237. From House Hacking to Hard Money with Zeke Mangum

Summary

Real Estate Investing School Podcast - Episode 237: From House Hacking to Hard Money with Zeke Mangum

Release Date: February 17, 2025

In Episode 237 of the Real Estate Investing School Podcast, host Joe Jensen engages in an insightful conversation with Zeke Mangum, a 23-year-old real estate investor, hard money lender, and founder of Noble Marketing. Zeke shares his journey from a novice investor to managing multiple real estate deals, emphasizing the importance of creative finance, strategic house hacking, and the pitfalls he encountered along the way.

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1. Introduction to Zeke Mangum

Joe Jensen welcomes Zeke Mangum, highlighting his impressive accomplishments at a young age. Zeke is not only involved in real estate investing but also delves into hard money lending, showcasing his multifaceted approach to the industry.

Joe Jensen (00:24):

"Today our guest is Zeke Mangum. Zeke's a 23-year-old real estate investor, hard money lender, and the founder of Noble Marketing."

Zeke responds with enthusiasm, setting the stage for a deep dive into his real estate ventures.

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2. Zeke's Entry into Real Estate Investing

Zeke recounts his initial exposure to real estate investing during high school while saving for a church mission. Influenced by an electrician landlord who operated solely by collecting rent, Zeke became fascinated by the concept of passive income through real estate.

Zeke Mangum (02:02):

"I was like, that's crazy. So they don't work, like, they just, they just collect rents."

This early interest led him to explore real estate further, particularly through door-to-door sales after returning from his mission during the COVID-19 pandemic.

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3. First Deal: Build to Rent – Challenges and Lessons Learned

Zeke's first foray into real estate was a build-to-rent project. Armed with $55,000 from a successful summer in door-to-door sales, he aimed to purchase a property without the traditional banking hurdles. Despite enthusiasm, the project faced significant delays and rising interest rates.

Zeke Mangum (00:00):

"I literally just showed up to the closing table with the cash and was able to get into it."

However, unforeseen challenges arose:

Zeke Mangum (05:05):

"It went two years. So it was supposed to be six months and it ended up going two years."

The prolonged construction period led to an increase in interest rates from 3% to 6%, forcing Zeke to sell the property on the day of purchase to mitigate losses.

Zeke Mangum (05:58):

"But I'm grateful I got out of that one because I saw one just barely sold for like 360."

This experience taught him the importance of understanding the risks associated with build-to-rent projects and the necessity of having more control over final numbers.

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4. Second Deal: Successful House Hacking Near the University of Utah

Unfazed by his first setback, Zeke pursued a more controlled investment strategy—house hacking near the University of Utah. By purchasing a townhome close to campus, he executed a plan to rent out multiple rooms, effectively living for free while generating positive cash flow.

Zeke Mangum (09:47):

"I should have just bought something by the college that I could live in and rent out the rooms."

He swiftly secured a property after knocking on homeowners’ doors and capitalizing on his keen market insights. Renovations were minimal, involving the addition of walls to increase the number of rentable bedrooms.

Zeke Mangum (11:35):

"I lived there in the master collecting. It was, let's see, my monthly payment was 2,200. So yeah, I was collecting $800 a month after expenses to live for free."

This deal not only provided immediate financial benefits but also reinforced Zeke's confidence in house hacking as a viable investment strategy.

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5. Third and Fourth Deals: Expanding Portfolio and Embracing Creative Finance

Zeke continued to diversify his portfolio with subsequent investments. His third deal involved another primary residence in Southern Utah County, utilizing conventional financing to secure a daylight basement apartment—a move that minimized construction risks.

Moving forward, Zeke's fourth deal marked his foray into creative finance. Partnering with a wholesaler, he acquired a property in New Braunfels, Texas, through seller financing. This approach allowed him to bypass traditional bank loans, lock in favorable interest rates, and generate ongoing cash flow.

Zeke Mangum (17:17):

"But it was so discounted and it's like a pretty new home is 2017. Didn't really make a lot of sense to not buy."

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6. Embracing Creative Finance: Benefits for 1099 Workers

A significant portion of the discussion centers on creative finance strategies, which Zeke advocates strongly, especially for individuals with non-traditional income streams like 1099 workers.

Zeke Mangum (23:21):

"The biggest thing, especially recently, has been creative finance because I work 1099. I don't want to pay a lot in taxes."

