Du serveur Red Robin à 250 unités (en utilisant le MLS!)

Brandon: Bonjour James, bienvenue dans le podcast BiggerPockets, mec. Heureux de vous avoir ici.

James: Oui, merci de m'avoir invité. J'apprécie vraiment cela.

Brandon: Oui, passons en revue votre histoire. Je sais que vous faites beaucoup de choses intéressantes dans la région de Seattle. Lorsque nous traînions à l’événement de (inaudible 00:00:19), j’entendais toujours de très bonnes choses à votre sujet, alors je suis plutôt enthousiaste à l'idée de fouiller dans votre histoire. Alors, pourquoi n’y allons-nous pas… Qu’avez-vous fait avant l’immobilier, puis nous avons fait le chemin de ce voyage qui ne va pas de l’immobilier à votre première transaction.

James: Ce que je faisais avant de devenir immobilier, c’est que j’allais à l’université de l’Université de Washington dans l’école de commerce et que je servais des hamburgers au Red Robin.

Brandon: gentil.

James: Tu fais des pourboires, tu payes pour l'école. À l'époque, mon colocataire était allé travailler pour une société d'investissement qui venait frapper aux portes de la saisie-arrêt des gens. J'ai donc pensé que j'étais un étudiant de premier cycle à l'université. J'avais besoin d'acquérir une très bonne expérience des ventes. La meilleure façon de le faire est d'aller frapper aux portes des gens qui ne veulent pas me parler. Donc, pour ma dernière année à l'université, j'allais en fait frapper à la porte trois jours par semaine et essayer de leur trouver une occasion d'acheter. Ils me donnaient simplement une pile de prospects, je n’avais aucune formation sur l’immobilier, et je frappais aux portes de la forclusion des gens ou simplement à un autre type de vendeurs pour discuter avec eux et essayer de les convaincre de vendre.

James: Honnêtement, j'ai été terrible au travail la première année. J'ai gagné zéro dollar, mais j'ai probablement frappé-

Brandon: Balling.

James: Oh, je faisais juste boule. Je perdais mon argent d'essence tous les mois. J’allais chez Red Robin, j’allais travailler sur les pourboires, obtenir mes pourboires, les mettre dans ma voiture, sortir et frapper à une porte et me faire claquer la porte au visage. Une fois diplômé de l'université, je me suis dit: «Vous savez, j'aime un peu ça.» L'immobilier m'intéressait vraiment. Je voyais des gens gagner beaucoup d'argent en retournant des maisons, en achetant des propriétés et en achetant des immeubles d'habitation. Donc, je l'ai donné comme un engagement de six mois après le collège au travail. En gros, je travaillais six jours par semaine à frapper aux portes pour tenter de conclure des accords et tout à coup, les lumières se sont allumées.

James: J'ai passé beaucoup de temps à rechercher le marché, ce qu'il fallait faire, ce qu'était le HUD, le type de prêt, car je n'avais aucune formation. Et, après six mois, je suis tombé amoureux de ce produit. Passant de zéro argent à soudainement, je recevais des chèques de cinq ou six mille dollars de cette société qui me paierait pour trouver le marché, et pour un finissant hors du collège, c'était beaucoup d'argent, et ça m'a un peu rendu accro.

Brandon: Alors à quoi ça ressemble? Pour ceux qui écoutent cela et qui disent peut-être: "Que disais-tu à ces gens?" Vous frappiez à leurs portes, des saisies. Pouvez-vous me guider comme si c'était le but? Que faisiez-vous et qu'avez-vous dit ensuite pour les amener à vous vendre leur maison?

James: Je travaillais donc pour une société d'investissement basée à Bellevue, dans l'État de Washington, qui est un sous-marché de Seattle. Leur objectif était que beaucoup d'investisseurs voulaient acheter une propriété locative ou une propriété retournée. Ils avaient juste besoin de pistes et ils voulaient donc engager des gens comme moi pour aller frapper à la porte et à l'époque, c'était assez drôle, car je considère que J'ai l'air d'avoir l'air très jeune maintenant, j'ai 35 ans et je suis très jeune à 22 ans. Je frappais donc à la porte de ces gens qui aimeraient bien: "Que vendez-vous?" Et ils penseraient que je serais vendre des journaux ou quelque chose. Je me contenterais de frapper… J'avais même des boucles d'oreilles, donc j'étais très jeune. Je frappais à la porte et je commençais simplement par une conversation sur le thème: «Je suis venu vous parler de votre prêt hypothécaire et certaines personnes sont intéressées par l’achat de votre propriété."

James: C’est très simple, et en fait, j’ai rencontré quelques-uns des propriétaires de cette société. Ils ont beaucoup d’énergie, ils sont très vendeurs et ce n’est pas vraiment mon truc. Je suis un peu plus analytique et je fais connaissance avec des gens, comme dans les restaurants, vous apprenez à vous occuper de ces gens et à les servir, alors j'ai en quelque sorte… Je me souviens que pendant les neuf premiers mois, j'ai fait pas d'argent, je ne pouvais pas entrer dans la porte, puis au hasard, j'ai parlé à ma mère et elle m'a dit: «Eh bien, Jimmy, sois toi-même» et littéralement… Donc, je voudrais simplement sortir et parler aux gens, Au lieu de sortir avec une mission pour aller chercher leur maison, c’était plus que de bavarder avec des gens et d’avoir une conversation amicale, puis à partir de là, j’entrais dans la porte et leur parlais des chiffres. maison.

Brandon: C'est incroyable de voir combien de personnes, en particulier les grossistes, surtout ceux qui se lancent dans la vente en gros ou même qui se retournent, frappent à la porte, peu importe, pensent qu'ils doivent être comme la personne qu'ils ont entendue le podcast, ou ils doivent être quelqu'un d'autre parce que le gourou qu'ils admirent ou le podcasteur qu'ils admirent ou ce qui est d'une certaine manière. Alors, ils pensent qu’ils doivent mettre cet acte en scène comme cette personne, mais j’aime que vous disiez cela, soyez juste vous-même. Ta mère avait 100% raison. Parce que les gens peuvent voir à travers cette trame toute la journée.

James: Oui, alors si tu as des problèmes, parles-en d'abord avec ta mère. Ne t'inquiète pas pour le gourou, parle à ta mère. Oui, et en réalité, lorsque vous vendez en gros et que vous parlez aux gens, vous apprenez à les connaître, à connaître leur situation et leur besoin de vendre. Parfois, les vendeurs ne savent pas quels sont leurs besoins réels. Souvent, quand j'arrive à une situation, il se peut simplement qu'ils aient deux, trois enfants et une maison beaucoup trop petite et que ce ne soit pas très agréable, et je suis plutôt allé vers une approche pour les aider à entrer une meilleure situation de vie et en faisant cela, en fait… je me concentrais davantage sur leur solution plutôt que d'acheter la maison, et cela a juste commencé à m'apporter une tonne de propriétés. Alors j'ai créé… À 23 ans, j'ai créé cette petite entreprise où je sortais, je les faisais en réparation de crédit, je faisais la queue pour les déménageurs, je leur trouvais un nouveau bien locatif, et ce que cela a fait, est-ce que ça m'a valu beaucoup de transactions et à partir de là, j'ai commencé à apprendre à analyser les transactions à partir de là.

Brandon: C’est cool, alors tu… Désolé. Allez-y, David.

David: J'allais demander, comment êtes-vous passé d'aider cette société à faire votre propre première transaction?

James: Oui, donc, une partie de leur travail consiste à… Un contrat sur 10, ils nous autorisent à acheter la propriété. C'était donc un peu comme une incitation pour les employés, et même avec mes employés aujourd'hui, j'ai la même incitation. Je me sens comme si des employés passionnés par l'immobilier voulaient acheter de l'immobilier, alors ils m'impliquaient. Mon objectif à 23 ans, je voyais tous ces gars gagner beaucoup d’argent, c’était: "Je veux être ce gars-là", et ils m'ont donc donné une option. En gros, lors de mon 10ème contrat, j'ai pu commencer à choisir celui que je voulais.

Brandon: C’est cool. Je n’avais jamais entendu cela auparavant d’une entreprise, mais j’aime vraiment cela aussi, car cela donne à la personne qui travaille pour vous quelque chose à espérer. "Hé, quand je fais 10 contrats …" De cette façon aussi, ce n'est pas comme si … je m'inquiétais dans le passé d'embaucher des grossistes ou des personnes pour travailler avec moi, comme si ils volaient juste le premier ou le deuxième marché? Ont-ils un moyen d'empêcher cela? Et après le 10ème contrat, avez-vous eu la possibilité de choisir un marché? Ou y avait-il un certain… C'était juste le numéro 10?

James: C'était après notre 10ème accord, je devais choisir n'importe quel accord que j'ai trouvé après cela.

Brandon: d'accord.

James: Je devais encore payer à la société leurs honoraires, ce qui fait partie du travail, et je pense avec eux… Beaucoup de gars en fait… C’était un peu bizarre. J'avais 23 ans et tous les autres vendeurs avaient entre 35, 40 et 50 ans. Donc j'étais le jeune homme du groupe, mais j'étais aussi le gars qui travaillait le plus. Je travaillais environ 60 heures par semaine et je le faisais… Après un an, je faisais deux à trois fois plus d’affaires que tout le monde, et ils me disaient: «Qui est ce jeune enfant?

James: Mais aucun des types plus âgés, ils étaient plus concentrés sur le salaire que sur l'achat de biens immobiliers. Ainsi, à part mon partenaire commercial, nous étions les deux seuls membres de la société à choisir l'option employé, ce qui était assez fou pour nous, car pour moi, l'immobilier consiste à créer de la richesse, pas seulement à générer un revenu, et vous pouvez faire les deux, mais dans le même temps, si vous ne vous fiez qu'à des chèques, vous allez être à court de chèques à un moment donné. Mon objectif n'était pas simplement d'impliquer et de faire un tas de vérifications. C'était, je veux créer de la richesse. Mon objectif premier était donc d'acheter ma propre propriété, ce qui a pris environ 11 mois, ou environ un an après avoir travaillé là-bas.

Brandon: Parlons donc de cette première propriété. Ca c'était quoi?

