← Karma & Chaos with Kail Lowry & Becky Hayter
Karma & Chaos with Kail Lowry & Becky Hayter
FOR THE HAYTERS S2E3 - Heroin Addict to Self-Made Millionaire
00:15:05
Listen as Josh recounts his journey through addiction, his battle to recovery and finds success in the real estate world. To hear the full episode go to: https://www.podcastone.com/pd/For-The-Hayters Share your story at forthehayters.com Follow...
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- [00:09]
A
For the haters. For the haters. Come on, do it now or later. It don't matter what your name is. Share your story. We'll be waiting.
- [00:30]
B
All right, what's up everybody? And welcome back to for the haters podcast. Today we have a special guest. But before we introduce him, for those of you new here, my name is Becky. I am the host. And then we also have Laura, who's our co founder and writer. Laura. Hello. Hello. Welcome back everyone. And we have a special guest today. Josh.
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A
What's up everyone?
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B
We're really excited to have you here and I'm really excited to, you know, jump into the conversation. So if you could kind of just tell us a little bit about yourself current self.
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A
Okay.
- [01:06]
B
I would like your current self. What you do.
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A
Okay. My name is Josh Axe. I currently live in Pennsylvania, northeastern pa, Represent. We're hailing out of Kingston right now, which is an awesome little town. And currently I'm a real estate investor. So it's my full time kids gig. I have a flipping business where we flip houses. Past 18 months, we've probably done about 30. And we also have a rental business that we use the profits from the flips to buy rentals. And we have about 52 rental units. So pretty big portfolio.
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B
And. And you came from just, you know, real estate in general before that.
- [01:46]
A
So before that I was a real estate agent and I had lived in Phoenix and that's where I got my real estate license. I started in property management and you know, I really saw the value of, you know, my job as a working for the property management company was working with investors to sign up for our services. So I realized that these guys were collecting rent, the managers were managing the property and they were just getting paid. I'm like, that's brilliant. You know, and they would tell me what the numbers were because I would have to tell them what it would rent for. So I'd, you know, they'd say, oh, well, what's this going to rent for? You know, my mortgage and taxes and insurance are $600. And I'm like, well, you're going to make $1,200 a month in rent. They're like, great. So I make 600 bucks after fees and stuff. I'm just like, geez, if I had ten rentals, yeah, I can make six grand a month. How the heck do I do that? Yeah, right. So then that's when the wheel started turning towards real estate investing as opposed to being an agent. So I did really well with that company and was signing Up a ton of owners, and they changed their commission structure to where it wasn't as beneficial for me. So I started looking around, and my wife's cousin was working for a different management company. So, you know, I started that conversation, and the owner of that company said, oh, well, you know, if you do as well as you do there, we'll pay you ten grand a month. I'm like, oh, great, you know, let's do it. So move to that company. And they weren't doing the same type of advertising. They weren't doing, you know, they weren't running the same type of business. So the success wasn't as easy as I thought it would be, which, you know, life lesson there. So I. You know, one day the property manager comes walking down the hall and he's like, hey, do you know how to sell a house? I'm like, yep. And I had never sold a house before. Right. I didn't know what the hell I was doing.
- [03:44]
B
Just say something with conviction.
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A
Yeah, yeah. So anyways, he's like, all right, cool. This owner wants to sell. Give him a call. So I give this guy a call, and I don't know what the hell I'm doing, but end up getting the listing. I figure it out. I mean, you can learn anything online, including how to sell a house. So I figure it out, get the paperwork signed, have the broker review it. He says it looks good. So I don't know. Sure. So I end up selling it, and I made like four or five grand just like that. And I'm like, this is incredible. How do I do that 20 more times, 100 more times, whatever. So, you know, started selling a lot of houses in Phoenix, moved to northeastern Pennsylvania, where, you know, Phoenix, your median home price is 200,000. Right. So 6% of that, you get 3%, whatever. So you make 6 grand. Well, here, the median house price in Kingston, for example, is 100 grand. So it's. You immediately make half as much money, you know, based on the number of home sales that you can do. But also, I came into it in this market where I was thinking, this is going to be so easy because when we moved, no one would return my phone calls. And I'm like, I am a communication expert. Like, I got this figured out.
