← Escaping the Drift with John Gafford
Escaping the Drift with John Gafford
From Cards and Collectibles to Real Estate Riches with Abraham Gray
00:53:17
Loading summary
Transcript373 lines
- [00:01]
John Gafford
The kind of burgers you get today tells you a lot about yourself. You're either someone who settles for sad, same old, same old burgers or you're Edit Carl's Jr. Obsessed with a tangy OG Western bacon cheeseburger, demanding a house made guacamole, loaded guac bacon fired up for the insanely hot El Diablo or craving a classic Charbold famous star. Give in to your flavored cravings. Do your mouth to Carl's junior Big burger, good burger.
- [00:31]
Abraham Gray
Not one person that could fix it. Like you need the house. There's just so many people that have to do it and no one's ever going to agree to fix it because it benefits all them because they all need it. Of course it's never going to be fixed. It's going to be what it is.
- [00:43]
John Gafford
Yeah, it'll get fixed right after they make it illegal for sitting representatives and congress people to trade stocks.
- [00:49]
Abraham Gray
Oh, yeah.
- [00:49]
John Gafford
The day that that happens. Yeah, the tax code will get fixed next day. And now, escaping the Drift, the show designed to get you from where you are to where you want to. I'm John Gafford and I have a knack for getting extraordinary achievers to drop their secrets to help you on a path to greatness. So stop drifting along, escape the drift. And it's time to start right now. Back again. Back again for another episode of like the opening says, man, the show that gets you from where you are to where you want to be. And today in studio, ladies and gentlemen, I got a dude that, I mean, I don't know, man. Do I use the word baller too much? Do I use that word too much? I might, I don't know. But this cat is a hardcore entrepreneur. He has founded over 100 businesses. He buys them, he creates them, he's done it all. He is the co host of the private money lending mastermind. So is a master at raising capital, placing capital, making money on capital, or my favorite word, arbitrage, if you will. And he's here to share a lot of knowledge with you today. Ladies and gentlemen, welcome to the studio. This is Abraham Gray.
- [01:57]
Abraham Gray
Abraham, what's going on?
- [01:59]
John Gafford
What's up, dude?
- [01:59]
Abraham Gray
I mean, it's cool to be here in Vegas.
- [02:01]
John Gafford
I love that dude. Love that you're. I love that you're here in Vegas.
- [02:03]
Abraham Gray
Yeah.
- [02:04]
John Gafford
Now we just mentioned you're from the atl.
- [02:07]
Abraham Gray
Yeah.
- [02:07]
John Gafford
Of which, you know, I have some roots there back in the day. You live in Bucket.
- [02:11]
Abraham Gray
Currently in Bucket.
- [02:12]
John Gafford
You know, I like to think that I'm the guy that Killed Buckhead. I like to think that.
- [02:15]
Abraham Gray
Yeah, I heard the story. You might have.
- [02:17]
John Gafford
Yeah. I think I'm actually the guy that killed Buckhead, if you think about it. And it was so funny. And that story, if you will. Well, you know, I'm not going to tell a story. We had a club there. I ran the club. Super bowl. Came a very famous pro bowler who will go unnamed, Ray Lewis came to the club. Some people got killed.
- [02:38]
Abraham Gray
Yeah.
- [02:39]
John Gafford
There was a murder trial, and at the end of the day, everybody kind of got off except for that club. Kind of just nuked the whole thing.
- [02:46]
Abraham Gray
Yeah.
- [02:47]
John Gafford
And that was. And that was the end of Buckhead. It was the end of it as we knew it then. It is now transformed into a. The rodeo drive of the south, if you will, for sure. Don't you kind of miss the dirty days of walking down. What was it, Bolway Way? What was the main drag there?
- [03:00]
Abraham Gray
There was a lot of Lulu's Bait.
- [03:02]
John Gafford
Shack and Metropolitan Pizza and. Yeah, all the. All the old school stuff that. The chili pepper dude. All the good stuff.
- [03:09]
Abraham Gray
Totally different now. That's a few decades ago.
- [03:11]
John Gafford
Yeah. But thanks for dating me. I appreciate you.
- [03:13]
Abraham Gray
A lot of the. Yeah, you're pretty old, but a lot of the.
- [03:17]
John Gafford
Two years older than you, my friend.
- [03:18]
Abraham Gray
Three.
- [03:19]
John Gafford
Three. Okay. All right. Yeah, okay. Three years older than you. That's where we're going.
- [03:23]
Abraham Gray
I was born in 75.
- [03:24]
John Gafford
Okay. Yeah, I was born in 72.
- [03:26]
Abraham Gray
There you go. Three years.
- [03:27]
John Gafford
Yeah, I'm tall. I'm taller. I'm taller than you are.
- [03:31]
Abraham Gray
Oh, man.
- [03:32]
John Gafford
Okay. All right. Keep going.
- [03:34]
Abraham Gray
Yeah. No. So I actually used to live in Vegas for a couple years.
- [03:38]
John Gafford
Did you?
- [03:38]
Abraham Gray
I played poker. Nobody even knows about this. I don't talk about that much, but I. I played poker here for many years. 2004, 5, 6. I was really big into poker and I played all the World Series events, all the WBT events. So I would just travel to all the big events where. And yeah, I was on a bunch of final tables and did pretty well.
- [04:00]
John Gafford
So what got you into poker?
- [04:02]
Abraham Gray
I just got into poker probably maybe in the early 2000s, and started doing really good online. And I was like, man, I was killing it on party poker and poker stars and all that. I was like, let's go and play like on the casino. So I started playing tournaments at casino. Started doing really well, made a bunch of money. But the problem was, it became a job. It was really fun in the beginning.
- [04:23]
John Gafford
Yeah.
- [04:24]
Abraham Gray
And once you, like, do it every single week or every single day became a Job and it was crazy hours and I got really out of shape and just got back into business.
- [04:33]
John Gafford
It was terrible. Okay, let's talk about how you got into business in the first place, just in general. So tell me about, where did you grow up?
- [04:38]
Abraham Gray
So I was born in Florida. Miami. I grew up there. I started my first business when I was 15 and from that it was sports cards.
- [04:48]
John Gafford
Okay.
- [04:48]
Abraham Gray
I was big into sports when I was younger, so I always collected cards, turned it into a business. From there just grew.
- [04:55]
John Gafford
Were you just trading cards like on ebay?
- [04:57]
Abraham Gray
Yeah, well, ebay just started back then.
- [04:59]
John Gafford
Okay. Don't you have like a brick and mortar or what were you doing?
- [05:01]
Abraham Gray
No, I actually. So back then, Protege, I mean it was like prodigy.net like before AOL, there was prodigy. So they had like boards on there where you could. Yeah, Prodigy. Yeah, yeah. So we used to, they used to have boards so you could buy and sell stuff. And that was kind of the first time the Internet kind of really took off. And from there I, I always did shows on the weekends. I would travel just from show to show the weekend events and buy and sell and I started doing really well.
- [05:31]
John Gafford
What'd your parents do?
- [05:32]
Abraham Gray
So I was never, I never lived with my parents for a while. My parents, my mom I hadn't seen really since I was maybe like 8 years old or something at the time. She lived, she lived in New York, but I, you know, I was in Florida. We, I was a problem kid and I ended up like ending up in a bunch of different foster families. I had problems with school, getting in trouble all the time and my parents couldn't handle me. My parents got divorced when I was like one.
- [06:00]
John Gafford
Yeah.
- [06:00]
Abraham Gray
But I lived with my mom for a while, got in fights, then with my dad for a couple of years. Got in fights, then just live with random people basically and then boarding schools until I was 15 when I moved into my grandmother's house. And that's when I started the sports car thing.
- [06:14]
John Gafford
So obviously, dude, that, that's, you know, that's a horrendous background. Like that's, that's really hard on a kid. Do you think that, that now looking back at it as a 52 year old man or 49 year old.
- [06:25]
Abraham Gray
You're 52? I'm 49.
- [06:26]
John Gafford
You're 49?
- [06:27]
Abraham Gray
Yeah. 50 is old man. I'm not that old yet.
- [06:31]
John Gafford
Looking at as it now as a middle aged man city cr. Would you say that? I mean, obviously it's terrible what you're going when you went through, but that had to have just built this incredible force of resilience in yourself.
- [06:45]
Abraham Gray
Oh, yeah, Yeah. I mean, you learn a lot from it. I think that's what kind of got me to where I am today. You know, I learned a lot, and I did stuff based on that. So I think if that didn't happen, I'd be a totally different person. And it worked out in my favor, so I'm happy.