James: C'était à Burien, Washington, qui est un sous-marché de Seattle. C’est à environ 10 km au sud de Seattle, la région principale. En fait, la raison pour laquelle je l'ai choisi, c'était une maison de ville construite en 2001. C'était un style de maison de ville, très bon état. Il avait besoin de moquette et de peinture, et à 23 ans, je savais que je ne savais vraiment pas comment rénover une propriété. Ce n'était pas mes compétences. Mon ensemble de compétences consistait à trouver le marché. Je voulais donc trouver quelque chose de peu d’entretien, qui ne me distrait pas de mes tâches quotidiennes, et j’ai donc trouvé ce bâtiment plus récent. J'ai payé 176 $ pour cela. À l'époque, cela valait 245 $. Donc j'avais cette position en actions dont j'avais besoin, parce que ce que je recherchais aussi, c'était une position d'au moins 20% en actions ou une réduction, parce que je voulais… À 23 ans, je n'avais pas beaucoup d'argent non plus. Donc, ce que je devais faire, c’était aligner le financement d’un premier et d’un second avec quelqu'un pour pouvoir le refinancer hors de la transaction.

James: Je recherchais donc quelque chose qui ne nécessitait pas beaucoup de travail, que je pouvais refinancer rapidement, qui détenait une position en actions de 20%, et pour moi, je suis un fervent partisan si vous êtes un nouvel investisseur, ne mordez pas plus que ce que vous pouvez mâcher, ce fut donc un très bon établissement pour moi, et les liquidités me rapportaient environ 250 dollars par mois également; c'était donc une sorte de victoire pour moi.

Brandon: D'accord, c'était donc un bien locatif. Comment l'avez-vous financé alors? Avez-vous dit ça?

James: Oui, alors j'ai financé une première hypothèque avec un prêteur dans la ville, puis un de nos clients investisseurs m'a plu de l'avoir trouvé. Ce que j'ai fait est que j'ai vraiment une analyse approfondie de la propriété pour s’assurer qu’il savait que l’équité était présente, puis je me suis pleinement qualifié pour un refinancement avec un engagement de 100% du prêteur, et j’ai donc contacté celui-ci et lui ai dit: «Hé, je peux tu me fais un… je te paierai », je lui ai versé un intérêt de 12% et il a contracté ma deuxième hypothèque, puis il s'est senti à l'aise parce que j'étais tout préparé et que j'ai donc contracté des emprunts. Je n’étais dans l’argent dur que pendant deux mois, car cela ne demandait pas beaucoup de travail. Et l’a fait refinancer et c’était ma première transaction.

James: À partir de là, j'ai pris un HELOC sur les fonds propres pour pouvoir ensuite acheter ma prochaine propriété. Donc, j'ai utilisé ces 20% pour me faire participer aux prochaines offres à partir de là.

Brandon: C’est cool. D'accord, nous parlons donc de BRRRR-ing. Vous l'avez acheté, cela ne semblait pas nécessiter une cure de désintoxication, mais vous l'avez acheté, réhabité, refinancé, remboursé le prêteur d'argent dur et le prêteur privé, ce qui est une stratégie phénoménale, soit dit en passant, et puis vous ensuite… Maintenant, vous êtes propriétaire de cet immeuble locatif, il génère des flux de trésorerie et, comme vous disposiez encore de fonds propres, vous avez pu puiser dans ces fonds propres au moyen d’une marge de crédit sur valeur nette et acheter quelque chose d’autre. Est-ce que je résume bien?

James: Oui, et ce que j'ai fait, c'est que je ne voulais pas sur-financer le marché, et l'HELOC m'a donné ça… Au lieu d'avoir à faire appel à un prêteur privé à ce moment-là, cela m'a donné un supplément 40 000 $ avec un financement bancaire seront mon prochain acompte. Mon objectif suivant lors de mon prochain achat était de trouver quelque chose de très similaire, avec une participation de 20% ou plus, puis de ne verser que 40 000 $. Je devais donc trouver quelque chose avec un achat de moins de 200 000 dollars.

Brandon: D'accord, ouais. Impressionnant.

James: Oui, l'effet de levier m'a mis dans une position tout à fait différente. Mais c’est la raison pour laquelle l’achat de cette première transaction est si important, pour obtenir une bonne répartition des actions, car vous pouvez en tirer le maximum et commencer à construire votre portefeuille.

Brandon: Ouais. Oui, j'adore ça. Je suis un grand partisan de l’achat de produits permettant de construire cette équité immédiatement, encore une fois. Je suis curieux de savoir quel équilibre y a-t-il cependant, entre quelqu'un qui vient de commencer, il est tout nouveau, il cherche son premier accord, il achète un accord doté de beaucoup de capitaux propres et achète simplement quelque chose pour obtenir son pied dans la porte? Si vous parlez à un nouvel investisseur, comment le conseillez-vous généralement? Quelle bonne affaire devraient-ils obtenir pour leur premier contrat, et où est la limite entre faire quelque chose?

James: Ce que je dis toujours aux gens, et c'est la même chose que je fais moi-même, c'est quel type de capital… En tant qu'investisseur, j'ai toujours une certaine somme d'argent mise de côté pour mes placements et mes réserves à long terme, que ce soit Je… Pour moi, parce que je suis aussi un gros flipper, et donc je retourne environ 100 maisons par an. Ce que je fais, c'est que je retire 30% de ce profit et je le consacre à mon achat.

Brandon: Oh, cool.

James: Et alors… parce que, comme nous le disions, l’argent va et vient, et pour moi, si je prends 30% de côté, cela va construire ma richesse, pas seulement mon revenu. Donc, pour un nouvel investisseur, je leur dis toujours: «Hé, la première chose à faire est de savoir combien d’argent vous devez travailler, et à partir de là, établissez le plan à partir de celui-ci." Si vous n’avez que 10 , 20 000 $, ça va. Vous devez simplement commencer à définir votre plan en fonction de ce que vous pouvez faire avec ces 10 000 personnes. Lorsque je parle à un investisseur si je n'ai que 10 000 euros à investir, il est possible que je cherche des sous-marchés moins chers à Seattle, car vous pouvez toujours obtenir un bon achat et en conserver un bon flux de trésorerie. et le mettre au travail, parce que…

James: Parfois, obtenir le premier accord conclu est la chose la plus importante, car vous devez apprendre vos processus, vos forces et vos faiblesses, et ensuite… N'achetez jamais un quelconque accord qui vous coupe la tête, c'est un rabais important parce que si vous êtes également nouveau, vous pourriez ne pas avoir ce fond de construction. Pour ma part, je n’y suis pas allé… j’ai tout gardé avec des copropriétés au début parce qu’il était facile pour moi de le faire, puis une fois que j’ai commencé à faire tourner beaucoup de maisons, cela m’a donné l’ensemble de compétences pour acheter ces propriétés à prix réduit faites-les refinancer et retirez des liquidités, puis réinvestissez-les.

James: Je l'ai donc pris en plusieurs étapes. Mes quatre premiers achats et retenues étaient tous des copropriétés et tant que c'étaient de bonnes affaires sur le condo et que je croyais au marché et que les loyers étaient très uniformes, c'était un bon moyen pour moi de partir. De plus, en tant que propriétaire, j'ai un peu aimé que les condos gèrent tout l'entretien extérieur. Je ne voulais pas avoir à faire face à tout l’entretien et à l’usure, parce que je n’avais pas les compétences nécessaires pour le faire maintenant. De nos jours, je n’achète pas vraiment de condos car j’ai ces compétences, mais c’est un très bon point de départ, ou bien l’achat d’une maison neuve est également une bonne chose, tout simplement parce que vous apprenez tout votre entretien (diaphonie 00). : 14: 07) genre de problèmes.

Brandon: Ouais, c’est un très bon conseil. J'ai toujours été nerveux à propos des condos, mais ensuite je les regarde. J'ai un copain à Hawaii, son nom, Greg, et Greg achète des appartements près de l'aéroport. Pas le plus grand quartier, pas le plus grand complexe, pas assez de revenus, mais le mec ramasse des condos pour beaucoup moins cher que la moyenne à Hawaii, et il fait des rentrées d'argent, comme… je devrais avoir Greg dans l'émission, parce que c'est comme stupide bon flux de trésorerie sur ces propriétés qui sont comme la section 8, condos bas de gamme, mais quand il me l'explique, il est comme, "Regardez. Ils s'occupent de tout l'entretien extérieur, ils s'occupent du bâtiment lui-même, j'entre », quand il les reçoit, il rénove complètement ces condos, ce qui ne coûte pas très cher, car ce sont de petites caisses en ciment d'une chambre. , essentiellement, et le gars est en train de faire un massacre.

Brandon: Bref, j'ai toujours eu peur des copropriétés, mais je n'y suis jamais entré, mais ça peut être une façon fantastique de commencer. Ouais, vous ne ferez probablement pas… vous n'allez pas forcément passer à des milliers de logements. Certaines personnes, je suppose. Mais oui, ce n'est pas une mauvaise idée de commencer.

James: Oui, parce que les condos comportent des risques. Vous voulez vous assurer que les réserves de HOA (diaphonie 00:15:13) sont en réserve, car cela peut réellement affecter votre trésorerie. Comme un condo, j'ai été évalué à 9 000 $. Je n’étais pas vraiment (diaphonie 00:15:20) –

Brandon: vraiment?

David: C’est la partie dont personne ne parle, c’est que nous savons tous qu’il ya des frais d’administration de base chaque mois, mais vous pouvez en tenir compte dans vos chiffres. On ne peut pas travailler dans les cas suivants: «Oh, un arbre est tombé sur le toit et notre fonds ne contient pas d’argent. Il faut donc que chacun investisse huit mille dollars pour acheter un nouveau toit», et cela dure deux ans. votre trésorerie est partie pour quelque chose que vous ne pouvez pas contrôler.

James: Oui, et c’est… Une chose est que l’entretien est agréable parce qu’ils s’occupent de tout, mais encore une fois, vous avez aussi des employés de HOA qui ne sont généralement pas des investisseurs qui embauchent du travail, et c’était mon plus gros problème, comme vous venez de dépenser… Je me souviens que j'avais fait cette évaluation, c'était pour une clôture et un toit, et ils ont dépensé une somme d'argent ridicule pour des clôtures et je me suis dit: «Je ne suis pas d'accord avec ça.

David: C’est comme quand le gouvernement essayait de prendre le pouvoir et (diaphonie 00:16:04).

James: Oui, exactement.

David: Il n’ya pas de motivation à le faire à moindre coût, et vous dites: «C’est sept fois plus que ce que je paierais pour la même clôture», et ils disent: «Ouais, eh bien. Vous n'êtes pas HOA. "

James: C'est drôle. Je ne supporte pas les budgets gaspillés. Cela me rend fou.