Creative financing eliminates the need for credit checks and lengthy bank processes, enabling investors like Zeke to act swiftly and maximize tax benefits.

Zeke Mangum (24:19):

"You're able to move so much faster. You save so much in taxes that even if you like are barely overpaying for a property or anything like that, you're still way positive compared to what you'd be paying in taxes."

Joe Jensen echoes the importance of multi-faceted financing approaches, encouraging investors to explore both conventional and creative options to optimize their investment strategies.

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7. Transitioning from Private Lending to Real Estate Assets

Having initially focused on hard money lending, Zeke now aims to shift his focus towards tangible real estate assets. While recognizing the stability and appreciation potential of real estate, he expresses the limitations of private lending, such as dependency on lending companies.

Zeke Mangum (28:26):

"I'm trying to transition to get that number from my private lending stuff just into mostly real estate stuff."

By prioritizing real estate, Zeke seeks to harness multiple income streams—cash flow, appreciation, tax benefits, and principal paydown—thereby establishing a more robust and secure investment portfolio.

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8. Lessons Learned: Opportunity Costs and Taking Action

Throughout the podcast, Zeke emphasizes the critical lesson of opportunity costs—the potential gains lost by not acting on investment opportunities. His early experiences taught him that taking action, even amidst uncertainties, often leads to greater long-term benefits.

Zeke Mangum (39:48):

"Having money tied up into something where I couldn't really do anything else for a year and a half, I missed out on probably two or three deals."

Joe Jensen reinforces this notion, highlighting that in real estate, the cost of inaction often surpasses the risks associated with making investments.

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9. Final Insights: Advice, Recommendations, and Future Goals

In the concluding segments, Zeke imparts valuable advice based on his experiences. He advocates for:

• Focus and Specialization: Concentrating on one investment strategy to maximize expertise and results.

  Zeke Mangum (43:08):

  "I like it because I think it's safe. I think it's a great investment vehicle, but it's like, what I understand better than anything else."

• Continuous Learning: Recommending resources like "Atomic Habits" by James Clear, which has significantly influenced his personal and professional development.

  Zeke Mangum (37:16):

  "One of my favorite books I've ever read is Atomic Habits by James Clear."

• Adding Value in Relationships: Emphasizing the importance of building meaningful relationships and contributing more than one takes.

  Zeke Mangum (36:32):

  "Try to add more value than you take."

Looking ahead, Zeke aims to continue scaling his real estate investments, partnering with others to expand his portfolio, and eventually achieve a passive income of $100,000 annually. Additionally, he aspires to acquire a personal cabin on substantial acreage, combining investment with personal fulfillment.

Zeke Mangum (35:08):

"We'll do more stuff like that. And that's what I think it'll look like from here on out."

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Conclusion

Episode 237 provides a comprehensive look into Zeke Mangum's journey in the real estate investment landscape. From overcoming initial setbacks to embracing creative finance and strategic partnerships, Zeke's story underscores the importance of adaptability, continuous learning, and proactive decision-making in achieving real estate success. His insights serve as valuable lessons for both novice and seasoned investors aiming to navigate the complexities of the market.

For those interested in connecting with Zeke or exploring partnership opportunities, he can be reached via Instagram at @Zeke_Mangum, where he is open to networking and new ventures.

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This summary encapsulates the key discussions, insights, and conclusions drawn from the conversation between Joe Jensen and Zeke Mangum on Episode 237 of the Real Estate Investing School Podcast.

Transcript

[Zeke Mangum]

The biggest thing, especially recently, has been creative finance. Being able to come in and buy a place without having to have my credit ran, have the long, drawn out process of working with a bank and trying to get a loan. Like this place, like, nobody asked for a bank statement. Like on this last one, nobody ran credit. I literally just showed up to the closing table with the cash and was able to get into it.

[Joe Jensen]

Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Today our guest is Zeke mangum. Zeke's a 23 year old real estate investor, hard money lender, and the founder of Noble Marketing. Enjoys spending time with his wife and dog, golfing and playing Sunday league soccer. Welcome to the show, Zeke.

[Zeke Mangum]

Thanks for having me. I'm pumped to be here.

[Joe Jensen]

Yeah, this will be fun, man. I mean, you're, you're pretty young to be in the game, but it sounds like you're doing some awesome stuff. You're not just investing in real estate, but you're also doing hard money lending as well. That's pretty cool.

[Zeke Mangum]

Yeah, no, that's, that's been sweet. It's definitely a more lazy investment. I for sure think real estate's a better way to go than that.

