How To Find The BEST Multi-Family Real Estate Deals (FULL Masterclass)

0:00 welcome guys this is my finding deals master class we're going to go into a lot of other things to give you a great framework really for the business in general with that is going to be incredible opportunity everything is going on sale there going to be a lot of stuff coming back which is why there's opportunity incredible opportunity so you are in the right freaking place let me tell you now we're going to focus on finding deals for these next three hours okay because I've got a bunch of ninja tricks I want to share with you but we've got a lot of stuff to cover but I want to give you a little framework first so why do multif family right why do multif family well here's why okay let me turn my my little thing on here so I can have fun with this so cash flow hello that's the reason my podcast is called lifetime cash flow all right of course the tax benefits are freaking incredible I don't pay taxes I haven't

0:46 paid taxes in a decade because I own real estate and that's all you know that's all I do of course appreciation now the beautiful thing about multifamily is you can force that appreciation it's called value ad because any increase to the net income is it's called the noi the net operating income is an exponential increase to the value okay so you know I'll give you an example we have a 296 unit asset in San Antonio we numbered the parking spaces okay we allowed the tenants to have their own parking spot Reserve spot 25 bucks a month for the privilege we had a hundred of them take it just right at about 100 actually it was kind of funny that was an $800,000 increase in value guys okay that's why we love this freaking business because you can force that appreciation to by by your efforts and increase to that bottom line exponential

1:31 increase to Value it's about 17 to $20 to $1 increase in net income it's incredible um of course the the thing you never think about is the principal reduction five years from now your loan's going to be lower and the Beautiful Thing is acquisition fees you know people charge typically between 3% and 5% acquisition fees and I can tell you on the last deal that I did it was a million dollars okay so the partners in that the the general Partners got to split a million dollars and and it's expected the investors expect it because when you do a syndication I want to go too far down the down the rails here the general Partners will split up the general partnership and you know they'll typically pay a preferred rate of return to the investors so the return the investors get a certain amount of money off the top then then anything over above that is split well the as you're

2:19 doing your value ad there's not going to be a lot of cash flow the first year or two so that acquisition fee you need it okay but it's incredible it's it's real money significant money you can you also will likely char an asset management fee now we by the way on acquisition we almost always do 3% and on the asset management fee we typically do 2% of the gross collected rents so you got money coming in from that as well now if you decide to manage yourself and you've got Partners you could do Property Management fees so a lot of ways to make money in this business guys it's very very exciting okay all right so let's talk oh that didn't lay out well did it okay that says selecting your initial markets to evaluate okay so what I want to do is is you know the beautiful thing about this business is you can buy Assets in any Market you you know across

3:05 the country now I'm going to suggest you don't go all the way across the country but I've got Assets in seven states you know a lot in Texas Florida North Carolina South Carolina Georgia Ohio Indianapolis and you know on and on so but you're able that's the beautiful thing about this business is you can literally own assets and away from you but I'm going to suggest when you're picking a market to to stick with these four things to consider first the first place would be your backyard obviously now I'm calling your backyard anywhere that you can drive to in two hours I live in Sarasota Florida for me that would be Orlando Tampa Fort Meers so anywhere two-hour drive because you can manage it with day travel okay the second place would be a place you know well maybe you grew up for me that's Denver hell I can still name every street across Denver because I own houses AC on most of them if you went to school somewhere grew up somewhere that

3:52 would be option number two because you know it right third option would be a place you got boots on the ground maybe it's friends or family that live there so they know what's going on they got their ear to the ground they know what's happening there so that's the third option and the fourth place would be a place you really enjoy going might even want to retire so I would suggest that those are your first four options um now if if none of those make sense only thing I'm going to tell you is what I said earlier is don't go all the way uh you know if you live in New York don't go to freaking California although I wouldn't invest in NE of those two states anyway Listen by the way not a political statement don't invest in blue States it's it's it's I I suggest you don't I mean unless you really are hellbent on doing it it the regulations are ridiculous the taxes are ridiculous they're just not business friendly their

4:38 their budget deficits are huge they're like 30 billion I believe in New York and California budget deficits for one year and how are they going to make those up they're going to raise taxes more so again I stick with red States not it's not a political statement although I lean that way in a big way politically but that's not why I'm saying it it's just a cost of doing business okay so but again don't go all the way AC what I to say in that statement before I derailed politically is is is don't go all the way across the country that's stupid okay there's enough lwh hanging fruit close to you is what I meant to get into now here's what you look for in a market these are some of the things you look for you definitely want to see that population's growing you want to see that income growing but the most important thing is that there's jobs growth there aren't employers moving out there are employers moving in now when I when I um at at my

5:25 boot camp we we we give you a sample deal package and the reason I bring this up is there are a couple other things in there we give you a sample deal package for when you approach investors you can say you know print it and just say hey this is what we look for if we find a deal like this would you be interested and so that's one of the things you get there but the reason I bring that up is in that it's a presentation of a deal in that we point out a couple other things that are super important in a Marketplace one is you want to see employment industry diversity okay you want to see multiple types of employment super important um and um and and you also want to see as far as as far as income you want to make sure these submarket that you're buying in there's a big disparity between the income and the amount of rent you're charging because we want to make sure they make