- [06:58]
John Gafford
But I think there's. I think the hinge point there is so many people would have an experience like that as a kid, and some people do. Right. And they use that as an excuse to underperform the rest of their life instead of fuel. So what do you think was the difference in you that made it turn into fuel instead of an excuse?
- [07:12]
Abraham Gray
The difference for me was, first off, I was a really bad kid. Like, in my younger years and even my teenage years, I was really bad. Like, I was at a point where I was either going to be, like, in jail the rest of my life or just be super successful. It was one of the others. Depending on which way I went. It was for sure.
- [07:28]
John Gafford
Or both at different times. If you want to go Wolf of Wall Street.
- [07:30]
Abraham Gray
No. 100%, potentially. So. I just. I really, you know, I wasn't in boarding schools. I was all these foster families. I didn't really have my freedom. I had to listen to whatever they said. I was, you know, stuck. I didn't have. I just didn't like it. And when I started selling these sports cards, I started having some money. I was able to kind of do my own thing. I didn't have to listen to people as much. And, you know, that's what kind of got me going to where I was. I was like, you know what? If I have my own money, if I could not have to listen to people, I have my freedom. That's what I really wanted. And that's what pushed me to just keep going. I just wanted to be able to do whatever I want. And how can you do whatever you want? The more money you have, the more freedom you have, the less you have to listen to people? Basically, yeah.
- [08:10]
John Gafford
That's a good. You know, it's funny, when you ask people what money means to them, for you, it means anybody else. Like, my answer is what money means. To me, it means time. Like, I can. I buy time. That's what I buy.
- [08:22]
Abraham Gray
With my money, you could buy time, but. But freedom is, like the ultimate.
- [08:25]
John Gafford
Yeah.
- [08:26]
Abraham Gray
So the ultimate freedom and time. The same thing almost did.
- [08:29]
John Gafford
So you were selling cars at 15. Did you ever have a real job? Do you have a job working for somebody else?
- [08:33]
Abraham Gray
I had one job in my life and it was one of 16.
- [08:35]
John Gafford
What was it? What was it?
- [08:35]
Abraham Gray
I worked as a bag boy at a grocery store. But I was there for a little while. I started bagging groceries, bringing carts in. Then I ended up stocking because I got a little bit of raise, start stocking. And then I was doing sports cars at the same time. So I was making some money on sports cars. Some money. And then I just started making too much money on sports cards. Got rid of the grocery gig and just went full time into sports cards.
- [08:57]
John Gafford
Yeah, I like to think that all great entrepreneurs are, to a certain level, unemployable, like chronically unemployable, just because they just cannot, like you just said. I just. I. Authority has just never been something that you want to adhere to.
- [09:10]
Abraham Gray
Yeah. You don't want people telling you what to do. That sucks.
- [09:11]
John Gafford
Yeah, it does. So you're selling your foot, you're flipping sports cards doing pretty well. And what did that lead to?
- [09:17]
Abraham Gray
So in 1996, so this is back I started, let's say 1990, 1991. Uh, so in 1997, something really, really crazy fad came out called Beanie Babies. And I was at baseball card shows and these middle aged women would come in there with tables full of Beanie Babies selling them. And I was like, why are they at a baseball car show selling Beanie Babies? And before I knew it, like week after week, all of a sudden I'd see their tables were busier than my table selling baseball cards. I was like, what the hell is this stuff? I gotta learn. I started off making fun of them. I'm like, wait a second, maybe there's something. Yeah, I kind of hang around their booth, started asking some questions, where they get it, where they selling it for, what's the profit? And you know, eventually, pretty soon I learned, I learned the business and I became the probably the biggest Beanie Baby dealer in the country for many, many years. I was in beanie babies from 1997 all the way through, like the early 2000s, 2003 or so, right when I get out.
- [10:09]
John Gafford
So that's trend spotting is what that is. So is that something you've always a gift for?
- [10:16]
Abraham Gray
Yeah. So I've been basically my whole life, up until even recently, I'm always going into like hot ads or hot trends. And that's, that's how I've made tons of money. I, I literally would pick whatever's really good at the time not. Not being it forever, but being it for as long as you could possibly make a ton of money on it. And then once that's dead, just move on to the next thing. And I did that for, for a long time until recently.
- [10:38]
John Gafford
So when you spot a new trend, or when you did before, you did this, when you would spot a new trend, how do you accelerate your, your learning of it, what it is? How do you get into it quickly enough to where it's still viable? Because the biggest, hardest thing with transpotting like that is. Yeah, you don't want to be the last guy at the table with all the chips in your hand.
- [10:54]
Abraham Gray
Yeah. So I have a few techniques of what I do. So obviously I'm always looking for trends. I have like a whole, like, system of how to do it. But I always find, you know, multiple. And then I figure out which ones make the most sense. I'll go investigate them. Sometimes I'll go other countries or other cities just to see how other people are doing with those trends. Because usually the trends start somewhere.
- [11:14]
John Gafford
Yeah, what's your system? Let's talk about that. That's. Now I'm interested.
- [11:18]
Abraham Gray
Yeah, so. But I would, I would basically start. I would try like four or five things out of the dozens that I see. And then the ones that do the best, I grow like crazy. And the ones that don't aren't so super successful. I just shut down.
- [11:32]
John Gafford
So you're test. So any trend that comes up, you figure out a quick way to acquire whatever it is and you can test out very quickly. And then you dance with who brung you.
- [11:39]
Abraham Gray
Yeah. And then the ones that don't do good, I just kill it soon, where I don't waste a lot of time or money. And the ones that do good, I just exploded all over the place. But as far as how I find them, that's how what you're asking. So my system really at the time was going on to Google and searching all kinds of keywords like what's hot in America, what's hot in Asia, what's hot in Europe, what's hot on the west coast, what's hot on the East Coast. And then I'd have like maybe a hundred different phrases like that, and I'd type them in. It would lead me down a rabbit hole of, you know, a whole bunch of different things. And from there I'd find other shit. And then I would go ahead and research which ones make sense. Another thing that I would do is when Groupon came out, that was A big one. I would go on Groupon. You can still do that today. Probably. I'd go to Groupon and say, just see what sold the most in every city. I'd be like, all right, what's in Dallas? You know, Texas. What's in New York? What's in Los Angeles? You know, I'd pick all the biggest cities first. And I go to small cities. Small cities actually can be really good because people have something good, but nobody knows about it. And some people are just content with their one location, so they don't grow it. So if I see something on Groupon that sells a ton of Groupons, it's.
- [12:43]
John Gafford
My products or experiences.
- [12:44]
Abraham Gray
More experiences than anything.
- [12:46]
John Gafford
Okay.
- [12:46]
Abraham Gray
But products could work also. So I just happen to do tons of experiences.
- [12:50]
John Gafford
But, like what?
- [12:51]
Abraham Gray
Like press. So I was one of the first people that had escape rooms in the United States. I was one of the first people by far that had ax throwing locations in the United States, arts and craft studios. All these different trends that got really hot in the beginning. I found them early on, either in other cities, other states. So, like, the X drawing I probably had, like, I was one of the top first five in the country. There's thousands, if not tens of thousands right now.
- [13:15]
John Gafford
Yeah.
- [13:15]
Abraham Gray
So I think the first two was like, one in New Jersey. There was maybe one in Vegas. Actually, those were the first ones that were here for over a decade, but there weren't any others. So I saw some in Canada, and I went to Canada. I went and saw them. They did really well. I checked out the.
- [13:29]
John Gafford
And you found this from Groupon?
- [13:31]
Abraham Gray
I found it from Groupon and from doing these Google searches. And another way that I find a lot of really cool trends is on Facebook. So I'm on Facebook or really any social media, but Facebook is just what I use the most. And I'm friends with tons of people, and people post places they've gone place, you know, fun things they've done. And I saw one day a friend of mine in another state that went to an escape room. I was like, what the hell is an escape room? It's like someone breaking in their house. Do they need to, like. And I figured out it's actually an activity where you go and you solve puzzles. It was really fun. I was. I never heard of it. And I went there, I flew there, I checked it out. It was. There was probably like only a couple dozen in the United States at the time. I was like, this is pretty cool. I got to bring this to Atlanta. And then I looked in Atlanta. There was a couple already before I started. And I was one of the first, you know, three or four in Atlanta. You know, now there's hundreds and hundreds in Atlanta. Just put in perspective. So what I did was, what's different than me, than everyone else that does this thing? Once I have one that does really well, I massively scale them. So I went from one escape room to 16, 17 escape rooms in like a few years where most people have one and maybe they open a second one. Usually they don't. There's a few companies that, you know, open four or five, six, but it's not that common. Same thing with the ax throwing. You know, as soon as I saw it, it made a lot of money. I opened a ton. The business that I made the absolute most money on was something that I did a different way. Right? So I just told you a bunch of different ways. I find I find these really cool concepts and trends. But another way that works really well is I have a network of people that I deal with. So different people that I buy and sell beanie babies to, baseball cards, whatever, you know, open ax drawings with or just people. So these are really creative people. They come up with other trends sometimes stuff that I haven't, you know, seen. And we're always in communication and talking. So when I find something really cool that I do that makes a lot of money that does well in my state, I'll go tell, like my network of, you know, a dozen people like you should try in your state, and then we do it all together. So the business that actually made the most money on was the jewelry industry. I had the first we buy gold store in the country. It didn't exist until I did it. And a friend of mine that we did other business with that we, you know, we shared different other things back and forth that we made really a lot of money on was like, man, you should get into gold. Like, it was like $300 last year. Now it's $700. Like, it's crazy.