[Joe Jensen]

But yeah, you know, you don't, you get the return, you don't get all the other benefits of real estate. Right. You're not getting like the tax write offs and appreciation, but it can be a solid way to get a return. I always say the only true passive player in the game is the, the lenders, you know, here's the money and they, they just sit back. So it's not a bad place to be for sure. That's awesome, man. So tell me, tell us your story. I mean, so 23 years old, you, you've got multiple deals already, what, four deals in the past four years, which, I mean, you were a teenager when you started, which is so awesome. So how did, how did you get into real estate as an investment vehicle? Like, where did that first come on your radar? Did you always know or was it like, how did, how did that begin?

[Zeke Mangum]

Well, I remember, like, I think my first time I really heard anything about real estate investing. I was working with an electrician, like to save up for my church mission when I was in high school.

[Joe Jensen]

Okay.

[Zeke Mangum]

And he was talking about this person he knew who's just a landlord. That's all he did. I was like, that's crazy. So they don't work, like, they just, they just collect rents. And that's the thing. And I didn't understand how it worked, I didn't know how. Like I assumed it was like man, so you have to have like 400k to be able to go and buy a property. Like I don't know how I'm ever going to be able to do that.

[Joe Jensen]

Right.

[Zeke Mangum]

But served a quick church mission for me it was pretty short. I was out for about six months and came home during COVID time. But like many people where I'm from, from Utah, I got into door to door sales pretty quickly after that. And the guy I was working with, the guy who owned the pest control company I was working with, I lived in his house that he had, it was in Vineyard, Utah and I paid. It was like $450 a month at the time. It's a lot more expensive now but 450amonth at the time. And I did the math on like how many rooms was in there and everything. And he was living for free and cash flowing still like 900amonth. Which I was just like that's, that's insane. And I was, I was pretty hooked from there. That was the vehicle I wanted to take to try to retire eventually.

[Joe Jensen]

That's cool. So you were actually the one renting the room, living there and you're like wait a second, like why don't I own the house and rent out the room?

[Zeke Mangum]

Yeah, no, I, I thought it was awesome and, and I would just ask him a ton of questions about it. He had owned a couple properties at the time and Yeah, I just very quickly wanted to get into investing after that in real estate.

[Joe Jensen]

That's awesome. So what did it take for you to be able to buy your first deal? What did that look like?

[Zeke Mangum]

Yeah, so I went out, did like my first summer of door to door sales in 2020 I sold in Utah. It was pest control. I did a little bit of a shorter summer but did pretty well. I was fortunate with the situation and how things went. I got, I got pretty blessed. And that summer I ended up making around 55 grand. So I had enough to go and put a down payment on a place. Didn't really realize that like you had to have two years of income and 1099 like didn't know, didn't know any of that stuff. So I was fortunate to have somebody be able to co sign with me on a property.

[Joe Jensen]

Cool.

[Zeke Mangum]

And started building just like a new build like kind of. It was Richmond America was the builder that I used but kind of one of those already like pre planned out places. And my good buddy, his dad was a real Estate agent and he talked me into start, like start building one of those. And so your first deal was a build to rent? Yep.

[Joe Jensen]

Wow, that's awesome.

[Zeke Mangum]

Yeah, kind of. It didn't work out super awesome unfortunately. But yeah, it was supposed to be like a six month build was in past in Utah. And the time they were estimating to have a 3% interest rate, which was what it was kind of at that time. The build went a year and a half over what it was supposed to. And when I finally was able to close on the property, my interest rate was like 6%. And fortunately I, I pretty much sold it. I actually sold it the day, the day I bought it. But I was able to get out of it. Didn't cash flow at all. Sold it to a guy coming in from a 1031 and just. He bought it, he bought it in cash and I was able to go put that money elsewhere. But yeah, that was the first deal. Learned a ton from that one.

[Joe Jensen]

So that's interesting. Let's dive into that a little bit. So you had, you're going to build it to rent. The numbers look like they would cash flow at 3% which is what you figure you'd be getting when it was done. But it went a year and a half total. A year and a half over the six months that was already estimated.

[Zeke Mangum]

It went two years. So it was supposed to be six months and it ended up going two years.

[Joe Jensen]

Jeez, that is. And, and talk about a time of interest changing. Like the biggest two years of interest hikes like ever like in our life.

[Zeke Mangum]

It was rough driving by and being like, man, this thing needs to hurry get done because you just saw the interest rates creeping up.