Brandon: Très bien, alors allons-y… Vous avez mentionné il y a une seconde quelque chose qui est assez choquant. Vous avez dit: «Je lance environ 100 maisons par an.» Est-ce ce que vous avez dit?

James: Ouais, environ une centaine.

Brandon: D'accord, alors je veux savoir comment vous êtes passés de… Tout d'abord, comment allez-vous du type qui achète un appartement, puis un autre à «Je lance 100 maisons par an»? Pouvez-vous nous guider en une minute, comment avez-vous vécu cette transformation?

James: Ouais. Je suis juste un peu fou et j'aime trop travailler, mais… et je pense que j'aime me torturer. Mais quand nous… Alors, je me suis lancé dans l’immobilier en 2006 et 2006 et j’ai créé mon entreprise en 2008. C'était juste quand le marché est tombé d'une falaise. Donc, pendant ce temps, nous partions de zéro. À l’époque, les investisseurs ne voulaient pas toucher… Vous pouviez simplement donner quelque chose gratuitement à quelqu'un et ils ne le voudraient pas. Ils sont comme, «Ooh, immobilier? Je n'en veux pas. »Ainsi, ce que j'ai commencé à faire, c'est qu'en tant que grossiste, nous trouvions ces très bonnes affaires à l'époque, car encore une fois, même les vendeurs ne faisaient que donner leurs propriétés, mais personne ne voulait en acheter autant. comme en 2008, 9 et 10, et ce que nous avons fait est donc devenu en quelque sorte l'acheteur. Pour nous, il s’agissait de… car encore une fois, le commerce de gros n’était pas si rentable non plus. Vous pourriez faire une très bonne affaire et peut-être en tirer cinq mille dollars.

James: Nous avons décidé de… Nous nous sommes alignés avec un couple de prêteurs pour nous financer, et nous avons commencé avec une sorte de flips cosmétique où nous les rendions un peu plus agréables que tout le reste, comme l'ajout de la tuile supplémentaire, le granit, et soyez très économe sur la façon dont nous achèterions ces choses, et nous considérerions également qu’elles valent 10 à 20% de moins au moment où nous en avons fini avec ces choses. Ainsi, nous avons commencé avec un à deux et nous nous sommes dit: "OK, nous construisons une maison de 20 000 dollars et nous pouvons en vivre", car la vente en gros était très faible… L'immobilier s'adapte simplement au marché et vous devez assembler vos systèmes avec tout ce qui se passe dans les conditions actuelles du marché.

James: Pour nous, parce que personne n’achetait vraiment, cela nous permet d’obtenir de très bonnes affaires, puis nous avons commencé à tourner lentement et à construire nos systèmes et nous sommes passés à 10 comme la première année, puis nous avons commencé 20 ans, puis au moment où le marché a commencé à se réchauffer en 2013 et 14 ans, nous avions déjà commencé, nous avons en quelque sorte perçu la tendance et nous avons commencé à faire de 40 à 50 maisons à la fois avec une grande équipe et alors nous avons vu toute la hausse et l'appréciation. Pour l’instant, je ne fais pas volte-face… Je fais environ 100 par an. Cette année, j’en ferai probablement 50 parce que j’essaie simplement d’être plus stratégique avec les conditions du marché. Mais oui, c’est un travail difficile et personne ne veut l’acheter. Nous avons donc pris le risque et l’avons acheté nous-mêmes.

Brandon: C’est incroyable. J'aime cette histoire, parce que les gens qui écoutent cette émission sont nombreux à en conclure un premier, leur premier condo, leur deuxième, leur troisième, leur quatrième. C’est pourquoi j’aime bien que les gens sachent qu’il ne faut pas 20 ou 30 ans pour devenir une entreprise importante. Je ne sais pas, vous mettez simplement dans le travail, en apprenant constamment de vos erreurs, en trouvant ce que vous pouvez faire mieux la prochaine fois, et en ayant cette vision, je suppose, vous faites avancer un peu, ce qui est génial.

Brandon: Maintenant, vous avez dit nous. Qui est nous? Vous avez un partenaire impliqué dans ceci ou un peu? Droite?

James: Oui, mon partenaire, Will Heaton. Nous avons été partenaires… Nous étions colocataires lorsque nous avons commencé à l'université. Ou pas… Il a six ans de plus, il est plus vieux que moi. Il a six ans de plus, mais lui et moi étions colocataires quand il a commencé à travailler pour cette société de forclusion. Il a été vendeur pendant longtemps, puis… Donc, nous sommes partenaires depuis le premier jour dans l’immobilier et nous n’avons pas changé depuis. Nous possédons toutes nos affaires ensemble, nous possédons toutes nos locations ensemble sauf que je possède quelques-unes de mes propres locations personnelles que je suis toujours en train de négocier, mais oui, nous sommes juste des partenaires à 50/50.

Brandon: C’est cool. Parlons de cela pendant une minute. Qu'est-ce qui vous a donné envie de faire équipe avec lui? Ce qui fait de lui un bon partenaire, et peut-être en quelque sorte le raconter aux gens qui écoutent la série. Comment peuvent-ils trouver un bon partenaire? De toute évidence, cela a été bon pour vous les gars. Vous avez explosé. Qu'est-ce qui fait que ça soit si bon?

James: Vous savez, le plus gros problème avec… j’ai eu beaucoup de partenariats au fil des ans, et certains ont très bien fonctionné et d’autres moins. Avoir un partenaire… Mon plus grand souci est de s’assurer que A, vos valeurs fondamentales sont sur la même page. Droite? Cela commence par l’intégrité, l’honnêteté, puis l’éthique de travail. Tout le monde doit être sur la même page d'éthique de travail. Ensuite, Will et moi avons été passionnés par le fait de ne pas faire de vérifications. Nous voulions créer de la richesse, et c’était notre objectif principal… Nous sommes passés de, je pense, probablement en 2009 a été la première année où nous avons acheté nos propriétés ensemble. Nous avons commencé avec un couple et nous avons maintenant plus de 250 portes. C’est parce que moi et lui partageons la même vision, la même ligne de conduite, que nous souhaitons créer un portefeuille immobilier à long terme. Donc, tant que nos valeurs fondamentales et nos principes d’investissement fondamentaux restent unis, nous avons pu être de très bons partenaires. Je veux dire, nous n’avons probablement eu que six grandes… grandes divergences dans la façon dont nous décidons des choses au cours des 12 dernières années. C’est donc très rare. Nous sommes juste sur la même page.

Brandon: C’est cool.

David: Bon, alors de ces 250 portes, de quoi sont-elles composées? Sont-ils des familles unifamiliales, multi-familles, des parcs de maisons mobiles?

James: C’est un peu de tout, mais nous avons probablement environ 10 propriétés unifamiliales. Pour nous, nous détenons des propriétés unifamiliales si elles ont des avantages en ce qui concerne le zonage ou certaines propriétés… Eh bien, A, nous les avons achetées correctement en 2008 et elles sont vraiment bon marché, mais elles sont situées sur de très grands terrains dans certains sous-marchés de Seattle, nous avons donc l'impression que le prochain boom de la construction aura lieu lorsque nous développerons probablement ces terrains et que nous vendrons ces terrains ou les exploiterons, mais pas ce boom de la construction. Ensuite, nous possédons, nous avons beaucoup de maisons de chambres où nous prenons des maisons unifamiliales et nous les transformons en chambres de huit et 16 unités, à côté de l’Université de Washington, n’importe quel type d’école principale. En fait, nous en faisons une où nous faisons actuellement une maison de 60 chambres à Capitol Hill, où nous prenons …

Brandon: Whoa.

James:… notre bâtiment et la construction de 60 portes. C’est un projet très complexe.

Brandon: Ouais.

James: Et puis nous avons aussi beaucoup de duplex et de quadruplex avec… et nous aimons les choses avec un zonage supplémentaire. Vous savez, s’ils ont zoné et qu’ils peuvent être développés plus tard.

Brandon: Parlons de cette affaire de maison de chambres. Cela me souffle l'esprit. 60, comme 60 chambres pour étudiants? Est-ce que… C'est fou.

James: Oui, à Seattle, l'accessibilité financière est un tel problème, et nous avons donc acheté ce bâtiment historique à Cap Hill. C’est une maison d’art, et l’un des aspects de Seattle est qu’ils veulent préserver ce type de structures, et c’était un peu comme ça… C’était plutôt un endroit pour les vagabonds, mais ils l’appelaient l’art. Alors, lorsque nous leur avons présenté cette proposition, nous étions un peu inquiets parce que ce n’est pas… Seattle aime… Je veux dire, ils vont faire un pas en avant sur le développement parce qu’ils veulent garder le quartier central ensemble. Mais le fait que nous construisions des logements abordables nous a facilité la tâche. C’était tellement… parce que la demande était si forte, ils ont travaillé avec nous sous différents angles.

James: Donc, ces chambres, les gens ont besoin d'un endroit où vivre et ils veulent un endroit agréable, et donc ces maisons de chambres que nous faisons, nous les dépouillons en fait jusqu'aux haras, les rendons vraiment agréables, toutes les belles cuisines, tous les beaux planchers, portes solides, et ils peuvent y vivre pour 999 dollars par mois. Donc, avec Seattle et le genre de mouvement hipster, les gens aiment la vie partagée. Il y a WeWork et co-living, et ils aiment ça. Donc, ce qui est réellement fait, cependant, nécessite un accord normal et vous pouvez hyper-accélérer le retour en mettant en place le bon plan. C’est la raison pour laquelle nous avons créé ces maisons de chambres.

Brandon: C'est fascinant pour moi. Y a-t-il un espace commun? C’est presque comme un dortoir géant, mais c’est un… mais ce n’est pas un dortoir. Je veux dire, c’est comme un…

David: Est-ce que c'est comme une auberge?

Brandon: Ouais, c’est presque comme une auberge, est-ce le genre de sensation qu’elle a?

David: C’est ce que cela ressemble.

James: Oui, donc celui-ci est un peu plus complexe. J'en fais une autre aussi, à côté de l'Université de Washington, où je prends un triplex qui porte le zonage SF500, mais qui est protégé par des droits acquis, et je le transforme en… Ou non, c'est un duplex, excusez-moi, et je le transforme en 16 pièces plutôt qu'un duplex. Donc, avec ces maisons de chambres, ce que nous faisons, c'est que nous aimons une très grande cuisine, une cuisine de style chef avec un grand espace de vie, une zone flexible. Chaque étage a généralement son propre petit… L’étage principal aura une immense cuisine et chaque étage a une petite cuisine avec une zone laveuse / sécheuse et ensuite ce que nous ferons habituellement est peut-être dans un tiers des Pour les unités, nous allons également installer de petites barres réfractaires. Celles-ci peuvent coûter 1100 $ par mois au lieu de 999 $, ce qui leur laisse un peu d’espace supplémentaire (diaphonie 00:25:07) –

Brandon: d'accord.

