Real Estate Investing School Podcast: Episode 124

REAL DEAL: Parade of Homes Drama

Date: January 18, 2024
Host: Brody Fawcett
Guest: Zach Memmott

Episode Overview

This episode dives into a unique "real deal" scenario—Zach Memmott’s journey to purchasing what became his dream home, complete with all the drama and negotiations of a Parade of Homes property. Departing from the typical focus on cash flow and pure investment strategy, the discussion unpacks the mindset shifts, creative financing, and personal motivations involved in moving up from a house-hacked starter to a high-end custom property.

Brody and Zach explore not just the numbers, but also the emotions, tactical wins, setbacks, and nuanced choices every real estate investor faces when considering the balance between investment and lifestyle.

Main Discussion Points & Insights

1. From House Hacker to Dream Home Seeker

• Background

  • Zach had lived for years in his starter home, which he had efficiently house-hacked with a basement rental.

    “There was a basement apartment, so we’ve rented that out since we lived there, which left like 300 bucks remaining for the mortgage.” (03:20)

  • Despite increased income, his lifestyle remained unchanged, prompting a desire for something new and exciting:

    “Nothing in my life has changed drastically… My income had, but driving same vehicles, living in the same house… we should shake it up.” (03:53)

• Motivation

  • The move was less about materialism and more about breaking out of comfort and fostering new experiences for his family.

    “Whatever you wake up to, in a lot of ways, determines how your day goes.” (09:15) “I want to feel something different when I wake up in the morning, and I want to feel something different as I go to bed at night.” (09:45)

2. The Search: Tight Criteria & Market Shifts

• Zach’s search was highly focused on a specific area and type of home (“east bench of Ogden or in South Ogden between this address and this one” (04:45)), but the volatility of prices and scarcity of interesting properties was challenging.
• Earlier opportunities were passed over; by the time they resurfaced, the market had shifted dramatically—homes previously listed at $1.5m were now close to $3m.

  “That home now is probably like 3 million bucks… at the time, homes were just cheap compared to what they are.” (06:18)

3. The Discovery: Walking the Potential Dream House

• Zach stumbled on a new construction with unique amenities (basketball court, tall ceilings) though it was farther from his preferred commute.

  “I just remember being in… the living room… ceilings are super tall and it’s got a basketball court in it. I’m just like, this would be sick to raise my kids here.” (07:06)

• The emotional resonance of the new home became a driving force.

  “It’s way more exciting to wake up there. Honestly more fun to turn the lights off at night… I feel way more gratitude living there.” (11:09)

4. Financing Strategies: Leveraging Existing Equity

• Zach utilized a Home Equity Line of Credit (HELOC) from his first, cash-flowing home as a down payment strategy for the dream property.

  “I just did a HELOC on it… bought the house for 320 grand… appraised for 600… owed 280. So they gave us 320 basically back… the upstairs tenants and the downstairs tenants pay the mortgage and the HELOC payment and it still cash flows.” (18:32)

5. Parade of Homes Drama: Negotiations and Curveballs

• Initial Negotiations

  • The house had been sitting for 200 days, listed at $1.7m. Zach offered $1.68m, seller held out, then indicated it was being reserved for the Parade of Homes, which required additional upgrades (pool, heated driveway), pushing the price to $1.9m or more.

• Zach’s Resolve

  • Zach refused to walk away after being told no, seeing “no” as “not that way, or not right now”—and looked for alternative solutions.

    "Two things I will rebel very hard against is being told ‘no’ or ‘I can’t.’" (19:27) "In a lot of instances in life, ‘no’ doesn’t necessarily mean that. It just means not that way or not right now..." (26:54)

• Customization & Conflict

  • Zach negotiated for improvements (e.g., replacing the planned vinyl pool with a gunite pool), leading to tension with the builder (who was also the listing agent's husband).

    “I want a gunite pool with the spa built in… they were not happy… my real estate agent and the builder could not get along… so I just cut him out entirely.” (20:34–21:13)

• Price, Concessions, and Deal Structure

  • Final sale at $2.299m, but involved significant upgrades (fully finished landscaping, furnishings, the custom pool) with Zach bringing a total of $500k down, $180k of his own and the rest from the HELOC.

    “I only put 180 grand of my own money down on this house, but we put 500 total down because we had the money from the HELOC.” (23:09)

6. Takeaways & Mindset Shifts

• Embracing Discomfort

  • Zach emphasized the power of getting uncomfortable as a key to growth and success in both life and investing.

    “I didn’t realize how complacent I had become… If you’re willing to get uncomfortable, that’s probably the biggest hurdle.” (12:20, 28:18)

• Negotiation is Problem-Solving

  • The hosts highlighted that real estate success often comes down to asking the right questions to find a win-win, not being deterred by an initial "no."

    “If someone says no… that is all real estate investing is—figuring out how to create a win-win.” (26:13) “So many times it’s just a matter of asking the right questions, not walking away from the deal.” (26:41)

Notable Quotes & Memorable Moments

“I want to feel something different when I wake up in the morning, and I want to feel something different as I go to bed at night.”
— Zach (09:45)

“Two things I will rebel very hard against is being told ‘no’ or ‘I can’t.’”
— Zach (19:27)

“If someone says no… that is all real estate investing is, is figuring out, hey, how can I create a win-win?”
— Brody (26:13)

“If you’re willing to get uncomfortable, that’s probably the biggest hurdle.”
— Zach (28:18)

“No doesn’t necessarily mean that. It just means, like, not that way or not right now or not in this… whatever.”
— Zach (26:54)

Key Timestamps

• [02:54] — Beginning of Zach’s story: what motivated the move
• [03:20] — House hacking and the economics of the first house
• [04:44] — Shifting mindset from contentment to seeking change
• [06:18] — Price appreciation and challenges of upgrading in a shifting market
• [07:06] — Walking the new property, envisioning family life there
• [09:15] — The emotional impact of environment on mindset
• [11:09] — Gratitude, new routines, and the surprising effects of change
• [18:32] — Creative financing: using a HELOC
• [19:27]–[22:11] — Negotiation drama: parade requirements, pool dispute, personalities clashing
• [23:09] — Deal structure: price, cash outlay, HELOC leverage
• [26:13] — Brody distills main investing lesson: win-win problem-solving through negotiation
• [28:18] — Final advice: radical honesty about comfort, risk, and action

Final Words & Takeaways

• Push beyond comfort if you want to achieve more—financially, personally, or experientially.
• Creative financing (such as leveraging home equity) and problem-solving negotiation can make even big moves achievable.
• Change—whether in your investments or your environment—can bring unexpected gratitude and perspective.
• Don’t accept “no” at face value: get curious, ask questions, and collaborate to create solutions.

Closing Quote:

“If it’s a good deal… figure it out, make it happen.” (28:54) — Zach