listeners who don’t recognize the name, he’s a very popular author.

He’s probably authored and co-authored about 20 books, he was considered one of the grandfathers of nothing down real estate. He wrote books like Nothing Down — Nothing Down for the 2000. His first book was Road to Wealth and this are all great books and they’re a little bit dated today but the basic techniques still stand if you can do it in the right market. He had created a company back then called EWI. The Enlightened Wealth Institute. Basically it was just an educational body to bring people into real estate and then have them come in to these courses, these workshops and boot camps.

So I’m sure you’ve heard the story if you haven’t been to the seminar, but they have this event on a weekend here in Orange County California up in Orange. I just signed up for it, the first one they did was in September. I went and there was probably 1,500 people in this massive ballroom at a hotel. It was a two day event, the speaker, his name was Glen, he was very entertaining, he had you riveted to your seat, I mean you wouldn’t even get up to go to the bathroom if you had to go. That’s how engaging he was.

But he was talking about his success in real estate and how to invest in real estate and the possibilities and the potential. It was very entertaining and it was very enlightening and everybody wanted to just get started in real estate investing, that’s what it was about. You’d see people running to the back of the room with credit cards in hand at the end of the first or second day, I think it was a two and a half day event. It was just amazing how many people signed up for these five and six day workshop, these boot camps that were held in different cities.

I took two years off as I mentioned before, I had nothing else to do. I thought, “Well you know what? I’ll just go and do that.” So I signed up for it and one of the events was held in Detroit, Michigan and it was the foreclosure boot camp. That was one of the first ones. That’s the one I went to and the person who was teaching that particular boot camp was talking about all of the great things going on in Detroit and how it’s turning around and all the money being dumped into the downtown core which was all true. There were pockets that were really being revitalized.

But you know we all started drinking that cool aid and a lot of the people that went to that seminar started buying these inexpensive homes in Detroit and many of them were fixer uppers but were fixing them up with the help of people that were there on the ground that were being introduced to us. So that’s how I got into the Detroit market. What was interesting though is a lot of these people who ended up taking all these different boot camps through EWI were still not educated, they still didn’t know exactly what to do, how to find properties, how to analyze them, how to rehab them if that was what the strategy was. They just needed help.

They kept coming to me because I was buying a whole whack of properties at the time. They kept coming to me saying, “Hey Marco, where did you find these properties? How did you analyze them? How did you get it setup, what did you look for? Can you find me some properties,” and really that was kind of the start to Narada Real Estate is people were coming to me asking for help, they were coming to me asking for properties.

And I thought, “Well, maybe there is an opportunity here, maybe people really do need help for something that’s a little bit more “turnkey”.” That’s how the business started. It was in tandem with my own investing and in tandem with me investing in markets like Detroit and southwest Florida and Atlanta.

[0:19:18] MS: Wow, that’s quite the story. I didn’t realize that that happened like that. That brings up a number of interesting points. First thing, there’s a lot of real estate education out there and I think it’s tough to always know what the good stuff is that is or the bad stuff is but I’m not saying those programs are bad or don’t have their value but I always kind of get nervous, shy away when there are more about marketing and trying to get system with the credit card at the seminar when they are giving away information. But I mean it sounds like, at the same time, that program obviously helps you get started and get investing real estate too though.

[0:19:57] MF: Yeah, it did. I think the sore point that I have with it is that people were working out in the beginning I think their basic program was about $15,000 and they eventually worked up their programs to 25 to $35,000. There was a lot of people spending $35,000 on these programs. Just the $35,000. You had to pay — they were all held in different cities, so you had to pay for your flight, your accommodations, your meals for two to three days at each of these cities.

So you paid the tuition of 25 to $35,000 plus the travel to each one of these different cities. The education was okay, it wasn’t great but for many people, it was like drinking from a fire hydrant. The sore spot is that, people were spending $25-$35,000 plus when they could have taken those dollars and used it as a down payment to purchase one or two properties and have a small portfolio right from the get go with positive cash flow. They could have gotten into real estate investing instead they spent it on these courses.

[0:21:08] MS: Right, and even if they lost their money and made a bad investment, they probably would have learned more by actually buying a house than going through the process than you can learn sitting in a classroom. There’s a number of programs out there now from different companies and groups that are, they’re the same type of thing with lots of marketing to get you to buy and then very, very expensive.