James: Mais les gens vraiment… La plupart de ce que nous obtenons est qu’un grand nombre d’entre eux le sont, pour être honnête, ce sont des étudiants étrangers qui arrivent, ils s'occupent en quelque sorte de leurs affaires. Ils veulent un lieu de vie agréable et propre et c’est pourquoi… Nous leur faisons aimer la qualité de la construction haut de gamme, afin d’obtenir un très bon lieu de vie, un lieu de vie confortable et un esprit d’entreprise propre. S'ils ont leur propre espace, ils sont bons. Mais nous essayons d’entrer… Si nous avons 16 chambres, nous essayons d’entrer comme 10 salles de bain, parce que les salles de bains sont un gros problème. C’est donc généralement deux chambres par salle de bains, deux à trois chambres, et certaines auront leur propre salle de bain pour laquelle nous facturerons un peu plus.

Brandon: d'accord. Est-ce que… Encore une fois, cela m'étonne. J'aime cette idée. Est-ce que le gouvernement… parce que c'est un logement à faible revenu et qu'il a besoin de logements pour les étudiants et autres. Alors ils sont d'accord avec… Ils travaillent avec toi là-dessus? Ils travaillent avec le zonage sur ceci? Est-ce que c'est comme ça… Comment vous en sortez-vous? Comme dans les quartiers et tout ça.

James: Vous pouvez définir le zonage à Seattle. Si vous possédez une propriété SF5000, vous pouvez y installer huit chambres. Vous ne pouvez pas faire plus de huit à ce moment-là. Donc, vraiment, quand vous les choisissez, vous pouvez aller chercher un immeuble de 6 000 pieds carrés, mais vous n’allez toujours avoir que huit chambres à coucher. Donc, il y a une sorte de bon compromis avec la taille du bâtiment que vous pouvez obtenir. C’est un peu… Nous avons appris qu’en période de ralentissement économique, nous cherchions une maison à côté de l’Université de Washington et que ce n’était pas assez bon marché pour un flip et que c’était pas vraiment une location, mais nous savions… Il était 390, à côté de UW, et à l'époque, encore une fois, ce n'était pas un bon accord, mais nous avons vu un potentiel. Nous étions comme: «Ceci est 390 à côté de UW. C’est un bon achat. »En fait, Will, mon partenaire, a eu l’idée et il a dit:« Hé, il ya cette affaire de maison de chambres. Laissez-moi creuser dans ceci. "

James: So we took this … We paid 360 for it, we put 250 grand into the building and made it really nice. It was our first one, so we had a little bit of inefficiencies on our construction. We made it a little too nice, went a little too in depth. But that thing brings in now $9000 a month in rent. And so our cash on cash return is astronomical, whereas every other investor … and this was a property just sitting on the market. No one wanted it, and we just kept looking at it and we were like, “This is a good piece of property.” It was also next to a freeway, too, so the flippers didn’t want it, the rental people didn’t like it. It was zoned SF5000, and then since then … So we’re into it like 600 grand, brings in nine grand a month which is just a ridiculous amount for a poor neighborhood in Seattle.

James: Then since then, the zoning’s changed and now we can actually build … It got up-zoned, because when we do look at these buy and holds, we’re also looking at path of progress, what’s going on in the neighborhoods, and that’s why we liked this one. It seemed more commercial than residential. So they up-zoned it, and now we can actually build two houses in the backyard, too.

Brandon: That’s cool.

James: So if you put the right strategy together and not just overlook the just one sitting there that everyone’s overlooking, you can get something that’s a gold mine.

Brandon: Yeah. Such a good tip. There are ways … Again, real estate … I like to say this a lot. Real estate is not two-dimensional, it’s three-dimensional. A lot of people look at a deal and they’re like, “Well, they’re asking 360 or 390 or whatever, they’re asking this price. I could rent it out for this much. Doesn’t make sense,” and they move on. But you guys definitely have shown how like … You’re like, “Well, what if we did this, and what if we turned it into this? And what if we did this?” It’s like a multidimensional project, and when you start thinking that way, in real estate deals, to use a cliché, the world’s your oyster. Droite? There’s a lot … Not that every deal’s going to work out, but the number of potential properties out there, it just, the sky’s the limit. There’s so much out there if you just learn to think three-dimensional like that. Now, is that something you just get over time? How did you learn to start thinking more creatively like that?

James: I think the credit actually goes to our flipping processes, because we got a lot of … Even back in the day, we would buy these small houses and carve them up into like … You know, we’d pick up a 950 square foot house and turn it into a three bedroom, two bath affordable product. So we got really used to putting together value engineered design, and then all of the sudden, we’re like, “Oh, well if we can rent these out for eight bedrooms legally, we can put our same flip process into our rentals.” Because a lot of times, people stayed clear from the major fixers in the rentals, and I don’t blame them. They’re a lot of work, you get dead time on your money. For a year, you’re out, you’re not making income.

James: But if you put the right strategy together and you have the right systems, you can really maximize out these returns, and the flipping really benefited us because we know construction and we know how to design things. We know how to get the permit pushed through and we know how to get the inspections done. So it’s been a huge … Flipping is good for income, maybe not for … I mean, it helps long-term wealth by building your capital, but it also gives you very good systems and tools. Because flipping’s not easy, so the more you learn on it, the more tools you have for your rental portfolio.

Brandon: So let’s talk about the construction stuff, because that is something that scares a lot of people. First of all, when you’re first … Not you necessarily, but when people are first getting into it, do you have any advice on how they can better estimate the costs of a rehab? When they’re brand new. How did you do it, or how do newbies can do that?

James: Yeah, construction’s really tough, because I think a lot of investors and a lot of people I work with, they do this cat and mouse game with them. They’re like, “Oh, my budget’s 100, so I’m going to tell the guy 90, and then he’s going to come at 140, and then we’re going to try to meet in the middle,” without really going through and logically breaking it down. So what I’ve done is I’ve created a spreadsheet for my whole team to use that breaks down square footages and then it breaks down install rates and material rates. The best thing an investor can do is find out what a normal install rate is per item, because a lot of people don’t even know that. Like an electrician should charge you $25 a fixture to install that fixture. That’s a pretty normal rate. On the high side, it’s $50.

James: So getting to know those things, like if I break down electrical, I know a panel is $1500 in Seattle. That’s a normal rate. A fixture’s $25. Running wires, $3 a square foot. So I get all these numbers from the electricians, compile it, and then when they give me a high bid, I then just work them backwards and say, “Oh, okay, well how much are you charging me for the panel? How much are you charging me to run wire?” You just have to really know your install rates. But the whole back and forth thing with the contractor is not a good method, because it just allows for massive amounts of change orders. So you really want to get the install rates and everything figured out, and working with a really good team that can help you with that.

Brandon: That’s great. Yeah, so … Go ahead.

David: What I love about what you just said was that you don’t just … Everybody asks, “How do you calculate rehab costs?” like it’s something that we can just say, “Well, here’s a cheat sheet. Every contractor’s going to charge the same thing.” It’s so complicated to explain to people how that works, that there is never going to be an easy way. You have to do exactly what you just said. How much is it going to cost you to do the wiring, why does it cost that much, how does a contractor look at it? Does he look at square feet, does he look at how many boxes he’s going to put in? They have a method or a metric that they use, and you’re asking the right questions so that you can understand it from their perspective.

David: I tell people that all the time, when they’re saying, “Well, how do I know what the ARV’s going to be?” Well, do you know what an appraiser’s method is when they look at a property, how they come up with what the price is? Because if you see it from an appraiser’s standpoint, you can get a really good idea what your ARV’s going to be. If you know how a contractor looks at a home, how they bid it, how they price it, you can get a really good idea.

David: You’re doing that really good, James. Everything that you’ve said is you look at a problem, “All right, I want to buy that house but it costs too much money. How could I chop it up into little pieces and rent them all out to make that work? What would I need to know in order to do that?” And you’ve just systematically broke this down into smaller pieces that then, it’s very easy for your brain to look at that problem and say, “I can make this work,” or not.

James: Yeah, and then … Yeah, I always work backwards off the issue. The other thing is, I dictate where the contractor can get their materials from, and I know that pricing. So I’m saying, “Hey, you’re going to get this floor from this supplier. It’s $1.65 for the materials, and the average install rate is $1.50 to install this.” So when they give me a high quote, I can ask them a logical question and if they can’t answer it, they’ll usually come down, or they’re just not the right guy and they don’t know how to estimate something, regardless, and so at that point, you don’t want to hire them anyways.

David: Isn’t that 100 times better than just living in fear of “I hope my contractor’s not ripping me off” or I don’t want to do this at all because a contractor might rip me off”? That’s what Brandon and I see all the time is, “Well, I don’t know. What if they’re taking advantage of me?” But what you just said is, “Well, I know the materials are $1.65 a square foot. I know the install rate’s $1.50 a square foot. So it should be a little over $3 a square foot times however many square feet I need.” And if he’s at $10 a square foot, he either doesn’t know what he’s doing or he’s dishonest and I can use someone else. There’s no fear, there’s no apprehension, there’s no worry, there’s no anxiety. It’s a very easy, quick-cut decision you can make.

James: Yeah, and you’ve really got to … I do something, I call it the bundle method, where I’ll take my whole budget and I’ll chop it into like six sections and that way, my … Like for construction, I can take my kitchen cabinets, I can just go to my kitchen cabinet company and I know exactly what they charge me for the cabinets, the counters, and the install. So I take those things away from the contractor because I don’t want their ambiguity to kind of mess up my budget. So I’ll take my whole budget and chop it into six really systematic things, like I have them do all the hard work and the planning, but the easy stuff, I’ll pull out for myself and just call my dependable subs that will give me that guaranteed price.

David: And you know, I bet if you get good at this, you could probably go to a contractor and say, “Here’s what I need. Here’s what I’ll pay you,” and you already have it broken down, and I bet you a really good percentage of contractors would actually prefer, because they’re not good at numbers. That’s not what they do. They like to build things and get sawdust in their hair. They don’t like to have to use spreadsheets and numbers, and if you could go to them and say, “Here’s what I need. Here’s what I’m going to pay you. Here’s what it’s going to cost,” and they can just look at that and say, “Oh, I’m going to make $7000. You got it,” and now you don’t have to worry about overpaying. I love … You’re the only guest I’ve ever heard that’s said that. That’s really good.

