Real Estate Nerds

On today’s episode of The Real Estate Nerds Podcast, we get to hear about both a Bad Beat and a Best Deal--because in the real world, sometimes they happen right on top of each other. That has certainly been the case for multi-family investor Ola Dantis. Tune in to Episode 50 of The Real Estate Nerds Podcast now to hear Ola dish about one of his worst deals, a bonus Best Deal, and many of the lessons he has learned along his path to real estate success.

Listen To Episode 50 of The Real Estate Nerds Podcast Now

Ola Dantis on Multi-Family Investing, Freedom of Mind, and Freedom of Time

Ola Dantis sits down with our host and attorney Scott Smith. The pair of investors chat about Ola’s real estate beginnings and the ambition of all real estate investors: freedom.

[1:00] Ola is originally from the U.K. but has lived in the U.S. for the past five years. One day he received a call from a friend whose business was taking off. The friend wanted Ola to invest in his business and invited him to learn about the opportunity in Dubai. Ola explains: “I did what any wise man does: consulted my wife.” [2:30] The two argued about the value of the trip, but Ola ultimately decided to go in hopes of learning something valuable.

[3:00] Ola ended up making the trip to Dubai, and spent the majority of it in his hotel room dissecting his friend’s business. He observed that his friend’s real estate business was doing very well back home in London. Ola decided to do the same thing in the United States and was buying his first properties within three months.

[4:00] Scott asks how Ola’s plan evolved over time. Ola points out that his trip changed everything. When he got back, he began diving into researching many investing books, podcasts, and forums like BiggerPockets. One book that was influential for Ola--and many other investors, was Robert Kiyasaki’s Rich Dad, Poor Dad.

[6:00] Once he’d finished Rich Dad, Poor Dad, Ola moved on to reading “more tactical content” about real estate investing to construct an investing plan. He settled on multi-family as his asset class of choice, explaining “Our first property was a multi-family. That’s how I got into it.”

[7:00] Ola knew from the beginning he wanted a business that was in some form passive. He uses this language because he recognizes “Real estate is never totally passive. If you’re not a creator or syndicator like myself, you can’t just be somewhere on a beach and your business runs. You have to manage the property manager.” He does acknowledge that you can be a passive investor on some deals, but to a degree you will typically be taking some action. When asked about his motivations, he says: “It’s about freedom of time and mind.” For him, true freedom of choice was tied to making good money.

[9:30] Scott probes Ola on whether money is a prerequisite to certain kinds of freedom. Ola points out the variety of experiences that are only available to those who have achieved a degree of financial stability. Pursuing truly ambitious goals generally does require capital. Ola believes this is also true of “freedom of mind”--and points to some of the experiences that combat the modern problems of anxiety and depression. Money can be used towards fulfilling activities.

[11:30] Scott points out that there’s a trade-off in freedoms. You may be able to use real estate to quit your job, but you will still have to manage your investments. Ola points out that he sets goals in terms of which freedoms he hopes to pursue: “I don’t have to be a billionaire at the expense of spending time with my daughter..I don’t have to be a billionaire at the expense of my soul.” He believes balanced goals are as important as goals that are specific and measurable.

[14:00] Scott asks about fears or anxieties that Ola has overcome. Ola speaks to a fear that is fairly common among real estate investors: “If I get very successful, will I still be the same person?” He also has fears of failure, but believes both can be addressed through consciously not growing too quickly and simple awareness.

[16:00] In reference to anxiety, Ola points to social media. He worries at times about the social media culture of artificial happiness, and projections of unrealistic standards of looks and success. This gives him concerns for his young daughter: “Our kids grow up into a culture of constant polished images of nonreality. It’s just not true.” He also recognizes the utility of social media for real estate, and has raised a substantial amount of money on Instagram himself.

[18:00] Scott points out many of us use social media to compare ourselves to others in a negative way. He wonders whether there is a more positive way to use these tools. For Ola, it’s all about realism. He thinks if people posted truer reflections of their life, social media could have a more positive impact on the world. “Make sure you’re pushing out reality,” Ola advises.

[20:30] Scott and Ola reflect on why people go to such great lengths to create ornately artificial impressions of themselves on social media accounts. For those who use social media deceptively, Scott warns, “You’re only tricking the people that are at the bottom tier of awareness of society. Everyone else has already picked up that there’s just no way your life is that great. It’s just not realistic.”

[Tweet "“Our first property was a multi-family. That’s how I got into it.” - Ola Dantis Episode 50 of The Real Estate Nerds Podcast"]

Ola Dantis on One of His Worst Deals

Scott and Ola transition into a real estate war story of one of Ola’s worst deals. As an avid podcaster and podcast listener himself, Ola is particularly excited to share about one of his worst deals. While he loves a great success story as much as anything else, he shares our opinion that discussing our worst investments can be extremely valuable.

[23:30] Ola had gotten into a partnership and bought a large house in Baltimore, Maryland. He wasn’t accustomed to buying houses that large--2500 square feet. He also knew personally he did not want to do a flip, since he preferred more passive investments and flipping is extremely active.

[24:40] Ola, despite knowing that he didn’t want to do flips, got drawn into the project after being promised high profits near $50,000. He freely admits he got overexcited. They bought the house, and it simply sat for the next three months. They did some very small repairs but the entire project took nearly seven months to finish. For the beginners in the audience Ola points out, “If you’re doing a fix-and-flip, you want to be done in about 3-4 months from start to finish.” [25:52]

[26:00] For each additional month that clicked by, Ola was paying interest to his hard money lender. Contractors weren’t completing their work on time. He knew from his projections that his budget would be higher. He knew rebuilding such a large house would be a massive project, but he didn’t realize it would take so long.

[28:00] If you get into real estate, according to Ola: “You’re going to fail...It’s okay. Don’t give up.” He believes if you tell yourself you can succeed, you will. Things just happen in real estate, and that’s okay. It’s still a powerful vehicle, even if you get beat up a bit along the way.

[30:30] Scott agrees and adds: “You can only say ‘I’m a failure,’ when you stop. Otherwise, you’re just learning on your path to success.”

