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Bill Ham - Creative Financing To Acquire 402 Units · REL Freedom Podcast

• 0:00
  Speaker 1: And it's like my time is valuable too and I want you to respect my time and say the job is from here to here.
• 0:04
  Speaker 1: Give me parameters and I'll show up and I'll do the work.
• 0:07
  Speaker 1: And that's great.
• 0:07
  Speaker 1: You know he had this kind of whatever it takes, you're part of the team, do it, fine.
• 0:12
  Speaker 1: Then treat me that way all the way to the end, not when it comes down to just doing the work and then when the money shows up.
• 0:19
  Speaker 1: You want to remember that I'm an employee, not a, not a.
• 0:21
  Speaker 1: That's where I had a problem with that.
• 0:27
  Speaker 2: Welcome to the Real Freedom Show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate.
• 0:33
  Speaker 2: I'm your host, mike Swenson.
• 0:35
  Speaker 2: Let's get some real freedom together.
• 0:37
  Speaker 2: Hello everybody, welcome to another episode of Real Freedom Real Estate Leverage Freedom.
• 0:49
  Speaker 2: We talk about building time and financial freedom through opportunities in real estate.
• 0:53
  Speaker 2: I am your host, mike Swenson, and if you want to get started on your journey for real estate investing, you can go to our website, freedomthroughrealestatecom.
• 1:04
  Speaker 2: That's freedomthroughrealestatecom.
• 1:06
  Speaker 2: We've got a lot of just basic information to hopefully get people started on their journey.
• 1:10
  Speaker 2: For today's guest, we've got Bill Ham here and Bill is going to talk a lot about scaling and growing creative financing apartments.
• 1:19
  Speaker 2: There's so much stuff that you've done.
• 1:21
  Speaker 2: You're very well versed.
• 1:23
  Speaker 2: Also have two books which, for those people that are watching, you can see right behind him Conveniently Place.
• 1:29
  Speaker 2: We've got Creative Cash and Real Estate Raw, so you certainly are a wealth of information on real estate investing and excited to dig into your journey.
• 1:36
  Speaker 2: Bill, welcome to the show.
• 1:38
  Speaker 1: Well, I appreciate it.
• 1:38
  Speaker 1: Thanks for having me on.
• 1:39
  Speaker 1: Thanks, mike.
• 1:40
  Speaker 1: I've been here 20 years, been doing multifamily for 20 years now, so started off in 2005.
• 1:48
  Speaker 1: I was a pilot by trade, flying airplanes, and I figured out I was not such a good employee.
• 1:55
  Speaker 1: I was a great pilot.
• 1:57
  Speaker 1: I love flying airplanes.
• 1:58
  Speaker 1: That was fun.
• 1:59
  Speaker 1: I just didn't like being told when and where to do it.
• 2:01
  Speaker 1: So I saw friends of mine sitting around and they were flipping houses and I thought, all right, something's wrong here.
• 2:10
  Speaker 1: This person my friend, who's a normal person like me we're all at the same bar having the same drink that I'm for and this person gets up and goes out and flips the house and in one or two transactions was making what I was making all year working and I thought, all right, something's wrong with this scenario.
• 2:26
  Speaker 1: So I spent about a year studying, figuring out real estate and I bought a duplex.
• 2:35
  Speaker 1: My very first deal it was cash flow and a whopping $300.
• 2:39
  Speaker 1: And that's if nothing broke.
• 2:40
  Speaker 1: And I had saved up $10,000 life savings and that's what I went into real estate full time with.
• 2:47
  Speaker 1: So after a year of studying, reading books, rich Dad poured out all that fun stuff I went and turned into my two week notice and I walked away from aviation and just went into real estate full time.
• 2:58
  Speaker 1: And 20 years well, 19 and 1 half years later, I'm still here for better floors.
• 3:03
  Speaker 2: So for you, then, it sounds like be your own boss, set your own schedule, unlimited potential.
• 3:09
  Speaker 2: That freedom piece is really what kind of drew you into that?
• 3:12
  Speaker 2: Versus having to be where you're at when you're assigned as a pilot yeah, absolutely.
• 3:19
  Speaker 1: Yeah, and those were the thoughts going into it.
• 3:23
  Speaker 1: I will tell you that life is not always that way, and I kind of laugh when and I've been in the real estate business for about 20 years now multi-family, from single family to multi-family I started single family, I went into multi-family and I've been teaching in this space for over 10 years now about 12 years or so and my favorite is when someone comes on and says, oh, I want to be totally free, no boss, and make my own schedule and all this kind of stuff, and I think, ooh, you've got a lot to learn, because being an entrepreneur is really actually not like that.
• 3:56
  Speaker 1: Everybody thinks it is, Everybody wants it to be.
• 3:57
  Speaker 1: I thought it would be and I realized it's not.
• 4:00
  Speaker 1: So what I would tell your listeners is that doing what we do, what you do, what I do, for a living, is a lifestyle.
• 4:07
  Speaker 1: It's something that I think you want to enjoy.
• 4:09
  Speaker 1: I think it's something that you want to have somewhat called to, because there are days when you're not free and there are days when there's not that much money, and if you're only there for the money, you're only there for those sorts of things passion, things like that that'll leave you high and dry.
• 4:26
  Speaker 1: So I think you need to be prepared for days that are not what everyone says that they are.