6:11 three times the rent in income so that's super important as well and then the other thing that's that's not I don't have a slide for here is you look at the median home price and I'm going to give you some websites I think see if they're coming up here okay let me let me tell you a couple other things here but I'm going to give you some websites where you can check all this stuff out um also no one horse towns no one employers I was going to buy I was looking at apartments where my wife's come from which is Belleville Illinois and um and there's a big military base there and so I didn't do it because that's a one horse town okay because that if that horse dies or gets sick or leaves town you're screwed if you've got assets there big deal you want multiple employers okay well that's there it is right there I guess I did have it on a slide now let me talk about the median home price okay if you want to make sure

6:58 that there is a sign significant difference between this median home price and the price per per unit that you're paying okay very important and then that's the reason I brought up that sample deal package because we point that out because it's so important that there's a disparity between income and rents and median home price and price per unit why because if it's close they're going to buy a place instead of rent okay super important you want to see vacant housing less than 20% not a lot of places that you're going to find that it's more than 20% maybe Detroit places like that but it is very important regardless okay okay here's the city infrastructure I look for I want to see a city that has at least 100,000 people ideally now that's not hard and fast I'd probably go 70 or 880,000 but also want to make sure it's got an airport with one major carrier

7:44 like Sarasota here we've got Delta and American here uh actually we got several here now but I I want to know that it has a highway to it or runs through it and I want to know that there's a nice shopping area it can be a mall or it can be just an area of shops those are like must havs okay but those are things you want to look for now if you've got a town that's got 200 people in it you're going to have a hard time you know first of all getting debt number one but number two telling me that it's it makes sense because of the lack of jobs okay all right now there's here's the the websites I wanted to give you so make note of these census.gov is one city actually it should be a hyphen here forgive me that's a typo should be cityy dat.com so there's a hyphen in here that I missed if you'd make note of that so I fixed that thank you uh bestplaces.net is another one data USA .io okay these

8:30 are websites to check demographics I'm going to tell you have fun with this don't get don't get intimidated by checking out the demographics just have fun with it go play with it put in where you live now put in where you're thinking and see what all you know what the what the makeup is the uh of the of the the demographic that lives there and just start playing with it that's and that's the operative word play with it okay okay so now let's talk about finding deals okay I know you're like oh come come on let's get on with the finding deals okay all right so here's a big big distinction the most successful people in my warrior program which is my coaching program I'll brag about that for a second so I've got a coaching program they called my Warriors I've been teaching about five years they now own we're pretty sure around 17,000 units in five years I'm freaking

9:17 proud of that and really proud of that and um and we're we're counting and we're about 160 now and I'm I'm certain there's another 10,000 so it just pretty extraordinary but a lot of my super successful Warriors put on their problem solver hat and if when you do that success is inevitable okay so all right so here's it starts now this business by the way my most successful Warriors are the ones that are most connected in the Warrior Community because this is freaking critical this business is more about I'm going to tell you this business is more about who you know than what you know I know that sounds crazy but it's the truth uh you know you've got to learn this business but you if if you know it's it's really relationship and if you're an introvert you're just going to have to have 5 Seconds of Courage I used to be an introvert you

10:04 know when I had that limiting belief that I wasn't good enough and I just forced myself to have five seconds of courage and walk up to somebody and say hey I'm Rod I don't think we've met and then I had a I used to have a list of questions in my back pocket that I would ask them so I could control the conversation I took a genuine interest in there in them you can get this in uh the book How to Win Friends and Influence People Dale car is it Dale yeah Dale Carnegie's book um but but that's how I got past that so if that's you I get it and I know there's a little bit of fear there if you come to my boot camp you will meet a should be about a thousand people there and I force the interaction so just know if you come you're going to end up having to stand up and meet some people and it's okay because that really is the secret to success in this business which is why I push it we have a lot of fun with it in fact I at the boot camp I we put a map

10:49 up on the on the monitors and we have people with signs that say Hey this is California this is North I'm I'm typically Canada and and then Florida and we have every people go to where they live and then they meet people near them so you know I really I this is very very important um but it it it really is a relationship driven business okay and it's and it's impossible to do it alone I'm just going to tell you I I don't you don't buy you know 20 10 20 30 $40 million apartment complexes on your own you just don't it's a team sport okay and that's the beautiful thing about it because there's a lot of hats you can wear uh on the on the team you know you can be the one that finds the deals like you're learning today you could be the one that uh that underwrites them maybe you're super analytical and you need to underwrite you know and you love spreadsheets um or you could be maybe

11:35 you're process driven or have some construction experience or project management experience you could do the asset management so there's a lot of different hats you can wear here and make sure by the way guys make sure you stay hydrated okay if you get tired you're probably dehydrated just FYI okay all right um so who do you need relationships with well obviously if you're going to go Direct to seller which I'm going to teach you how to do today I'm going to teach you how to go directly to seller for deals you're going to have to have relationships with them right um if you're going to raise money which I highly recommend you do okay you're going to have relationships with investors with what's happening economically I would highly encourage you to get relationships with Bankers local and Regional Bankers because there's going to be deals I'm telling

12:21 you guys there is the commercial real estate right now is like this train headed towards a brick wall okay there's there's all this commercial debt coming due a lot of people use Bridge debt which is adjustable rate loans short-term very honorous debt um and and they're in trouble okay and and we're going to see a lot of foreclosures they've already kicked up um a lot of of office is is a train wreck in fact I'll share something with you real quick I got a I got a manage timer I'm we're going to be here for five hours but let me just this is this month's Forbes okay let me just share something with you if I can find it real quick well I I remember it there were the six major cities um that have office debt um their average occupancy this was mindblowing is 70% okay now what you