The Other Side of the Investing Coin: One of Ola’s Best Deals and Today’s Take-Aways

We were fortunate to also have time to hear Ola tell us about one of his best deals, which teaches some slightly different lessons. Then, each investor shares their favorite take-way for our listeners from Ola’s story.

[32:00] Ola shifts gears to tell us about the property involved in one of his best deals, which also happened to be his earliest. In fact, it was his first multi-family investment property in a “good area” of Baltimore.

[33:00] Ola’s team remodeled the home and installed new appliances. Now, “This thing cashflows like a monster.” He points out that sometimes good deals and bad deals happen right on each other’s heels, and real estate can just be an “up and down game.”

[34:00] For Scott, one of the major lessons he learned from Ola’s story was the importance of moving in the right direction. Fears and anxieties are normal; it’s all about which action you take.

[35:00] Ola has two lessons: “First and foremost, real estate is an abundance game. There’s enough to go around.” He adds that the other major lesson is that real estate isn’t a get-rich-quick scheme, but a long-term plan. There will be ups and downs, and how you handle them will determine your success.

[Tweet "“You’re going to fail...It’s okay. Don’t give up.” - Ola Dantis, Episode 50 of The Real Estate Nerds Podcast"]

Connect With Ola Dantis

Connect with Ola on his website, InvestWithOla.com. You can also find him on Instagram most often out of his different social media accounts.

Listener Resources

Thank you for joining us on today's episode of the Real Estate Nerds Podcast. For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

Don't forget to subscribe to stay up to date and have the most current episodes of the Real Estate Nerds Podcast directly in your listening library. Every subscription helps us create new, custom content for you. What did you think of today's episode? What would you like to hear more about in the future? Leave your thoughts and questions in the comments section below, or leave us a review in the iTunes store. We love hearing your feedback, so fire away. Join us again next time for another fascinating conversation. Thanks for listening and joining us on our journey to become better investors!

On today’s Best Deals episode of The Real Estate Nerds Podcast, we hear from investor Jeremy Roll. After a decade in the corporate world, Jeremy began pulling his investing funds out of the stock market and pouring them into real estate assets. What started as a series of long nights reading books in the Investing section of Barnes and Noble has evolved into a consistently cashflowing, reliable investing strategy that serves Jeremy to this day.

Tune in to Episode 49 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 49 of The Real Estate Nerds Podcast Now

Jeremy Roll on Cashflow Investing and the Value of Long-Term Strategy

Our host and attorney Scott Smith welcomes Jeremy Roll onto the show. Together the two investors discuss Jeremy’s background, real estate beginnings, and how he developed the strategy that has led to consistently good deals in the long term.

[1:00] Jeremy is originally from Montreal, Canada but moved to the U.S. to obtain his M.B.A. from the Wharton School in Philadelphia. He spent a decade in the corporate world.

[2:00] In 2002, just after the dotcom crash, Jeremy began seeking investment alternatives that weren’t linked to the highly volatile stock market. He began pulling funds out of stocks and bonds and into managed real estate funds. He found cash flow was far more predictable when he began using this strategy, and that he also had more opportunities to diversify.

[4:00] By 2007, Jeremy had pulled all of his investing funds out of the stock and bond markets and was working at Toyota headquarters: “I loved having both the paycheck and the cashflow...But I had enough cashflow to take a risk and leave the corporate world.” Jeremy is now a full-time passive investor with a portfolio that spans a variety of asset classes. Since 2007 he has focused on increasing his passive investment “snowball” to keep the trend going and avoid returning to the corporate world.

[7:00] “In my opinion, the average long-term returns of the stock market will be much lower than real estate,” Jeremy explains. He points to the tax benefits of real estate, and highlights that the freedom he has gained from real estate investing has been a major appeal for him when deciding to make these types of investments.

[8:00] Scott asks how Jeremy went about researching his investing options, and specifically, what that process looked like. Jeremy points out that he spent many nights in Barnes and Noble reading a variety of investing books. Reading about many different ideas and methods helped Jeremy decide to pull the trigger on changing his investing strategy. He was also influenced by a family friend who was achieving success with syndication opportunities.

[10:00] Scott asks Jeremy about his process for determining which asset classes made sense for him, as factors like tax benefits can change. Jeremy explains that “Cashflow investing is the opposite of a get-rich-quick scheme. It takes a long-term view.” [10:41] He explains that if he were no longer happy with the cashflow coming in, he might change his strategy. But for now, his investments are working for him in both the short- and long-term. Jeremy’s ideal is ensuring that his investments offer consistent cashflow so that he does not have to concern himself with redeploying his capital into other methods.

[12:00] Jeremy points out that his preferred type of investing is highly liquid and draws listener attention to SEC regulations he describes as “anti-flipping laws.” He recommends his methods for any investor who values predictability with their investments. Scott asks if there are personality factors, such as risk-aversion, that drove him towards passive cashflow investing. Jeremy cautions listeners that his strategy is not ideal for anyone impatient or expecting massive returns within the year, even with sufficient capital.

[14:30] Despite having been an investor for 17 years already, Jeremy looks forward to the future: “A long term mindset can determine your success.”

[15:30] “You can invest in assets across the entire risk spectrum,” he adds while also stating he does have a personal preference for lower-risk investments.

[Tweet "“A long term mindset can determine your success.” - Jeremy Roll, Episode 49 of The Real Estate Nerds Podcast"]

Jeremy Roll on What a Best Deal Looks Like

Scott and Jeremy turn their attention to

[16:22] “I think everything is overpriced right now,” Jeremy explains, adding that in a way he looks forward to a downturn so he can take advantage of lower prices. Yet this belief did not stop him from investing in an Alabama-based mobile home park. His investment cashflowed heavily right from the beginning, and he enjoyed 95-97% occupancy rates in a relatively economically strong area.

[18:30] Jeremy believes a strong local economy can combine with other factors, such as better-than-average pricing and the proper operators, can create layers of security within an investment. “You’ve got to invest in the right people,” he explains, pointing out that he was essentially betting on mobile park operators with a great track record. He found the high return rates and low prices appealing, particularly since his preferred types of investments are harder to come by in the current market.