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B
Yeah.
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A
But the way that real estate brokerages are structured here is completely different, where they. They get a large portion of your commission when you sell a property. So they would eat up a lot of that money. So, you know, I tell people, when you're selling a $50,000 house, you only get 3% of that, right? So 1500 and then you give your broker 30%, you're taking home 1050. Then you have self employment tax, you have health insurance, you have all this stuff. I'm like, man, I'm not making any money. I can't do that, you know, because Lauren was going to school, so started looking again at real estate investing. And at the time I had met my business partner who's one of our really good friends, and his wife went to school with Lauren. So we went for dinner and a couple months later we started a company together. Didn't really know what we were going to do with it, but figured, okay, well do real estate investing to some capacity. And we ended up finding this rental property that was a 35 unit complex. So we're like, I'll send him a letter, you know, like, see if he wants to sell. So we did and he responded. This guy lived in Mexico, right? So we're like, that's cool, you know, he's just collecting rent, whatever. But then we started like diving into the books and there was a lot of interest issues with their management, right? And I had a history of property management, so I saw all of these errors and my business partner did as well. So, you know, we're going through negotiation. We're seeing that his tenants are paying cash, they're paying literally every week. So it was just so mismanaged that we're like, okay, this could be a really great opportunity. So as we continue to go through it, we got really creative during the negotiations because we knew that the building likely wouldn't appraise for what we were under contract for, which was like 1.3 million or 135 something around there. So we're going through this with him and we say, well, we'll buy the building, but we're afraid it's not going to appraise. So can you do seller financing, which is where the seller essentially becomes the bank for us. So we don't have to come out of pocket with any money, but we can still buy the building, which eliminates the need for an appraisal. Right. So we structured a way. He was taking home about $6,000 per month. We knew that. And he lived in Mexico, so he didn't deal with any of the management. He had a property manager, blah, blah, blah. So we figured out a way for him to get paid. Like it was actually like $7,000 a month through him carrying the mortgage. So he became the bank for us. So ended up getting this Deal. And it was phenomenal, right? So we increased the rents, we, you know, started billing back some of the utilities, we started renovating all the units, putting all the cash flow that we were getting from the building back into rehabbing it. So we did all this stuff. And it's actually really cool how the value of commercial real estate is calculated because it's based on the net operating income. So however much money after your taxes, insurance, everything, whatever is left, that's your net operating income. And it's, it's, there's a multiplying effect. So in Kingston, it was a 8 cap, right? So an 8% cap market. That's how they factor what the prices of buildings are going for, because that's the trading rate, right? So, for example, we made a phone call the day that we bought that building and we cut the insurance from $16,000 per year to $8,000 per year. So our NOI increased $8,000. Well, since it's an 8 cap, that increased the value of the building $100,000 in a five minute phone call. So that's what's really cool, right? So everything that you do and in that type of real estate increases the value significantly.
- [09:04]
B
So that's great. Wrong line of work.
- [09:07]
A
Yeah, so it's really cool. And, you know, I only know this because, like, literally I spent years, and Lauren, my wife, can attest to this. Every single day I was listening to podcasts about real estate. Every single day. I was reading books about real estate. Like, I completely, it consumed me because I knew that, man, there's so much potential in this. So I just, I dived in and, you know, the rest is history. So. Sorry, that's a long answer. The quick version of who I am now.
- [09:38]
B
It's funny because I was listening to a podcast and real estate has always been something that like, you know, triggers my mind and thought process. But I was listening to a podcast that Grant Cardone was a guest on.
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A
And that dude's incredible.