• 4:32
  Speaker 1: It's kind of like you want freedom, well, ok, but at work you're free to go home at 5 o'clock.
• 4:38
  Speaker 1: You're free on Saturday and Sunday.
• 4:40
  Speaker 1: You're free two weeks out of the year.
• 4:42
  Speaker 1: As an entrepreneur, you know you're on all the time.
• 4:46
  Speaker 1: You don't go on five o'clock, you know, but you also might be off on Tuesday.
• 4:50
  Speaker 1: Maybe you're working on Sunday.
• 4:52
  Speaker 1: You know it's a lifestyle.
• 4:53
  Speaker 1: So many people need to understand that when they kind of look at what we do and it's great, love it.
• 4:57
  Speaker 1: But it's not.
• 4:58
  Speaker 1: For some of those reasons of Now, now that I'm my own boss, you know I get to do whatever I want to do, whatever tell everybody else, but yes, not that.
• 5:07
  Speaker 2: Yeah, I'm avoiding the nine to five.
• 5:08
  Speaker 2: To work 24 seven is what it's about.
• 5:11
  Speaker 1: But yeah, right, right so you may enjoy the 24 seven infinitely more than the nine to five, and so I think it's all about fulfillment, personally, yeah and it's first for somebody that's had had a w two for quite some time.
• 5:24
  Speaker 2: You know, when the boss asked you to work on Wednesday night at seven PM, you're like I'm doing them a favor by.
• 5:30
  Speaker 2: You know, like I'm not seeing the benefit of of doing that work.
• 5:33
  Speaker 2: But if I choose to work at seven PM because it's gonna help grow my business, I'm okay with that, because I'm growing my business Versus helping grow their business on my time, my off time.
• 5:45
  Speaker 1: Exactly, and that was really actually one of my aha moments that got me to ultimately be okay, quitting my job.
• 5:51
  Speaker 1: And you know what I realize it just wasn't a good employee and that's why I was okay with the job because, yeah, I had a boss being there for the sun up and there till late and if he was working he wanted us to all work and all that great.
• 6:10
  Speaker 1: I don't remember getting a portion of that company.
• 6:13
  Speaker 1: I don't remember getting any.
• 6:15
  Speaker 1: I remember getting a paycheck, you know I mean.
• 6:18
  Speaker 1: So he wants us to work like an owner but he wanted to pay us like employees and that's right kind of the rub and I'm not saying that that you know you shouldn't work hard, you shouldn't be good, but I'm using.
• 6:31
  Speaker 1: For me personally, that was a rubber, just couldn't, I couldn't get past.
• 6:35
  Speaker 1: I can swallow that.
• 6:36
  Speaker 1: My time is valuable to and I want you to respect my time and say the job is from here to here and parameters and I'll show up and I'll do the work and that's great.
• 6:44
  Speaker 1: You know he had this kind of whatever it takes, your part of the team, do it fine, treat me that way all the way to the end, not not when it comes down to just doing the work and then, when the money shows up, you want to remember that I'm a employee.
• 6:57
  Speaker 1: Not that's where I have a problem with that.
• 6:59
  Speaker 1: You know, it's like I'm a family employee.
• 7:02
  Speaker 1: You're gonna pay me like one treating like one, let me go five o'clock.
• 7:05
  Speaker 1: Don't ask me to stay on here seven o'clock on Wednesday and then there's no benefit to that to me.
• 7:10
  Speaker 1: I'm with you.
• 7:12
  Speaker 1: That was my kind of okay.
• 7:13
  Speaker 1: I can do that all of my own.
• 7:15
  Speaker 1: If I'm gonna have to sit here work seven o'clock on a wednesday, it can be for my company as well as somebody else's, and so I'm with you.
• 7:21
  Speaker 2: That was my sort of Transition moment in into my own business and for some people you're willing to do that and build stuff on the side for a year or a couple years or five years.
• 7:32
  Speaker 2: Some people do more of this.
• 7:33
  Speaker 2: Let's just jump right in and go through that learning curve as fast as possible.
• 7:37
  Speaker 2: So talk about kind of that Early start.
• 7:39
  Speaker 2: You had a little bit of education, a little bit of knowledge, a lot of excitement.
• 7:43
  Speaker 2: So talk about those early days of kind of building and scaling.
• 7:47
  Speaker 1: Yeah, job I fired.
• 7:48
  Speaker 1: So, you know, I did, I got an education, I and I kind of say education jokingly because it was a function of reading books.
• 7:55
  Speaker 1: I remember my, my first real piece of education, you know, was was a vcr tape from carleton sheets that I bought I'm aging myself now that I bought at a garage sale, you know, I literally rewind and put it in the.
• 8:11
  Speaker 1: That was my first piece of education, you know, and it was terrible, you know, and that's what I got started with.
• 8:17
  Speaker 1: And so, yes, it's very difficult in the first some years, because that was, that was before we had a lot of educators, a lot of coaches and people out there and even even still, I didn't have the money for any of that.
• 8:27
  Speaker 1: When I was getting started, I was, I was good job, so I was living on a, you know, ramen noodles and any little bit of rent I collect while building the business.
• 8:35
  Speaker 1: So, yeah, it was very difficult and I had to go out and learn a lot and so my first 400 units, 402 units exactly, I did with all creative financing.