David: For the people who are out there saying, “Well, how would I ever figure out what a cabinet costs?” Or “How am I going to get these numbers?” What James did, was he went and worked for another company that was already doing this, and he built his skills serving somebody else and that was how he got started, he got knowledge, he got confidence, then he did his own thing. That’s what I’d recommend if that’s what your problem is. “Well, I don’t know how much that stuff costs.” Well, go to work for a company that’s already doing this. Go to work for a guy like James. Figure out a way to make it worth his while to hire you. That’s the fastest way you’re going to learn.

David: Now, one thing I want to know is, you’re definitely doing big things, you’re good at what you do and you’re very humble about it, by the way, which is impressive, so good on you, James.

James: Oh, thanks.

David: Tell us a little bit about where you’re finding deals, because that’s probably the number one objection that I hear from people, other than “I’m scared,” is, “There’s no deals out there.”

James: You know, I hear the same thing. People are like, “Oh, I’m going to different states,” and there’s nothing wrong with investing in different states at all. I’m a firm believe you should just invest in everything, especially … Just learn it before you invest there. I like to play in my own sandbox, which is King, Snohomish, and Pierce county. I like to be able to drive it. I know my crews, I know my systems, and I do a little bit more complex plan, so I need to have my systems prepared.

James: But everyone always asks me, “How do you get these amazing deals?” I buy them right off the market 60% of the time, and I buy them off wholesalers, I also own a wholesaling company, so we direct market to sellers, as well. But the best deals that I find are right on the market, and they’re usually misrepresented by the broker. The broker doesn’t quite know what they have going on there, or maybe it was a flipped inspection deal and the previous buyer’s inspection was so gnarly it freaked out the broker. So we’re always combing through the MLS, and I love the ones that are just sitting there on the … I mean, even my own, I just flipped my own house, basically, in Bellevue. I paid 850 for it, I just sold it for 3.1 over a two and a half year period-

Brandon: Wait, 3.1?

James: 3.1.

Brandon: Whoa.

James: And that property that I bought was on the market for 360 days before I even … and I bought it 10 grand off list. The seller wouldn’t budge, no one wanted it. Everyone thought it was a teardown, which is wasn’t, and so they were pricing that at dirt cost and I’m like, “No, this is a structure I can fix.” I mean, it was a lot of work. I put over a million dollars into it, too, so it was definitely a … It was not easy, I worked for it. My wife worked for it, too, because she dealt with (crosstalk 00:37:51). But that … and so those deals are out there, as long as you can underwrite and look at them in the correct way.

James: We also bought an apartment building in Magnolia, which is a really good neighborhood in Seattle. It was sitting there for over 200 days. It flipped four times on the inspection. We ended up getting in contract 300 grand off list, because it was the fourth inspection, and we bought it at 3.2 cap, which is not a good cap rate. I would always tell people, don’t buy that. But then after raising rents, we got it to a 5, which is still okay, right, but that’s not my standard. But the thing that everybody missed is, we have short platted off two lots in the back and now we’re building two homes and it’s bringing our whole basis down $600, no, $950,000 off because we’re building the two homes and selling them off, and so it turned our 5.2 cap into now we’re going to be around a 9 cap in Seattle, which is amazing.

Brandon: That’s exactly what I was saying earlier about the 3D, thinking about real estate in three dimensions instead of two. This is exactly what your … That’s your magic superpower. If you were an Avenger, you’d be the 3D real estate investor.

James: Yeah. One thing you have to be careful of, though, is don’t go too crazy. We have learned getting into too big of a project, you kill your return for two years.

Brandon: Yeah.

James: You need to factor in your dead time on return, and that’s … We’ve had to learn that over the last couple years, like, “Okay, well, maybe we’re going to do it this way now,” or “We’re going to do less projects, be more efficient, and get the cap rate out.” So you can start to over-exchange, and so we kind of learned that and now we’re kind of more balanced out.

Brandon: That’s phenomenal.

David: Cory Nemoto talks about that, too. They do a lot of flipping in Hawaii, and it’s basically the economic concept of opportunity cost.

James: Yup.

David: So you can look at it and you can say, “Well, I’m going to make this much money,” but you also have to factor in well, what else could I be doing with that money during the time, what you call dead time. That’s a really good point, and sometimes when you want to get a deal or you want to brag to your friends about what you did, you can make those decisions without thinking about, “Well, what if I could’ve turned that money over four times on flips where maybe I made half as much money, but if you did it four times during that period, you would’ve made twice as much in the end?” So that’s a very good point you’re bringing up, unless you can get access to other capital so that while your capital’s tied up, you can still do deals with someone else’s.

James: Yeah, and finding deals on the MLS is really looking for that broker that doesn’t know what they’re selling but also looking for that next market that’s still depreciated, that path of progress. So those condos I bought, originally I ended up 1031 exchanging those into a house in Suncadia, Washington, which is kind of like a resort town, because I saw my condos go way up in value and I’m like, “Okay, these things are at the peak of a market. I need to sell that and maximize my equity,” and I 1031 exchanged it into a vacation rental, which was totally random, but it brought in … They were renting for $1100 a night, and then I liked that for upside because I was buying it below replacement cost. They spent $400 a foot building these houses and I was buying at $270 a foot, and so I saw the runway there.

James: So it’s … buying and hold’s not just about your income that you collect. It’s about placing your money in markets for a couple years and then repositioning it when the market starts cooling down, because that’s how you can hyper-accelerate your appreciation and your return by buying it so you’re always increasing your cash flow but also increasing your equity position, the whole BRRRR method, and then taking that equity and putting that equity to use.

Brandon: So you’re not a “I’m going to buy it, hold it for the next 50 years.” You’re always looking, “How do I get a better return on my equity that’s there?”

James: That’s … In this kind of market, I think we … I personally think I have to be, because right now, markets, in Seattle, there’s a lot of things at peak pricing, in my opinion. I look at okay, what’s the upside? Am I going to get that much more in rent? The asset maybe has appreciated 25%, and then if I really like the building and it’s just turnkey and I don’t want to mess with it, then we’ll leave it alone, but … Or I’ll then … I want to always increase my position. Being an investor is my full-time job, so if it just takes me a little bit more work than to roll it over, I’ll switch it over there.

James: Even the Suncadia property, when I bought that, I was like, “Oh, I’m going to keep this forever. I love it, I get a vacation there,” and then it went up 350 grand in value, and I’m like, “Well, that’s now going to go down,” because then I also saw a record number of building permits pulled there. And so I’m not only just looking at my asset, I’m looking at what’s going on around my asset. So if I’m seeing a bunch of building permits pulled around one of my assets, that means that there’s going to be an oversupply, which is going to bring my value down, which also could bring my rent income down, and so then I ended up selling that and going back into a traditional investment from there. But usually, I keep them for minimum two years.

James: There’s some, in me and Will’s portfolio, there’s property, like that 60-room rooming house, we’re going to keep that, because that’s a lot of work and it’s a high income, and that’s just going to be a staple property for us. But other ones, I’ll always … If I can increase my position, I’m always going to increase my position, because I’m not retired yet, so that’s my job, is to always increase my investment position.

David: Well, I talk about that in Long-Distance Real Estate Investing, that return on equity is a metric you need to learn and understand, because when you bought the property, let’s say you were getting a 10% return and rents have gone up and now you’re getting a 15% return, and it’s easy to say, “Wow, I’m crushing it. I’m doing so good,” but your property has increased in value so much that the return on your equity is 1 or 2%, and if you were to reinvest that money, you were getting a 3% return, now you’re getting a 15% return on something new, you’ve 5Xed your cash flow and you have the value added opportunity that comes from buying a new property and turning it around. I’m sure you would say, James, from the deals you’re doing, the money that you make, the equity that you build, comes primarily from buying underperforming assets and fixing them up, making them worth more. It’s that initial “I bought it cheap, I fixed it up” where most of your wealth comes from, and then the rest is where we just let it go and the cash flow comes in.

David: But make sure your equity is working for you. Look how hard you’re working at what you’re doing. You can’t let your money not work when you’re working this hard, and you understand that and that’s exactly why you’re building wealth so fast, is you’re buying it, you’re making it worth a whole lot more, and then you’re saying, “Well, is this equity better spent sitting in this property? Or can I get more somewhere else?” and then moving it to a new asset class. You combine that with everything you know about real estate, zoning laws, how to buy deals off the MLS, making a hostel, all the stuff you’re talking about, and you’re going to accelerate your returns quite a bit.

James: Yeah, and it really just comes down to timing, too. Because right now, the market’s still appreciating in a lot of neighborhoods, especially in Washington, and so for me, I’ll probably stop exchanging as much once the market kind of flatlines out. The other thing I pay attention to when I’m trading around is bank rates are really low right now, so it’s easy for me to trade around. But once rates creep up, which they will eventually, then it doesn’t make it as worth your while to trade around a property because now you’re also trading … you may be trading into a better discounted asset, but your bank financing could be two points higher.

James: So there’s all these things outside the box that you’ve got to pay attention to. For me, the last five years, I’ve seen what’s going on in the market, so I’ve been doing all my trades. But at the end of the day, when everything stops and I’m going to settle down, I’ll be locked in with low rates and I’ll always increase my equity and cash flow position. So if I can’t get a low rate and I’m not increasing my cash flow position, then I’m not going to sell that asset.

David: Once you’ve got a rooming house with 60 doors and you’ve a total of 250 doors in your portfolio, and a lot of that is not just an individual house that one property manager’s doing, it’s a property with a whole bunch of doors in it, how are you structured to collect those rents, make sure your bookkeeping gets done? I’m sure you’re not making sure all 60 rooms are full in your rooming house. How have you delegated that responsibility to other people?

James: We used to use property managers, and property managers are a good way to go. They can cost quite a bit. Once you get to a certain portfolio … We actually have full-time leasing people on our staff now, and so we just have it all in-house, accounting’s all done in-house. We use a Yardi system for collecting rents. So it just really comes to down to … You always want to analyze your portfolio, what your expense is, and property management, usually we can get it for about 5 to 6% locally, if you’re giving them a lot of business. So we run our 5 to 6% cost and then at that point, it’s half the price to have two full-time salary people, and in addition to, we also can control the maintenance cost, because we want to do our own maintenance because we’re thrifty. Bad … Or not bad property management-

David: Lazy property managers that send the first handyman they find that charges three times what your guy would pay, yeah, that’s your biggest expense with single family housing.