- [15:51]
C
It took a lifetime to find the person you want to marry. Finding the perfect engagement ring is a lot easier. @blue nile.com you can find or design the ring you've always dreamed of. With help from Blue Niles jewelry experts who are on hand 247 to answer questions and the ease and convenience of shopping online. For a limited time, get $50 off your purchase of $500 or more with code POD@Bluenile.com that's $50 off with code POD@Bruenile.com. need new glasses or want a fresh new style? Warby Parker has you covered. Glasses start at just 95 bucks including anti reflective scratch resistant prescription lenses that block 100% of UV rays. Every frame's designed in house with a huge selection of styles for every face shape. And with Warby Parker's free home try on program, you can order five pairs to try at home for free. Shipping is free both ways too. Go to warbyparker.com covered to try five pairs of frames at home for free. Warbyparker.com covered Imagine what's possible when learning doesn't get in the way of life. At capella University. Our game changing flexpath learning format lets you set your own deadline so you can learn at a time and pace that works for you. It's an education you can tailor to your schedule. That means you don't have to put your life on hold to pursue your professional goals. Instead, enjoy learning your way and earn your degree without missing a beat. A different future is closer than you think with Capella University. Learn more at capella Edu.
- [17:23]
Abraham Gray
I'm setting up at these hotels on weekends. I'm just doing weekend events. I put an ad in the paper and I'm buying x amount and I'm making like fifty hundred thousand dollars a weekend just buying gold at these stores. It's crazy. People are just bringing it in. Keep in mind, this was back like 2006, 2007, when the economy started to go down. People had a lot of gold. Yellow gold was going out of style. So it was all really good timing. But I was like, all right, I don't know anything about gold. At the time, I was into another fad called webkinz. It's sort of like beanie babies. It's a stuffed animal.
- [17:53]
John Gafford
Anyhow, I think I remember this.
- [17:54]
Abraham Gray
I made millions and millions of dollars on webkinz. It was a really, really big fad. It was crazy, but I was still making a ton of money. But it's kind of down toward the end of the cycle of my cartel. And he's like, you should get into gold. I was like, well, I'm still doing really good webkins, but I see it, you know, dying. You know, let me come there in a few months, we'll talk it over. So, you know, fast forward a few months. I ended up meeting him. I went to one of his shows. I was like, holy crap. Like, you're just buying a crazy amount of stuff. I didn't know anything about jewelry at the time. He's like, look, every time I spend a thousand dollars. I'm making 3,000. And he was buying, like, tens of thousands of dollars when I was there. I was like, holy crap, is that easy? He's like, I didn't know anything about jewelry. Like, five months ago, I learned all this.
- [18:33]
John Gafford
Since then, I'm just weighing the gold.
- [18:34]
Abraham Gray
And the number and testing to make sure it's real. So I was like, all right, cool. I got to do it. So I was like, you know what? I'm interested. I want to do this. I see the proof of concept you showed me, like, a couple of months of you doing this and making a ton of money. It's, like, crazy. So. But here's the thing. I don't want to set up at hotels every weekend, go to a different hotel, spend a ton of money. So what he did is he spent a ton of money on newspaper ads and just advertise people to come to these shows. I was like, you know, that's a lot of work. You're reinventing the wheel every single. Every single weekend.
- [19:01]
John Gafford
Why not a standalone store?
- [19:02]
Abraham Gray
Why not just open a store and, like, just have a store, advertise it? People keep coming to the same place. You're always there. He's like, yeah. I mean, I never thought of it, but, like, you could try it and see. So I was like, all right. So I just rented a space on a busy road, opened the store, put a we buy gold store, advertised, like, literally within the first couple weeks, I had lines of people coming in selling me their gold and literally at, like, 30% of what I could get for it. So again, they would sell to me for 30 bucks. I get 100 bucks. And they were. They were, like, super thrilled. It was all stuff that they. They weren't wearing anymore is outdated, broken, whatever. It doesn't matter. And people needed money at the time. Now we're back in, like, 2007, 2008, when the recession started hitting and everyone's losing their job. So I did that, and I went from one store, like, I opened a second store, like, instantly. Within. Within a week, this is going to work. And then within. Within a month, I had, like, you know, three other, you know, leases signed. And within, like, the first year, I had 50, 60 locations. And ultimately, over. Over the course, I did about seven years. So, like, within the first four years, I had over 300 locations.
- [20:08]
John Gafford
Geez.
- [20:09]
Abraham Gray
Yeah. And these locations were making the worst locations I had, and these were really bad. So it was very rare. Maybe 30, 40,000amonth profit. But, like, the best locations were 150,000amonth profit.
- [20:21]
John Gafford
What do you. I'm just curious because now I don't know. What did you do with the gold when you melt it down? Do you, what do you do?
- [20:26]
Abraham Gray
So you'd buy all this smelter? Yeah, more or less. So you'd buy gold and the really nice pieces you put aside and see if you could like sell them to a jewelry store for a little bit more than the gold and diamonds are worth. But 99% of it you would just send to a refinery, they'd melt it down and they'd basically pay you what it's worth. So every single.
- [20:46]
John Gafford
So you didn't have to do it, you were just shipping it off.
- [20:48]
Abraham Gray
Shipping it off? Yeah. Brinks would come by every single week and pick up like, you know, tens of millions dollars worth of gold and take it off.
- [20:56]
John Gafford
It would go.
- [20:57]
Abraham Gray
Yeah. We ended up dealing eventually with the biggest refinery, which was Johnson Matthew in Utah. And we actually went there and toured the place a couple times. Pretty cool. But they do crazy volume and that's where we end up shipping most of our gold when we were doing it on a big sale off it.
- [21:10]
John Gafford
So I want to go back a little bit because we may have. Now that we're buying tens of million dollars worth of gold, we may have outpaced some of the listeners at this point. Like, oh well, yeah, I'll just go open a store and buy tens of million dollars worth of gold. Let's go back to the trend spotting. Let's go back to that.
- [21:28]
Abraham Gray
I gave you like five different ways. How I spent.
- [21:30]
John Gafford
You did it was good, but each.
- [21:32]
Abraham Gray
One was a different.
- [21:33]
John Gafford
But what I want to know is did you bootstrap all of those? First question is did you bootstrap all that or did you go raise opm?
- [21:42]
Abraham Gray
So I was fortunate enough to in my baseball card days made a lot of money. So I was, when I was 15, I was making you know, 40, 50,000amonth, I mean a year. And then when I was 16, I started making almost 100,000 a year just selling baseball cards. And by the time I was 17, 18, I was making a lot. And I was able to save over a million dollars cash in my bank account by when I was 19. So I always had some money. And from then my business just grew. So like I was making a lot of money every year in my early 20s.
- [22:13]
John Gafford
Let me ask you this as a teen, right? Dude, I cannot even imagine like that kind of money rolling in at that age. I mean, and not just like the fact that you accumulated a million dollars and didn't just go blow it in every direction. I mean, when you were first starting out, I mean, I guess maybe coming from nothing, you were like, I need this big pot, like every dollar, man. Yeah.
- [22:34]
Abraham Gray
I didn't blow money. Like, I didn't waste money. Every single time I made money, I would just reinvested into other stuff that made more money. I. I never blew money. So I never had fancy cars. I never had. Still no still no still. I mean, I have a nice house, but, you know, unless you come to my house, you wouldn't know. But I mean, cars, I mean, I've never had like, I've never had like Ferraris, Lamborghinis, you know.
- [22:56]
John Gafford
Just not your thing.
- [22:57]
Abraham Gray
Yeah, I mean, I have, you know, decent cars, but they're not like, exotic, you know?
- [23:00]
John Gafford
Yeah, yeah. Just not your thing.
- [23:02]
Abraham Gray
Not my thing.