13:07 need to understand with the multif family and and any commercial real estate asset I should have had it ready here I wasn't even going to talk about this but but any commercial real estate asset if it's not at 85 90% it's not breaking even okay and and already a lot of this stuff has gone here we go yeah New York is at uh at New York is at 80% but but if you average these it's about 70% Chicago 70% La 70% um San Francisco 67% um Houston Under 70% so so you get the idea and there have already been some big big foreclosures where where distressed assets like billions have gone back to Banks so here's my point in all of this Bankers are going to be taking properties back and there will be bank failures I'm telling you there are

13:52 going to be a lot of bank failures it's inevitable because a third of all commercial real estate is held by um by Banks and so if you've got over 250,000 at a bank I would highly encourage you um DM me and I can give you a bank where you can spread your money they spread it to multiple Banks and they they don't put more than 250,000 in each bank and it's high interest rate too like four or five% if you DM me on social I'll give you the connection to the bank that I deal with be careful because there are going to be some bank failures absolutely no question but the other reason you want to connect with Bankers Bankers are going to be taking back properties and I will tell you I interviewed people that bought in9 101 they got Bank financing from the bank that owned the property okay so those connections are super important I'd highly recommend you build those you're going to want to build relationships with Brokers Brokers can make you

14:39 wealthy and they're much easier to build relationships now I've gotten more contact from brokers in the last three months that I've gotten in the last three years because there stuff's not selling there's a 75% year-over-year decline stuff's not selling and that's why I'm saying these people there's 1.6 trillion in debt coming due by the end of next year but they either have to sell and that's not happening very much or they have to refinance which is very very difficult there's going to be a lot of stuff coming back which is why there's opportunity incredible opportunity so you are in a right freaking place let me tell you okay and then service providers insurance agents and Property Management all these things you need to build connection with now I go a lot deeper than this at my boot camp I just can't do it here because this is about finding deals but I wanted to give you some framework so like I said utilizing Brokers one broker can make you freaking wealthy okay if they

15:24 like you and they send you deals you're you're can make a lot of money period and you you only want to deal with multif family Brokers and here's the thing in this business it's all about referrals you know you want to ask a broker who's the best property management company for this type of asset you know who's the you know uh who's a good lender that you know and if you guys if you if you're buying an asset that's over say two three million and you want a fantastic lender let me know I'll give you the one my Warriors use uh just DM me on that but but you want a good lender but you here's the thing it's referral driven so you ask a broker who's a good property manager when you when you interview property management companies ask them who are good Brokers or who are good other types of people you want to align with okay it's all referrals okay so how do you find Brokers well I would encourage you to

16:12 find Brokers that have several properties of the size and asset class that you're interested in okay now when I say asset class I don't know if I have a slide on this or not I'm going to pretend I don't but there's a b c and d a is brand new D is the hood stay out of the hood ask me how I know okay I I give t-shirts away at my boot camp that say hash ask me how I know because a a student gave me one once I'm like this is funny and so we started printing them and giv them away because I made every freaking mistake you can possibly make so I'm like don't do that ask me how I know right so anyway but so so you're going to find you loopnet is a great place to find Brokers okay uh it's the largest multi uh really the largest Commercial Real Estate websites owned by co-star and so you can go in there you can go in there for free and you can see

16:57 who's got stuff listed that you might be interested in but again you got to pick your asset class I would tell you right now don't do D ask me how I know I've I've had people killed in my properties I mean until we got them turned around to crack sales I mean just you don't want to deal with it um and so I would encourage you to focus on a or b properties if you can afford them and make them work and if you can raise enough money for them even C especially C minus properties are something I would be a little bit afraid of right now why because that demographic is getting killed I went to the grocery store I don't really I I'm blessed I don't really have to pay attention to what I pay for stuff anymore but I happen to notice that was 150 bucks for a bag of freaking are you kidding me I told I told the the clerk there this is like last week I'm like how do people afford

17:44 this she goes I don't know you know gas of course but of course the people that are renting the C minus class stuff they're they're really struggling so just be careful of that because at some point that's going to impact rents okay in fact let me show you another headline here more than 20 million us households are behind on their utility bills this is a headline I printed okay you know I I mean guys the soup is gonna hit the fan don't get scared get excited you're in the right place okay all right I've got a script here I'm not going to read this to you but the basically I'm calling in regards to one of your listings I would love to get some more information about it why is it for sale you know this sounds like you know something I might be interested in here's my email I love you if you send me the link you know if you get properties like this more often um please let me know this is the criteria

18:30 we look for and again I I can't go into great detail about this but you you you're going to play with this and just start now here's the thing I'll tell you if you're brand new and you don't know the verbiage yet the nomenclature I'd encourage you to call Brokers where you're not interested in practice first okay because they can tell a newbie a mile off um and again I can't spend too much time on that right now but here's the thing that I will tell you about Brokers okay and that is most people never follow up a broker will send them a listing and they'll they'll never do anything with it right and so you don't be that person don't let you don't be a black hole if they send you a deal make sure you respond you tell them why it didn't work with as much specifity as possible okay and and I again I I'll if you if you come to one of my events I teach you how to do that to to sound

19:16 more credible when you're talking to a broker and I I just can't do it here there's not enough time but uh you also want to refresh their memory when you call them back as to what you're looking for when you tell them why it didn't work you know listen we're looking for you know uh we need a return of at least 8% cash on cash and this thing comes in at five or four um you know and I mean if we paid X we could get that return I don't know if that's you know even worth mentioning but let me mention that to you Mr broker but but um but let me remind you this is what we want you know what we're looking for here's our investment criteria okay this are the size property I'm looking for asset class area all that that's investment criteria okay and also respect respect their time um you know Brokers are very very busy don't don't take up their time but you got to stay in front of them too