[20:30] Jeremy adds that his operator underpromised and overdelivered through conservative estimates.

[21:30] Scott invites Jeremy to share another best deal and highlight any trends that have contributed to his success. In 2015, Jeremy purchased four self-storage facilities from one of the Top 30 operators in the United States. He purchased three of the properties directly from the investors, and secured prices 10% lower than market value. His investor was a high-profile, high net worth individual with whom he has maintained a relationship.

[22:30] Jeremy was able to secure cap rates between 3.5 and 8% for these A-class Florida properties. He was able to sell the properties three years later, a feat he considers only achievable because he “bought them right.”

[24:30] “We were really picky about how we bought properties,” Jeremy explains. He believes his success is largely attributable to this simple fact--along with having the best operator for a given property. He believes making purchases the right way is particularly important in this current real estate climate.

Lessons Learned From Jeremy Roll’s Best Deals

Jeremy and Scott each chime in about what they feel are the most important takeaways from Jeremy’s story for our podcast listeners.

[19:00] Scott’s main takeaway: “Expect the downturn and price things appropriately”

[21:20] Jeremy’s advice to listeners is simple and direct: “Be very careful right now. Pricing is high. Real estate is cyclical. You have to be cognizant of where we are in the cycle. If you’re a new investor, step back and look at the cycle.” He points out that you can do everything perfectly, but if you fail to execute the right timing, your investment may fail in spite of your hard work.

On today’s Best Deals episode of The Real Estate Nerds Podcast, we hear from investors and Special Forces veteran Edwin Epperson Some of you may know Edwin already from his podcast, Can Investors Save The World? Spoiler alert: we totally can. Today, Edwin shares how his real estate journey has evolved, as well as some of the ways he has implemented the lessons he learned from his military experience in his real estate investing life.

Tune in to Episode 48 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 48 of The Real Estate Nerds Podcast Now

Edwin Epperson on The Beauty of Being The “Bank,” The Value of Clear Expectations, & Investing Lessons From the Military

Our host and attorney Scott Smith welcomes investor and decorated combat veteran Edwin Epperson onto the show. The two investors chat about Edwin’s background and his life and mindset going into his best deal.

[1:00] Edwin got into real estate with the plan to buy homes, fix and flip them. He was in the military in a Special Forces unit, training to become a Green Beret. He joined a club in Fayetteville, NC and found a money lender at one of these meetings. The lender told him he wouldn’t make him a loan, which shocked Ed.

[2:30] Ed admits that at the time, “I didn’t have the knowledge or experience to be successful at real estate investing.” His lender friend advised him to carve out time to gain the knowledge he would need. Ed followed this advice and stuck around at the meetings, where the same lender asked him if he’d considered becoming the “bank.” Ed found five mentors. He spent the next couple of years learning about investing from a lender’s perspective.

[4:10] “I fell in love with the idea of shifting the risk to someone else while also mitigating that risk,” Ed explains. Around this time, he was deployed but continued to study his plan to become the bank.

[5:30] By 2014, Ed was redeployed to Afghanistan and had gotten some of his fellow service members interested in becoming involved with these real estate projects. By late spring, he received an offer and began analyzing the relevant figures. He agreed to help an investor make a purchase while he was still overseas. He ended up making his first real estate loan admidst this deployment. He got the copies of all of his confirmation documents just as he was preparing to go out to mission: “I did my first real estate loan while in Afghanistan.”

[8:04] “I fell in love with the idea of not being geographically restricted,” Ed explains. For this reason, he thinks being the bank is a great way to become involved in real estate.

[9:20] Despite his love for Special Forces work, Ed decided not to re-enlist and instead went into real estate full time. He wanted to be home for his family, and realized he could use his tools to build a network and keep using this business model.

[11:00] Ed explains why he believes most Ponzi schemes start with the best of intentions, and how he avoided that. So rather than actually handling another person’s money, he used a servicing company: “I had professionals who were there as a buffer between me and anything that might cause a problem.” This helped his credibility, as did his track record. Ed elaborates: “Word of mouth is huge. My business has grown largely by word of mouth.”

[Tweet "“Every business is a learning experience.” - Edwin Epperson, Episode 48 of The Real Estate Nerds Podcast"]

[13:00] Ed started out by leveraging his own network of family and friends. Rather than providing formal plans such as a PPM, he would simply share his personal guidelines and checklist that he would use to evaluate loan opportunities. He also developed hard limits for his company as well, in terms of which loan-to-value ratios he was seeking. By presenting himself and his plan in this way, he was able to expand his network.

[15:50] Scott points out that some of his military friends operate the same way, with highly accurate approaches. He feels operating based on a plan is stronger than operating on hype alone.

[17:40] Ed shares a bit about how military processes, such as “After Action Reviews” following missions, can actually be adapted for investing strategy. He shares how these reviews allowed him to make tweaks to their plans and procedures. Ed believes that implementing this type of process could help any investor (or any business person at all) evaluate what works and what doesn’t, then adjust accordingly.

[21:00] Scott wonders whether Ed’s strategy of showing investors the plan is also a way to recruit them into investing with you. Scott wonders whether this encourages higher levels of personal responsibility. “Every business is a learning experience,” Ed explains: “I’ve got three core values: 1. Communication, 2. Extreme Ownership, and 3. Giving Back. Those are the three things I really focus on.” The second value comes from a book of the same name, authored by a Navy Seal, that both Scott and Ed recommend.

[23:00] For Ed, “Setting expectations is absolutely critical.” Keeping expectations clear keeps all parties accountable and leaves no room for assumptions. He shares about how expectations he has set on himself and investors have worked both in his favor and against him, when not done properly. Ed explains how his failure to set expectations has created miscommunications between him and his investors.

[26:50] Scott points out that “It doesn’t even matter what the expectations are, so long as you meet them.”

Lessons Learned From Edwin’s Story and Experience

Scott and Edwin each share their top take-aways for our listeners.