It’s crazy to me and the tactics they use to get people to find money too are not always the best routes to go either. Anyway. So your started your turnkey company, are you still investing yourself, you keep buying properties, you started that company?

[0:21:47] MS: Yeah, There’s a small advantage to having 150 properties plus or minus at any given time available on the website, you see deals come along all the time, every day. I’m currently in escrow on two properties right now, it was three but I gave one of them away to a client that was looking for something in particular and what I was buying myself happened to be exactly what he was looking for so I gave it up.

But I’m in escrow on two properties right now and the greater Kansas City market. So yes, I’m still investing today and I do buy the same properties that we offer our clients, that we have on our website. There’s a certain formula or criteria. I know you know this Mark but maybe your listeners are not aware of this and I actually covered this in one of my earlier episodes on my podcast, I think it was episode four and I called it “Turnkey real estate investing defined”.

A lot of people throw the term turnkey around pretty loosely. Most investors have a general idea of what turnkey means but people define it a little differently. For some people, it’s simply rent ready, you’re a real estate broker so you know, you can go to the MOS and pull a property off and I know you bought one of these properties because I’ve listened to your podcast. But you bought a property that was virtually rentable from day one and probably needed just minimal work for cleaning. In fact, one of your properties had a tenant in it.

So I would call that, it is somewhat turnkey but it’s definitely rent ready. There’s not much you need to do to get that thing rented, it’s just a matter of cleaning it and turning it over. But to take that to another level, you want to define turnkey as being something that you can sink your teeth in to, something practical.

For me, what turnkey ultimately ended up becoming was the right market, the right neighborhood, the right property, meaning it’s new construction or newly renovated, there’s no deferred maintenance, you can just take over and you’re not going to have to worry about any kind of maintenance or repairs for the foreseeable short term.

Ideally it has a tenant in place under professional property management and of course when we’re talking about the numbers that have to generate positive cash flow and an acceptable cash on cash return for the investor. That’s what it’s all about, if it doesn’t cash flow from day one, to me it’s not an investment, it’s got to be putting money in your pocket. I’m a big fan or Robert Kiyosaki, I love his teachings and a lot of the stuff that we talked about is based on Robert Kiyosaki’s philosophies and principles.

An asset has got to put money in your pocket, it has to generate cash flow, that’s what it’s all about. That’s an important factor and I’m probably missing a few other bullet points here in terms of defining what turnkey properties and turnkey investing is but that’s what it is for us. And I think that is the best way for someone to build their portfolio if they are either a newbie , just getting started and they need the help, this is a great way to get your feet went and to learn the business and continue building your portfolio.

But even seasoned investors here, people who have 10, 20, 30 plus homes will still come to us because they have careers, they have a profession, they have family, their time is limited, they don’t want to be rolling up their sleeves and becoming an “active real estate investor”. So that turnkey model is really well suited for them because it allows them to build their portfolio in a relatively hassle free manner and they’re still involved but it is as passive as it can get. And I go on tangent for a lot so I’m not sure how I went down that road but I know I was talking about something before.

[0:25:48] MF: Yeah, I’m not sure what it was either but it’s some great information. Like you said, the turnkey definition changes based on who you’re talking to. As an agent like you said, I’ll see properties on the MOS, turnkey investment. It can mean anything from vacant and barely livable to a tenant in place or maybe it’s newly renovated. So many people have a different definition of what turnkey is.

And you’re right, you really have to make sure, your definition as an investor is the same as the definition of the seller who you’re buying the property from. Yeah, I agree with you. Turnkey should be either newer or renovated with a tenant, property manager and like you said, another great point the cash flow side.

I see quite a few turnkeys out there that aren’t really cash flowing but they’re betting on appreciation or talking about how great the market’s going to be and I’m a huge proponent of buying for cash flow and hoping for appreciation but never count on it because I’m not smart enough to predict what the markets can do and I don’t think the economist who study that stuff can predict it either. Cash flow is really what you have to base your investment off of.

[0:27:09] MS: Yeah, you’re exactly right, you got the order correct. Cash flow should be the number one priority, it should be at the top of the list. We try not to talk to investors about appreciation. If they bring it up we’ll talk to them about it but we’ll never discuss that or lead with it because it’s hard to time a market. Granted you can pick markets that are more prone to appreciation potential but if that’s your number one criteria then effectively you’re speculating, you’re a gambler.