• 8:46
  Speaker 1: So that's how I got myself into the business, back in that sort of post five going into, oh, eight, world right, and when it's very similar to where we're at right now, because the lending dried up in a lot of lending is sort of post away through in 2012 or so.
• 9:02
  Speaker 1: It's when you want to talk really tough, right.
• 9:04
  Speaker 1: And so I had to do all creative financing, which is also convenient because I was broke.
• 9:09
  Speaker 1: So I didn't have any money, didn't have a job needed to figure out how to do real estate, so I was doing seller financing, lease options, match lease options, american express don't do that last one but everything I could possibly do to get into deals I was getting done partnerships, all kind of crazy stuff, and so that was kind of my beginning and kind of how I got started.
• 9:29
  Speaker 1: Went from single family, did that for two, three years, flipped houses.
• 9:32
  Speaker 1: I built up a portfolio of about A forty single family that I were hold I was holding, started getting rid of those, transitioned into multi family.
• 9:39
  Speaker 1: Multi family was was again small to large.
• 9:42
  Speaker 1: I did not jump straight up to the big stuff.
• 9:44
  Speaker 1: My first Real I call it real multi family was nine units and then I did a twenty unit and then a twenty seven unit and then forty four and then a hundred one hundred fifty two went on up into the larger stuff.
• 9:56
  Speaker 1: So I'm very humble.
• 9:57
  Speaker 1: Beginnings did not start off with anything particularly In my favor.
• 10:01
  Speaker 1: Did not go to the top, not start doing big deal.
• 10:03
  Speaker 1: Start off very much like most listeners here, maybe couple houses.
• 10:07
  Speaker 1: You got a little experience, you know, and I just grew up from there, so that's that's how I got going, and you know I said been here ever since.
• 10:15
  Speaker 1: so that's, that was the first several years of my business.
• 10:19
  Speaker 2: so you're telling me that creative financing that's all the rage now wasn't invented just a couple of years ago?
• 10:26
  Speaker 1: Was it last interest.
• 10:28
  Speaker 2: It's funny.
• 10:28
  Speaker 2: It's funny here, people that have been in the business a while I know no, no, no creative financing isn't new here.
• 10:33
  Speaker 2: It's been around for a long time.
• 10:34
  Speaker 2: So Talk, talk a little bit about how those conversations go with sellers.
• 10:40
  Speaker 2: I know everybody's kind of got their little take about how they approach it in the best way to do that.
• 10:44
  Speaker 2: But talk about how you approach somebody, because For people that are newer in the business or even people trying to scale, they want to tell me this one line that I have to walk down.
• 10:56
  Speaker 2: And with creative financing it's kind of like I've got a toolbox of options and so I could really pull out the hammer, the screwdriver, the wrench, you name it.
• 11:05
  Speaker 2: And I think that's what trips people up about creative financing is I have so many things I can choose.
• 11:09
  Speaker 2: I don't understand them all and I don't know what to do.
• 11:12
  Speaker 2: So how can you help folks kind of navigate those waters?
• 11:16
  Speaker 1: First off, read my book.
• 11:17
  Speaker 1: Besides that, actually, in the book I answer the question you're asking right there because yes, I've been.
• 11:23
  Speaker 1: So it lives this back up right.
• 11:24
  Speaker 1: So I did my first deals, all creative financing back in, like I said, 2005 through eight, 12, all that Back then.
• 11:32
  Speaker 1: I didn't know that what I was doing was a good thing.
• 11:36
  Speaker 1: I was doing lease options, I was doing seller financing.
• 11:39
  Speaker 1: I didn't know they were called that and I thought this is how stupid people do real estate.
• 11:44
  Speaker 1: This is how poor people do real estate.
• 11:46
  Speaker 1: Everybody else at that seminar I went to man, they're all writing checks, they're getting loans, they're just buying real estate cash money.
• 11:54
  Speaker 1: And I'm the city that over here doing lease options and seller financing.
• 11:58
  Speaker 1: I was very embarrassed to talk about it In the very beginning of my career.
• 12:01
  Speaker 1: I was terribly embarrassed to talk about any kind of creative financing because I did.
• 12:05
  Speaker 1: And then one day I had gotten up to several hundred years and somebody really was asking me like, how did you do that?
• 12:10
  Speaker 1: How'd you get all these units to finance?
• 12:11
  Speaker 1: I was like, all right, listen, I did seller financing, I did lease options.
• 12:14
  Speaker 1: And all of a sudden I look up and there's this whole crowd of people all standing around me like taking notes.
• 12:19
  Speaker 1: And that's when my aha moment went off and I was like, wait a second, you all wanna hear about this.
• 12:25
  Speaker 1: And I was like, yes, my God, tell us how you did this stuff.
• 12:27
  Speaker 1: So, yeah, creativity has been around forever.
• 12:31
  Speaker 1: It's how I built my career.
• 12:32
  Speaker 1: This book, creative Cash, was launched about two and a half years ago.
• 12:36
  Speaker 1: It was written over 12 years ago.
• 12:38
  Speaker 1: I wrote this book back right after the OA 2012 recession.
• 12:44
  Speaker 1: It used to be a home study course.
• 12:46
  Speaker 1: I was a terrible salesperson, never did any home studies through in the closet, and it sat there for almost 10 years.