20:01 you either email them or call them every six to eight weeks say hey you got anything new what's going on build a relationship these are lifelong relationships You're Building guys okay and and let me say this to you this business is not a get-rich quick business okay anybody tells you you can get rich quick in this business you can make a lot of freaking money right out of the gate yes but but but I'm going to say with acquisition fees and so on and so forth but this is a become super freaking wealthy overtime business okay so just remember that so you're building relationships for life okay so you put your decades okay so that's the approach you take you're not trying to get the best deal and screw somebody out of the gate uh just to get a little better deal and save a couple of bucks because this is a lifelong thing you're doing by the way it's a very small world believe it or not even though there's two plus

20:47 million multif Family Properties in this country it's it's a pretty small world okay so if you get a bad reputation everybody knows about it pretty fast um so yeah every few weeks you call them um you know you maintain the relationship if there's any way you can set yourself apart you know um and and that looks a lot of different ways some people wear funny hats some people wear funny jackets I got students that both do do those things I've got a student that that um uh has connected with somebody that has sells sports memorabilia so he'll send ass signed baseball or football or basketball to a broker take him to a game whatever anything you can do to set yourself apart matters okay so that's that's super important because the goal is to get off Market deals right the goal goal is to get deals that very few people know about where you're only bidding against a couple of people

21:33 ideally okay so you're going to ask them to get on their list and have them send you deals um but again the goal is to is to um is to get off Market deals now I'm going to tell you something else here um Mo almost anybody that get started in this business aligns with someone that's successful first okay they find somebody that's got a few hundred doors or a thousand doors and they say hey if I find a deal can I work with you and bring it to you or if I can raise money can I get involved in a deal everybody does that it's why my Warriors are so successful there's dozens and dozens of what we call sponsors in there people that have done big deals and so you know it's just an incredible environment but you know if you don't want to check that out that's fine but but you you need to get into an environment where there are a lot of people doing this so you not only can talk shop and and have people

22:19 that support you and aren't afraid of your goals and dreams a peer your peer group is super important so find that because it's critical in this business um and and every every body starts that way they find what's called a sponsor to help them take a deal down and then they're able to use when you're talking to a broker you can use the Wei word you know we own uh 300 doors 500 doors a thousand doors in your market and so you you know instant credibility when you align with somebody's already done some deals everybody does it this way guys okay so just keep that in mind and by the way there will be a thousand of these people at my boot camp okay so just keep that in mind um so let me mention something to you I think is kind of important and I I I like to talk about this I'm going to talk about college basically so I invite you to

23:06 consider you know we go to school we take tests and we study all the time right and we take very little action why is that I'll tell you why because the people that teach us business in school don't actually have any results in business right and that's not what entrepreneurship is and that's why most professors who teach business haven't actually ever conducted business and that's part of the problem in my opinion with our education system I won't go too far down this Rabbit Hole don't get me started it's crazy our education system so the first part of the progression really is the system so what's the system a system is go to college get a job and then retire when you're 65 right and there listen there's nothing wrong with college and I support people that want to go to college for technical things right but there's that statistic that 74% of the people that finish

23:51 college don't ever use their degree and then from there I think there's another crazy statistic it's like 65% of Americans have less less than $5,000 in their bank accounts you know and have an average of $20,000 in debt right college is not producing the results we want in the world right and I respect people who are doctors and dentists and Engineers uh you know those are technical things or an accountant or if you really love your job and college provided you with that then great I support you and I support college and and you should too if you're kids in your future is going to be in technical roles right so again we know that college didn't prepare us for business because most people that teach business in college have never really built a business you guys hear what I'm saying and so I've learned more from coaches and mentors in my life than

24:37 any college now with college they charge you what 250 300 Grand and then you're in for like 300,000 or 200,000 in debt for 30 years at 6% it's the worst debt in the world because you can't bankrupt it that system is broken okay and that's the old way of thinking as well guys okay the new way of thinking is investing in yourself with mentors or workshops and boot camps like I mentioned earlier that's and see there's the old way of thinking there's nothing wrong with it it just doesn't work for what you want to achieve you wouldn't be here and now you're here at this Workshop like I say because the old way isn't getting you where you want to be and we all agree on that you know okay so do you see how there's nothing wrong with the old way you can still live a very happy and fulfilling life and that said you're you're here because you want more yeah so how do you achieve more

25:23 well what you have to understand is the difference between institutional education and education that's in the information AAL space or in the coaching space we're just not brought up to learn from boot camps or workshops because it's not part of the system so it's not your fault it's just something you're not used to doing and we know you didn't grow up in a system where you've seen the benefits okay so um let me mention something else to you while I'm talking about this because you're going to be speaking with Brokers especially when you're new I want to take a moment and I want to talk about acting as if okay so what do I mean by acting as if it basically means you fake it until you make it and and and like I mentioned to you nobody in the starts out an expert or world class or successful in multif

26:10 family or anything for that matter it takes hard work it takes study it takes discipline and very often it requires you to act as if you're already successful right you fake it till you make it now I do a version of this every morning myself I I visualize the things that I want as if I already have them with gratitude and I teach my coach students to do the same thing because it's so freaking powerful and I also tell them to set up their own meetup groups for example you know or create a YouTube channel or start a Facebook group or even a podcast like I did adding value to people even when they're not yet an expert in the business you know telling them to bring in experts to interview or you know researching what they need to know to be able to add value to others and I've got scores of students that have done just that I mean we have the biggest multif family Meetup Group uh uh multiple locations in the