James: Yeah, that’s how I pull my hair out. I’m like, “You just spent how much on a toilet?” I just can’t … I still have that cheap side to me, where I’m like, “No. I’m not paying that.” So but yeah, just putting together the right systems, and that’s where you have to look at your portfolio and go, “Okay, well how much time do I have?” If I’m a Microsoft guy, I’m probably still going to use property management because I’m not a full-time investor at that point. And so for me, being a full-time investor is my business, so we had to hire and staff accordingly.

Brandon: Yeah, that makes a lot of sense, and a lot of real estate, what I’ve found is if you can get to that certain level, there is that level, like at 20 units, it might not be worth it, you can’t hire … I mean, it’s not worth it to hire someone in-house to run that. At 30 units, it might not be worth it. You’re still doing it yourself. But there gets to be this point, maybe it’s at 100 units, maybe at 200, where you can bring that in-house and then lower all your costs. It’s almost like … I’m looking at this with mobile home parks right now and with apartment complexes. What number do I need to get to where everything becomes cheaper at that point because of the economies of scale? I’m not saying I’m going to go out and buy bad deals, but what I can look forward to is hey, I can drop that property management cost from 7% down to 3% once I get over 200 units, because then I’m going to bring it all in-house, or something. It’s just another interesting way to look at kind of a three dimensional deal.

James: Yeah, and you always just want to perfect your return, especially if you’re in a stabilization period where you’re like, Okay, I’m making 10%. Can I get it to 11 by doing nothing? Or by changing things, not doing nothing, but changing things around?”

Brandon: Yeah, definitely. Well hey, I want to move us along to the next segment of the show, and dive deeper into one of your particular deals. So it’s time for the Deal Deep Dive. Hey, so James, I’m pausing real quick here. This is the part of the show where we … I don’t know, did we talk to you about this at all? We’re going to go … We just basically want to go into one of your deals, so any deal that you’ve recently done. We’re just going to ask you where you found it, how much you paid for it, what you sold it for if it was a flip or what do you rent it for.

James: (inaudible 00:48:53).

Brandon: Okay, I didn’t want to spring that on you, but that’s why we’re pausing real quick here.

James: Yeah, so I just bought one that I’m in the process of, where it’s actually, I bought three houses next to each other and then also had a ADU and a garage in the back, and so I short platted around it and kept the ADU, the house, and the garage, and then I’m selling-

Brandon: Yeah, that’s a perfect one. Yeah, that’s perfect. D'accord.

James: Definitely not a good deal on paper when I bought it.

Brandon: All right, let’s talk about that one. Okay, we’ll start again. Give it a second of silence so Dave can see the … All right, the Deal Deep Dive. This is the part of the show where we dive deep into one deal that you’ve done and ask a series of questions about it. So let’s see, you got a property in mind, then? Before I ask the questions.

James: Yeah. Yeah, yeah, yeah. I’ve got one I just closed on and about ready to list one of them, too. It’s kind of a flip/rental pseudo.

Brandon: Ooh. Parfait. All right, well that’s the first question. What kind of property is this? Is it multifamily, single family? And then where is it?

James: So it’s in Olympic Hills in Seattle, Washington, which is about 10 miles north of downtown. So it’s a good transitional neighborhood, borders with Shoreline. It’s actually a single family purchase, where I purchased three single family houses and then it also had a detached thousand square foot ADU in the back and a detached three car garage in the back, as well.

Brandon: Okay. Sensationnel.

James: Yeah, it was a deal I bought off a builder that needed the cash.

Brandon: So three single family houses and a thousand square foot ADU, like an extra unit. So it’s almost like four houses but not really, right?

James: Yeah, four … The ADU is bootlegged into one of them, but yes. Basically three and a half houses and a big, big garage.

Brandon: All right.

James: Yeah, it’s good for toys.

Brandon: That’s awesome.

David: You said you found it from a builder. Can you tell us a little bit about that?

James: One good thing about buying properties in Seattle for so long is people kind of know us, that if we give them our word, we’re going to close on it. So there was a builder, a lot of people are doing, like we’ve been talking about, 1031 exchanging, and the builder kind of got caught and needed to sell off some properties. But he’s also a very experienced guy, he wasn’t going to give them away. So we came to terms and I ended up buying these properties, it was a combined purchase of $1.56 million for three houses, and he had been shopping it, actually, for like 60 days before he found me to buy it. The reason being is a lot of people just said no because on a cap rate basis, they were rentals for him, it was like a four cap on houses in Seattle, which isn’t very good, and then the equity position, I paid basically 540 per house and they’re worth 699 to 750, so there wasn’t that big of a discount for a flip, either.

James: So when he ran it by me, I originally was like, “No, I’m not really into this,” but I went and drove it and took a look at it, and I was like, “Oh, okay. I think I can come up with a plan here,” because partially what he did, too, is he built three houses, built that ADU in the back, built a garage in the back, and they’re all crossed all over property lines. So the house had the garage, but you couldn’t get to it, and it was just kind of a mess. So what I kind of dug into, I was like, “Well, I really like this property with the ADU and the garage, because it will rent out … that front house will rent out for $3500, the ADU will rent out for about $1900, and then I can rent the garage out for $100 per bay.” So there was a combined rent of around $6000 a month on this property. But the rest of the properties were kind of these dragdowns, and then even at the purchase of 550 and the renovations, I’m like, “This still isn’t that good of a cap rate.”

James: So what I ended up doing was looking at two of the properties and running the flip numbers on them, and because they were pretty cosmetic, what I’m in the process of doing, I’m listing one this week, is selling off two of the properties. I short platted them, boundary line adjusted everything around to where the one property now had all, it had the house, the ADU, and the garage, and I’m flipping the two houses to take my basis down on that property. By flipping the two houses, I’m actually generating about 110 in income there, which is going to take my 550 purchase on that one building and it brings it down to 440, which ends up being a payment of $2400 a month, taxes and insurance included, which is now going to bring me in six grand a month in income, so after-

Brandon: That’s awesome.

James: I have no money in the deal. Once I’m done flipping them, I’ll have no money in the deal and generating about $2500 to three grand a month, plus I get to stick all my crap in the garage.

Brandon: That’s amazing.

James: (crosstalk 00:53:32).

Brandon: So okay, let me dive in a little bit. I was going to ask, did you just pay what he wanted, the 1.56, is that what he ended up coming at? Or did you negotiate him down-

James: Well first I was going to tell him 500 a house, and then I drove it and kind of looked at it, and I was like, “Oh no, I can pay this,” and then I wanted to realize it before someone else realized what they could do with it. Tu sais?

Brandon: Yeah.

James: I think everyone kind of blew by it, because there’s houses right by that for sale for 575 (inaudible 00:53:59). So it didn’t look like there was a lot of discount on the houses. So for me, I wanted to kind of … and naturally, I always like to grind people down, but at the same time, I don’t want to lose a good deal, and if I can make an extra two grand a month and get storage for free, I mean, I’m going to, I’d be kicking myself a year down the road. The other thing that also passed while I was in contract on this is that new ADU rule in the back, to where now I can actually condo off that back house if I ever want to, and so now the combined value is worth like over a million and I’m only going to owe 450 on it.

Brandon: Oh, I didn’t know Seattle had that. I know we have it out here in Hawaii, where you can condo out your ADU and separate it. I didn’t know Seattle has that. That’s cool.

James: It’s been around for a while. There’s a trick to it, so maybe I’ll … I can explain the trick to you later.

Brandon: Sure. That’s cool.

James: About going through the county. But so at first, I was like, “No, I’m not really into this.” I didn’t really like the street. It was surrounded by apartment buildings, so I was like, “Eh, the upside of the houses aren’t really there.” But then once I did all the math on it, I was like, “Oh no, this is going to work,” and so I was paying him a little bit more of a premium on it, how I look at it. So because I was paying him a premium, I got cheaper financing lined up right away. He let me conventionally finance them all, so it saved me all my hard money and debt cost. And that was my thing to him, he wanted cash and I said, “Well hey, I’m going to pay you what you want, but you’ve got to give me 40 days to close these.” And by doing that, it saved me about 60 grand in hard money cost on there. Just by getting the … I gave him what he wanted. Instead of chasing, trying to get him down 60 grand, I just gave him what he wanted and financed the deal in a different way.

Brandon: That’s awesome.

David: So how did … Explain how you financed it, how you funded it.

James: I funded it with … I actually really like working with credit unions and local banks, especially once you have more than eight properties financed in your name. As an investor, I’m a firm believer you should go meet with all those people, get them comfortable with your processes, and once you get that, you can actually get pretty good financing done quickly and very … I mean, it’s not very hard. My books are very complex, it’s a lot of different companies feeding into each other with a lot of different write offs, and so it’s a … I’m a mortgage guy’s worst nightmare when it comes to on paper. But they … I worked with Alaska Credit Union on these ones. They were quick, they were fast, and because of the plan, I explained to them my plan, too, and what I was doing, and so I was able to just put 10% down on all those properties as well, which usually you’ve got to put 20% down. But after I showed them the income potential and what my plan was, they actually got it down to 10% for me.

Brandon: That’s awesome. That’s just another reason why yeah, getting to know those local community banks, credit unions, really, really smart idea, instead of just going to the big national banks.

James: Yeah, big national banks, they have different people making the calls, and they don’t know us. So I’ve always had more luck with local banks

Brandon: Yeah, that makes a lot of sense. All right, what about like … at the end of the day, you got it with 10% down, but are you going to refinance out now once you sell off those two properties? Is that the plan? Or how does that work from a title standpoint?

James: I got a really good rate on the one, and so what I’m doing is the two flips are going to generate me about 120 grand in cash (crosstalk 00:57:20), and so after taxes, it actually comes down to 80 grand, which is the down payment for the one … So honestly, at the end of the day, I’m plus $30,000 in my pocket and I’m walking with two grand a month in cash flow.

Brandon: That’s awesome.

James: And I locked in a really, it was … because rates dropped at that time. I think I’m at like 4.65 on a 30-year fixed rate, because this one I do plan on keeping for a while, because I … well A, I need the garage, so it fits really well for my construction company, I can put tons of stuff in and rent it out. But for now, I plan on keeping this one for a while. But after everything … and that’s when I really realized it was a really good deal, because I could flip the other two houses, basically get all my down payment back plus 20 grand and collect two grand a month.