- [23:03]
John Gafford
I. It's so funny, man, that, like, you know, I guess each to their own. And I tell everybody that does this because, you know, dude, I've got a couple nice cars and that's fine, but at the end of the day, they are for me and everybody that I know that has a really nice car, I'm like, look, this is going to go one of two ways for you, dude, or you're going to buy this thing and you're either going to feel nothing after a week or you're still going to love it.
- [23:22]
Abraham Gray
Yeah.
- [23:23]
John Gafford
So if you've never had a car like that, maybe go rent one for a couple days and just see how it feels.
- [23:28]
Abraham Gray
If you really enjoy cars and you have plenty of money, it makes sense to get it. I just don't care about cars. Like, I really want, like, cars. I would buy, like, nice cars. I just don't. This doesn't do anything for me.
- [23:37]
John Gafford
So. Okay, so where, where does your mind. What, what do you. What. What. What gets you? What. What's the thing?
- [23:43]
Abraham Gray
What do I do with my money?
- [23:45]
John Gafford
Yeah, where's the joy?
- [23:46]
Abraham Gray
I mean, I. I like to see it grow. So that's what, that's what's fun. So I invested into a few things. The three things that I put all my money into is real estate, more businesses, and a lot of lending. So I do a ton of lending, a ton of business, and a ton of real estate. And every single year, I own a lot more property. I have a lot, you know, more businesses, and, you know, I have more loans on the books. So those are the three things that keep growing. But, you know, I love martial arts. I've been Doing that for, you know, decades. So I'm always going.
- [24:13]
John Gafford
That doesn't cost any money.
- [24:14]
Abraham Gray
Not really. I own the gyms, so I make money off.
- [24:17]
John Gafford
Yeah, just buy the places you like to go. That's it.
- [24:19]
Abraham Gray
Oh, yeah, that's what I do. So I have.
- [24:21]
John Gafford
I gotta buy a golf course now, Damn it.
- [24:23]
Abraham Gray
Hey, you know, they're available, you could buy them all right. What's crazy is people think that you can't buy stuff and because it's too expensive. But most of the stuff that I've bought, I've used none of my own money or very little of my own money. Like, it doesn't matter if it's a $10 million deal or $5 million deal, whatever it is. You could buy these things without using your own money. Or, you know, there's lots of ways to do it.
- [24:43]
John Gafford
Yeah. It's so funny talking about real estate. It's always like, what comes first, the chicken or the egg, Right. People are like, oh, well, I need to raise money or I want to, you know, get some investors so I can go do this. And it's like, bro, you get a good enough deal, you're not going to have a problem finding investors.
- [24:56]
Abraham Gray
Yeah, that's the key.
- [24:57]
John Gafford
If you get. Go get the deal, go tie the deal up and then, trust me, if it's a good deal, you'll know.
- [25:02]
Abraham Gray
Anytime you have bring someone a good deal, there's plenty of people out there that have plenty of money that want to invest and make money. If the deal is good enough, you'll find people to loan you the money. If no one loans you money, then.
- [25:12]
John Gafford
You get out of the deal.
- [25:13]
Abraham Gray
No, if no one loans you money means that you're.
- [25:15]
John Gafford
The deal sucks.
- [25:16]
Abraham Gray
Exactly. That's what it means. That's all it means.
- [25:18]
John Gafford
Get out of the deal. Well, let's talk about this, because obviously you have a lot of cash heavy businesses and I want to lean this into. Obviously that's probably one of the reasons you started real estate investing, I'm guessing.
- [25:28]
Abraham Gray
Well, I started real investing when I was 22. I bought my first property in 1998. I was making so much money in business, I had a friend that's like, why don't you start buying some property? First off, you diversify a little bit. Plus the tax write offs, the appreciation, like, you know, it's 5, 10, 20, 30 years from now, you're going to have crazy amount of money, which I did. So I still own a lot of the stuff from the 90s and early 2000s, and it's worth, you know, 10 times what I paid for it. So. Yeah, so it worked. And then the tax depreciation was. Was a really big one. Especially now there's so many. Cool.
- [25:58]
John Gafford
That is the one. Yeah, that's the one you do cost seg depreciation on all.
- [26:02]
Abraham Gray
Yeah, of course.
- [26:04]
John Gafford
Yeah, yeah, yeah. It's so funny, dude. I didn't. I'm going to give you, I'll give you, I'll give you an. I don't know if you knew this or not. So one of my groups that I'm in, we have probably the best cost dude in the countries in there that actually does them for like massive buildings. Like whatever.
- [26:18]
Abraham Gray
I use someone like that.
- [26:19]
John Gafford
Yeah. And this came out of his mouth the other day and I couldn't believe this because somebody was buying. They were buying 300 something units. They were talking about the improvements they were going to have to do and they talked about the roof. And he goes, whoa, whoa, whoa, whoa, whoa. Before you do that, let me cost seg the roof. Because you can get, you can make bonus depreciation on the disposal of the roof you have and then write off the new one.
- [26:38]
Abraham Gray
Yep.
- [26:38]
John Gafford
And we were like, what?
- [26:39]
Abraham Gray
Yeah.
- [26:40]
John Gafford
What for the one you throw in the dumpster? He's like, hell yes you can. It's in the tax code.
- [26:44]
Abraham Gray
I was like, that's so many scams in these tax codes. You know, it's crazy. If you just know everything that you need to know, you have a good accountant, you could probably make a ton of money and never pay any taxes or very little.
- [26:55]
John Gafford
Yeah, I mean, it's, it's. Again, there's. What is it? There's 15 or 20 pages that tell you how you have to pay taxes and then there's thousands that tell you how you don't.
- [27:05]
Abraham Gray
Yeah, yeah. I mean, it's true. I remember when I was making the most money back in the gold days, the crazy things that all my accountants were doing to were 100% legal. Didn't make any sense to me before, but now I understand it. Where you could basically do all these crazy things and just. You don't have any. You know, they're like, yep, you don't have to pay taxes because here's your zero. It makes no sense. So it's kind of a scam. But whatever, you got to do it if that's what everyone else does.
- [27:29]
John Gafford
Yeah. I love that clip. Back in the day, not, not to talk about politics, but I just love that clip from about Dave Chappelle talking about Donald Trump in that first debate when he's like, yeah, you know what? And you. I know the system's rigs. Cause I use it. And you won't fix it either, because the people that give you money use it too.
- [27:45]
Abraham Gray
I don't think anyone could fix it because it's not one person that could fix it. Like, you need the house. There's just so many people that have to do it and no one's ever going to agree to fix it because it benefits all them, because they all need it. Of course it's never going to be fixed. Of course it's going to be what it is.
- [27:59]
John Gafford
Yeah, it'll get fixed right after they make it illegal for, for sitting representatives and congresspeople to trade stocks.
- [28:04]
Abraham Gray
Oh, yeah.
- [28:05]
John Gafford
The day that that happens. Yeah, the tax code will get fixed next, which is never. So let's go back to all of these little businesses that you have because eventually, because you're running, you were chasing fads at the time. You were trend spotting. And at some point, man, the cards go south on you. The market turns, you're holding inventory. So how do you, how would you talk, talk to me about pulling the ripcord out of a trend when you're.
- [28:27]
Abraham Gray
Sitting on a trend. So you've gotta, you've gotta be able to see it. So obviously when it keeps going up, keeps going up, that's great. At some point it levels off. And once it starts leveling off, that's when you gotta pay really close attention to see when it starts dipping. So once it starts dipping, you gotta have a plan to. How to get out of it without losing too much. But you made so much up here that if you lose a little bit at the end, it doesn't really matter. But you got to, you've got to really understand, like, where, where the market's going to die and how to get rid of it without losing the most. So I always figured out ways to sell the best stuff and, you know, get out of stuff. I have like, really good leases where I'm able to get out of different leases with different ways. But yeah, I was just always lucky enough to, to not stay in it and be like, attached to any one business and let it ride all the way down to where I'm losing money. Because that's stupid. That's what a lot of people do, lose a lot of money. They're in this business, they're super attached to it and they just don't want to let it go. I'll let something go easily. I don't Care.
- [29:24]
John Gafford
Well, I think that's. That's something that people don't understand is when they go into lease a space for a brick and mortar business that may or may not be viable, how important it is to not get a personal guarantee on that space.
- [29:34]
Abraham Gray
Yeah, not get a personal guarantee. Or if you have to put a personal guarantee on it, put it on for 12 months, you know, or six months, don't put it on for five years. Especially if it's. If it's expensive, lease or something like that. Yeah, people will get. Could get really screwed. Yeah, I learned my lesson when I was really younger on that one. I did do a personal guarantee on. In my early 20s on one. And yeah, so I learned my lesson on that one. So I don't do it anymore, but I don't mind doing it for a certain amount of time because if you start a location, you're not going to leave in the first year. You know, you're going to write it out even if it is bad, typically. But yeah, you don't want to be stuck for five years. That's miserable.