[28:00] Scott thinks there’s a major lesson in how Ed shared his processes to gain trust. He also was struck by how Ed’s military experience has informed his investing in specific ways. These items go hand-in-hand: “How can an investor be pissed at you if they bought into your process?

[30:00] Edwin’s take-away is even simpler: “Never compromise your guidelines. When you start looking to the almighty dollar, you will make mistakes.”

[17:00] Scott and Dave share about BiggerPockets, and the tools this online community offers investors. Scott regularly contributes asset protection content to BiggerPockets.

[18:43] On the topic of asset protection and long term real estate success, Dave comments: “Having great people on your team is so huge.”

On today’s Best Deals episode of The Real Estate Nerds Podcast, Scott chats with fellow attorney-investor Sean Yesner. Yesner was investing to get to know his clients’ situations and frustrations better. And he made a great deal that survived the Recession specifically because he avoided it. How? He got out of real estate investing just in time. If you’ve ever wanted to hear a couple of real estate attorneys talk shop in a way you can understand, this episode is for you.

Tune in to Episode 47 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 47 of The Real Estate Nerds Podcast Now

Sean Yesner on The Best Deal That Helped Him Survive the Recession

Sean Yesner joins our host and attorney Scott Smith. The two attorney-investors chat about one of Sean’s best deals.

[1:00] Sean, like Scott, practices law and also invests in real estate. He finds his experience with owning real estate has helped him related to his clients: “As a real estate attorney representing real estate investor clients, I need to have some kind of frame of reference for what they’re going through. To practice without having owned real estate would be a disservice to them.”

[3:45] Sean also hosts a podcast, the Crushing Debt Podcast, which is informed by his practice of consumer law. Both attorneys capitalize off of attacking the “business end” of lawsuits and briefly share their experiences.

[6:30] Sean rented out his first home, placed inside of a Land Trust with an LLC as its beneficiary. When he saw the crash coming, he sold his investment property in 2007. He points out that one of the harbingers of the crash was “people who weren’t in real estate giving me investment advice.” He recounts a story of meeting an IHOP waitress who owned a $300-400,000 house and knowing it was a bad sign.

[10:00] While he sees fewer ill-advised loans in today’s market, Sean explains why he believes that not everyone should own a house. He does feel banks are loosening standards a bit at the moment.

[12:00] Scott pins Sean down on what exactly persuaded Sean to pull out of the market before the crash. “You make money when you buy, not when you sell,” Sean explains [13:37]. If you make the purchase right, it should not matter when you sell.

[15:00] Sean points out that he and Scott have the benefit of their clients’ collective experience as well as their own.

[17:00] Sean was also getting married around the time he sold. His lifestyle was changing in a way that no longer lended itself to being a landlord. He also is just conservative by nature

[18:20] In addition to being Sean’s hero, Sean’s CPA father has also influenced his career. Sean started his law firm in part because of his father’s inspiration and because of his experience working on the other side of the equation in foreclosures. When his law firm shut down, he did the same thing his CPA father did and struck out on his own.

Sean Yesner and Scott Smith Chat Mentorship, The Value of Professionals, and How to Solve Poor Decision-Making in Investing

The two attorneys shift focus and give us some great legal points to keep in mind about asset protection for real estate investors. These guys learned real estate law so that you don’t have to. Tune in to hear the full inside scoop on how you can make the most out of your professionals, what good professionals do for you, and the importance of proactivity with asset protection strategies.

[21:00] Scott and Sean touch on the importance of mentorship in building good decision-making. Scott points out that who we listen to can be a huge factor in developing the right mentality for real estate and business success.

[24:00] Sean shares about a client who always has a “deal pending” that will fix everything, and how this is the same type of gambling logic that gets people in trouble with investing. He points out that we hire professionals to remove emotion from our decisions, and shares an example of when he had to do exactly that for himself with a creditor. Fortunately, he also had his legal structures in place to keep his assets protected.

[28:00] The two attorneys share on the importance of being proactive with asset protection.

[30:00] Circling back to the importance of impartiality, Scott speculates that sometimes the best question isn’t how you feel about an investment, but how someone smarter or more experienced than you feels.

[31:30] Sean points out the value in hiring a competent professional: “One reason to hire an attorney is to let us do what we’re trained to do while you go out and make money.”

Lessons Learned From Sean’s Story

Sean and Scott wrap up the show with their favorite takeaways from Sean’s story.

[32:50] Scott’s biggest takeaway from Sean’s story is to check your motivations.

[34:00] Sean sums up his biggest lesson learned with a quote from his father: “If opportunity knocks, you don’t have to let it in, but you’re a fool if you don’t answer the door.”

On today’s Best Deals episode of The Real Estate Nerds Podcast, we will hear about some of the ways investors can capitalize on tax strategy. Dave Foster’s best deal story is an example of exactly that, and he is all too keen to share his methods with our listeners.

Tune in to Episode 46 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 46 of The Real Estate Nerds Podcast Now

Dave Foster on 1031 and Tax Free Investing Tactics

Our host and attorney Scott Smith welcomes Dave Foster. The two investors chat about Dave’s background and the strategy that led him to a string of best deals.

[1:00] Dave has been a “deal junkie” for over a quarter century. He began investing in Denver following economic collapse in the 1980s. He describes this as a cowboy era rife with both booms and busts.

[3:45] Scott probes Dave’s strategy further. Dave bought his first fix-and-flip in 1996. It was a success until tax time came. The amount of tax liability lowered the overall quality of the deal.

[5:30] Dave points out some of the larger context of his story involving 1031 Exchanges and tax-free treatment. He describes how he was able to capitalize on saved tax dollars, putting them instead toward the growth of his portfolio.

[9:00] Scott and Dave dive deeper into his 1031 strategy. He includes a type of tax exemption that, when combined with a Tax Code update in 1987, allows for substantial savings. The exemption applied to primary residences.

[12:00] Dave explains how he was able to capitalize on these tax exemptions by moving into his investment properties every couple of years to convert tax deferred dollars into tax free dollars.