Brandon: That’s so cool. That’s amazing. So what … I’ll take the last question, unless David, you want it. Lessons learned? All right, what’s the lessons learned? What have you learned on this project that you can share or that made an impact on you?

James: The biggest lesson I learned on this was actually when I did my first … So when I was purchasing the property, part of it was I was going to do all the easements to get rid of the title issues with the buildings on different property lines. Originally what I did is I just went in and did easements and recorded easement for access. That cost me like three grand to do, three to four grand, had to survey it out. Got it all done, closed on the deal, and I was about ready to list the property three weeks ago, one of them, to get my cash back, and I screwed up. I didn’t think about my plan of possibly condo-ing off the house down the road, because to do it that way, I can’t do it with the easement I recorded and I need to do a boundary line adjustment.

James: So I kind of … My first plan was too rushed, and so now what I had to do was un-record the easement, go in for the boundary line adjustment, and what it’s done is it’s made me sit on the middle house that I’m selling for another month, which is a loss of three grand at that point. But it would’ve been a lot more detrimental, actually, if I didn’t do it and I sold the house and then I couldn’t condo it later, because it’s kind of specific rules.

James: So making sure … Sometimes speed isn’t your best friend, right? Don’t rush into that project and just try to get things done. Because my goal was to get that one flipped in 45 days, get my money back, and then move on to the next deal, and I should’ve slowed it down because it probably would’ve saved me six, seven grand at the end of the day. That’s kind of wasted money, plus it was just sitting there.

Brandon: Wow. That was a phenomenal story, though. Very, very cool, and yeah, good luck on that project. I’m curious of-

James: Yeah.

Brandon: Yeah, that’s so cool. I love … Again, it’s just over and over and over, this theme today just keeps coming up of just finding different, creative ways, not necessarily to finance a deal, even though that was creative, as well, but to put together something that might not be a deal and how to turn it into a deal. We just keep coming back to that, and I love that. That’s your superpower. So yeah, keep that up.

James: We call it inventing returns, like yeah, you can’t get a cap rate of … you get a four and a half to five cap in Seattle. We’re not okay with that, but we like the area, so we need to invent our own returns to get it to meet our minimum standards.

Brandon: Yeah. It’s like David and I always talk about, how today’s market, you don’t really find good deals anymore. It’s not 2012 or 2011 anymore. Today, you make good deals. You make them by being creative, and that’s exactly what you’ve done. So very, very cool. Well, before we get out of here, let’s go to the next segment of the show. It’s time for our Fire Round.

Brandon: All right, time for the world famous Fire Round. Of course, these questions come direct out of the BiggerPockets forums, which you can visit, everybody can go hang out there at biggerpockets.com/forums. Totally free. So let’s do it. Some people got to ask some questions of James here. Number one, Hector from Overland Park, Kansas, said, “I’ve got no cash, but I do have an investor willing to fund my first flip. What do I get out of it? What does he get out of it? What’s the best way to approach him and form a relationship that can continue into the future?” What advice have you got for Hector?

James: Well, Hector, just like I did my first one, instead of bringing in an equity partner, I just paid him like a lender, because for me, it was about getting that first deal in my name. So you find that really good deal and what you want to do is you want to … Or what I did, is I went to my investor with a plan of, “Hey, I’m going to buy this. You’re going to do my second for me. I’m going to pay you this return,” and sometimes it makes more sense to overpay that person on the return to get the deal in your name, and then get set up to get him taken out with a plan … Give him the plan to get your money back, and then so just pay a little bit more for your financing rather than giving up equity on your first rental. That’s just where I came from, I wanted to start building my own portfolio, but I offered to give him better loan terms and a safe loan rather than giving him equity in the deal.

Brandon: All right. Okay, cool.

David: All right, question number two. “I love hearing success stories on the podcast, but I’m wondering if you can share a deal gone wrong? Why did it fail? Bad location? Did you overpay? Bad property management? Et cetera.”

James: I have more bad deal … I have tons and tons of bad deal stories. You have to be … That’s how you learn in investing. Well, I guess going back when I was new, biggest mistake I made was jumping from buying condos to buying a really big fixer house in the middle of nowhere, and I had no systems for construction. I had only done carpet, paint, but it was this amazing deal, I was paying like 40 cents on the dollar for, and I just got smoked on this. Time and materials, it went six months over timeline and then during that six months, 2008 happened and the market crashed, and so I was three times the amount of budget, three times over the timeline, lost all my cash, and that’s because I was buying what I didn’t know how to buy. So as an investor, I won’t buy unless I have a process somewhat figured out for it, because that’s how you can really get your butt kicked.

James: I also, same time, I bought a commercial building during that time, which I don’t buy commercial office space, is what I learned. I learned that because we bought a really cheap building in a not that good location, but it was this amazing, we were paying like $100 a square foot for this office building. But it doesn’t matter if no one wants to rent it in a bad location. So it sat vacant, and we actually had to move our whole business down there when the market crashed and occupy it, and then get it leased up, and that’s actually how we learned condo-ing things off. We condo-ed out little sections and leased it up and then moved out. But it always comes down to not buying the right deal, or buying what you don’t know.

Brandon: I had a mentor tell me early on in my career, very, very early, said, “You can go broke buying good deals.”

James: Yes.

Brandon: I didn’t totally understand what he meant back then, but I completely understand it today.

James: Yup.

Brandon: Yeah, just because it’s cheap or just because you think it’s a good deal doesn’t mean you should buy it. Number three, Adam from Roxbury, Connecticut said, “My tenant wants to put in a ceiling fan in the unit he’s renting. He said he would buy the fan and his brother, who is an electrician, would do all the wiring and install it for free. Should I allow him to do that? Or any advice on how I should go about this?”

James: Personally, I wouldn’t mind if a tenant improved mine, but I also want to make sure, it’s my building, that they get a permit and it’s inspected. You don’t want the liability of that thing possibly catching on fire because he had his brother do it. Personally, I don’t really talk to my tenants because I’m a softie, and so I’ll just usually approve it, so they go through … Usually my property management team will say no, and then if they ask me, I’ll probably say yes, but get a permit.

David: You sound eerily like my best friend in real estate.

Brandon: Are you talking about me?

David: Yeah.

Brandon: Yeah, I can’t … Tenants can’t ask me things, because I will always say yes, because I’m a softie, as well. So I created systems of people who say no for me, so I don’t have to.

David: It’s insulation. That’s exactly what you need.

James: Yeah, I’ve lost lots of rent because I let people slide, because their mom or whatever it is, and it hurts.

Brandon: Me too.

David: All right, next question. From Mike Nelson in Miami, “Does anyone have any tips to get hard money lenders to fund your deals? A little about me, I have a background in construction and I’ve done one flip, which was a big success. I also know a couple of good listing agents. Je vous remercie."

James: For me, getting my first capital was really just A … So I got my first loan through a local lender. They just wanted 20% down, and so for me, it was really finding the 20% down was the harder part, and so I just had to make sure every property that I presented that person with had a really detailed out plan, not just construction, but I covered all different angles, like, “Hey, if I’m going to flip this property, here’s my backup plan in case this doesn’t flip. I’m fully pre-qualified, I can get a loan for this amount.” I always wanted to give them a really good exit strategy on it.

James: If you’re doing a flip, one other thing you can do that’s worked well for me, especially in the beginning, was bringing in an equity lender at that point. That’s where I will bring in an equity lender, just to build my track record, because I really wanted to have 10 to 20 deals under my plate so we could kind of get it ramped up, but I didn’t have the 20% down for all these deals, and so it was I would give him way more equity in the first couple because then they saw it was a little bit less risky and then they wanted to be involved again, and I actually gave him less equity as time went on. So it went from going 50% to 25% to then just borrowing money at that point.

James: And then as a first-time flipper, the most important thing I can tell you is don’t spend your profits. Save your profit. It’s really easy to get your first check and just blow it. Save it, because then you don’t have to bring in those equity partners. It saves you so much money down the road.

Brandon: That’s terrific advice. Really, really good. Yeah, I know a lot of people when they flip a house … My very first flip I ever did, I took the money and I paid for my wedding, which wasn’t a bad use of the money, but I didn’t have anything after that. I was like, “Well, that went … Now that’s gone, and now I’m broke,” and so like-

James: Did you feel like a princess for the day, though?

Brandon: I did. I felt like a princess for the day.

James: That’s all that matters.

Brandon: It was all worth it. It was all worth it. All right, that was great. Great answers of the Fire Round, and now, let’s get to the last segment of the show. It’s time for our Famous Four.

David: Famous Four.

Brandon: All right, these are the same four questions we ask every guest every week here on the podcast. But before we ask James those questions, let’s hear what’s going on this week over on the BiggerPockets business podcast. But before we get there, let’s hear what’s going on this week over on the BiggerPockets Money Podcast. Dave (inaudible 01:08:00)you can pick the ones you want.

Brandon: All right, here we go. All right, let’s get to the Famous Four. Number one, James, do you have a favorite real estate-related book?

James: You know what, my favorite book that anyone’s ever given me, and it’s not that real estate … It’s How Not to be a D*ck.

Brandon: That’s a book?

James: That’s a book. I’ve got it in my drawer right here.

Brandon: That’s funny.

James: My employee gave it to me, because she said it was (crosstalk 01:08:27)-

David: Brandon’s going to send me that now.

James: It’s a good book.

Brandon: Yeah, I’m going to send everyone that. Ouais.

James: You know, I started with Rich Dad, Poor Dad way back in the day. It was just … It was the first book that someone gave me when I was 21, and most of the reading I do is actually more economics now and conditions than actual like strategy, because my strategy is based on market conditions than anything else.

David: It sounds like that book might be the 2019 version of How to Win Friends and Influence People.

James: Do you have that one? We can trade. I’ll trade it out.

David: (crosstalk 01:09:02)books with-

Brandon: (crosstalk 01:09:02)name.

David: Yeah, there’s more and more new books with the really, titles that are just-

Brandon: Yeah, there’s like a dozen books with the F word in the bookstores right now.

David: Yeah, the Subtle Art of Not Giving a F.

Brandon: Yeah, that was the first one, I think, and now there’s like a dozen of them. I see it every time I go to any bookstore. Ouais.

David: I thought they were joke books, but they’re actually real published actual edited legit books that sell a lot of copies.

Brandon: The Subtle Art was actually a fantastic book.

David: See? I never would’ve thought so. I would’ve thought it’s like a bachelor gift or something.