The property needs to be an income producing asset, that’s what it needs to be. The appreciation will come along with it. That equity, the real estate guys say equity happens, so it happens in one of two ways. One is through the amortization of the loan, your tenant is paying off your debt service, your mortgage is being paid down by your tenant and each month, that equity, the principle is reduced and your equity grows.

If you look at markets historically, they’ll appreciate anywhere from four to six, maybe 7% on average over the long term. Effectively, what they’re doing is they’re keeping up with headline inflation, the CPI. You’ll get that appreciation over time. In fact there’s been some studies done not too long ago that it’s compared you’re relatively flat or what I call linear markets, particularly in the mid-west to more cyclical markets that you’ll find in coastal areas like California and on the east coast that happen to appreciate and depreciate in very rapid cycles, sometimes in double digit increases and double digit decreases.

Over the long term, what they have found is that a lot of these slower more boring linear markets have actually kept pace or in some cases outperformed the long term appreciation of the cyclical markets. So I got to find that study, I got to dig it up. I’ve heard of it and I just haven’t found it but I never really put the effort in but I do know the numbers in some of the markets because we’re in some of these markets like Kansas City and Indianapolis.

The point I’m trying to make is don’t bet on appreciation, define your criteria and this is what we tell investors all the time. Know what your investment goals are, have a strategy, define your criteria and then use that criteria to guide what you’re investing in and where.

When we look at that criteria, which we help investors define, we take a top down approach. We’ll take that criteria and we’ll say, okay, these are the markets that will help you achieve what you’re trying to achieve with your investment criteria, that might be Kansas City, Indie, Birmingham, Memphis, okay. Now, let’s start looking at combinations of properties and neighborhoods. It was in their criteria, they may have certain requirements in terms of the type of neighborhood.

Is it an A, an A minus, a B plus, whatever? Maybe they have bedroom, bath requirements, maybe they have a minimum cash flow requirement, maybe they have a minimum cap rate requirement? Maybe they’re looking for just a certain cash on cash return? Using that criteria, you can use it process of elimination to start eliminating markets, neighborhoods and properties till you eventually boil it down to a short list. Now when you have a short list, and anybody could do this, it’s not just with us, it’s even doing it on your own.

Define your criteria, look at the markets or research some markets that will help you achieve those goals, narrow it down until you get a short list, now start doing due diligence on those properties. You look at the neighborhood, make sure it meets your criteria in terms of economics, demographics, look at the cash flow on the property, find out what the condition is, you can request, at least with a turnkey provider, you could request a scope work so you can see what has been done to that property.

Ultimately, when you have that short list down to one or two properties, you’ll put them under contract and then the next thing you’re going to do is order an inspection, you want a third party home inspection to go through that property top to bottom. You want to make sure there’s no deferred maintenance, compare it to the scope at work, just see that everything that was said to be done is done. The biggest things you’re looking for an inspection are things that I call “must be done”, you certainly don’t want be done items on there.

You could have things that are meant to be done or what I call “should be done”, that could be a grey area. Matter of discussion but you want to comb through that. Then of course you’re going to have a huge laundry list of things that could be done and those are just things that I call “filler”, the inspector’s going to fill that inspection because they don’t want to send you a blank report. That’s the next item on your due diligence check list.

If you do that, you’ll actually build a portfolio based on your criteria and you’ll be very successful because now you’ll have an income producing asset under management that’s generating positive cash flow every month. Now, the key is to just rinse and repeat. Just keep doing that and keep adding to your portfolio and within five, seven years, 10 years, you should be at a point where you could hopefully be financially free.

[0:32:22] MF: Great breakdown of buying a turnkey property. I’m curious, with your experience in working with people, what are your thoughts on the financing aspect of turnkey properties? Many people are buying out of state, conventional loans, how do you feel about financing in different options or people looking device, the turnkey properties?

[0:32:44] MS: Well the best deal out there in terms of financing is again, your conventional loans, your Fannie Mae, Freddie Mac loans because they’re government subsidized. You’re going to have the lowest interest rate and the lowest down payment. It’s 20% down and you can get rates in the neighborhood of 5% plus or minus for non-owner occupied.