26:58 really in the world you know but just to talk award-winning podcast in my students and just to talk shop about this exciting business you know or set up their own like I say uh YouTube channels Facebook groups and by virtue of the fact if they're doing the interviewing for example are just heading up whatever vehicle they've chosen you know they're proceeded in a position of authority in other words they're acting as if right now everybody wants to be happy right that's what we all want and you know Dale Carnegie said act as if you're already happy and it's going to tend to make you that way I'm just trying to turn up my volume here I like this music there we go and and so I would add also act as if you're already successful or act as if it's impossible to fail

27:45 right or act as if everything you want you've already got or act as if you've already achieved your goals and that's how you bring all that into your life for example nobody's born incredibly confident but the most successful people you know exude confidence and I'll tell you when they first started they acted as if now if you're working a W2 job and you take ownership in that position and act as if you're an owner or a manager and you behave that way I'm going to tell you it won't be long before you're noticed and your position increases now you often see this acting as if Dynamic with people's titles or when they write a book they Proclaim themselves the world's greatest you know or as an authority on a particular topic which is just another way of acting as if so like the good book says as you say it so shall it be so you can start declaring

28:31 yourself an Incredible multif family investor an amazing parent or frankly whatever it is you hope to embody and this causes you to focus on what it is that you want as if you already have it this is how the wealthy people get wealthier and the poor get poor because where focus goes energy flows okay I talked to about Focus you're a leader what you focus on right now is critical you got to stand guard at the door to your mind bring in the good stuff because what you focus on gets larger and becomes your life both posit positive or negative now this business in multif family real estate like I told you is a team sport and you're going to need to influence different types of people to become a success in this business for example like I said Brokers and sellers and potential investors and very often you're going to have to ask as if you're going to have to act as if

29:17 initially I think it's also important super important for you to feel the emotion associated with whatever it is you're hoping to embody feel that success feel that competency at a visceral level and it's great it's going to greatly enhance the speed at which you're truly living that way when people ask me how I'm doing I usually say I'm freaking fantastic or unbelievable because again as you say it so shall it be right so ask yourself my friends am I acting the way I need to act in the important areas in my life right my business in my relationships my health am I acting as if if you start walking that walk and talk in that talk I promise you at some point you're no longer going to be acting so we have a lot more to cover today um but I want to take two minutes and just if you'll humor me and mention my boot camp okay

30:04 and just give you a little more detail on it okay so go ahead and throw the slide up here um so it's September 15th through the 17th in Orlando again you can come for $197 freaking dollars if you use the code finding deals and it's not a big sales pitch I talk about my coaching for like 30 minutes the rest of the three days is fullon training I've got three billion in panelists coming on several panels each day you know it's 3 days um it's we dive deep on finding deals much deeper even than I'm doing today raising all the money you need for your deals um you know doing a full evaluation and underwriting and due diligence financing your deals syndicating your deals Property Management all the above and if you know me I'm G to spend some time on mindset there's a reason my students own we're pretty sure 170,000 units so it's

30:52 because they actually take action with what they learn right so it's it's there's also some awesome bonuses what they get the deal evaluator software they get the document library right I mean incredible bonuses I mean hell that alone's worth thousands so um anyway you go to rods links. rods links there's a bunch of free free resources there as well free books and use the code finding deals to come for 197 I hope you come and I let me say this to you if you come and you don't love it I don't mean like it I mean freaking love it I'll give you your money back and I I don't say that lightly so all right well let's get back to it here um thank you for allowing me to do that um all right so let's talk about the online websites where you can find

31:37 deals and get information I told you about the ones where you can get information already that's right demographical remember city hyen data best places.net data USA dat USA census.gov um but loopnet is a great place to go okay and people say that's the place where deals go to die absolutely not true but you but you want to look for what other people have missed you know could you increase income or decrease expenses now I'm going to tell you that once you decide on an area you need to really learn what's going on there you need to know what the rents are doing you need to know who the employers are we have I have my coaching students do an area presentation it's part of their training to present the area to the whole group because you're ultimately going to have to do that when you find a deal and you want to raise money so you know uh are the expenses High typical expense ratio

32:23 is 50% it's more than that you want to dig deeper you know is the management overpriced that's very common you'll get management creep where the management rates go up and up you know are the rents at current market value of course the the rents have gone crazy the last couple of years they're starting to Flatline now don't be aggressive when you project rent increases right now don't do it because you know we're heading into a storm like I said right so what's the vacancy percentage in the area if most of the properties there are 10% vacant you find an assets the 20 or 30% vacant why that's a clue right so could be poor management it could be a problem with the property but you you want to you want to explore that right so again those are things you look at you look at can you increase income by doing a value ad by improving it and and or or just bringing the rents to

33:09 Market maybe they have increased the rents because they didn't want to you know deal with people moving out when they increase rents or can you decrease expenses with LED lighting and and and water saving and so and and better management fees and put the vendor stuff out to bid again because again vendors raise their prices it's called vendor creep where they raise their prices over year after year you know so you want to look at all this stuff and become and just have fun with it again but go to loopnet and start playing with this and looking in the area that you're interested in okay um but I'll tell you don't think that you can't find deals there I remember we found a 24 unit near Tampa and this was like three or four years ago and it was at a six cap when a six cap was ridiculously low now a six Cap's fantastic but but that's coming back to being low again uh but you know there was very little information listed