Brandon: That’s funny.

James: What is it? The Subtle Art?

Brandon: Yeah, it’s called The Subtle Art of Not Giving an F, and then they block out the F word.

James: I like it.

David: It’ll make a great complement to the book you just mentioned, James. We need to get it.

James: We can start a book club.

David: All right, I’m still having trouble concentrating because I’m picturing Brandon in a wedding dress at his wedding, all six foot five of him, bearded up, looking perfect and-

Brandon: I only had a goatee at the time, so it’s okay. It was goatee Brandon, not beardy Brandon.

David: Poor Heather. That woman is an angel.

Brandon: She is.

David: All right, next question. What is your favorite business book?

James: Ooh. My favorite business book. I should’ve …

Brandon: You could put Rich Dad, Poor Dad if you want.

James: My favorite business book that I read, and I still, it was actually called The Sales Bible. As a young salesperson, I really wanted to learn on how to handle objections because I was trying to negotiate a good … It all starts with a good deal. Droite? So that helped me organize all my, how I did sales, my followup methods, because following up is the biggest part of sales, and it taught you how to do objections, followup method, and it just, I remember, I read that book like five times in my first year because I was getting nowhere, and it just kept kind of helping me through.

David: That’s a nugget, because followup is where it’s at. People, they don’t realize that. They send one round of direct mail letters and they don’t get a reply and they’re like, “That didn’t work.” I had a new agent on my team that went door knocking the other day and she’s like, “I’ve been door knocking twice in a row and I haven’t found one person to sell their house.” It’s like, what are the odds that the moment you knock on their door, they’re going to have been, “Oh, actually, I do want to sell”? You have to keep doing it. That’s the whole point is, you get a relationship, you build, and then eventually, that starts to feed you. But I see so many people that start off on that journey of lead generation, looking for leads, and then they only hit somebody once. It’s like, you’re looking for a tree that will fall down with one swing of the ax. That’s what you’re looking for. You have to keep chopping at it and eventually, it will go down. So that’s (inaudible 01:11:28).

James: I used to knock 30 doors a day, five days a week. That was my minimum.

Brandon: Wow.

David: But how many … I bet a lot of those deals did not come from the one door. They were consistently talking to the same people and letting them know you were there and saying, “Hey, I want to buy your house.” Right?

James: Yeah, and then just … Yeah, you mark the hot leads, you’d be like, “Oh, this one’s beat up, this one’s neglected,” and then those ones, I would go back to weekly.

David: You make it a funnel.

James: Yeah, and you bring them gifts. You can bring them all sort … Whatever thing they liked, I was going to bring them. Whether it was a beer or cigarettes or food or whatever it was, I would drop by and bring it to them.

David: I think we need to have you write a book, man. This is some really, really good stuff.

Brandon: This is awesome.

David: Yeah, How to Buy Real Estate Without Being a Beep. All right, next question. What are some of your hobbies?

James: I’m a big … So I like boating a lot. I can spend a lot of time out on the water. My kids are top priority for me, so anything kid related on the weekends. I love hanging out with my kids. And then I’m just kind of a fitness person in general. I’m a firm believer if my body feels good, my mind works better. So anything active, like if it’s wakeboarding or working out. Like I said, I’m relocating to California a little bit just to be out in the sun while I’m surfing. Just anything active.

Brandon: That’s awesome.

James: And Seahawks football. I’m a huge Seahawk football fan.

Brandon: So are you going to change when you move down to California?

James: Oh, absolutely not. No, I’m flying back for every game.

Brandon: Are you really?

James: Oh yeah. I usually go to about four or five away games, too. I love … I don’t do much, but football is my thing. Football and real estate.

Brandon: There you go. That’s cool. I went to the Seahawks-Vikings game that was outside in Minnesota, what was that, three or four years ago?

James: Oh, you went to that?

Brandon: When it was like 30 below. Yeah, I flew into Minnesota. I mean, I don’t even go to games ever. That was my first Seahawks game ever. But Minnesota was my team growing up, and it was a big game, right? So I flew in and it was the coldest (crosstalk 01:13:16)of my life.

David: Is there anything in the world that’s fun at 30 degrees below zero or whatever-

Brandon: No.

David: It doesn’t matter what you’re doing. At that temperature, it isn’t fun.

Brandon: Yeah. It was-

James: You still had a better day than Blair Walsh, though.

Brandon: Yeah, that is true.

James: That guy … that poor guy.

Brandon: Poor guy. That was a rough day for him. All right, number four. What do you believe sets apart successful real estate investors from all those who give up, fail, or never get started?

James: I think the biggest thing you can have as an investor is having integrity and doing what you say you’re going to do. That has gotten me so much deal flow over the years, like building that representation and then telling … If I’m going to do something, I tell it to them and I’m going to stick to that, no matter what. That reputation alone gets me so many people coming to me to bring me stuff because they know if I tell it to them, and I always give them logic with my answer, give them logic, and then I just … and I’ve boughten properties that I told yes on that I ended up not really wanting to buy, and I did it just to keep the relationship going. But yeah, those … A lot of times, people go for these specialty, like, “Oh as a real estate investor, get a niche, do these things,” but core values will always make you stand apart.

Brandon: Makes sense. J'aime ça.

David: I agree. I’ve done the very same thing, and it always comes back. And I think Josh Dorkin was actually a big proponent of that, as well, just you have to be a person of your word, and if you’re not, you’re not going to be in business long. That’s definitely been the case.

David: All right, well James, I have thoroughly enjoyed this. I had no idea that you were this smart, because you, like I said-

James: Not that smart.

David: … you’re a very humble guy. You don’t come across like a know-it-all, but the more you talked, I’m like, “Oh my gosh, this dude’s got it together. We’ve got a really good guest here.” For people that want to find out more about you and learn to be you, where can they find out more about you?

James: Well, my social media is … So actually, I will do daily, or not daily, but weekly videos of me visiting sites, looking at things. My Instagram handle is jdain, J-D-A-I-N flips F-L-I-P-S, or our company website is www.heatondainard.com, H-E-A-T-O-N-D-A-I-N-A-R-D dot com, and that kind of … and we do a bunch of different, just investor tool helping things there, so it’s all free. Our goal is just to always give back to the investment community and it pays back.

Brandon: That’s great. J'aime cela. Love it. Super cool, and of course, we’ll have links to all that at the show notes, biggerpockets.com/show338. They can check out it there, I’ll have links to all those good things, including your social media and all that. So definitely follow James, check him out, check out his website, and with that, I guess we’ll get out of here. David Greene, you want to take us out?

David: This has been fantastic. He is jdainflips, Brandon is beardybrandon, I am davidgreene24. Follow us on Instagram to keep up with our journeys. Thank you very much, James. This has been an awesome episode, and this is David Greene for Brandon the beautiful bride Turner signing off.

James: Thanks guys.

Brandon: Perfect. That was great, dude. I’m going to stop my recording. Yeah, really phenomenal show.

David: Oh man. I didn’t word that very well, saying I didn’t know you were this smart and made it sound like you look stupid. That’s not how I meant that to sound at all. Brandon was laughing when I said it, and I was like, “Oh, I stepped in it right there.”

James: I prefer to look unintelligent anyway. Then you can sneak up on people.

Male: There you go.

David: Yeah, that’s my motto. That’s exactly why I look this way. Nobody sees it. Nobody sees it coming. But yeah, honestly dude, the more you talked, I’m like, “We could do like 10 series episode just from you.” You’re the perfect poster child for what investors should be learning.

James: Well, if you guys ever need anything, and just so you guys know, I have a bunch of free webinar stuff, if you guys … It actually coaches … About nine months ago, so many investors were having issues with construction. I did a four-part series on how to negotiate contractors, how to come up with … It’s very … Basically, it’s my process, I just put it out there, so that’s kind of what we’ve been doing is these free, like, “Okay, here’s my process. Here it is,” because it’s-

Brandon: That’s cool.

James: I’m not like a guru course guy, we’re not trying to sell that stuff. It’s just not my thing. But I like giving out free education.

Brandon: If you had any interest, I don’t know how … I’m not really in this department, so to speak, at BiggerPockets, but stuff like that is gold for the BiggerPockets YouTube channel, which gets tons of views. So if you wanted to, at some point, we can connect you with Zach and see if you want to do another one, or just take the one that you have and we’ll just edit it together and put it on the BP site. That’s not a bad idea.

James: Yeah, I would … I mean, whatever synergy there is, I’m always for it, so yeah.

Brandon: Cool.

David: And what’s your email, James?

James: It’s James, J-A-M-E-S at Heaton, H-E-A-T-O-N Dainard, D-A-I-N-A-R-D dot com.

David: Thank you.

Brandon: I feel like you need a url redirect so you don’t have to spell that every time you give people the url.

David: Yeah, it’s-

Brandon: Just go to James.com and it’ll send you to the website.

James: Yeah, that’s a good idea.

Brandon: That’d be expensive to buy that, James.com, but you know … Anyway, no, dude, this was amazing, so thank you. Yeah, and have you … You said learning to surf. Have you surfed before? Are you a surfer?

James: I … You know, I’ve surfed a couple times. My first time ever, I got up on a longboard, rode it all the way in and thought I was like brilliant, and I couldn’t do it after that. It was in Hawaii.

Brandon: Yeah, that’s exactly how it happens usually. Yeah, the first time you’ll get it. I actually, I help a lot of people learn kind of like the beginning surfing out here, and everyone does that. The first wave, they’ll ride it right in, and then after that, they can’t do it anymore. Je ne sais pas. It’s weird.

David: It’s that focus you get when you’re brand new. That’s exactly … like the first time I went snowboarding, I made it all the way down because I was so insanely, intensely focused. But I just couldn’t maintain that for the whole trip. That’s why … I honestly think that’s what beginner’s luck is. You’re so zoned in on what you’re doing that you make it through, and then after that, you don’t focus that hard and that’s when it has to become muscle memory.

James: Yeah, are we going to go in July?

Brandon: Yeah. Yup, we’re going, if you want to come.

James: I’m in. I’m going to do longboard. I’m going to longboard-

Brandon: Good. Yeah, I’ve got four of them, four longboards, so yeah. It’s going to be an amazing time. Yeah, it’s going to be cool.

James: Yeah, I’m (crosstalk 01:19:16).

Brandon: Well cool. Je suis surexcité. All right, dude, well, we’ll let you go, but thank you.

James: Yeah, thank you guys.

Brandon: Yup, see you later.

James: All right, bye.