• 12:53
  Speaker 1: And then, well, that 10 years has been the upcycle in the market, right?
• 12:57
  Speaker 1: Well, first off, how you can tell when a market's gonna shift.
• 13:00
  Speaker 1: Interest rates go up.
• 13:01
  Speaker 1: So that's how I started going.
• 13:02
  Speaker 1: Ah, it's market cycles, and that's why I brought the book out about two years ago, because I knew we were gonna go into this market cycle where creative financing becomes very prevalent.
• 13:12
  Speaker 1: So it's easy to predict, right.
• 13:14
  Speaker 1: And so now getting to the answer of your question here, like, how do we kind of where's that one thing that we can use to navigate this technique?
• 13:21
  Speaker 1: It's easy.
• 13:22
  Speaker 1: It's what I call the spy technique.
• 13:24
  Speaker 1: All right, this is an acronym seller property, you.
• 13:28
  Speaker 1: That's the line in the sand that sets people that are good with creative financing apart from those who are not.
• 13:34
  Speaker 1: So it's all about making an offer or using creative financing to create value.
• 13:41
  Speaker 1: All right, and there's the catch right there.
• 13:44
  Speaker 1: So, number one, creative financing.
• 13:45
  Speaker 1: You really hit on this.
• 13:46
  Speaker 1: It's a pile of tools.
• 13:47
  Speaker 1: Well, the first step is the diagnosis.
• 13:50
  Speaker 1: What tool do we need?
• 13:52
  Speaker 1: Right, right there.
• 13:53
  Speaker 1: So, analyze the deal, break it down when the deal doesn't work and you say these numbers don't work, okay, stop and let's see.
• 13:59
  Speaker 1: Now, apply the spy technique.
• 14:02
  Speaker 1: You wanna ask what's going on and how is my offer, whether it's a lease option or seller financing or whatever going to create value for the seller.
• 14:12
  Speaker 1: First, the property.
• 14:14
  Speaker 1: Second, you last, and follow that order and you will increase your creative financing a hundred fold getting accepted.
• 14:23
  Speaker 1: So step number one what's up with seller?
• 14:25
  Speaker 1: What does the seller sell the property for?
• 14:27
  Speaker 1: What do they want?
• 14:27
  Speaker 1: What's going on?
• 14:28
  Speaker 1: Are they distressed personally?
• 14:29
  Speaker 1: Do they need the money?
• 14:30
  Speaker 1: Do they not need the money?
• 14:31
  Speaker 1: Burned out landlord, like, what's going on with the seller?
• 14:35
  Speaker 1: Is my offer gonna create value and solve a problem for that seller?
• 14:40
  Speaker 1: So, step one what problems does seller have?
• 14:42
  Speaker 1: Step two what's up with the property?
• 14:43
  Speaker 1: Is it bad shape?
• 14:45
  Speaker 1: Is it occupancy?
• 14:46
  Speaker 1: Is it deferred maintenance?
• 14:47
  Speaker 1: Okay, is my offer going to solve that problem?
• 14:50
  Speaker 1: And then, lastly, is this gonna solve my problem?
• 14:54
  Speaker 1: And only last?
• 14:55
  Speaker 1: Most people reverse this and so they say I wanna do master lease options, I wanna do seller financing.
• 15:02
  Speaker 1: Who cares what you want?
• 15:03
  Speaker 1: You don't have the real estate.
• 15:04
  Speaker 1: That's irrelevant, right?
• 15:05
  Speaker 1: 90% of a good deal is seller.
• 15:08
  Speaker 1: 10% of real estate, 90% seller, right?
• 15:11
  Speaker 1: So you've gotta have a willing seller.
• 15:13
  Speaker 1: No, willing seller doesn't matter, right?
• 15:15
  Speaker 1: So that's what I'm saying, these steps here.
• 15:17
  Speaker 1: Step one is figure out what's up with the seller and offer the creates value and solves their problems.
• 15:22
  Speaker 1: Second for the property.
• 15:23
  Speaker 1: Third for you.
• 15:24
  Speaker 1: Don't start with you.
• 15:25
  Speaker 1: If you'll do that, that's your one thing that'll move you forward and then create a financing tremendously, and that's the key.
• 15:31
  Speaker 1: Just always remember that creative financing being a tool, tools solve problems.
• 15:36
  Speaker 1: That's what creative financing does solves problems.
• 15:38
  Speaker 2: That's one of the things that, as a former residential real estate agent and somebody who spent a long time in residential, I felt like I had this brain block, trying to go from residential sales to investor and think about these different creative financing options.
• 15:54
  Speaker 2: And I remember I was at a seminar one time and asked a question and the speaker was like oh, I just love you residential agents because it's like we think like this is how the deal should happen, right Cause this is how we were trained, it's.
• 16:07
  Speaker 2: We do this, we do this, we do this, we do this, and then we have the closing and investment.
• 16:11
  Speaker 2: Real estate is just so different, and so if you're a residential agent or have spent a long time doing residential sales, it takes a little bit of unwinding to relearn a different way to approach these types of things, because you just can't get past the but this is how we're supposed to do it as a residential transaction, and that was a big challenge for me.
• 16:29
  Speaker 1: Exactly that's a great way to put it.