[Joe Jensen]

Yeah, for years. That's crazy. So, so when you ended up selling it, were you able to sell it at a profit though? Because I assume it, it probably the value went up a lot as well as the interest rates while you were sitting those two years.

[Zeke Mangum]

Kind of. So I ended up pretty much walking out of it, like even after fees and everything.

[Joe Jensen]

Yeah.

[Zeke Mangum]

Which I was, I was grateful to just get out of it. But it, yeah, it went up. I'm trying to remember. I think I was under contract on it. So I bought it at like 390 and I ended up selling it at like 415.

[Joe Jensen]

Right.

[Zeke Mangum]

But yeah, they, they skyrocketed up to like 450 for a second and then came back down. And yeah, I'm grateful I got out of that one because I saw one just barely sold for like 360.

[Joe Jensen]

Wow.

[Zeke Mangum]

Two three weeks ago. So yeah, I dodged a bullet on that one. But I definitely learned you don't buy. I just, I don't buy any properties. I don't know what I'm buying. Like if there's something like that up in the air on a build or anything like that. If I don't know the final numbers, for me that experience was, was enough to avoid that from here on out.

[Joe Jensen]

Yeah. When that's the scary thing about, you know, the thought of building to rent is awesome because it's like, oh cool. Like it's a brand new build. You're not going to have any issues. Like you not going to have like repair issues for the most part, you know, stuff like that. Like, you know, but then, but you say when you, when the interest rate isn't locked in, it's like that's the, that's a scary thing we've seen. And, and also just the time to build. Like you said, it's like, is it six months, 12 months, a year? There's so many things that are just unsure. But when you go buy something that's sitting there and it's like you just buy it and now it's yours, you just own it. Like there, there's not really these unforeseen things unless it's like a rehab or a you pretty old place. Then you have a lot of, you know, deferred maintenance and stuff like that you're going to have to deal with. But so everything has its pros and cons. But no, I agree. I've always been interested in the, the build to rent scenario. But yeah, there's too many assumptions and speculations for me too. I'm like, but what if things change and it doesn't work that way.

[Zeke Mangum]

Some people obviously kill it in it and they, they love it. But, and the amount of stress it brought on me to be like, wait, this was supposed to be done a year ago. What's going on? Just. Yeah, yeah. Not all my other deals I've liked a lot more than that one for sure.

[Joe Jensen]

Yeah. And that's the cool thing about real estate. You can kind of pick and choose like how risk averse you want to be, how much of a sure thing you want it to be, and then just kind of build around that, you know, and if you avoid rehabs, you avoid builds and you just buy with locked interest rates, it's like, it can be pretty, it might eliminate a lot of your options, but it can be pretty clear of what you're getting and avoid a lot of Risk. I just posted on my Instagram. It was a kind of like a repost. I just want to share this, see if I can pull it up here. They. Oh, come on. It was, it was some quote. It was like, you know, Monopoly shows us that if you don't take risks, then you'll be paying, you know, rent for somebody else or something like that. And I reposted, but I scratched off, you don't take risks. And I just say, you don't buy assets, then you'll end up paying rent to someone else. And I was like, I don't think real estate needs to be that risky. You know what I mean? Especially once you know what you're doing. There's a lot of ways to secure the interest rate, to secure the property, to know what it's going to be. You have it all guaranteed in your name. You have a contract that they have to sell it to you and you could still back out. Like there's all these things you can do to make sure it's very risk adverse if you want to be. Now you can go riskier, but you don't have to. Which. Which is super cool.

[Zeke Mangum]

Yeah, for sure.

[Joe Jensen]

So what'd you do the second deal then? So you, your first deal was not a home run. You didn't make 100 grand, you didn't make 50 grand. You weren't even making the 900amonth or 200amonth where it's like, oh, free money. And a lot of times that's what gets people hooked. Like, I didn't do anything. I'm just, people are just giving me money like every month, you know, this is so rad. You didn't get that experience. Yours was just a big, long, scary headache. So what did the second deal look like and why did you decide to do a second deal?

