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Real Estate Investing School Podcast
224. REAL DEAL: The Real Estate Roller Coaster
00:34:42
Welcome to the Real Estate Investing School Podcast. Have you ever thought to yourself “how do I apply all of these podcasts I've listened to into real life?” If so, then this is the interview for you. Noah, a successful real estate investor who...
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- [00:00]
A
What's up? Welcome back to another Real Deal episode. This one's going to be short. Sweet, but so good. We actually have had this guest on our long form podcast before. One of our first few episodes. Go check that out. I don't know what episode is off the top of my bat, but go check it out. We have Noah Evans in the house. What's up, Noah?
- [00:30]
B
What's up, brother? Thanks for having me back on.
- [00:32]
A
Yeah, this is gonna be fun because Noah and I are, are really good friends and it's just easy to talk with Noah and maybe it's just. Maybe you. Maybe you just make everybody feel that way. Maybe it's not just me, it's just you, bro.
- [00:44]
B
It's just a little bromance we have going on.
- [00:47]
A
Well, dude, you've done, you've done some cool stuff in the real estate space. Obviously you always have your ear to the ground with everything that's going on. Noah's super connected with a bunch of the real estate investors out there. Always seems to know, you know, what people are doing, what projects people are working on. Give us a quick background on you, just like super quick. And then we'll dive into this deal that we were talking about that I'm excited for people to learn how they can go and basically replicate what you did.
- [01:14]
B
Yeah, absolutely, man. I mean, it's always so fun to chat with you about real estate because I always have to give you credit that you're the guy that actually inspired me to go into this. Like, I get. I almost cried because it's pretty cool. Like, you know, not to get weird and emotional about it, but it is really cool. Like, it's a full circle thing and I'm very grateful for our long term relationship and that we've maintained and become closer recently too, but also maintain a friendship for a long period of time. So, yeah, I mean, in college I watched you buy a couple of rentals. I watched you share some stuff on it on social media. And then when I moved to Washington, lost all my connections, all my entrepreneurial, like, startup world that I was building in Utah, I lost it all and went and went. Had to go work a job at Enterprise to support my wife through medical school. And I was like, dude, this is not working. Like, I was like six months in, I was like, this is, this is not what I'm supposed to be doing. So I hit you up. I was like, dude, where do I start? Download a Bigger Pockets episode. Found a guy named Elliot Smith that lived like, like an hour and a half. Away from me, found out what he was doing. It felt real. Went after it, you know, failed forward. Took a long time to start making money, then kept failing forward. Took even longer to like scale it to something. And then like two years ago I got into like my first or two years ago I started scaling my flipping business. So I went from doing like one at a time to being able to do multiple at a time. We got up to like maybe 20, 30 flips a year. Pretty crazy. Don't ever want to do that again. There's like way easier ways to make money, I think. But it was cool. I acquired some rentals in that time period, in that, in that time frame as well. And I learned a ton, man. I mean the education is worth way more than any dollar amount. Just becoming a competent business person and becoming less afraid of failure. Once it slaps you in the face a couple times, you're, you're less, you're less afraid of that slap coming. So.
- [03:00]
A
Yeah, that's a, that's a great way to put it. No, I think we underestimate how much there is to learn from our failures. And these failures turn into, you know, our favorite failures. And I know, you know, being in the flipping business and kind of like especially in Idaho where you're at, getting kind of caught in like this high, high market and then all of a sudden things just took a tank for a little bit. I know you're feeling that and I'm sure you've learned a lot from that and just like, like learning how to like you said, get slapped in the face sometimes but like come back bigger, better and stronger because of that. What's up guys? Thanks so much for tuning into the show. I have an announcement. In just a few weeks we are hosting a live event called the Cash Flow conference. This is April 29th. This is an in person event where you can come and learn from expert real estate investors and how to get to the next level in your real estate investing career. So you're going to be able to network with other individuals. We'll have about 300 people just like you all across the board. Beginners, intermediate, advanced and come together to network and to get better, better at investing in real estate. We'd love to see you there. There's still time to snag a ticket. Click on the link in the show notes and enjoy the show.