[13:30] Scott points out how Dave’s strategy is particularly smart in an appreciating economy. It has worked out for him. Dave currently lives on a sailboat--giving this investing story a somewhat idyllic ending.

Lessons Learned From Dave’s Strategy

Brian and Scott conduct a quick post-mortem to see what other investors can learn from Brian’s mistakes with this property.

[14:00] Scott points out that these are basic investment strategies anyone can take advantage of, even with a smaller portfolio.

[15:20] Dave points out that setting up entities and hiring an appropriate team of professionals can be essential for real estate success

[17:00] Scott and Dave share about BiggerPockets, and the tools this online community offers investors. Scott regularly contributes asset protection content to BiggerPockets.

[18:43] On the topic of asset protection and long term real estate success, Dave comments: “Having great people on your team is so huge.”

On today’s episode of The Real Estate Nerds Podcast, we hear a Bad Beat from an investor and entrepreneur who rightly points out that success can sometimes reveal our problems. This was certainly the case for Antonio Smith, Jr., whose hustle and drive from growing up and experience of homelessness and his youth have undoubtedly helped mold him into the mentor, teacher, and multi-million dollar success he is today. But his first taste of success ended up unfolding into one of his all-time worst deals. Fortunately, Antonio isn’t one to get knocked out of the game easily. He’s bounced back and now has his sights set on leveraging real estate on the higher goal of philanthropy. Tune in to hear a truly remarkable story that does what our favorite episodes of The Real Estate Nerds do best: tells us as much about the person as the investment while giving us all some brain and soul food.

Tune in to Episode 45 of The Real Estate Nerds Podcast now to hear the full Antonio’s full conversation with our host and attorney Scott Smith.

Listen To Episode 45 of The Real Estate Nerds Podcast Now

Antonio T. Smith, Jr.’s Incredible Personal Story and Incredibly Bad Set of Deals

Antonio went from rags to riches after rebounding from profound early life struggles--but his journey hasn’t been without bumps in the road. Little did he know, he’d lose big within his very first year in real estate--but that didn’t stop him from learning from his mistakes and winning in the long-run.

[1:00] Scott asks where Antonio’s head is at, as that informs all of our deals. Antonio tells us about his mindset: “My mindset is dominate. All day, every day...You want to become a monopoly as fast as possible.” He isn’t a monopoly in real estate, but he is in his type of coaching field. Antonio rose from homelessness as a youth aged out of foster care and is now a multi-millionaire.

[2:45] Antonio is from Galveston, TX. He had escaped poverty and immediately went into several deals when he got into real estate in 2008 after Hurricane Ike devastated the island. He purchased several homes in short order as his first rental properties.

[4:00] Hindsight is clear for Antonio: “Success will reveal your problems. My problem was overcompensation.” He had one renter walk out and that, and overcompensation, led to the loss of four of his houses. Scott asks how things went wrong so quickly. Antonio explains that he learned to invest before he learned to create systems that sustained a healthy business.

[5:45] Antonio trained under his mentor for two years, learning the real estate game before learning creative financing. He found a way to finance notes, picked his houses, then would get renters to fund the notes.

[7:50] Antonio bought his houses in 2009, when the housing market in Texas dramatically declined. His renters were forced to downsize. The first time, he resolved the problem by moving into the house. But when another two renters left, he couldn’t account for that.

[10:17] Another problem Antonio had from the beginning was a lack of preparation: “I thought six months’ reserves was enough...I’m telling everyone: that is never enough.” He now aims for about ten times that.

[Tweet "“My goal is my legacy...to create more millionaires.” - Antonio T. Smith, Episode 45 of The Real Estate Nerds Podcast"]

Learning From This Bad Beat: Bulletproofing Your Assets and Building Your Legacy

Antonio and Scott reflect on some of the mistakes Antonio made in his story, as well as what has changed for him in the years since.

[11:50] In Antonio’s view, learning and having someone else pay for your debts are critical to investing. He also believes entrepreneurs should have a high tolerance for pain. His main issue was the individuals paying his bills stopped.

[13:00] Scott asks if his problem wasn’t a lack of knowledge so much as a lack of knowledge of what to do when things go poorly. Antonio agrees, pointing out there are a lot of other things he didn’t know about--taxes, what to do when he passed up his mentor, let alone what was the smart thing for him to do at the time.

[15:00] Scott wonders whether another mentor would have helped. Antonio thinks if he had gotten one, he would have known he had 180 days to prevent foreclosure and be less dependent on having tenants actively in the properties. He also would have advised himself that his investments weren’t protected as assets, and that he needed to diversify into small businesses of some kind to generate income. That way, if his investment income stream dried up, he’d have another form of income.

[17:45] Scott points out that many people spend their active income, and have trouble keeping their lifestyles down. He describes that critical piece of “bulletproofing your assets.” Today, Antonio has 16 income streams.

[20:30] Antonio didn’t have a technical deficit, he simply didn’t know what types of questions to ask. He believes a mentor would have been immensely helpful in keeping him in check in multiple ways. That would have included asking what he was going to do if all of his renters walked out on him.

[23:00] Antonio also admits he was chasing a lifestyle. Scott points out that’s what a lot of people sell, but that smart investors worry about what they want long-term.

[26:00] Antonio’s long-term goals have changed: “My goal is my legacy...to create more millionaires.” He has already done so with his core team of eight and has a new goal of 100 by a set date. He wants to create a lasting change in the world.

[28:00] The two investors discuss how initially, investing may be about having things. Those who succeed beyond a certain point will have wiser ambitions, usually involving giving back.

[31:30] Antonio shares another one of the goals that drives him: “My passion in real estate now is to buy in low-income areas and fix them up, but not gentrification. I want to buy the hood then teach the people there to appreciate the hood.”

Take-Aways: Start Moving & Invest for Your Long-Term Goals

Scott and Antonio each share their favorite take-aways for listeners from Antonio’s story.

[32:45] Scott shares that his main takeaway is that slow growth isn’t necessarily “sexy,” but it’s sustainable and what gets investors to the higher levels of wisdom and contribution to the world. He also finds that Antonio’s story is a testament to the power mentors in maintaining this type of growth.