Your first four are usually the easiest to get because they have the lowest requirement, lowest credit score, it’s 20% down. The next six conventional loans will be 5% more in terms of down payment and you’ll have a credit score requirement that’s 700 or 720.

[0:33:20]MF: I think it’s 720.

[0:33:21] MS: Yeah. Right, so that would be your next six. At that point, now you got 10 on your mortgage or excuse me, 10 on your credit report and if you’re married, if you have a spouse, strategically it’s best to do those independently of each other, in other words, don’t put both names on that mortgage because if you’re both employed, theoretically you could double the number of properties you can buy.

10 on the husband’s name, 10 in the wife’s name, now you’ve got 20 conventional loans. At this point, what you’re going to have to start looking at are portfolio loans, there’s many lenders that we work with and there’s many lenders out there that do what are called portfolio loans. They’re not your Fannie Mae, Freddie Mac, they write their own rules, they may or may not sell those loans after they fund them but that allows you to purchase additional properties.

With some lenders, they have no caps. Again, theoretically, you could purchase an unlimited number of properties using that conventional financing. The interest rates are a little bit higher than conventional but they still work, they might be in the upper five or 6% range and then there’s some boutique lenders that will finance foreign nationals. We work with about three companies that will finance Canadians, almost any for a national investor.

Those rates are usually in the seven and a half to 8% range but in the right markets, the numbers still work very favorably and you can still get up to 30 year fixed rate mortgages. There’s really no excuse for anybody that has decent credit and some investment capital for a down payment 15, 20, $25,000 plus. You can get started. There’s financing options, there’s a lot of financing options today. Two, three years ago was pretty tight but right now it’s opened up, there’s a lot out there.

[0:35:15]MF: Right. I talk a lot about portfolio lending. If you can find a great portfolio lender, it can make your life so much easier because it’s rental properties or even flipping, they will finance flips too which many people don’t know. That’s great information. The foreign national thing as well, many people don’t realize, you can get a loan as a foreign national, it’s not easy to find those lenders but they do exist and after talking to people all over the world, United States has a pretty unique real estate investment market compared to a lot of places where it’s just really hard to make money.

[0:35:53] MS: Yeah, the US is interesting because again, we have these government sponsored entity of Fannie and Freddie, we’re the only country that I know of and has been for a long time that offers a 30 year fixed rate mortgage, that’s unheard of in other countries around the world. Canada has a 25 year amortization as supposed to our 30 amortization. But in Canada, you have to lock in a rate for three to five years and then after that term is up, you’re effectively refinancing that loan at a new rate.

It’s almost like getting a new loan every three to five years. I’m not a fan of that type of financing but that’s what they have, that’s kind of what they’re stuck with. I’m not sure how it works in Australia and in the UK but we’re pretty unique here in the US having 30 year loans. In fact, a few years ago if I recall, we even had a 40 year, there were some lenders offering 40 and even 50 year amortization loan, that’s incredible.

[0:36:54] MF: Yeah, I was just thinking about that, when you’re saying that, I remember those 40 year amortization, “Man, I wish I could get one of those down to help my cash flow.” Great information. We are really in a unique marketplace in the US and that’s why so many people from around the world are investing here. Great information. So tell me, now if somebody is interested in buying a turnkey property or they’re interested in talking to you more about turnkeys, what’s the best way for them to get a hold of you, to see some of the properties you have?

[0:37:26] MS: Well, we’re pretty open about having a strategy session, it’s essentially a free call, it could be 15 minutes plus. It’s funny how some of those calls end up being an hour easily but anybody can just call our office and talk to one of our investment counsellors and what they’re going to do is they’re just going to talk to you about what you want to achieve.

What are you trying to do, where are you today, where are you trying to go, what are you thinking of doing and that will tell us pretty quickly if we can help you or not. If we can’t, that’s fine, we would have a good conversation. At the end of the day, what we’re trying to do is just help people get their bearings straight so they can define their goals, their strategy, their criteria, the criteria will help define where they should be looking and what they should be buying, we could at a minimum help guide people to figure that part out.

Then, if they want to work with us, great. If not, that’s fine too. We’re in about 10 different markets in the US and that changes from year to year just depending on the economics of that market, the rent to value ratios, the economics, the fundamentals, how healthy the housing market is. That’s what we do day in and day out. I don’t know if I’m answering your question.