- [04:18]
B
Yeah, absolutely man. So it, I would say like the first couple losses are super hard because you go from winning, winning, winning and the market as it appreciated. I just flipped more and More houses, right? So it's like the ego tells you that you're more responsible for your success than you are. And so sometimes there's external factors, sometimes there's timing that plays a huge part into it. But then I think it's on the other side. You have to forgive yourself and be gracious to yourself when the market goes down, right? So you have to say, like, hey, there's some things that are out of my control. I probably could have flipped this faster. I probably could have kept the budget tighter. I probably could have held people more accountable. And those are all things that I'm growing and I'm learning every single day. And I'm definitely, like. I would say my experience in my ability to, like, run a project to a t is probably 150 better today than it even was, you know, six months ago, let alone, if I go back, you know, 36 months ago. Holy crap. I'm not even the same person. So I think that's actually what really people should focus on, because there's a lot of people that are probably going to be experiencing losses over the next couple months, if they haven't already started experiencing them, is focus on how much you've grown as a person and how much more capable you are rather than worrying about a dollar amount. I mean, you and I talked about this, but, like, money comes and goes, man. Like, one month you can make a million bucks, and the next month you can lose it all. But you as a person haven't changed, or hopefully you've changed in a positive way and you're more capable. Right. But it's like, I mean, really, what's important is more so, like, your connections with people, my relationship with you, my friendship, you know, the fact that I could call you up anytime or with my family or with my dogs or whatever. So I think that's an interesting perspective to keep as the waters probably get rougher for most people coming up the next couple months.
- [06:01]
A
Yeah. Yeah, I love that. That's good, dude. And, yeah, it's just. It's cool. You can take a loss and focus on what you learn from it. I just think that's such a powerful concept, and it's kind of a best practice to even evaluate yourself at the end of every single day. Maybe it's a certain few categories that you use, but, Ivan, just like. Like, one through ten, how did I. How did I show up in these categories? And it's like, okay, well, why Wasn't I a 10? And just writing, okay, this is why, like, I can Improve. Improve on this tomorrow and not focusing on the bad as much as just like, oh, yeah, I realized I could have done better. So now I can kind of course correct before I get too far off track and work my way back onto the path that I want to be on. Dude. Yeah, man. This is, like, already this could be something. We could just go a million different directions, and it's going to be so good no matter what, because you're good at what you do. It's cool that, like. Yeah, one, it's cool. I didn't know that I kind of inspired your real estate investing journey. Well, I did. I know that now, but I didn't know until you had me on your podcast, which is called Chasing Freedom. So go check it out. If people. I'm just huge proponent of just getting as much information as you can and then applying what you learn from it. But I was just going to say it's interesting that that happened and I pushed you towards bigger pockets podcast, because that's like, for me, that was where I could just get information because I didn't know anybody around me that was teaching these things. And so it's cool. We both have platforms where we're, like, helping educate people, and we're passionate about that and especially on the podcast side of things, because that's exactly how we learned a lot of the stuff that we know now. So cool to kind of like, see that and see that drive with both of us to go and spread the love and share that, because that's the platform we've learned so much on.
- [07:54]
B
It's so true. I think something else that we should share with the people listening that's really cool is had you not been sharing what you were doing, I wouldn't have known, you know, and it is. It just felt real to me because I knew you from school, so I was like, well, dang. Brody's out there buying real estate. He went to my school. He lived in the town I lived in. Like, that means it's possible for even a person like me. Yeah, I think, like, it's now it's. And that's why it's been a. It's been a purposeful thing for me to make sure that I share my wins, my losses on social media, because I don't ever know who that's going to impact. And, like, these are cool moments, dude. Like, I hope that there's a hundred opportunities for me in the future to hear from somebody who said that something I said on a podcast, put in a video, or put out there on social media that it inspired them to go chase the life of their dreams. Like, that's a. That's a cool moment, man. Especially for you because I turned out so awesome. No, I'm just kidding.
- [08:50]
A
I was gonna say, are you gonna start blaming all your failures on me now or what? I'm just kidding, dude.