[31:30] Antonio knows what he wants to tell our listeners: “Move before you’re ready. I suffered from that, but I had a continuing education problem, not a moving problem.” He elaborates that “It is far easier to educate a doer than it is to activate a thinker.” [34:00]

On today’s episode of The Real Estate Nerds Podcast, we explore a Bad Beat that is truly a real estate horror story, complete with colorful characters and AWOL property management. Brian is well-versed in multi-family and note deals, but the one-bedroom condo he bought in North Carolina was one of his earliest and worst deals.

Tune in to Episode 44 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 44 of The Real Estate Nerds Podcast Now

Brian Hamrick

Brian Hamrick joins our intrepid host and attorney Scott Smith. The two investors go over Brian’s background

[1:00] Brian isn’t just here to share his Bad Beat--he’s actually researched the property after-the-fact to see how bad it really was. Brian is the owner of an investment group and podcast host himself. He describes himself as a “net seller” who has bought and sold over 450 units.

[2:00] Brian gives a brief overview: “This was one of the smallest deals I’ve ever done, but also one of the most boneheaded deals I’ve ever done.” The property in question was a condo in North Carolina. He began investing after reading Rich Dad, Poor Dad, took some seminars, and made offers in his home community (Los Angeles) but found almost none of the properties there cashflowed. Properties were simply too expensive, even with Brian’s nice job in the entertainment industry. He found a network for out-of-state investors, complete with property managers and brokers, that allowed him to buy 7 single-family homes in multiple states. He was given the offer of “armchair investing,” though this ended up being far from the case.

[4:40] Brian had invested in several properties already, and all were performing well. He paid $33,000 cash for a condo in a community called Heritage House. He reads out his full list of monthly expenses, which should have been $125. Given the total rent, he should have been cashflowing $350-360/monthly. He was also comfortable enough in his W-2 job that this deal seemed like a no-brainer.

[7:00] “I will never invest in condos again,” Brian explains, briefly listing his reasons. HOA fees tend to go up on these properties, and HOAs have been the source of other problems. He was also promised rent-ready properties complete with new fixtures and appliances and given indications that tenants were ready to move in. Brian was almost prepared to buy two or three of these properties.

[8:50] Brian describes his due diligence efforts. His biggest problem, in his view, is that “I never visited the property. I took their word for it.” [9:40]

[10:00] The property was in a less-than-desirable area. Brian now realizes the error of owning the nicest property in a terrible area.

[Tweet "“This was one of the smallest deals I’ve ever done, but also one of the most boneheaded deals I’ve ever done.” - Brian Hamrick, Episode 44 of The Real Estate Nerds Podcast"]

How The Property’s Problems Snowballed Into a Major Loss

The two investors explore how Brian’s issues with this property piled up quickly.

[12:00] The first major red flag for Brian was that his rental payment was paying $475, not the $550 he was promised. He accepted this in the interest of getting the cash-flow immediately, but it ate into his profits by about $50. Things went well enough for a year, but the next tenant paid only $400 and Brian was on the hook for new furniture.

[13:30] That tenant was evicted, and the property remained vacant. The property manager informed him a fire was set in the hallway, and that Brian needed to replace the carpet. Since his tenants were a woman and a small child, he was concerned for their safety. They left, too--leaving him with yet another vacancy. At this point, he went online and did some research on the complex. He found a horrible review complaining of prostitutes, thieves, broken appliances, and worse.

[15:25] Scott speculates that there may not have been no on-site property manager. There was, which makes Scott laugh and question whether they were drunk all the time. But the reality was worse: the on-site employee was apparently an ex-convict photographed smoking crack on the premises. He used the services of the local prostitutes, but for whatever reason, the property management would not fire him.

[17:00] Brian points out he owned this property in his own name rather than in an LLC structure--something we at Royal Legal Solutions advise investors never to do. He worried, quite rightfully, about the possibility of being held liable for the antics on this property. He knew he had to get it out of his name, and quickly. He found a real estate agent willing to sell properties in this “war-zone” area, but she could only get $2,000-$4,000 for it.

[18:00] Ultimately, Brian took the deal: “I bought this unit in 2008 for $34,000 and sold it in 2010 for $3,000.”

Lessons Learned From This $31,000 Loss

Brian and Scott conduct a quick post-mortem to see what other investors can learn from Brian’s mistakes with this property.

[19:00] Brian realized he should have done a lot more on the due diligence front. The fact that he never met the people he trusted to manage his properties, let alone took a flight out to view the property and area, contributed to this becoming a bad deal. He learned his lesson and changed his strategy: “Now, I only buy in my backyard...All of my residential properties are within 20 minutes of where I live.”

[21:20] The property management lesson learned is even simpler for Brian: “Having the right management team is important in real estate. You really have to know and trust your team.” He also has far less confidence in “armchair investing” in general. He got a call every time there was a problem anyway, and the team on the ground wasn’t handling them. He is careful to point out that armchair investing is different from syndication or ordinary passive investing, as there are asset managers who are incentivized to deal with any issues.

[24:00] The building Brian owned was later condemned, and just for fun, he reads of the laundry list of scary things inspectors found on the premises.

On today’s episode of The Real Estate Nerds Podcast, fellow attorney-investor Michael Quarles is giving us a twofer. Normally, we focus on one Best Deal or Worst Deal--but Michael has two Bad Beats to share with us today, and a host of free information about negotiation, investing psychology, and why success is a “requirement” in his life.

Tune in to Episode 43 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 43 of The Real Estate Nerds Podcast Now

Michael Quarles on the Finer Points of Negotiation

Scott Smith welcomes Rebecca Walser, who shares about her background, business philosophy and wealth building strategies.

[1:00] Michael decides to share two of his worst deals with our listeners. Scott asks Michael to set the stage for the period of time before the deal.

[2:00] Michael has been engaging in entrepreneurship since he was a teenager. He shares his general real estate investing strategy, but also describes himself as a “serial entrepreneur.”