33:56 on loopnet it was like you know so most people didn't even bother looking at it is the point I'm making it at that time it just didn't look very good but we dug deeper we found out the sellers were in their 90s the rents were 150 below Market expenses were high they were being screwed by maintenance and Landscaping and management and everything else it was a huge opportunity that got missed by literally thousands of people because they didn't dig deeper remember I told you when you're willing to do what other people aren't you'll be a success there's an example of it okay uh other online websites um if you want to take a picture of this on your screen so you don't have to dig for it later there's cityfeet.com there's nii global.com cimls Marcus and millichap CBRE kushman CBC worldwide there's oh God there's

34:41 Newark uh there's gruban Ellis there's all these big brokerage houses that have websites that you should have links on or have alerts on that when deals pop up you see about them okay so these are some online websites to look for deals other than loopnet like I just showed you so again what are you looking for you're looking for low rents abnormally low rents so maybe you just bring the rents to Market you don't even have to bring them beyond what the market rent is there in the other competing properties that's that's Market what are the competing properties renting for maybe you just have to bring them up we're looking at asset right now in Tampa where that's the case right now um or you look for an abnormally high or low expense ratio again if it's if it's like over 50% you need to dig deeper maybe the seller is paying something

35:28 that um you know they shouldn't be paying maybe they're paying utilities and you can Bill back utilities that's very common okay or uh so so or they're paying too much in management fees expenses they're just not managing it well 50% expense ratio is the average now what do I mean by expense ratio you got all the income on the property um and then you have the property related expenses doesn't include debt okay so it's just the property related taxes Insurance maintenance so on and so forth that's the expenses if it's more than 50% % you look at now if it's considerably less than 50% somebody's probably BS in somebody okay even on a brand new property you're never going to see much lower than about 40% maybe 35 if it's super well-run so just remember that on the expense ratio maybe it's been marketed for a long time and the sellers like disgusted and it's stale

36:15 and they want out you know or if you see a property that has very little information get excited because everyone else gives up okay again doing what other people aren't willing to do you know and I told you about let's say the Market's vacancy percentage compared to the subject property if there's a big disparity there the market's at 5% vacant that's property's 15% vacant I would absolutely dig deeper could be incredible opportunity uh and again I talked about overpriced management so these are all the things you're looking at when you look at a property right let me know if you're still with me and you're getting value from this could you please just say yes if if you're still getting value and you haven't falling asleep while I get a drink please put yes in the chat thank you okay guys I appreciate you thank you this keeps me going thank you Jeffrey Dale Crystal

37:02 Irene John inz Chris Carlos appreciate you guys thank you okay all right now let's talk about property management companies now I'm going to give you a resource please don't go look at it right now because you're going to miss what I'm saying but if you go to rods links.com in the free books there is an incredible book that is let me give me a second and I'll pull it up here and show it to you sorry I thought I had had it right ready here and I don't there is this it I think this is it no that's not it well you know what I'm not going to sit and hunt for it but it's it's how to hire a third-party property management company and the questions you should ask don't go look at it now just write it down make yourself a note to go look at it later but I want to talk about bringing on a property management company right now by the way that book

37:48 is extraordinary it's got every question you could possibly ever ask I don't think there's a better book out there on the topic I say I don't say that lightly and it's free it's in your it's at rods links okay so this is super important now that's the beautiful thing about this business is you can hire people to run these assets for you property management companies now when you hire a property management company is your work done no okay you're going to asset manage right you got to manage that asset that's why you take in 2% asset management fee if you that's what you decide to charge but this is very important when you've got a relationship with a property management company you know who's going to know better if an owner is going to sell than the property management company now let me ask you this if they know that the owner is going to sell who do they want to buy

38:34 that asset somebody that they know right so if you've got relationships with property management companies they're going to want you to buy that thing so they can stay in management does that make sense they are an incredible source for deals um you know they know the property better than anybody they know the problem tenants they know the most common maintenance problems they know the best contractors in that area and they know when an owner wants to sell hello okay so and and they know the sit they know exactly what's going on with the property they know the detail and so you know they they're going to know if somebody wants to sell now they want to sell in six months and and so and they're going to be able to help you determine what the expenses and the income should be and so on and so forth because they're experts at it whenever we go into a market that we're not intimately familiar with we learn more

39:19 from interviewing a property management company than anybody else we do but again they will give you deals I know people that have gotten thousands of units I'm not exaggerating thousands from property management company connections okay so this is a good one very important um auctions now guys I'm going to tell you in what's coming in this economy we're going to start seeing some auctions and and there's going to be a lot of it they're already started actually uh and so it is really important that you get up to speed on auctions now I want to give you some really important caveats okay but but first of all the they're always listed significantly more sorry significantly less than what they're going to sell for why because they want to get you excited right okay so be aware of that and it's

40:04 very often below low replacement value and it's to entice you to bid okay now if you bid on a property at an auction and you're the successful bidder you've put up a deposit for that privilege okay and if you back out you lose a lot of money right so I want to give you some caveats okay first of all they are sold as is and and there are nefarious sellers that may hide defects because they know you're not going to do a significant due diligence if you let me give you an example if you get a property from a broker and you're going to you're going to typically write a contract that allows you to have a due diligence period and for a while there the last couple years we didn't have those you had to go right to to your money being non-refundable or hard they