- [08:57]
B
You're.
- [08:57]
A
You're crushing it. So I'll. I'll take any in. Even if it was a half of a. Half of a percent, I'll. I'll gladly take it. So. But, dude, I'm. I'm. Let's dive into this deal. I always get sidetracked on this. This is supposed to be the Real Deal episode. I'm like, shoot, we're going, no, stop, stop. Whoops. Whoops. Just cause it fun to talk and jam different topics. So we'll dive into the deal so people can get straight to it and learn from it. But tell us about this deal you're going to talk to us about. It's a recent one that you've done. There's a cool spin to it. Hasn't been talked about this type of a deal before on this show. So I'm excited to just dive into it. But give us an overview really quick on what this thing is.
- [09:37]
B
Yeah, absolutely. So I bought this in April of 2022, which, if you're in the Boise market, was a horrible time to buy houses because it meant you were going to be sell in like Q3, Q4 of 2022, which is right when the market started to crash. But either way, my first mistake, my number one mistake. And I'll describe the property first, but the property is basically this little distressed farmhouse on three acres. So I had, you know, it's got like three or six that backs up to the freeway. It's got like a barn. And I'm like, man, people in Idaho love property with acreage, and it's super rare to get something flipped out here. So I figured, you know, it'd be a premium product. So a couple mistakes. First off, in my underwriting, this is my. This is my number one mistake. This is what I mean. If I would have caught it here and removed my ego from the equation, I would have probably not done the deal. But in the end, I'm kind of grateful that I've been put in this position to have these problems to solve. So in my underwriting, I sat there. The market told me this house was probably not worth more than $430,000. There was a comp that had sold for four. But it didn't quite have the land and it didn't have the barn. Those are hard things to adjust comps for though. Like how do you add the value of a barn that's so dependent on so many factors, like is the barn big enough, is it nice enough for high quality horses? Because high quality horses are going to demand, are going to have a buyer that has more purchasing power. You know, there are horses out there that cost $150,000, $250,000. This barn will probably more subdomance horses that are like 8, 900. That's not something I looked into going into this. Right. My ego just said, dude, you're a great flipper. You're going to kill it. You're getting 450, 460 all day. Not going to be a problem. Number two, I was in a position on my business where I was trying to delegate the flip side without actually knowing really how to do it. And I don't think, you know, have to know how to do everything. But I needed a little bit more education myself. So I like gave this entire rehab project to an employee of the company at the time. And they just ran that budget up because I wasn't watching it. Because to me at that time, you know, like I said, I've evolved and learned a ton. But at that time, delegation just meant I didn't have to do it. That's not what delegation means. So now I have a more clear understanding that delegation means I've clearly assigned roles, expectations and KPIs which allow the team to be successful if they hit them. If they don't, it's my job as a leader to interject and change course. So there are probably plenty of times in that rehab process that I could have interjected and changed course, but I never did. So, I mean, that was a huge learning lesson as well. Over budget, over timeline. Then the market took a huge dip. We listed this house for like 4:50, which was the break even. Which as you remember before, I thought that's what we were going to be able to sell it for. Which means my break even should have been way less. Another huge issue popped up. Despite doing everything right, and this happens sometimes, you just got to. You got to deal with the cards you're dealt. We actually did a full inspection on the property at the beginning of it. And we used like official real estate forms, like MLS forms for Idaho, which require owners to be honest on something called an R25 they have to fill out if they know anything's wrong with the property. This particular seller said nothing is wrong with the plumbing. In fact, it's brand new. So I assumed for literally a zero dollar expense in plumbing. My inspection also said plumbing was good. There's like a small link. A small link. Leak. Can't say that word. Leak underneath the kitchen sink. And that was supposed to be. I was like, dude, that's. I'm not even going to put that in the budget. We're not even worried about that. Well, when we got into the house, started doing the demo, which was supposed to be light, we found out that the bathroom literally drained to the dirt. So my inspector missed it. The seller wasn't honest. And so now I'm like, dude, from a zero dollar budget to eighteen grand, just like that in new expenses for the plumbing, for the plumbing line item. So they're ripping open the floors now.