• 16:31
  Speaker 1: Yeah, in Resi, you know there's that form, you got your form contract, your form letter.
• 16:35
  Speaker 1: Everybody wants to do it.
• 16:36
  Speaker 1: Yeah, in commercial or in small multi or in creative financing.
• 16:39
  Speaker 1: Yeah, you have to kind of throw all that out and just stop and immediately look at problems solving.
• 16:44
  Speaker 1: You know why is this seller?
• 16:45
  Speaker 1: And so if you're a realtor, right, and, by the way, if you're a realtor, you really want to get into understanding creative financing.
• 16:52
  Speaker 1: If you're an investor, same comment, but for really for different reasons.
• 16:57
  Speaker 1: If you're a realtor right now, you're going to have trouble getting your clients financed for a lot of these loans, especially when we're moving away from single family, we're talking commercial use, four or five units, things like that, right.
• 17:10
  Speaker 1: So, right there, your seller may have a distressed asset.
• 17:13
  Speaker 1: You're going to want to learn the underwriting, right, you don't want to kind of have to learn the math a little bit.
• 17:17
  Speaker 1: And if you see that that deal is not going to work out for traditional financing, that's where you, the realtor, really want to start trying to educate your seller to hey, look, you know, buyer's going to have trouble giving you the price you want and getting a loan.
• 17:30
  Speaker 1: So let's look at some other ways.
• 17:32
  Speaker 1: We can get you the price you want, but maybe we have to kind of give on terms.
• 17:36
  Speaker 1: You know other things of that nature, right?
• 17:38
  Speaker 1: So that's a lot.
• 17:39
  Speaker 1: Largely, what I do with credit financing is to try and get the sell of the price they want.
• 17:43
  Speaker 1: But as I tell everybody, give on price, take on terms.
• 17:47
  Speaker 1: So I'm trying to get you the price you want, but it's going to be on my terms links down payment, interest rate, things of this nature.
• 17:53
  Speaker 1: So yeah, if you're a realtor, you can read my book, but you really want to kind of get educated on some of these different techniques so that you can bring those to sellers.
• 18:00
  Speaker 2: If you're an investor, you're going to learn to make these offers or need to make these offers where you're offering creative, problem-solving offers that don't include going over to and I will say too, having you know some more experience, not as much as residential, but you know, as you move to the larger properties there is a lot more opportunity for creativity, because that's probably how that owner got the property was.
• 18:22
  Speaker 2: Maybe through some creativity.
• 18:24
  Speaker 2: If they have that property there, there may be more business savvy.
• 18:28
  Speaker 2: They understand like putting a deal together, and so they're willing to be more flexible with that.
• 18:34
  Speaker 2: Or, yeah, if it's single family residential, that owner just may not be thinking in the same way as somebody who owns a small commercial building, because they might have that business savvy or they might have needed the creativity to get the property themselves.
• 18:48
  Speaker 2: So they're much more flexible.
• 18:49
  Speaker 2: I've certainly learned that being in the business.
• 18:52
  Speaker 1: Yeah, but even that fact on the side, either, or commercial realtors, whether you know, the ones that typically need to be educated.
• 18:58
  Speaker 1: So again as a buyer, hey, first thought on your realtor's mind how are they getting paid, hey?
• 19:05
  Speaker 2: as a realtor.
• 19:06
  Speaker 1: First, thought on your mind how are you getting commission out of this thing, Right?
• 19:09
  Speaker 1: So, whether you're the buyer or the agent, you need to be thinking in regards of how are you getting your commission, how are you getting your realtor's commission and in, how does you know?
• 19:18
  Speaker 1: How is this going to work?
• 19:19
  Speaker 1: So, either side highly recommend you get educated on these techniques.
• 19:22
  Speaker 1: It's going to really open up a lot of opportunities for you to solve problems and get bills closed.
• 19:27
  Speaker 2: Kind of bouncing back to your journey and growth In terms of like market selection, because I know, as people are trying to figure out, like the types of properties where they're located, a lot of times people get hung up on where am I going to invest.
• 19:40
  Speaker 2: So talk a little bit about your story of how you chose the properties as far as the locations, and how that's maybe evolved over time.
• 19:48
  Speaker 1: So, yeah, on a macro conversation.
• 19:52
  Speaker 1: So when we talk about market because a lot of times when people start getting into multifamily start looking at other cities, other states and they imagine investing in you know places further away typically, I think in residential people kind of focus a little more closer to where they are in their own town.
• 20:05
  Speaker 1: So if we're discussing the city, the market, yeah, I use several different metrics in there.
• 20:11
  Speaker 1: Now there is a lot of high level conversation that you can get into about selecting a multifamily market and those are going to be on topics like job growth, rent growth, population growth, you know, landlord friendly laws and all those sorts of things, and those are all great conversations and great topics to delve into.
• 20:27
  Speaker 1: But I think there's a much more basic thing to kind of look at two things Can you find something to buy there and can you get there?
• 20:36
  Speaker 1: Those would be the two major things that work with my students.
• 20:38
  Speaker 1: All right, so let's say I'm in Atlanta and all of a sudden I say, well, gosh, I heard and I'm making this up Dallas, texas is the market for me.
• 20:45
  Speaker 1: Okay, fine.
• 20:47
  Speaker 1: Two comments Can you go there on a regular basis and can you find deals there?