- [30:07]
John Gafford
Yeah. So it seems like now, I mean, you're kind of at. You're out of all of these fad businesses.
- [30:12]
Abraham Gray
You're really pretty much. I mean, I still have a few fad businesses, but they're not like the fad. The fat on the businesses that I have aren't like super hot anymore. They're kind of like, you know, now just leveled off. But yeah, most of the businesses I have now are not fads. Over the last like five, 10 years, I've started getting into just normal businesses that I'm kind of getting old enough to where I don't have.
- [30:33]
John Gafford
You are getting old right away.
- [30:34]
Abraham Gray
Yeah. As old as you.
- [30:35]
John Gafford
But no, I'm just saying that the grave is calling. It's chasing behind you. I actually saw the Grim reaper looking for you when you walked in. So I feel it when you get to be this old, it's, It's. It's hard.
- [30:45]
Abraham Gray
You can feel it. Like I'm training. I'm training with all these younger guys and man, they're just so much quicker, faster. Yeah, yeah, it's taller. You start shrinking, huh? Yeah, so. But yeah, no, so I'm giving this guy.
- [30:59]
John Gafford
And he knows jiu jitsu or what? So she's gonna kill me right here live on the podcast.
- [31:03]
Abraham Gray
We can do that at the end.
- [31:05]
John Gafford
They're so choking me out on the podcast. Not to say that it probably won't happen at some point, but I just rather have it not happen today.
- [31:11]
Abraham Gray
I mean, if you start tapping, there's a good chance I'm gonna tap now.
- [31:15]
John Gafford
I'm tatt. See, I'm tapping right now. I'm tapping right now. Your wife is here as a witness. I'm tapping right now. There's no need to joke somebody. Back to your bad businesses.
- [31:22]
Abraham Gray
Yeah. No. So fab business. So I was super involved in fat businesses in my 20s and 30s. In my 40s, I started getting more into like stuff that it's not really fad. A lot of the stuff will just last for a long time. So now, now I have like home service businesses. I have.
- [31:35]
John Gafford
Let's talk about that real quick because trades are. A buddy of mine just exited his roofing business.
- [31:42]
Abraham Gray
Yeah.
- [31:42]
John Gafford
Nine figures.
- [31:44]
Abraham Gray
I know a lot of people that.
- [31:45]
John Gafford
Tons of the private equity. Nine figures.
- [31:48]
Abraham Gray
Yeah.
- [31:48]
John Gafford
So it's. Dude, it's the dumb stuff that makes money, man. Everybody wants to fly. Everyone wants the flashy. They all want the flashy.
- [31:54]
Abraham Gray
Take what makes money. That's all that matters, dude.
- [31:56]
John Gafford
Plumbing.
- [31:56]
Abraham Gray
Yeah.
- [31:57]
John Gafford
Solid roofing. Solid.
- [32:00]
Abraham Gray
Everyone's gonna need that crap.
- [32:01]
John Gafford
Everybody needs it. Everyone doesn't matter.
- [32:02]
Abraham Gray
Yeah.
- [32:03]
John Gafford
So what's your favorite home services trade that you're in?
- [32:09]
D
This episode is brought to you by Progressive Insurance. Fiscally responsible financial, financial geniuses, monetary magicians. These are things people say about drivers who switch their car insurance to Progressive and save hundreds. Because Progressive offers discounts for paying in full, owning a home, and more. Plus, you can count on their great customer service to help you when you need it. So your dollar goes a long way. Visit progressive.com to see if you could save on car insurance. Progressive Casualty Insurance company and affiliates. Potential savings will vary. Not available in all states or situations.
- [32:49]
E
Have you met All Modern? All Modern brings you the best of modern furniture. And right now through November 30, you'll score up to 70% off during their Black Friday sale. Prep your space for holiday hosting with deals on plush sofas, modern tabletop essentials and more. All on sale at All Modern. Then get them delivered for free in days. You heard that right.
- [33:10]
John Gafford
Days.
- [33:11]
E
That's modern made simple. Shop All Modern's Black Friday sale now through November 30th at allmodern.com imagine what's.
- [33:20]
C
Possible when learning doesn't get in the way of life at Capella University. Our flexpath learning format lets you learn on your own schedule. A different future is closer than you think with Capella University. Learn more at capella. Edu.
- [33:35]
Abraham Gray
Well, I have. I have some tree companies now that Cut down trees. So we're on the east coast, so we're really busy. We're going to where all the hurricanes just hit and crazy. Like we used to do X amount a day. We're doing like four or five times that because there's so many emergencies everywhere, like work everywhere. Yeah, everyone needs.
- [33:50]
John Gafford
So terrible.
- [33:51]
Abraham Gray
It's. But yeah, I'm probably gonna get more of those. But I mean we've done other stuff like granite, you know. And so I, I have like a whole team, a whole bunch of teams that do all kinds of.
- [34:02]
John Gafford
That was gonna be the next question.
- [34:03]
Abraham Gray
Everything. Whether it's painting, whether it's flooring, you know, I have people that can do anything. So they mostly work on my own homes because I do so many fix and flips. But when I have extra time, then I'll put them on some other people's projects, so.
- [34:16]
John Gafford
So you bought your verticals, your vertical integrated home flipping business. Yeah. How many flips are you doing?
- [34:21]
Abraham Gray
So in 20, 2021, I did over 200 each year. Well, I would say like the market started to shift in 2023, so I probably doing about half that. But I still do, I still do a hundred a year.
- [34:35]
John Gafford
A hundred a year. So can you talk to me about the structure of your business to do that? So, yeah. Are you just at this point on top? Are you. You're not. You've got acquisition people, you've got dispo people, you've got.
- [34:45]
Abraham Gray
So when those super slam. The super busy 20, 20, 21, 22, I had everything. But now I. I've kind of, you know, downsize a little bit with. With the in house team because I don't need them. I buy most of my stuff from wholesalers and I just have a lot of connections with other. I let them do the dirty work, sell it to me and whatever so I don't have to manage, you know, acquisition teams and all that. But I get so much lead flow from all the people that know that I buy that I could buy enough. But I do have a little bit of in house team because I own a homevestor franchise actually in Atlanta.
- [35:17]
John Gafford
Yep.
- [35:17]
Abraham Gray
But you know, it's not that good anymore like it was. So I buy a home or two a month maybe from that and.
- [35:23]
John Gafford
But the problem is, don't you have to pay them a point on everything?
- [35:25]
Abraham Gray
You buy a lot. Yeah.
- [35:27]
John Gafford
Even if it comes from them or not.
- [35:29]
Abraham Gray
Yeah. But here's the thing. It's not in my name, so I don't technically own it. Okay.
- [35:33]
John Gafford
Somebody else we might need to cut this out. I don't know. We'll go with it. That's good insight, though.
- [35:37]
Abraham Gray
I don't. I don't own it, like, on paper. I. I basically funded it for someone else.
- [35:41]
John Gafford
Got it.
- [35:41]
Abraham Gray
And they give me all the deals.
- [35:42]
John Gafford
Got it. Smart way. So the other. So the other stuff you're doing is completely separate from that, as legally it should be. And I can testify to that in court. There we go. That's fine if need be. No, I like that. Um, so you're just still doing a hundred. What margin are you mostly in Atlanta?
- [35:57]
Abraham Gray
Yeah, only. Only in Atlanta. I go like 50 miles north, 50 miles south, 50 miles east. 50 miles. So you could drive from one project to another? Could be two hours. Because it could be 100 miles or so.
- [36:07]
John Gafford
Oh, my gosh.
- [36:07]
Abraham Gray
But. But Atlanta's big, so that's where I'm at. 50 miles, any direction from. From the middle of Atlanta. I have two partners, so it's me and two other people. I'm in charge of all the underwriting, buying, negotiating with the sellers. So I'm the one that does all that. Once I buy it, I hand it off to one of my partners that does all the rehab. He's in charge of all the crews and all the rehab. And then my last partner is in charge of like, you know, if there's legal involve, accounting, a dispo, selling the properties, dealing with the agents after we have them listed, or, you know, we do buy a lot of properties that we don't want to rehab because either it's just not an area we like to rehab in, or, you know, our crews are busy or whatever. And then we'll just. We have a dispo guy that will sell all our stuff for us that we don't want to. That we don't want to rehab. And if they don't sell it, then we end up rehabbing it. But.
- [36:55]
John Gafford
And you own your crews?
- [36:57]
Abraham Gray
Yeah, they work for us full time.
- [36:58]
John Gafford
They work for you full time. How many project managers do you.