[3:30] Michael took a student to a presentation, and actually posed as the student to bolster his mentee’s credibility. After a lengthy wait in the car, the student emerged from the meeting dejected. Michael had thought everything would go perfectly, and asked what went wrong. The student simply replied “I started talking.”

[4:45] Michael shares the lesson his student learned the hard way: “That’s the worst thing we can do: not realize when we’ve said enough. And when we’ve said enough, stop talking.” That resulted in the loss of the contract.

[6:00] Michael points out that any time a seller offers you something, even something as minor as a beer or a glass of water, you should take it. These small offers are actually closing signals. “Consumers give us little hints and triggers that we can see,” he explains.

[7:30] Scott wonders whether Michael’s point is really about how to listen. Michael clarifies that at this point, he means simply stop talking about real estate.

[9:05] Michael shifts towards his thoughts on negotiation: “We can’t convince someone to do something they don’t wan to do...But through the art of negotiation, we can convince them to set a price that causes us to say yes.” He describes an example.

[12:05] Michael gives some surprising advice on negotiation: “If you want to learn how to negotiate, how to communicate: go talk to a 3-year-old.” Michael points out children this age do not know how to lie yet, but have some reasoning abilities.

[13:20] Scott asks about situations where execution does not line up with training, such as when they take classes like Michael’s. Michael points out that one must be a gifted storyteller to be an effective negotiator, and that practice is vital to any learned information. He and Scott do a brief exercise to illustrate this point. They speak back and forth using only three words, a tactic Michael recommends.

[16:00] Michael describes how he always surveys his tenants after the fact. He found she did not get to communicate with him the way she wanted to, which he considers a personal failure.

[17:30] Scott and Michael discuss the power of mimicking, a tactic effective with both children and fellow investors.

Michael Quarles’ on The Beauty of Ugly Houses

The two investors shift focus to the second deal Michael wants to discuss.

[18:00] Michael bought a house that was “not quite a duplex” but had an additional small house in the back of the property. There was a double homicide in the house, which worked to Michael’s advantage with lenders. But that wasn’t the end of the criminal element: the offender who committed the homicides returned to commit an arson in an attempt to destroy the evidence relating to the homicides.

[19:00] Michael easily resold the house to another investor who renovated it, got a tenant in, and is still profiting. The lesson he learned from this deal is simple: “Those deals that don’t conform are the ones where we make the most money.” He goes on to state he would buy every “ugly” house in his city, given the opportunity.

[21:00] Michael’s current market is direct tenants and investor-buyers (typically flippers). There is a specific value in the types of houses he purchases--those under the median for the area. Michael encourages investors to look at the properties through the eyes of the consumer.

[23:00] Michael points out that ethical, moral, and legal boundaries are critical. He also points out that the order of those is significant, as something can be legal but not ethical.

[25:00] Scott points out that acceptance of certain harsh realities can serve the savvy investor.

[26:00] Michael describes visiting a house that was outside of his comfort zone. He found a highly motivated seller who was in need of back surgery that made his home uninhabitable during his recovery. He also wanted a relatively low amount of the house. He sold it within ten days.

[Tweet "“There’s a currency of success that has nothing to do with dollars.” - Frazer Rice, Episode 40 Real Estate Nerds Podcast"]

The Takeaway: Facing Fear and Requiring Success

Michael and Scott wrap up with their major lessons learned from Michael’s experience.

[28:42] Scott points out a major learning lesson from Michael’s story. He finds that we must practice habits of success regardless of outcome. Michael counters that even a failure is a type of success, and necessary.

[30:00] Michael asks about the cost of law school, and legal education generally. 3.5 years and $150,00 is the figure they settle on. He points out that many investors spend massive amounts of money to “hit the home run” upon execution. He shares a story of overcoming fear as he forged a professional relationship with a female investor.

[32:00] Scott points out that a life of comfort is one that can cause regret about not taking more risks. He puts it bluntly: “Risk always means fear, and overcoming fear.” [32:00]

[36:00] Michael shares his own take-away. He encourages the audience to treat life like a requirement.

On today’s episode of The Real Estate Nerds Podcast, fellow attorney-investor Rebecca Walser sits down with our host and attorney Scott Smith. If you’ve ever wondered what happens when a couple of lawyers sit down to talk real estate shop, Rebecca and Scott are here to help you find out. Tune in for some free insider knowledge as well as a good-old-fashioned Bat Beats episode.

Tune in to Episode 42 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 42 of The Real Estate Nerds Podcast Now

Rebecca Walser on Building Wealth

Scott Smith welcomes Rebecca Walser, who shares about her background, business philosophy and wealth building strategies.

[0:45] Scott is particularly enthusiastic about talking about a bad deal with a fellow attorney, and asks Rebecca to share some more about her background and practice. Rebecca is a Certified Financial Planner who worked in finance for over a decade before attending law school at the University of Florida, then proceeding with her LLM in Federal Taxation at NYU.

[4:00] Rebecca’s law practice centered around tax minimization for high net worth individuals. She describes a revelation she had during a meeting with a client where she decided to strike out on her own, “marrying” her love of both law and finance.

[6:00] In Rebecca’s practice, Walser Wealth Management, she regards market volatility as the first of two major threats to wealth building and maintenance. Tax issues present the other major issue to keeping wealth.

[8:00] Rebecca shares how her background informs the way she serves her clients: “Our practice is unique not only because we help build wealth financially, but because we also make sure the wealth is built in the right tax bucket.” She believes approaching tax and traditional wealth building holistically is essential. Using a self-directed IRA to hold real estate investments is a common and effective strategy among Rebecca’s clients.

[Tweet "“You could be a doctor with a high litigation risk. You could own a construction company. You could have a high inheritance risk with a drug-addicted sibling. Everyone’s situation is different.” - Frazer Rice, Real Estate Nerds Ep. 41"]

Self-Directed IRAs and Real Estate: Managing Expectations

Rebecca shares how self-directed IRA deals can sometimes go sideways, and the best management solutions for when they do.