• 20:51
  Speaker 1: If the answer is no to those two questions.
• 20:53
  Speaker 1: That's not the market.
• 20:54
  Speaker 1: Forget population growth, job growth, all that stat stuff, all right.
• 20:57
  Speaker 1: So what I'm saying is number one can you go there?
• 21:00
  Speaker 1: You need to be physically showing up in your market, wherever that is every few weeks, once a month or so or you need to be able to go there quickly if a realtor calls you up and says hey, I've got a hot deal.
• 21:11
  Speaker 1: Now here's a big difference between multifamily and single family, and there's lots of them in the realtor world.
• 21:17
  Speaker 1: I'll just hit this one quickly.
• 21:19
  Speaker 1: It's really about buying deals that are not for sale today.
• 21:23
  Speaker 1: And, as I always tell all my students, if a deal, a multifamily deal, specifically days on market, if it's still sitting around the market, chances are it's been picked over.
• 21:31
  Speaker 1: It's not a great deal.
• 21:32
  Speaker 1: So what you're doing is you're trying to get to know these realtors so that when that brand new listing walks in the door, that realtor is going to pick up the phone and call the short list of buyers right, everybody's got that no like and trust list and they're going to call the top couple of buyers that they've been working with now.
• 21:47
  Speaker 1: That not to say they can force the seller to sell, but they're going to call those first buyers, quick pass the deal.
• 21:53
  Speaker 1: If they can't sell it there, then it's going on out to the main market.
• 21:56
  Speaker 1: Right, your agenda, get on that short list.
• 21:58
  Speaker 1: How do you do that?
• 22:00
  Speaker 1: Show up right, and people want to kind of do this dial for dollars and call the realtors and all this and I always kind of tell everybody look, it's not a date, you're not trying to date the realtor, right, these people are busy, they have stuff to do.
• 22:10
  Speaker 1: Don't call them up on a Monday morning and start talking about their friends and their family and try and build commonality.
• 22:14
  Speaker 1: That's creepy.
• 22:15
  Speaker 1: Show up for a property tour, that's the magic.
• 22:19
  Speaker 1: Show up, meet the realtor, do a walkthrough, just like you would in single family, except same in multifamily.
• 22:25
  Speaker 1: You're going to show up and you're going to do that property tour.
• 22:28
  Speaker 1: That's why I say it's key when choosing a market that you can physically get to right, because you're competing with the local.
• 22:34
  Speaker 1: Number one competitor in a market is always local, right?
• 22:37
  Speaker 1: The person that should get up, go meet the realtor, take a coffee break and go tour the property.
• 22:40
  Speaker 1: You're competing with that individual.
• 22:42
  Speaker 1: And so choosing a market too far away where you're just dialing for dollars, you're never really going to be competitive in that market.
• 22:48
  Speaker 1: So that's the number one thing I would say for choosing a market Can you show up?
• 22:51
  Speaker 1: Second of all, is there anything for sale in that area, right?
• 22:53
  Speaker 1: So on that note, I always tell everybody I'll explain this quickly pick a center starting point like your home, your house, your address, whatever.
• 23:02
  Speaker 1: Draw a circle around that.
• 23:03
  Speaker 1: Inside that circle you want to find three deals a week, right?
• 23:07
  Speaker 1: So I live in Atlanta.
• 23:08
  Speaker 1: I'll draw a circle around Atlanta and I'd say I've got to find three deals a week inside of this circle.
• 23:12
  Speaker 1: Three, what Duplexes, 10 units, 100 units, whatever I'm trying to buy, I got to find three a week to analyze, to be in the business on a regular basis.
• 23:19
  Speaker 1: So I'm going to now allow that circle to be as big as it needs to be to find three deals a week.
• 23:26
  Speaker 1: And now, inside that circle is my market right, and that could be a collection of cities.
• 23:32
  Speaker 1: So, number one, can you show up to this circle?
• 23:35
  Speaker 1: Number two, how many cities are inside of this circle that provide you with three deals a week?
• 23:40
  Speaker 1: Analysis wise, that's all you need to do for market selections, all you need to be worried about.
• 23:44
  Speaker 1: If you can do that, you're off to the races.
• 23:48
  Speaker 2: I think so many times people get hung up on like the next hot market, the perfect market, and it's like every piece of real estate in the United States is owned by somebody.
• 23:58
  Speaker 2: So right, it's not.
• 24:00
  Speaker 2: Like you know, in the Midwest nobody owns the real estate, but in the Southeast everybody does.
• 24:06
  Speaker 2: Like somebody owns it everywhere, so you can make money anywhere, most anywhere, but it's and then also realizing.
• 24:13
  Speaker 2: You know, I kind of think about this from like an educational perspective.
• 24:16
  Speaker 2: I don't necessarily.
• 24:17
  Speaker 2: I'm not a graduate level real estate investor yet, I'm a kindergartner, right, and so I got to learn.
• 24:23
  Speaker 2: I got to go through the lessons I'd learned as a kindergartner to go to elementary school, the middle school, the high school, the college, to then get further down the road so you can find that top emerging amazing market that's just printing money later.
• 24:37
  Speaker 2: But you got to go through the lessons in the learning curve first.
• 24:40
  Speaker 2: That's going to help you find those great properties.