- [37:01]
Abraham Gray
So I have a partner that's in charge of the project managers, and then I have one main project manager that's in charge of all the crews. But, like, each crew has its own project manager, so. And then we have, you know, at least one inspector that works full time, just going. Inspecting properties.
- [37:16]
John Gafford
Yeah, yeah, that hits everything up. Have you had to change your buy box? Have you adjusted your buybacks or buy box, or you just buy less?
- [37:26]
Abraham Gray
I don't. I don't. I never adjusted my buy box. As far as what I'll buy or where I'll buy it, what I might.
- [37:32]
John Gafford
Do about the spread.
- [37:33]
Abraham Gray
Yeah, that's what you might change. So I might change. Like certain areas that I see aren't as hot. I'll buy them at a lower, you know, loan to value. But the good areas I'll still pay all the money for. It doesn't matter. You know, the good areas are still really good.
- [37:46]
John Gafford
How much of your margins gotten squeezed from 2021 to now?
- [37:49]
Abraham Gray
Huge. Huge. Yeah, I'm making way less now on fix and flips than I was. I was making, you know, I was able, I was able to make 40, 50,000 a home in 2021, 2022 and I was able to buy you know, 25amonth where now I'm buying 12amonth and I'm making 25 30,000. So I'm buying a lot less and I make a lot. So yeah, you know, exponentially. It's way less, but it's, it's still.
- [38:14]
John Gafford
Good when you're doing that at scale. Do you guys have spec? You have spec. You have like house gets this flooring, this carpet, this paint.
- [38:21]
Abraham Gray
So we, we make them all the same. So we don't do new construction or we don't buy land. I only do fix and flip.
- [38:25]
John Gafford
That's what I meant. But I'm saying you've got everything. Here's our spec, tile, here's everything.
- [38:28]
Abraham Gray
So every single house we do that is within, you know, let's. So in Atlanta, the average home we sell is like a three hundred and some thousand dollar home. So any home that we do that's you know, let's say 150, which is probably the cheapest homes that we do all the way to you know, 4550-maybe-600. We all have the same pain, same flooring, same everything. But then we do some million dollar homes like maybe once, one every month or two we'll buy like this really expensive home that we'll do. I would buy more. It's just hard to get really good deals on them.
- [38:57]
John Gafford
Yeah.
- [38:57]
Abraham Gray
And then those obviously we have like a special designer come in and they know that particular area market and then we just go with what they say. But we have all our own. We, every single home we do looks the same as far as the interior and exterior and paint colors and tiles and all that, you know. Lvps.
- [39:13]
John Gafford
Yeah, Yeah. I got crushed in the high end here when the market, when the interest rates turned. When the interest rates turned, I was sitting on eight And a half. Nine million retail.
- [39:23]
Abraham Gray
Yeah.
- [39:24]
John Gafford
Through about five houses.
- [39:25]
Abraham Gray
Right, right, right, right.
- [39:26]
John Gafford
What year this is ten months ago.
- [39:29]
Abraham Gray
Oh, okay.
- [39:30]
John Gafford
This is when the market. When the interest rate changed. We were sitting on that much inventory.
- [39:33]
Abraham Gray
Yeah.
- [39:33]
John Gafford
We're sitting on five houses worth about 8,9 million bucks. And I did good on one. So the one in Sedona we did good on. Yeah, seven figure went on that house, but the rest of them murdered on.
- [39:43]
Abraham Gray
Yeah, just got. So I don't. I don't do like too many. Like, it would be really hard for me to get murdered because I'm. My average home is like a home that like, is a starter type home that most people will buy. I don't do too many. Best advice, I do one expensive home at a time, usually once in a while. 2. Back when the market was a little bit better. But, like, I'm going to be really safe on those.
- [40:02]
John Gafford
Yeah, dude. I'm the first person that was dumb to take that kind of exposure. You just, just. We just had a lot of stuff kind of fall into our lap at one time. And it was like, we can do this and we can do a good job. And we made some money on the first couple and everything was going good. It's like, let's buy some more. And then the interest rates turn on. But yeah, you're right. I love, like Kris Krohn says, you know, oh, he won't buy anything over the median price because he never gets caught holding cards.
- [40:26]
Abraham Gray
Right, right.
- [40:27]
John Gafford
And that's good. You know, it's good.
- [40:29]
Abraham Gray
Yeah. And I do the other thing I do a lot of. So every single home that I buy that I fix and flip, I pay cash for every single one. I use my own cash for everything. But I do buy a lot of creative deals. I buy a lot of owner finance and subject to deals. And that's how I mainly build up the portfolio that I have on top of what I already have. So I own a little bit over 200 and maybe 20 properties or so. That's like locations. Some of them are duplexes or quads or temps, but actual just addresses 220 or so. And the way I grow those right now is Bailey Mason, you know, just by buying owner finance and subject to them. So every single month, I'm probably buying about one a week. That's subject to our owner finance.
- [41:13]
John Gafford
So what's your buy box there? I mean, obviously you guys want.
- [41:15]
Abraham Gray
I just need the cash flow as long term rental.
- [41:17]
John Gafford
What's your minimum cash flow?
- [41:18]
Abraham Gray
There's no minimum as long as so there's six things I look at and I look at them all on a scale and if one's really bad and the other ones just have to be really good levers. So I cash flow is obviously the most important. I want the cash flow but I like for them a cash flow like 300 bucks. But some I have cash flow a lot more. Some are break even. I even have some that are negative. The reason why I buy some negative ones are because I'm buying it for way less than it's worth. So I could still sell it. Or maybe the interest rate zero. I have a lot of zero percent interest so I don't care if it doesn't cash flow. I'm building so much equity and the principal pay down is so much every month.
- [41:51]
John Gafford
Doesn't matter.
- [41:51]
Abraham Gray
It doesn't matter. So you know there's different things like that I look at. There's six things, right. So the interest rate is important. The, the amount that I'm paying for it like compared to what it's worth is important. The cash flow, the balloon, if there's a balloon on it. So when I buy subject to there's really never a balloon. But when I buy owner finances 5, 10 year. Yeah, it depends. You know some people want sooner, some people want longer. So the balloons, the balloons really important. I care about how much rehab is needed. When I buy these buy and holds I prefer them to be as fixed up as possible because for a lot of reasons obviously but. And then the last thing is how much money is it going to cost me to buy this like my entry fee. So that am I having to put down 10%, 5%, 20%. So all six of those things I just said kind of work hand in hand. If I'm buying it at a very low ltv then I don't mind paying a really high entry fee or I don't mind, you know, maybe not cash flowing but if I'm paying all the money I'm paying 100% what it's worth. I need to make a cash flow or I need to have a really good interest rate or the campy ability, you know the balloon has to be longer. So all these things kind of play. So there's not like one particular thing but I look at them all, all six together.
- [42:58]
John Gafford
What's your long term rental strategy? Do you have section 8 mixed in?
- [43:01]
Abraham Gray
Some section 8 mixed in but section 8 works really well in like lower income areas. If you're in like a medium or lower than medium income area then section 8 works really well. But if you're in like a medium or higher, I don't think Section 8 is that great in those. The reason why Section 8 works so well is because you could buy such cheap homes and you can get like 2%, you know, rent. But everyone I know that makes a lot of money and it does that they're buying like these homes, they're paying 60, 70,000. They're renting it for 1400, you know, so they're. You can't do that in the nicer areas. But I like Section 8 because, you know, the money's coming. There are some, you know, bad stories I have. Overall, it's fine. I like it.
- [43:39]
John Gafford
Yeah. But I, I love, I love Section eight by. I think it's great.
- [43:42]
Abraham Gray
No, no. Section eight is really good. If you do it correctly.
- [43:45]
John Gafford
Yeah.
- [43:45]
Abraham Gray
If you do it correctly and you buy the right types of homes. Well, yeah, you buy the wrong types of.
- [43:48]
John Gafford
And you put the right stuff in them.
- [43:50]
Abraham Gray
100%. Yeah, 100%. I'm just people that made a fortune on it. I know a lot of people that teach courses on how to. How to make billion dollars doing Section 8. But a lot of people just think, oh, Section 8 is great. So they could do it with. You got to do it right. Like it doesn't matter any single business out there or anything that anyone's doing really good out there. There's a way to fuck it up and be horrible. It doesn't matter. You could be in the best thing, but if you don't do it right, there's people that lose money and everything. There's people that make it. And even the worst things where you think is horrible, there's the best people in that industry are going to make a lot of money.
- [44:17]
John Gafford
Yeah.
- [44:18]
Abraham Gray
So it's like a section eight.
- [44:19]
John Gafford
Good. Yeah.