- [13:30]
A
Is anybody responsible for that?
- [13:32]
B
Yeah, so I'll get to that. Because it comes around and through some negotiation, I actually like hold the owner responsible and recover from that. Not quite. Not all the way, but better than nothing.
- [13:43]
A
So just to pause, you bought this flip. It's three acres, kind of on a farm area. And you bought it for 370? 380.
- [13:53]
B
No, we bought it for 326.
- [13:56]
A
326. Okay. And your plan was to sell it for 460? 470, yeah.
- [14:01]
B
After putting in maybe 55ish in rehab.
- [14:04]
A
Okay. So you're like, this will be a solid close to 100 grand profit that I'll make on this. Maybe 75 grand.
- [14:11]
B
Yeah, 75 grand was the goal. I. I mean, we still have like holding expenses for like four or five months. I wanted it to be done on the sixth month. It was done on like the ninth month. So that's an extra three months of holding at 2500 bucks a month. And I guess to give some context too, to how I structured the deal up front, so I use 40. A $40,000 owner carry from the owner. So I told her, I can pay you more money, but you have to give me, you have to carry some of the debt because every dollar you carry, it costs me less to borrow from you than it does the bank. So I'll just pass those savings over to you. So she carried 40 grand. I put like 40 grand of my own money down and then I went and raised like 55 for the rehab. So that's kind of how I structured that deal.
- [14:51]
A
Okay. And this was, this was just a hard money deal that you did.
- [14:56]
B
Yeah, first position was hard money. Second position was my private money lender for 56 grand. Hers is third position, she's the owner, carry 40 grand, third position, and then my money's unsecured. That's just the risk I take as the investor.
- [15:10]
A
This is interesting. I know you're not diving too deep into all the nitty gritty, but just a cool way of structuring her off the bat. I know you just skimmed over it. Most people are too scared to even ask that to the seller. They're just scared out of their minds. I'm not going to ask them to carry some money and whatever, how that works. But she's getting a check and she's probably stoked because she doesn't owe that much on her house if anything. Right? So it's not that big of a deal. But how do you, how do you work that out with the, with the hard money lender? Like are they cool with that? Do you have to disclose, hey, I'm borrowing, you know, half of this down payment that I'm giving you from the seller or it's a private, private money from somebody else. You don't have to tell them who it's from. Maybe just touch on that for a second.
- [15:59]
B
Yeah, absolutely. So we actually have a mutual friend, Tarl Yarber. I actually used his fix and flip company on this one, I believe. And so that's called fixated funding. I think they're a great lender. They actually are really cool about making creative deals happen. And so this one was weird. Like actually for most people to go try to flip this home out in the country, most hard money lenders would say no, they're not funding it because it's, it's non conforming in the fact that it's like the population within like a five mile radius of that is probably like 40. So it's, it's pretty weird to flip houses out in the country like that. And so most hard money lenders don't want to give loans. But fixated, like I said, it's pretty creative. So yeah, I definitely disclosed up front to Fixated that I wanted to owner carry the $40,000 owner carry to count towards my down payment. And so I don't know how they work it up on the back end. Sometimes they'll apply like as much of it as they can to fees and interest reserve account and all this stuff. And they still want you to bring a full down payment. Sometimes they'll apply it to the down payment. In this situation, they applied it to my down payment so they reduced my down payment by $40,000, which was pretty cool.
- [17:06]
A
Yeah.
- [17:07]
B
Usually a contingency of that, though, is that that owner carry has to be subordinate debt, or they'll tell you, like, hey, don't record this till the day after closing. Because we don't. We can't fund second. We can't fund debt with second positions in place. But technically, what happens after closing, this is not legal advice. I would not, you know, take any. Everything I'm saying with a grain of salt, because every state's going to be different. Every lender is going to be different. But in this situation, I just went and recorded it after closing. Can you air this, like, once? The property is like, you know, I've owned it for like a year.
- [17:42]
A
So we're going to send. We're going to. The title of this is going to have the address and. Good.
- [17:48]
B
Yeah.