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B
Insane. He's insane. And you know, he was saying, he was talking about how his father died when he was young, he was like 13. And he was talking about how the biggest mistake that that generation did and the current generations think they have to do is buy a home for their family, right? And he talks about, you know, how his dad had passed away and all of his money was in this house that they couldn't no longer afford because he wasn't making income. And he's like. And he left us with nothing, right? And which was why he got into Real estate. So when he passes away, he has residual income that's constantly flowing into, into his family. He was like, talking about how his first investment was like five grand or something. And he's like one of the biggest real estate people in the world. And he was. He also talked about how, you know, it's inevitable that the economy is going to crash. Right? And he's like, and when that crashes, people still need to live somewhere. So he buys like all economically friendly housing that he's like, they're going to have to live somewhere, they're going to have to rent it. He's like, my business isn't going anywhere. And so after that, I remember coming home and being like, let's, let's, like, let's look up a multifamily house. Like, what? And he also talked about how dumb people are to save money. He was like, if you don't have enough money to invest in real estate, invest in yourself until you have enough money to invest into real estate. He's like, don't let money sit there. He's like, you know, invest into something that's going to make you money.
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A
Right.
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B
But that was a long rant. But real estate, like, gets me really excited.
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A
So for anyone listening, he has a phenomenal book called the 10x Rule. If you haven't read it yet.
- [11:44]
B
I haven't. I bought like a smaller version of it. I have it actually, but like, I haven't read it. No, it's like, it's like a you. He, like, I follow him and he was doing some promo, like basically like a spark notes of it he would send you for free.
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A
Oh, nice. So it's a great book. You know, it, it really changes your, your perspective of what you need to do to be successful. And it's had a huge impact in my personal life and in my business.
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B
Does it lend itself to any career.
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A
Or is it specific to. So he talks about, like how to be successful in any industry, essentially. And a lot of what he teaches is like. So he made a lot of his money from sales training, which, if you're not aware, everything in life requires sales.
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B
Right.
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A
When you're going to the, you know, the grocery store, you're either selling or you're being sold. Right. And so you. He has a bunch of different books that talk about that, which those skills are applicable in any line of work, you know, so you have to sell yourself. Exactly.
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B
Not in like a prostitute way, but yeah. So now this is very different than most beginnings of our podcast, but the reason that we wanted to start with this, and because it kind of speaks to how successful you have become. And you're 29.
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A
29.
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B
29. And fairly young. I mean, to. Fairly. Yeah. I mean, there's people in this room that are in their early 20s. So, I mean, in hindsight. What do you mean? What are you making fun of me for? Because he is young. Yes. I think we're all. We're all 28, 29. I think. I think we're very young.
- [13:26]
A
Well, yeah, we're still in, like. We're still in the first inning, you know. Well, maybe like second, but.
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B
So you're young. You're very successful.
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A
Thank you.
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B
And, you know, it wasn't always. This wasn't always the path that you were going down. Right. This wasn't the life that you had been creating for yourself. And, you know, you had a lot of things that you had to overcome. So I guess to jump into the beginning if you want to kind of talk about your childhood and then. And leading up to that, for sure.
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A
So. I was born in Salt Lake City, grew up in West Valley City, which is kind of like the armpit southwest of Salt Lake City. So kind of a rougher part of town. It wasn't bad, you know, but there were, like, my group of friends made the neighborhood kind of bad, you know, like, we just did stupid crap all the time and got into a bunch of stuff we shouldn't have. So, you know, I. When I was in high school, you know, it's kind of a critical moment in every young adult's life. My parents got divorced. I had just broken up with a girlfriend who I, you know, thought was the one. Yeah, you know, like, you're just. That's that naivete, you know? So that happened, and it was kind of a moment where my best friend at the time had been smoking weed, but keeping it from me because I was always really against it.
- [14:52]
B
I appreciate you listening this far. For the Haters is where we dive even deeper to hear the rest of this episode. Make sure to subscribe to for the Haters. Remember, you are not alone. Your support means so much. Thank you.