- [44:19]
Abraham Gray
If you know what you're doing, it's great. If you do it all wrong. Yeah. You could lose.
- [44:23]
John Gafford
Yeah. Problem. Let's talk about this because, man, that's a big portfolio to have 220 doors is a big portfolio. And when Covid hit back in 2020, did you have a fear that, like, oh, shit, I got 220 doors. People are gonna stop paying?
- [44:37]
Abraham Gray
No, not, not really. No. So I, I own a good bit of it free and clear. So I don't even have mortgage payments on a lot of it, but I just have people have to live that. I mean, most counties, you could kick people out pretty fast. In Covid, it was a lot harder. But there are like three counties in Georgia in Atlanta that are really tough if people don't pay, they're like, super, super. Like, they want them to stay as long as possible, even if they're not paying. So those counties I get a little bit worried on. So those, you know, I try to not by as much. Yeah, there's three counties that are really bad in Atlanta. But all the other counties, if someone doesn't pay, I mean, that's stealing. They just kick them right out. You go, you go to the judge, you go to the court, they're kicking right out. It's like, I don't understand how someone could just stay for a year and not pay. How is that legal? Like, if someone's hungry, can they go to the grocery store and steal?
- [45:28]
John Gafford
And apparently, yes, in California, you can do that.
- [45:32]
Abraham Gray
Not in the rest of America, but.
- [45:33]
John Gafford
From what I see on the interweb, I guess in California that is legal. You can't do that.
- [45:37]
Abraham Gray
That's a little crazy. But, you know, whatever. That's why I'm not in California.
- [45:40]
John Gafford
So it's nuts. So let's talk about private money lending. Because. Because you obviously, you put your own money to work, and I. And I've obviously. So here's the thing. You have three other partners on this.
- [45:50]
Abraham Gray
And the private money.
- [45:51]
John Gafford
No, no, no, no, no. I'm talking about your houses. Because I was going to say so.
- [45:55]
Abraham Gray
On my fix and flips.
- [45:56]
John Gafford
On your fix and flips, right. Because like an. An agent here came to me a couple weeks ago and was talking about a deal he just did. And he was like, yeah, you know, I took this house down. It's a million bucks. We're going to, you know, did this, and it's going to be worth this. And I said, okay, cool. I said, what's the, you know, what's the deal structure? And he goes, well, the guy that's doing the work is. He's going to do it, you know, at cost plus 10. I can see everything. And then we're going to split the money. I go, okay, cool. He goes, yeah, I put the down payment down and I levered. I go, okay, cool. What did you charge for your money? And he went, what are you talking about? And he goes, well, no, I took the deal.
- [46:27]
Abraham Gray
Now.
- [46:27]
John Gafford
I go, well, if you would have borrowed the money, would he have still done the deal? And he's like, yes. I'm like, then there's got to be a cost to your money.
- [46:35]
Abraham Gray
Right? Right.
- [46:35]
John Gafford
Like, you got to. You got to build some of that. So if you said. You said a lot of Stuff you own free and clear. You're bringing your own money to the table. You charge money. You charge your partners cost for that money or no.
- [46:45]
Abraham Gray
Well, keep in mind, on the buy and holds, I pretty much own all that. Most of the. Right.
- [46:50]
John Gafford
But the flips. You're financing too?
- [46:51]
Abraham Gray
I'm financing, but my partner is put in an equal share.
- [46:54]
John Gafford
Okay, so you are levering the fix and flips.
- [46:56]
Abraham Gray
No. So let's say it's me and two other people. Let's just say we all own a third each. If we buy something for $1 million, we're all putting in 333,000 of our own money.
- [47:05]
John Gafford
Okay, so everybody's just putting their own money.
- [47:06]
Abraham Gray
Yeah, yeah.
- [47:06]
John Gafford
Okay, got it.
- [47:07]
Abraham Gray
Like, luckily, partners all done good over the years. I've done lots of stuff with them. We all have plenty of money, so.
- [47:12]
John Gafford
Okay, got it.
- [47:13]
Abraham Gray
It's not like. Yeah, but if they needed to borrow the money, you're 100% right. I, I would charge them.
- [47:16]
John Gafford
Okay, got it. Okay, cool. Got it. Let's go back to private money lending.
- [47:19]
Abraham Gray
Yeah.
- [47:20]
John Gafford
So obviously you're lending on your own deals. So when did you start lending on other deals? And, and let's talk about that.
- [47:26]
Abraham Gray
Yeah, I mean, I, you know, to some degree, I've done it for over a couple decades. I've loaned some people here and there, but like one off stuff, um, I started making it like a much bigger business probably like five years ago where I started loaning more people. And then probably over the last three years, I've got where, you know, I have over a hundred and some people that I'm loaning money out to at all times. I actually use probably half my own money and then half of investors money. So starting I would say last year, about a year ago.
- [47:56]
John Gafford
Did you, did you have a right defund.
- [47:58]
Abraham Gray
I have, I do have a fund. Yeah, so I have a fund, but I do it a couple different ways. So I have people that put money in the fund, and then I actually have people that go directly on the security deeds or deeds of trust, and that's how they're protected. So I do it both ways. It works out really well. So right now I have probably close to like $20 million out in loans, and probably maybe 35, 40% is mine now, and the rest is just investors.
- [48:30]
John Gafford
And what, what deal structures are you looking for to loan money into?
- [48:33]
Abraham Gray
I only loan for fix and flips in the Atlanta market.
- [48:36]
John Gafford
First position.
- [48:37]
Abraham Gray
Yeah. 90, 95% first position. I do have some second position, but it's like you know, that's not what I'm really looking for.
- [48:43]
John Gafford
Yeah, but there's tough.
- [48:44]
Abraham Gray
There's some second position that, that makes sense. So I'll do them. But yeah, first position loans. Really. Georgia in particular. But what else.
- [48:54]
D
This episode brought to you by Progressive Insurance. Do you ever find yourself playing the budgeting game, shifting a little money here, a little there and hoping it all works out well? With the name youe Price Tool from Progressive, you can get a better budgeter and potentially lower your insurance bill too. You tell Progressive what you want to pay for car insurance and they'll help find you options within your budget. Try it today@progressive.com Progressive Casualty Insurance Company and affiliates Price and coverage match limited by state law. Not available in all states.
- [49:31]
E
Have you met All Modern? All Modern brings you the best of modern furniture. And right now through November 30, you'll score up to 70% off during their Black Friday sale. Prep your space for holiday hosting with deals on plush sofas, modern tabletop essentials and more. All on sale at All Modern. Then get them delivered for free in days. You heard that right.
- [49:52]
John Gafford
Days.
- [49:53]
E
That's modern made simple. Shop All Modern's Black Friday sale now through November 30th at allmodern.com Imagine what's.
- [50:02]
C
Possible when learning doesn't get in the way of life at Capella University. Our flexpath learning format lets you learn on your own schedule. A different future is closer than you think with Capella University. Learn more at capella.edu tv I I.
- [50:19]
Abraham Gray
Loan basically up to what I pay for it. So if I there's nothing in Atlanta I won't buy. Like there's not a property that I won't buy.
- [50:25]
John Gafford
It's just if they screw it up, you take it over.
- [50:27]
Abraham Gray
Take it over. So out of thousands of loans I've done, I've had to start the foreclosure process I don't know, maybe like 15, 20 times. And I've only had the foreclose on two. So there's only two properties so far that I've actually taken back that I've, I've sold at the foreclosure auction. But I made more money on them as soon as they they sold. I ended up buying them myself and just made an extra 25,000 on each one I have had where I've I started foreclosure process and people are like, look, I don't want to get foreclosed on. Let me just give you the deed. And I made more money on those. Yeah. And Stuff like that. So, you know, I don't like doing that because I'd rather just keep getting the interest. But I know I'm going to make more money if people. Unless the market just drops in half overnight. But I have, you know, stuff in place in case that happens.
- [51:07]
John Gafford
What are your standard terms? You're, you're lending on right now?
- [51:09]
Abraham Gray
So I am lending at one and a half percent a month. So for every 100,000 I loan you, someone's paying me 1,500amonth. They pay me monthly interest every month. And then my investors, I'm paying like 10, 12% a year. So let's just say I'm paying them 12%. So I'm paying for every hundred thousand. I'm paying my investors 1000 bucks and then I'm charging 1500. So I'm making 500 bucks on every hundred thousand.
- [51:31]
John Gafford
Any points up front?
- [51:32]
Abraham Gray
Yeah, I charge a half a point, and that's just because I go inspect it and do it.
- [51:35]
John Gafford
Yeah, that's super fair.
- [51:37]
Abraham Gray
Yeah. So a lot of people are like, oh, my hard money lenders only charge me 1% a month. I'm like, all right, cool. But you're paying three points up front, and if you want, I'll charge you three points up front and then charge you 1% a month, too.