- [17:48]
A
I appreciate you diving into this. Cause at first glance, this is. I mean, you start off by like, this is what I learned. This is what I did wrong. This is what I learned. This is what I learned. This is what I learned. Everyone's like, wait, I thought this was a deal that we're supposed to be, like, learning from, you know, so we're gonna get to that part. But it's just cool that this is a little bit different than what you're probably used to hearing, because we're diving into a deal that basically was out of your control. A lot of the things that happened, some in your control, but ultimately you can't control what's gonna happen with the market. Right. But you kind of have spun it and turned it into something good. So, yeah, let's.
- [18:24]
B
Let's get to that part. That part's pretty cool. So I listed it for 450. Nothing. Absolute crickets. And I'm like, dude, this is my break even. Like, I'm not even trying to make a profit. I just want to get out of it.
- [18:34]
A
And this is how long ago that you listed it?
- [18:35]
B
This was probably September. September. But this was like. I mean, the market started dropping quick in September.
- [18:43]
A
That was like, what, five. Five months ago. Yeah.
- [18:48]
B
So I started dropping really quick in September. Actually, I want to say. I take that back. I want to sell this in October. So we were two months behind schedule. Yeah. So in October, in like, October, November. Fastest drop in real estate history for the entire state of Idaho, by the way. In December was just dead. There was nobody shopping for homes in December. Here we had a couple of flips. Just sit almost the entire month. And now we've. We've gone pending on almost everything because January has definitely started to pick back up. But this specific deal, I dropped it to 4:19, nothing. So now we're sitting around Thanksgiving times 4:19. I'm getting showings, you know, a few here and there, but it's hard to get to that property with snow on the road. And you know, I'm like working it. I'm calling up these agents that are showing it. I'm like, hey man, what do they want? They want me to build them a fricking 400 foot fence around the whole property. Sure, I'll build the 400 foot fence. They want me to pour a freaking gravel driveway, Want me to add heaters to the freaking barn. What do they need? I want to sell this house. And at 4:19 I was just going to lose all of my money, but my investors would all get paid off. So that's why I was okay with that. Because to me that's better than owing somebody else money. So nothing. No offers, no deals. Not even, not even, not even a low ball offer on the home. And it's a good remodel. It's a cute little home. Like I said, tons of room to have your own farm and do all this cool stuff. So finally I'm like, you know what, this isn't working. I can't just keep blindly hoping for something to happen. Like I got to be more proactive. And I'm continuing to rack up the bill on a property that's already losing because the holding payment is still happening every single month. So I start talking to long term debt providers. So like a normal mortgage, a DSCR loan provider, talk to a couple of them, find one I like, we start processing. The paperwork. Literally has taken 45 days. You're supposed to close this Friday on it, by the way. So just horrible process. Not going to call them out or anything like that. But I definitely, you know, learned a lot from that too. And we're going to get 8% debt on it, which is going to equal out to probably about a 2800-2800amonth to $3000 a month payment by the time it's all said and done. Okay. A three one house way out in the country, Even if I included all the land, the barn, the shop, the garage, everything, probably going to max out at like $2100. So after also taking into account for things like, you know, stuff breaking was, by the way, tenants moved in like two weeks ago. Plumbing all broke. Brand new plumbing. Tell me how that happens. We're sorting that out. That's cool. So, you know, you still got to account for things like repairs, vacancy. You know, it takes time to move people in and out. Capital expenditures that. That roof needs to be replaced in 20 years, I got to save up for that. So by the time I was all said, and then that property is going to lose 1400amonth. 1500amonth. That's a good. That's a good month, by the way. I mean, if somebody doesn't pay rent, we're more than that. So I was like, this just. This just doesn't work. But I can't let this be the story on this property because I've decided I'm not going to sell it if I'm keeping it. It needs to cash flow. So we put the house up for rent by itself. House rents for 1850. I thought maybe 1600 all day by itself. 