40:50 call it uh but now it's back to normal again and you can have a due diligence period so you're able to check everything out you know scope the sewer lines check the foundation Electrical Plumbing HVAC roofs all that stuff well if you're buying a property at auction your due diligence is going to be cursory at best because you're you're you're doing the due diligence on a property you're not even sure you're going to buy right and that's why it's critical that you really know you have me or someone like me looking over your shoulder if you're going to buy an auction property super important because there's no contingencies now the other thing is you got to have all the money lined up very often these auctions are cash so you have you need to raised the money something like that but I'm going to tell you the other thing I'll tell you about auctions I don't know if there's any another slide on this um yeah there is so here's the biggest

41:35 auction houses you should get registered take a picture of this screen as well you should uh let me zoom in a little bit so they can see it please okay there we go thank you yeah let's do a little bit more of that going back and forth on these these that that are unless you can really see them well you can see them well okay thanks okay so so here's the these are the big auction houses you should get on all of them okay and get on their lists don't do it now you're going to miss stuff but get on all their lists and have them start sending you deals why because you're going to learn so much see when you get a deal from a broker typically all you're going to get is their proforma which is what they think the property will do which is toilet paper okay but if you register on an auction deal and you get an auction deal they give you everything they have because they know you have to make a decision based on what you see so you'll

42:21 get you'll see stuff that'll help you learn this business faster things like environmental reports appraisals you know uh phase one uh that's environmental reports uh you know uh other surveys things to help you learn this business okay but again don't attempt to take down an auction uh unless you've got somebody knows what they're doing looking over your shoulder okay now there's two types of auctions there's a reserve auction where the seller has a reserve and that has to be met before they have to sell and then there's the absolute auction absolute auction I it'll s for whatever the highest bid is even if it's a penny That's the Law okay um in an absolute auction the highest bidder always wins in a reserve auction of course the seller can say no I can't even pay off my debt with that with that bid or whatever okay so that's a reserve auction okay um okay now let's talk

43:09 about the most well-known and I'm GNA give you some ninja tricks here the most well-known way to go direct to seller okay we talked about going to Brokers right to find deals this is going direct to seller and um Direct Mail is the absolute best way it's the most well-known it's the most effective and it works okay it and it's the best way to get what we call Mom and Pops okay um you know and and I will tell you it works better in the under 50 unit range okay so like five by the way commercial real estate commercial multif family is five units or higher so I'm going to say five units to 50 we're not going to talk about duplexes triplexes fourplexes for purpos of this are they great sure most a lot of people start there I saw a lot of you guys own two three four five units and so um okay okay hold hold on

43:57 can you go to the screen with the largest listings okay I'm going to go back cuz I see a question here and and let you take a picture of that screen sorry guys I guess I did it a little too fast I just saw the chat okay there you go can take a picture can you zoom put it on there okay take a picture of that and then I'm going to go to the auction site oops me get that out there and I'll go to the auction one so you can take um take a picture of that there's all the big auction houses okay these are the biggest okay all right bring it back to me thanks all right I went a little fast yeah I'm sorry I had too much coffee forgive me so just throw the throw the um throw the uh questions on the chat I'll uh and let me know if I missed something if you would okay thanks all right so auctions fantastic you should

44:42 learn them because I think a lot of stuff's going up for auction okay um all right where was I okay Direct Mail here's the thing if you decide that you're definitely going to buy in a market okay you love this area maybe you live there maybe you bought another property there you're definitely going to go there I'd highly encourage you to go direct to seller with some mail now I'm going to give you some caveats okay um I told you don't go don't go uh over 50 units too much in fact it might even be a little high there it might be better 30 40 max but here's the thing you're not going to mail everybody that owns one of those I'm going to encourage you to mail people that have owned at least 20 years or if that's the list is too small go 10 years I'm going to tell you even in a

45:29 huge Metropolitan statistical area MSA where was what we call it like Tampa or Denver or Los Angeles or Phoenix even there you go 20 years it's going to be a few hundred at most it's not going to be thousands if they've owned 20 years highly encourage you to do that and I'll tell you why in a minute but um it is the best way to get Mom and Pops for sure but there are some tricks okay and I'm going to tell you some tricks if you're going to do direct mail but again I would get people that have owned a good bid um and if I you know what let me tell you why now because I don't think I get into that that's more stuff I teach at the boot camp but let me tell you why you want people um that have owned a good bit why because if they've owned for 20 plus years all their tax benefits have run out they're fully depreciated okay that's number one typically they're elderly and if they're

46:14 elderly they're not going to take that money from that investment and put it into another high-risk investment and they're going to pay Uncle Sam 6570 cents on the dollar when they sell so when you if you mail to these people and you have one of them call you can have a conversation like this Mr Mrs Smith um you know I'm going to buy your property or or make you an offer for a million dollars just just round numbers um and you want to do this just like I'm saying here you want to work it out just like I'm saying here you know now if if if I pay if I get financing and and you get cashed out you're only get to get to keep 60 650 700,000 because Uncle Sam's going to take their chunk right now if you work with me I'll give you enough down of a down payment so you know I'm serious and I'll pay you you know 5 6 7 8% interest whatever makes sense the numbers make sense and um and

47:03 you're only going to pay taxes on the amount you get from me every year so your payment for me is three times what you'll get if you put it in the bank see a lot of them will put it in the bank and you know although the rates are up now they're going to come back down and it's you can literally double or triple what they'd get in a bank and typically they like cash flow so you want to make sure you have that conversation around seller financing which is why I encourage you to go to the smaller properties and to people that have owned a good bit okay good long time okay now you want to find them when they're motivated and what's motivation maybe they passed and it's their heirs and the kids have want nothing to do with real estate they just want the cash and that's another thing if I don't talk about probate attorneys probate attorneys is another great source of leads okay maybe there's management problems they're tired there's divorce you know retirement they're out of state