- [51:46]
John Gafford
Oh, do we?
- [51:47]
Abraham Gray
I will do that also. But everyone ends up paying more that way because most people, most people are out of the deal in six months or less. And if you're paying three points upfront and 1% a month, you end up paying more money, especially if you get appraisal fees and origination fees.
- [52:01]
John Gafford
That's super, that's super fair, dude. I mean, we just had a guy come to us for 2 million. We're going to charge them 2 points and 15%.
- [52:07]
Abraham Gray
Yeah.
- [52:07]
John Gafford
For 16 months.
- [52:08]
Abraham Gray
Yeah.
- [52:09]
John Gafford
Yeah.
- [52:09]
Abraham Gray
And that's, that's probably similar to what I'm doing.
- [52:11]
John Gafford
Yeah.
- [52:12]
Abraham Gray
If you, you know, more points, less interest. I mean, it all comes with one half dozen the other.
- [52:16]
John Gafford
Yeah, yeah.
- [52:16]
Abraham Gray
So, yeah, that's the type of thing I do. But I do it all in Atlanta. I only do Georgia. The reason why I picked Georgia, first of all, I'm there. I know the market.
- [52:23]
John Gafford
Yeah.
- [52:24]
Abraham Gray
But also Georgia has like, the most friendly laws in the country. So it takes 30 days to foreclose in Georgia. You just have to put the add up in the local newspaper. I think there's 159 counties in Georgia, so every county has their own newspaper. You have to put the, the that you're that you're going to foreclose in there for 30 days, and then the first Tuesday after the first Tuesday of the next month, after those 30 days, you can foreclose. So if you time it right, it can be 31 days and you can foreclose. Time it wrong, it could be 60 days. But between 30 and 60 days, you can get any single property off the books. And then there's something called usury laws, which is how much you're allowed to charge people.
- [53:01]
John Gafford
Yeah.
- [53:02]
Abraham Gray
You know, so it's not predatory lending. And Georgia at 60%. So 60. Yeah. Six. Zero. Yeah. So I only charge like 18, 24 on the really high side. So I'm super low.
- [53:13]
John Gafford
Yeah, that's wild.
- [53:14]
Abraham Gray
Way under it. But there's a lot of states that are like 18.
- [53:16]
John Gafford
Yeah, yeah, yeah.
- [53:17]
Abraham Gray
There's a lot of states that are 20, 40. There's a few states that have no user laws. You charge wherever you want.
- [53:21]
John Gafford
Yeah.
- [53:22]
Abraham Gray
But so just Georgia works out really well. You could. I could charge. I'm never going to charge more than the usury. The only time I charge 60% is for late fees. For late fees, I do charge 5% a month. But, you know, besides that, you know, most people aren't late if they are, you know. No, it's very little. People don't want to be late because I'm loaning them an amount that they have so much equity that they would be stupid to let me take the property over.
- [53:46]
John Gafford
Yeah, well, you know, it's like always one of my favorite things. Equity doesn't go to foreclosure.
- [53:51]
Abraham Gray
Yeah. It really just doesn't.
- [53:53]
John Gafford
Very rarely, in no case, because somebody's going to do something to get that done.
- [53:57]
Abraham Gray
People that have no idea what they're doing, potentially. Like homeowners that live there that no idea what they're doing potentially not someone that's in the industry, you know, I don't.
- [54:03]
John Gafford
I disagree with that. I think a homeowner that doesn't know what they're doing, if there's equity and it's on the foreclosure log, there's 30 people knocking on their door.
- [54:10]
Abraham Gray
There are 30.
- [54:10]
John Gafford
Zero chance.
- [54:11]
Abraham Gray
100% right about that. That's how we buy so many good deals. Yeah, but. But I'll tell you, I've seen a lot of these people be so stubborn where they just let the house go. You've seen that, too. You've had to have seen this.
- [54:21]
John Gafford
I don't. Yeah, I don't know. I don't know. I don't Know that I've ever seen really equity go crazy unless somebody, unless somebody died and the kids just don't know what the hell's going on. Which. That happens.
- [54:30]
Abraham Gray
That happens too.
- [54:31]
John Gafford
That happens.
- [54:31]
Abraham Gray
I mean, there are people, there are people that are so stubborn and so prideful. Like you're like, look, let me help you out, let me give you some money. They're just like, no, no, no. They just want, they don't want to listen to you because they think you're, you know, I don't know, they think they're too good for you.
- [54:42]
John Gafford
Part of the machine.
- [54:43]
Abraham Gray
Yeah. So there's people like that, you know, they're idiots, but I see that to.
- [54:46]
John Gafford
Part of the machine. So you mentioned that you've got other people that have come to you. So you teach people how to raise private money. Yeah.
- [54:52]
Abraham Gray
Oh, totally. Yeah. So there's so many people that asked me how to do it that I started doing these masterminds about a year ago. And these particular masterminds I do probably three a year and probably like 100 people that come and I teach from A to Z, it's two full days that I teach every single thing about how to find people that need to borrow money, how to find people that have money that want to put in it, how to underwrite deals, how to do all the paperwork to where you're safe, how to, you know, what you need to file, what type of, you know, deed of trust you need. And promissory knows title insurance, all these different things. I know it's two days of just going through and then a lot of underwriting to making sure that people know how to underwrite a deal and make sure that they're loaning the right amount and not learning too much because you do everything right. But if you loan somebody more than it's worth, you're never going to. Yeah, yeah.
- [55:39]
John Gafford
Problem. So I mean, that's so interesting because a lot of people listen to this probably thinking, oh yeah, private money lending. I don't have millions of dollars to lend. You don't have to.
- [55:46]
Abraham Gray
No. So I have people that do this, that I've taught, that have millions and millions and millions of dollars out. It's none of their own money. Zero.
- [55:53]
John Gafford
Yeah, they're just, they're just making a fee for basically connecting the dots for people.
- [55:57]
Abraham Gray
That's all it is.
- [55:58]
John Gafford
Being, bringing the world together, being a connector of people. That's what it is.
- [56:01]
Abraham Gray
Exactly, exactly. And you know, I do it in a way that everyone's safe. So everyone pays me the monthly Interest and I pay everyone monthly answer. So every single investor that I've had for years now, years and years and years now, they get every single month before the first of the month, they get, you know, a wire or some people want to sell or whatever, but either a wire or Zelle. I think everybody. Everybody gets every single month.
- [56:20]
John Gafford
I love that, dude. That's awesome, dude. Abraham, you are killing it, my man. You are balling out in ways that, you know, for. For a man of your age, which is really surprising. That you still have the cognitive ability to do all these things is shocking to me. But. But, yeah, there you go. So he's gonna choke me out now. We're not choking him out. No, no, I'm just kidding. No, that'd be fun.
- [56:42]
Abraham Gray
That'd be a good ending, dude.
- [56:43]
John Gafford
No, it would not be a good ending. It'd be a permanent ending to this show. Be an absolute permanent ending. Well, dude, look, man, yours, dude. If they want to find more of you, how do they find you? Where do they connect with you?
- [56:53]
Abraham Gray
I mean, so I have a YouTube channel you can go to. Abraham Gray. G R A Y. And you know, check. Check stuff out there, obviously. Follow me on Instagram, Facebook, you know, LinkedIn, all these places and reach out to me. I answer everyone's message. You know, if you have deals you want me to buy or loan on or you're looking for stuff. Yeah, hit me up. I'll give you, you know, my email address, abrahamma.com. send me. Send me whatever you want.
- [57:19]
John Gafford
Send me the deals.
- [57:20]
Abraham Gray
Send me the deals and we'll talk. I answer. I'm pretty fast on my emails. I'm pretty fast on answering all my messages.
- [57:26]
John Gafford
I love it. I love it, dude. Listen, if you took nothing else away from this today, like, nothing else away, take this. This is a dude that really kind of raised himself from eight years old on and look at what he's become. Fuck your excuses, man. You don't have any. Go out and get it. We'll see you next time. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope. Hope you got a bunch out of it, or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to escapingthedrift.com. you can join our mailing list. But do me a favor, if you wouldn't mind, throw up that five star review, Give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway. In the meantime, we will see you at the next episode.
- [58:17]
C
Imagine what's possible when learning doesn't get in the way of life at Capella University. Our game changing flexpath learning format lets you set your own deadline so you can learn at a time and pace that works for you. It's an education you can tailor to your schedule. That means you don't have to put your life on hold to pursue your professional goals. Instead, enjoy learning your way and earn your degree without missing a beat. A different future is closer than you think with Capella University. Learn more@capella.edu.