18.50, mind you. We thought that 2100, 20, 200 is going to be the max run on the whole place. We got 1850 for just the house in the garage attached to house. So that's pretty good start, right? And there's a lot we can go to there. Like, I always allow pets, but I take a large nonrefundable pet deposit up front and then I bill back another $50 a month for pets. You think that doesn't add up, but all of a sudden, you know, I have seven rentals with pets in them. Seven times 50. Don't make me do that math. It's good money. So. And then I'll. Brody will have one of these. This aerial view of the property. I ended up having my brother go out with a drone, took an aerial shot of the property. I drew up a bunch of lines and separated the whole thing out. It's not. I'm not legally splitting up the property. It's not like a legal plot or anything like that. But I go, okay, house renter, you're getting this small portion of this three acres. It's going to be your house, a little backyard and your garage. That's it. You don't get anything else. They're cool with that, right? Then I look at the barn. I go, okay, I'm going to rent the barn in this fenced in pasture by itself. So I put the barn up on Facebook marketplace. Somebody's willing to pay 1100 bucks a month for it. Apparently there's a lot of demand for barns. I thought that was crazy. So Now I'm collecting 1100 bucks a month on the barn, 1850 on the house, and I still have all this other land to figure out to do something else with. So now I'm going to put three RV pads on the back side of the pasture. So it's. It'll be expensive. We gotta, you know, the property's on well and septic. We got to drag and dig about four feet down and drag the water over, drag a sewer line over, put a pump in. Probably going to put a pump on the well too because the water flow is not high enough to be able to pump water to that many dwellings on the property. But that's all fine. We'll probably be in it for 20. So an additional $20,000 investment in the property. Scary to throw good money after bad money, by the way. That's a hard thing to do. But by the time it's all said and done, this property will come close to cash flowing. 750 bucks a month. That's with three RV pads, the house, the barn, and then I still got options to like rent out the other 0.75 of an acre of a pasture either. Just someone who wants to raise some cattle, maybe someone who has sheep. I don't know. I mean, we, we're going to get creative. We're going to get weird, but I ain't going to lose money on steel.
- [24:17]
A
Dude, that's awesome. That's awesome. I love it. Talk about getting creative and a real and raw deal that we need to. This is the. This is as real as it gets when it comes to real deals. So. Dude, that's cool. I love it. Love it. Obviously, I'm a huge fan of getting creative and I'm a huge fan of just building that cashflow as high as you can get it, letting it rack up and come in every single month from quality deals. Not just quantity, but from quality deals. And that's like. That's like taking a lemon for sure and, and turning to lemonade. Did you. I'm curious on. This is going to have to be a whole other episode. Dive into DSCR loans because I just am finishing one right now as well. And super cool option for a lot of people. But did they. I'm curious, what did the house appraise for and was it hard because you said you can only rent it out for so much like the actual house. Was it hard finding comps for them to approve that to get the rent high enough to cover the. The debt?
- [25:20]
B
So that's a, that's a really intelligent question, by the way. But so the way that worked, the house actually appreciated for $495,000. Which was like, super annoying. Sell it. And I went back and texted all the agents. I was like, dude, I have an appraisal report for. For 495. I'll still sell you the house. Nobody, man. So. So that was cool though, because that counted for a lot of my equity, so I didn't have to bring a ton of money down.
- [25:49]
A
Yeah.
- [25:50]
B
And then to reset, to circle back to debt. I called up the owner and I was like, hey, I. I literally spent probably not only 15 to $18,000 in plumbing repairs, but an additional two months of holding. You signed an RA25 single. Plumbing was good. So she wanted to fight me on it. It was a battle, right. She's like, I'm not paying you anything. You know, we'll just see you in court. Well, I called up the person, she said she had do all the plumbing in the house. The person says, I only did the plumbing from the house to the septic tank. I didn't touch the plumbing in the house. And she knew that there was. They basically were like, we wanted to do the plumbing in the house, but she said she didn't want to spend that money, but we told her it was bad. Oh, there you go. That's all I needed. So, unfortunately, I had to hire an attorney. The attorney helped me negotiate it. We took that $40,000 owner carry down to a $27,500 payout, which is like, in my opinion, way more than fair. Because if you do the math, $40,000 minus I probably, I don't know, lost 22 ish thousand dollars in cost by the time I hired the attorney, the holding, the extra plumbing repairs. So I'm not even. She's not even recouping me for my entire loss.