[10:00] Rebecca describes pairing with a group to establish manage self-directed IRA accounts, including finding deals. She experienced some difficulties in terms of on-the-ground property management. Poor property management can get expensive fairly quickly. Many of Rebecca’s clients like real estate’s “hands off” investment approach when property management is active and professional.

[12:20] Scott discusses Rebecca’s vetting process for the nationally-recognized company that managed her clients’ properties. He wonders if contractual solutions could have improved her situation, or whether to simply take a different approach moving forward.

[14:26] Rebecca points to the nature of expectations in this type of asset (real estate in a self-directed IRA) and its unique problems as learning moments in her own story. Scott suggests real estate investors may have, or at least desire, a heightened sense of control over their asset than a typical investor would feel over a stock or a bond.

[18:00] The two investors agree one one critical point: “Real estate should be looked at like any other investment: whether it’s working or whether it’s not.”

[19:30] Scott brings up client management. He finds “high transparency and frequent touchpoints” useful for problem-solving with clients. Rebecca agrees both are important in professions where you’re managing other people’s money, as she and Scott are. Rebecca shares some communication strategies for clarifying her company’s role and boundaries regarding clients and their investments.

[Tweet "“There’s a currency of success that has nothing to do with dollars.” - Frazer Rice, Episode 40 Real Estate Nerds Podcast"]

The Takeaway:

Rebecca and Scott conclude the show with their “lessons learned” from Rebecca’s story.

[23:57] For Scott, clarifying expectations upfront is a huge lesson to be learned from Rebecca’s experience, particularly surrounding responsibilities to other people.

[25:05] For Rebecca, cautioning clients about the distinctions between real estate and stocks/bonds has proven essential. She points out failure to do this creates a situation the company has to manage later anyway. Rebecca succinctly sums up: “Real estate, as great as it is, we do ourselves a disservice to describe it as turn-key easy.”

On today’s episode of The Real Estate Nerds Podcast, our host and attorney Scott Smith is joined by Frazer Rice. The two attorney-investors dive right into a deep conversation about asset protection and management, learning financial responsibility, and the true meaning of wealth.

Note that this is an episode in our “Live From FinCon 2018” Series. Don’t forget to check out the Royal Legal YouTube channel for video extras and other great content. Back to the show...

Tune in to Episode 41 of The Real Estate Nerds Podcast now to hear the full conversation.

Listen To Episode 41 of The Real Estate Nerds Podcast Now

Frazer Rice on Wealth Actually and Steps You Can Take To Keep More of Your Investing Income in Your Hand

Frazer Rice sits down with our host and asset protection attorney, Scott Smith. Together, they chat about Frasier’s latest book,

[0:45] Frazer is a wealth expert who helps other investors keep as much of their earnings in their own pockets. This includes asset protection, but also tax minimization work. He points out the many ways that the U.S. Government, via taxation, pockets taxpayer dollars through sheer ignorance on the part of the taxpayer.

[2:00] Frazer recently authored Wealth Actually: Intelligent Decision-Making for the 1%. The book is full of wisdom for those changing asset classes or “moving up” in the real estate world.

[2:30] Scott expresses his admiration for the book, relating his own experiences as an asset protection attorney.

[3:15] Frazer points out the need for unique, customized plans: “You could be a doctor with a high litigation risk. You could own a construction company. You could have a high inheritance risk with a drug-addicted sibling. Everyone’s situation is different.” Each of these circumstances requires a specific type of risk management, and that’s where Frazer’s latest work is useful

[5:30] Scott asks what motivated Frazer’s latest book. Frazer immediately points to taxes, and how to mitigate capital gains and minimize tax liability. He also speaks to how to form an adequate estate plan--advice he routinely gives his clients. Failure to form an estate plan can lead to lengthy litigation, forced sales, and plenty of avoidable fees.

[Tweet "“You could be a doctor with a high litigation risk. You could own a construction company. You could have a high inheritance risk with a drug-addicted sibling. Everyone’s situation is different.” - Frazer Rice, Real Estate Nerds Ep. 41"]

Tools Even Children Can Use for Learning Fiscal Responsibility

Frazer shares some of his practical tips for working with young people to set them up for a life of financial responsibility. Since financial literacy is generally overlooked in schools, Frazer has taken the initiative to fill this education gap.

[7: 20] Frazer lists a couple of exercises for teaching children about investing, preparing them for a lifetime of responsibility. They learn early on about losing as well. Siblings present an ideal situation, as they can work together on exercises to determine their strengths and weaknesses

[10:00] Scott inquires whether these concepts are for children only. Frazer replies that financial literacy is something investors can work on at any age. Scott asks how Frazer explains headier concepts like taxes, real estate investing, and problem-solving. Frasier replies that his financial literacy tools are modified for age-appropriateness.

[14:00] Scott asks about whether it is worth the effort to train children in their real estate business for seamless transition. Frazer says yes, and that the lessons about wealth are fairly intuitive--and better off taught. He elaborates more on wealth management with some stories from his experiences with clients.

[18:30] On the subject of wealth, Frazer points out that a broad definition can improve your life: “There’s a currency of success that has nothing to do with dollars.” Scott agrees, and points out that people can use real estate for passive income to free up time to pursue the things they really enjoy.

[21:00] Scott asks a bit more about how children learn from early investing options. Frazer believes if the power of compound interest were taught universally, Americans in general would be doing better.

[Tweet "“There’s a currency of success that has nothing to do with dollars.” - Frazer Rice, Episode 41 Real Estate Nerds Podcast"]

The Takeaway: Your Approach Can Be What Makes The Deal Work

Scott and Frazer wrap up with the take-aways points from their discussion. Both investors agree that a strong backing system and network is vital.

[22:40] Scott points out that most investors take mis-steps because of their own blind spots.

[23:00] Frazer confirms, and further elaborates that skill sets are diverse, and that’s okay: “You don’t need to know how to solve every problem..If you’re okay at a couple of things, that’s a good business model.” Some team members may be better with lenders, while others can crunch the numbers on properties and comps easily. Still others may be more equipped for managing contractors and the properties themselves.