47:49 owner that's like a stepchild I've still got 20 properties in Memphis I'd love to get rid of pre maybe they're in trouble there's going to be a lot of that coming up or they're in poor health but you want to get them when they're motivated so here's the thing if you do mailing it's not going to be a once andone thing you're going to do it probably every I would the most I would say every three months but again if it's just a few hundred it's not a big deal okay so that's why you want to have a honed list very important um and so you can buy your list if you want to take a picture zoom in on this please you can take U if you want to buy your list you can I'm going to tell you I I think that you can do better it's still on Me Oh I thought I meant put it on that as what I meant sorry there you go take a picture of that these are these are reputable list

48:35 Brokers okay so take a picture of that let me give you a second these are reputable okay you can put it back on my smiling face anyway these are reputable list Brokers okay and and I listen you there are lots of Nefarious list Brokers I mean it is a doggy dog wild wild Weston list Brokers highly recommend use one of these if you're you're going to buy a list now I would encourage you not to buy a list i' would encourage you to build your own it should say build not buy pretend that says build anyway build your own list you go to the county assessor's website now if you want to know where that is if you go to NE online that is you can click on your state and you can find your county assessor website at NE online don't do it now write it down NE online and it'll

49:23 give you a list of every County's website so NE on online.com is how you get the County website to build your own list it's not that hard you can do searches you can download the names and addresses and get a lot of information honestly sometimes you have to go down there sometimes you pay a couple of bucks but but it's the most accurate list you're going to get as well even the list Brokers you know they they they don't update it all the time so you're going to get the most accurate list this is what we did okay now um here's the thing now now listen to me for a second most commercial real estate assets are held in entities they're held in Partnerships or llc's mostly llc's now and if you mail to the registered agent of an LLC where do you think that's

50:08 going to end up in the freaking trash and by the way I'll come to some questions here in just a second we'll take a minute I'll sit down and I'll answer some questions because I see a bunch of them popping up here so but let me finish this Direct Mail thing first okay so so what you want to do if you're GNA mail is you want to get around goad and throw the slide up you want to get around the entity okay and so what you do is you go to the Secretary of State's website you you um um you can look up their articles of organization and you find out the names of the managing members the owners and you mail them at their home okay and and I'm going to tell you that alone is a huge step in the right direction okay for your your results in mail here's the thing in MA when you mail the um average open rates

50:57 1% okay um actually I think it's a half a percent I think it's a half a percent it's a half or 1% if you get 2% you're freaking doing back flips now if you do some of the things that I'm sharing with you here when we did it I'm not exaggerating at all embellishing at all we got a 6 to 9% response rate six to9 responses for every hundred letters that we sent not and that's real okay but I'm going to give you some ninja tricks here like I just did this is one of them go through and break down the LLC and mail them at their homes so that's one of them here the here's some more type the letter make sure that the property address is in the first paragraph make sure the owner's name and address is on the top property address first paragraph try to make it one page

51:42 no try make it one page if you can put a picture of you and your spouse or your family on there massively increases response okay so that and and then I would tell you uh do I have it on here yes um and you you could put some headlines on there I can save you thousands in taxes I just told you how you can save them thousands in taxes by doing seller financing right save them to real estate commission for sure because you're buying it directly say you want you need you could say this is a ninja trick you could say you need to purchase a property in 30 days why is that a ninja trick because many of these sellers are going to know what a 1031 exchange is a tax deferred exchange and they know that if someone has a timeline it's typically because they need to identify and close on a property within that timeline so they're going to think they have an ed Edge on you it's a real

52:27 sneaky way to to let them think they have an edge on you and and or you could just say you really love whatever the town is you want to you want to buy there and live there whatever but these are some headlines you can put in the letter that'll enhance your response rate here's the thing you always handw write the envelopes okay and you can find stay-at-home moms veterans or even companies that will handr write your envelopes and stuff them for you but it's critical that you handr write them and it's critical you put stamps on them you don't use the little machine that fre can stamps them put stamps on them okay know it's a pain but that stuff gets opened okay you can hire people from Craigslist and again there's some companies that do it uh click to mail ITI direct mail and lob so those companies do it you're going to mail multiple times the first time you mail a

53:14 business envelope the second time mail an invitation color envelope those always get opened right you could do a postcard where everything's right there on the postcard you got to mail it every 3 months we mail ours every 3 months super important we did this and it was incredibly effective so if if you're if you're mailing to retirees what was their primary mode of communication growing up it was mail right so we put a self-addressed stamped postcard we stamp it too so it's double the mailing cost but stay with me here um and it says you know this is the price I'm asking for my property this is how many units it has um and name and address and and they can just send the card back to you I can't tell you how effective that was okay so you're mailing them an envelope but it's got a

53:59 card where they can just fill it out and send it back to you just droping it's got It's stamped in everything okay ninja trick um so the next thing um so any let me answer some questions so you want to zoom in on me here Frank uh you want to ask your a question about high interest rate buddy is he unmuted go ahead Frank unmute yourself there you go he Jo can you hear me yes sir how are you I'm doing good thank you sir appreciate there you bet you know you know I'm just curious that you know because the kind of interest is very high does it still makees sense to fund and buy the properties because the high interest is cash flow sure sure sure well here's the thing the interest rate has to the prices have to come down to justify that

54:47 okay and and right now we're still at a point where sellers haven't really

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