- [26:59]
A
Yeah.
- [27:00]
B
But that reduction, plus the equity built in from the appraisal report, I don't bring any money down. So that's pretty cool. That's pretty cool. I'm gonna step into this property with none of my own money down.
- [27:11]
A
So you had a 12 month just term with her? Is that what. Yeah. You had negotiated with her to get. Man, this is the deal that keeps on giving. There's just more to it and more to it.
- [27:24]
B
Yeah, there's a lot to this one, man. And it's gonna keep going, you know, Like, I paid this plumber to re. Plumb the whole house. And the first week in the house, the tenants call me and say their toilets and their tubs not draining.
- [27:34]
A
Yeah.
- [27:35]
B
Oh, that's crazy. So I called the plumber. I'm a Little mad. And I'm like, we got $18,000 worth of new pex plumbing in this house and it's not draining. He goes, it's a septic. I'm like, okay, I'll take your word for it. Septic guy goes out, pops open the, the septic tank. Dude, you got, you got four inches of septic in a, in a 60 inch tank. And it's a septic tank. So, you know, it's okay though. It's like the, the thing I've learned is like, you just got to keep rolling with the punches, man. It's always going to be. But if you focus on, on all the negative, that's all you're going to find. That's all you're going to see. So instead I'm like, dude, this is a cool opportunity. Like I get to learn how to put in these RV pads. I get to test out a new business model and see how that works. Like we might, we might do long term rentals on two of them and leave a third pad open on camping sites. So like it's. Dude, I got to test something out. I've never tested something out, but I've never tested that out before.
- [28:28]
A
Yeah.
- [28:28]
B
What if that one site can potentially make, I don't know, a thousand bucks a month when I only plan for 500. That's pretty cool.
- [28:36]
A
That's way cool. Yeah. So I have a question on the. Just with the DSCR alone, which we'll dive into another day. The ins and outs of them, but because. Just cool stuff. But did you. So I just did a cash out refi with a dscr, um, which I thought was pretty cool, but have you. Was there just not enough equity sitting there? Cause I mean, it appraised for what it needed appraised for, for the most part was just not enough to get your down payment and money left over or did you just not explore that option?
- [29:12]
B
Um, so, I mean, I'm getting a little bit back, but I'm going to roll it right back into the RV pads. So it's not really coming back to me. Um, but yeah, there was enough that I could have pulled it out, but I would have pulled it out and then just slowly it would have been chipped away if I didn't create new revenue streams at the property. The other cool thing, like I probably wouldn't have been able to do, I keep looking this way because it's up on my screen over here, but I probably wouldn't have been able to do this deal on a DCR Loan because of the fact that the rental comps really showed like 20 $100 a month. That doesn't. Yeah, but they counted my passive income from my other properties as part of, of the loan of being able to make this payment.
- [29:54]
A
No way.
- [29:55]
B
Yeah, I got really lucky in that fact because like I can show, you know, a couple thousand dollars a month of rental income based off my other properties are like, yeah, he's good, he can cover it.
- [30:03]
A
That's cool, huh? Yeah.
- [30:06]
B
That underwriting process, crazy, bro. I had to get purchase and sales agreements from the time I bought those properties, which I'm not record keeper. I don't keep that. I gotta go find the purchase and sales agreements, then I gotta go find the loan documents, then I gotta give them all the leases. Then I had to go and find rental history for the leases, which I use building them now. So that was actually pretty easy. It just shows my rental history for all the properties. Then they had a cross reference all of that and then they had a search title for every single property in Ada county and Canyon county. And they looked at every single property I've owned in the last and they wanted the same information there to make sure I still didn't own it. I'm like, my business is a flipping business. There's going to be lots of those. They literally helped me do my taxes for the next year.
- [30:51]
A
There you go, man. There you go. There's a silver lining in all of this. It's great.
- [30:56]
B
Yeah, my taxes are done. Normally I don't have that done until like June, man.