• 24:43
  Speaker 2: So don't get hung up finding the perfect market and the perfect property yet Figure out how do I get in and get learning.
• 24:51
  Speaker 1: Yes, and even in your own area you can find sellers that still may make that deal a good deal by helping the seller creating value.
• 24:59
  Speaker 1: It's not always about the market.
• 25:01
  Speaker 1: You can find really good deals and not such great markets with the right person, the right structure, the right creativity.
• 25:07
  Speaker 1: So, yeah, don't always think it's just everything's market driven.
• 25:10
  Speaker 1: I agree with you, complete, and I'm cracking up because always always laugh same comment you made.
• 25:15
  Speaker 1: It's like look, everybody already owns this stuff.
• 25:16
  Speaker 1: Always laugh on the inside when people show up and they go I found a deal.
• 25:20
  Speaker 1: No, you didn't.
• 25:20
  Speaker 1: That thing's been sitting there for 30 years.
• 25:22
  Speaker 1: You'd find it's like you didn't jump out of the bushes the minute they go and like surprise, no, that apartment complex was built in the 70s.
• 25:28
  Speaker 1: Man, it's been sitting right there the whole time.
• 25:30
  Speaker 1: Right, you didn't find anything.
• 25:31
  Speaker 1: You may have now encountered a seller that, for whatever reason today, is willing to sell at some reasonable price.
• 25:37
  Speaker 1: Fine.
• 25:38
  Speaker 1: But yeah, let's understand that all the deals are already owned by everybody.
• 25:42
  Speaker 1: You're not finding anything.
• 25:43
  Speaker 1: You're not finding deals.
• 25:45
  Speaker 1: You're still finding people and it still comes down to the people in the business and it's creating value for those people.
• 25:51
  Speaker 1: If you can do that, markets and all this other stuff are a great distance.
• 25:58
  Speaker 1: Second to simply creating value to a seller.
• 26:02
  Speaker 1: That's the key.
• 26:02
  Speaker 1: And again, that it doesn't matter what market you're in if you can do that.
• 26:05
  Speaker 2: So, as somebody is kind of scaling now, so let's just say somebody in your shoes, what's important to you as you're looking about the next five or 10 years?
• 26:16
  Speaker 2: You've obviously been in real estate for 20 years.
• 26:19
  Speaker 2: You've got a ton of experience.
• 26:21
  Speaker 2: You've got a ton of knowledge.
• 26:21
  Speaker 2: You're educating a lot of people and helping them, but what are you looking for for growth for your portfolio here?
• 26:28
  Speaker 1: Deep.
• 26:28
  Speaker 1: Personally and this is kind of the exact same thing I'm telling everyone else to be looking for quality.
• 26:34
  Speaker 1: So flight to quality.
• 26:35
  Speaker 1: Right now, my concern and this we could spend the whole day talking about this but my concern is the aging buildings in the multifamily space in America.
• 26:46
  Speaker 1: So what I'm talking about aging is anything really older than about 1980, 1985, 1980s and older.
• 26:52
  Speaker 1: So your 60s, 70s buildings are starting to hit physical obsolescence.
• 26:57
  Speaker 1: And if you've been watching the news, we've seen that we saw the building that collapsed in Miami.
• 27:01
  Speaker 1: Corner of that building, I think it was.
• 27:03
  Speaker 1: Brooklyn River was up there.
• 27:05
  Speaker 1: So there's been some different areas, and so what I am telling everybody right now is that you have to be very careful about older buildings, because understanding the real cost inside the building is very difficult to do.
• 27:18
  Speaker 1: So for me, for my portfolio, I'm looking for B class, newer buildings in metro, major metros.
• 27:27
  Speaker 1: So I'm going to go into the major cities and I'm buying quality buildings.
• 27:32
  Speaker 1: That's, for me, what I'm looking for.
• 27:33
  Speaker 1: Going forward.
• 27:34
  Speaker 1: I can't say that's for everybody, but what I can tell everybody here is, yeah, if that building is older in the sense of older than 1985 or so, be very careful about the infrastructure and knowing what you're buying, and that is difficult these days.
• 27:50
  Speaker 2: Yeah, absolutely, because I know.
• 27:51
  Speaker 2: I mean, here in Minneapolis St Paul, I think we'd be jumping for joy to find anything newer than 1980.
• 27:57
  Speaker 2: You know, because it right, you know small multifamily, especially Minneapolis St Paul, a lot of it was built in the early 1900s and so there's, I mean 1900s, over 1960s, any day of the week, though they built the right Night night, you know that's fine.
• 28:13
  Speaker 1: Those, those properties are.
• 28:14
  Speaker 1: You know, if you've got the plumbing okay in the infrastructure or the other wiring and all that, your foundation, your building is probably solid.
• 28:21
  Speaker 1: Yeah, what are you know?
• 28:23
  Speaker 1: Again, going way in here, what I noticed from from doing this for a long time is the post baby boomer World War two type construction.
• 28:31
  Speaker 1: So what you start seeing is the large multifamily apartment complexes or affordable housing Really started to come around with the advent of pine frame construction.
• 28:42
  Speaker 1: So if you're looking, the stuff built in 1900s, 1920s, it's still your brownstones, big block construction, very, very solid.
• 28:48
  Speaker 1: It's the pine frame.