[0:38:43] MF: So they call you, should they go to the website? And I’ll put the links in the article. But yeah. What’s the best way to get in touch with you guys?

[0:38:53] MS: Yeah, probably the simplest thing to do is just to go to the website because we have a contact form there and an 800 number as well that people can call from and then the primary website is Noradarealestate.com — that’s N-o-r-a-d-a — Noradarealestate.com. And there’s tons of articles and there’s actually a great free report there too. Called the ultimate guide to passive real estate investing and it’s a free download.

[0:39:21]MF: Right, we’ll send a link to that website on the article write-up I do for the podcast. Yeah, you have a podcast yourself as well, that’s full of great information, I encourage people to check you guys out for sure. I think that’s about all I have for the show. I always like to ask people before we leave, someone just starting out in real estate, trying to figure out investing strategies, what advice can you give someone who is beginning, trying to figure out where they want to go and what they want to do?

[0:39:54] MS: Wow, that’s a pretty broad question.

[0:39:56]MF: I know, that was pretty, really broad but I’ll put you on the spot.

[0:40:00] MS: Yeah, I could probably take an hour answering that and I know you don’t’ want me to do that. If someone is just starting out, what they should do? Okay, so here’s what I would do. The first blog article on our website is called the 10 Rules for Successful Real Estate Investing. It’s always at the top it’s a sticky post because it’s really starting point.

The first rule of the 10 rules is knowledge. Knowledge is the currency of today. Without having knowledge, you are basically going to follow other people’s advice and you’re going to be prone to doing what other people suggest you do or tell you to do and you just become a lending effectively. What you need to do is educate yourself, that’s the starting point.

If you’re just getting started and you need to just get put on the tracks and have a right mindset, read Kiyosaki’s Rich Dad, Poor Dad. If you’re past that stage then get Gary Keller’s book The Millionaire Real Estate Investor. There are a lot of great books out there to help educate you, there’s some great podcast, there’s your podcast. My path of real estate investing podcast. There’s so much free information out there that there’s no excuse for not educating yourself and building a knowledge base.

The more knowledge you have and the more knowledge you apply, the more successful you’re going to be, you just can’t educate yourself, that is a starting point, that is the key to it all but you need to apply that knowledge. The next step is to take action. Start with knowledge, build upon that, get familiar with terminology and strategies and markets and ask people questions and that’s really how you’re going to accelerate your success.

[0:41:51] MF: Great information, I would say to you, when I first started out, I’ve been an agent for a long time and flipping houses but rental properties is just a completely different ballgame. I listened to some lenders and some other agents for investing advice who apparently had no idea what they’re talking about, they’re just kind of telling me what they had heard over the years.

And it taught me that even though they’re real estate agents and professionals in the real estate business, you really want to listen to people who are investors. Not just agent, not just lenders but people who have invested in real estate and want to do what you want to do because just because I’m in real estate doesn’t mean they know anything about investing. I learned that a long time ago.

[0:42:37] MS: It’s true. Yeah, most real estate agents and this is not a put down in any way, it’s just what they’re trained in. They’re effectively sales people. They’re trained in real estate, they have to understand the laws, the real estate laws but at the end of the day, they’re trained, educated sales people. It doesn’t mean that they know how to invest or how to analyze an investment property, in fact, I don’t know the statistics but a very small percentage of real estate agents actually buy real estate as investments. I saw statistic not too long ago, the percent of real estate agents that actually own their own home.

Many of them rent, they’re selling the stuff but they don’t actually buy the stuff.

[0:43:25] MF: It’s staggering, I saw that statistic too, it’s been a long time ago but I’m like “that is crazy”, how many real estate agents rent and don’t even own their own house and they’re selling it. Investing is even very few agents on investment property. Yeah, you’re right on with those points.

Marco, I think we’re coming to the end of the time we’ve got allotted for this interview. Really appreciate everything we talked about, advice you’ve given, really spot on, many different ways I feel about investing as well. Thanks a lot for being on the show, hopefully look forward to talking to you again soon. Really appreciate it.

[0:44:06] MS: It was my pleasure Mark, thank you very much.

[0:44:08] MF: Alright, thank you Marco, have a great day.

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