- [31:01]
A
Two years later. Yeah. Well, dude, this has been super insightful. Thanks for going deep on this one. If people want to reach out, connect with you, ask you more about all the stuff you have going on, this deal in particular, where's a good, Where's a good place to do that?
- [31:20]
B
Yeah, so one, my Instagram is a pretty good place. But too, if you actually want to book a direct call with me, I'm doing four calls a week now. It's called, it's called the Freedom Hotline. I mean, if you're watching Brody's video, you see Chasing Freedom is kind of like my brand identity. It's on my hat. You know, I love, I love the idea of Chasing Freedom. So, yeah, I'm taking four calls a week to help people. There'll be a link in my Instagram profile underneath my link tree, so you can just click it. If there's a spot available, you can book it and I'll hop on. I'm happy to Help people.
- [31:48]
A
So that's sweet. For sure. Take advantage of that. Definitely take advantage of that. Thanks, dude. I appreciate it. Hey, thanks.
- [31:58]
B
Share a funny story about you and I from, like, a long, long time ago.
- [32:02]
A
Oh, maybe. I don't know.
- [32:03]
B
It's pretty funny, dude.
- [32:04]
A
So, sure.
- [32:06]
B
I probably had only reached out to you maybe three or four times about bigger pockets, and we're just talking back and forth. I want to say this is probably like 2017, a little long time ago. Right?
- [32:15]
A
Okay.
- [32:15]
B
And I was like, hey, I need your help underwriting this deal, and you sent me a link with a payment to be processed to talk to you.
- [32:23]
A
You're lying.
- [32:24]
B
No, dude, I'm not kidding.
- [32:26]
A
You're lying. That wasn't.
- [32:27]
B
I'm not kidding, bro. You don't have to air that. But it was. I thought in hindsight at the time.
- [32:32]
A
We'Ll definitely air that, but I don't even know if I knew how to do that. I wish I was that smart in 2017.
- [32:39]
B
I think it was the first time I'd ever seen, like, a calendary thing. And then I had to put my credit card in to process the call. You may not have even known you set it up like that.
- [32:48]
A
I was like, yeah, if it was set up that way, it was an accident for sure.
- [32:52]
B
Like, I was like, damn, dude, I can't be paying $45 to talk to Brody right now.
- [32:57]
A
45 bucks? That's all I charged, dude.
- [32:59]
B
I don't know. Maybe it's 50. I just didn't have. I did not have that money at that time, so.
- [33:03]
A
Oh, man, that's hilarious. I don't know if that's true or not, but I don't know if I've ever had that set up. If it was. Maybe it was a complete accident the first time I ever used Calendly, but I'm bummed you didn't see my time worth at least 45 bucks.
- [33:20]
B
I did. I totally did. It's just that my bank account didn't. I literally had taken that month. I think I'd spent the entire $2,000 I had in savings on postcards.
- [33:33]
A
Dang.
- [33:33]
B
Yeah. Like, completely. There's been a couple.
- [33:36]
A
You got a cool story of how you got started and stuff, too. It's super cool. Just because it took a while to get your first deal, and you just kind of kept. Kept grinding, kept grinding. I think that's, yeah, super awesome because you look at where you're at now, how far you've come, and it's crazy. So easy just to give up, you know, in those first few months that are. That are just a grind, so.
- [33:56]
B
Absolutely, bro. Well, dude, thanks for.
- [33:59]
A
Yeah, absolutely. Thanks for. Thanks for coming on. And no, you cannot book a call with me for 45 bucks to talk about real estate deal that you're doing next, so. But you can book one with Noah for free.
- [34:13]
B
Only four. Only for a week.
- [34:14]
A
Go hit him up. And you'll air it on your show too, right?
- [34:18]
B
I don't know that I air all of them. I'll probably pick a couple.
- [34:21]
A
Okay. So if you do a really good job, you'll show up on those podcasts. Awesome, dude. Thanks so much, bro. I appreciate it. Thanks for the time and thanks for dropping all your knowledge bombs.
- [34:32]
B
I think this is something to do.