• 28:50
  Speaker 1: You know, vinyl siding or or wood siding, that kind of stuff it was built in the 60s, has reached its physical obsolescence and so they did not build in the same way in the 60s, 70s as they did the 1900s.
• 29:03
  Speaker 1: So I'm still saying, yes, everything older 1985, be careful.
• 29:07
  Speaker 1: But if you're in this range of like 60 to 80, be extremely careful, because those were those buildings, were just not meant the last 100 years.
• 29:16
  Speaker 1: They weren't built that way and and and they're running out of time.
• 29:20
  Speaker 2: I mean they just are what I was gonna say is you know, I often tell my investors, you know, for something in the 1900s.
• 29:26
  Speaker 2: Sometimes they're like, oh my gosh, that seems so old.
• 29:28
  Speaker 2: And I said, Like you said, to your point, it's, it's probably built really well.
• 29:32
  Speaker 2: But I said number two will be able to tell if it was well cared for or not.
• 29:36
  Speaker 2: We'll be able to tell if the foundation strong, it's good, if it's not, it's not.
• 29:41
  Speaker 2: And you can usually tell by dropping a marble on the floor and you'll see if it stays.
• 29:47
  Speaker 2: The foundation is solid, it's been around for 120 years, you're good.
• 29:50
  Speaker 2: But if it starts taking off for the corner and if you start to see, you know, some of the cracks in the building or the HVAC's, just not good.
• 29:58
  Speaker 2: I mean, it's either.
• 29:59
  Speaker 2: It's kind of like feast or famine.
• 30:00
  Speaker 2: If it's good, it's good, if it's not, we move on to another property.
• 30:04
  Speaker 1: Yeah, you know it's funny, we mentioned these 1900s properties being being good.
• 30:08
  Speaker 1: Well, yes and no, I'm from Macon, georgia, and so there were a lot of turn of the century houses built in Macon.
• 30:16
  Speaker 1: Georgia is old Victorian homes Now they were also still stick built and those things are, you know, two, three story Huge.
• 30:25
  Speaker 1: I owned one once, 7000 square foot old Victorian home.
• 30:30
  Speaker 2: Yeah, but it was garbage man.
• 30:32
  Speaker 1: The light bill, the electricity, cost more than the rent.
• 30:36
  Speaker 1: It was so energy inefficient it was so old.
• 30:40
  Speaker 1: It had all lead, weighted windows and all that said.
• 30:43
  Speaker 1: The house was probably worth more Breaking it down in parts and selling it on eBay than you know trying to keep this house as a rental.
• 30:50
  Speaker 1: It was a nightmare.
• 30:52
  Speaker 1: You could stand on the third story and it would make you nauseous.
• 30:55
  Speaker 1: The the floor was so Unlevel I mean you felt like you're constantly just falling.
• 31:00
  Speaker 1: You're trying to straighten up.
• 31:01
  Speaker 1: The house had that much of a lean to it.
• 31:03
  Speaker 1: The neighbors were always yelling at me saying your house is going to collapse and fall on our house.
• 31:07
  Speaker 1: It never did but uh, but you literally see the lean in that building built in the 1900s, early, early 1900s.
• 31:14
  Speaker 1: So yeah, I I would say Northeastern 1900 real estate is probably better than southeastern 1900 real estate, unless in the south has been very, very maintained and it's some kind of historical building you guys built with with more solid construction up there, your bricks, your blocks the south being warmer climate, a little more stick built stuff.
• 31:35
  Speaker 1: Victorian homes they're beautiful when they're maintained.
• 31:37
  Speaker 1: They're disasters If they're not awesome Well bill.
• 31:41
  Speaker 2: Thank you so much.
• 31:42
  Speaker 2: I mean I know we stretched the surface on quite a quite a few things.
• 31:45
  Speaker 2: I think you shared an awesome amount of information to help people along the way.
• 31:49
  Speaker 2: Especially, the creative financing is really important for people right now, for for people that want to learn more about what you're doing, how can they do so?
• 31:58
  Speaker 1: So, uh, I love to give my email.
• 32:00
  Speaker 1: It's bill at go broadwellcom.
• 32:03
  Speaker 1: Feel free to email me, ask me any questions.
• 32:05
  Speaker 1: Is bi l l at go broadwellcom, go B l l.
• 32:12
  Speaker 1: And my website, real estate rawcom.
• 32:15
  Speaker 1: Just like the book here.
• 32:15
  Speaker 1: Real estate rawcom Just check that out.
• 32:19
  Speaker 1: Um, I've got a tremendous amount of free information on that site.
• 32:21
  Speaker 1: I've got a blog on there about 80 different articles that I've written.
• 32:26
  Speaker 1: I offer Education services.
• 32:29
  Speaker 1: You know I won't go through the pitch in here, but you're certainly welcome to go to real estate rawcom.
• 32:32
  Speaker 1: Check that out if you want to reach out to me.
• 32:34
  Speaker 1: If you want any help from anything, uh, for me that I can help you with creative financing.
• 32:38
  Speaker 1: Real estate rawcom Um, I'll be right there waiting on you.
• 32:41
  Speaker 2: Awesome.
• 32:42
  Speaker 2: Thank you so much, bill, for sharing your huge welcome information with the audience.
• 32:46
  Speaker 2: We appreciate it.