[Zeke Mangum]

So I, I was still super in on real estate. That didn't turn me off from it. Just like I said, kind of the more building stuff. But my second deal is still my favorite deal for sure. So I did what I knew I probably should have done the first time I was in college at U of U. And I was just like, I, I should have just bought something by the college that I could live in and rent out the rooms. So there was a row of townhomes, like really, really close to you view just on the south side of it. And I liked them. So I went out and I actually just knocked all the townhomes and I just to the owners, I was like, hey, would you sell me or would you sell me your house. And I actually had one that I went under contract on. She ended up wanting to back out, so didn't buy that one. But there was one person who told me, no, we're not interested in selling at all. And then literally two weeks later it was on the market. So I called the realtor and I was like, hey. Like I talked to him and the realtor was, was a family member and he's like, oh yeah, okay, I'll talk to him. I'm like, I. I just talked to him like two weeks ago. I'm really interested in buying their place. Like, I'll go under contract today at this number. So one of them buy it had sold for 450 just before. I ended up getting that under contract at 4:30 and closed on it at 4:30. And then it was a really big townhome. There's a lot of square footage and two kind of unused spaces that already had closets, already had windows. And so I threw up two walls. That was it. It cost like three grand to have somebody come in and do it. And turned a four bed, three bath into a, to a six bed, three bath. And with that I rented each bedroom out for 600, master out for seven. I lived in the master reverse. Now I rented out for seven, but I was living there in the master collecting. It was, let's see, my monthly payment was 2,200. So yeah, I was collecting $800 a month after expenses to live for free.

[Joe Jensen]

Nice. Almost exactly what you had experienced on the flip side. That's so cool you're able to duplicate it for sure.

[Zeke Mangum]

And now it's great. Like I, I rent out the master bedroom, that one cash flows like after most of my expenses around 12, $1300 a month. The one it's connected to just sold for 530.

[Joe Jensen]

So nice that, so that's funny. So why did they, two weeks later they go enlisted. They just like really wanted to pay real estate agent fees or like, you know the story behind that?

[Zeke Mangum]

No idea. All I know is she was pretty rude to me when I knocked on the door. But I'm happy that we were able to get a. Get, get it done because I liked, I liked that area a lot.

[Joe Jensen]

That's so funny. Yeah, it's like they just could have saved so much money if they just listened to you. Um, but that's cool that you kind of like picked the area. You knew what you wanted, you, you understood it. And, and you just went out and started knocking doors to try to like find the deal. And even though you probably could have found a better deal, you from that you still ended up finding on the market, but your eyes were there and you knew what you wanted. So you're able to act fast, it sounds like.

[Zeke Mangum]

Yeah. And I just. My buy box at the time was like, I didn't care much about anything else as long as I could get a 12% cash on cash return. I watched a lot of Chandler Smith. Like that was a guy who I binged and that's what he always preached. So I was like, I'm just gonna duplicate whatever he's doing from his buy box side of things, like from his returns.

[Joe Jensen]

That's cool.

[Zeke Mangum]

Yeah, it's done a lot better than 12%. But yeah, it was nice just knowing what I wanted, where I wanted it to be and didn't really have to think on it. Like, the day it went up, I could get it under contract.

[Joe Jensen]

And you knew before you even got it under contract that it had the space to add the extra rooms and everything. You'd seen the layouts of these homes?

[Zeke Mangum]

Yeah, they're all like the same thing. So I'd walk some of them before, like I said I was under contract on one.

[Joe Jensen]

Like, yeah, I wanted to pick your brain on that. You said they wanted to back out. So what? Why? I mean, that's not really their call. Like if you have under contract, they kind of have to sell it to you. But what was the story there?

[Zeke Mangum]

So, yeah, it was a lady, she was probably like in her 50s. She really wanted to move. So I had it under contract. And honestly I felt like it was a very fair, reasonable price. Like it was what CMA was pulling up and then just took out the realtor fees. So I was like, hey, I'll buy it basically for what you could sell it for. Took out the realtor fees. And yeah, like after we'd been under contract for like a week, she just started feeling pretty worried about it. She's like, wait, actually, I don't know if I want to move. And I was getting pretty worried and I didn't. I don't know, like, for me, I knew there'd be another one out there. I didn't want to try to twist anybody's arm into. Into doing it if they didn't want to. It's just not the way I really want to do things. So, yeah, I knew something else would pop up.

[Joe Jensen]

So you. She just got cold feet and. And you just let her out just to be nice?

[Zeke Mangum]

Yeah, pretty much.

[Joe Jensen]

That's cool. That's nice. That's dope, dude. And then obviously it still worked out because you got a great property in there and you paid a little more and they made a little less. But it is what it is. That's cool. I like that. So that's sweet. Why don't we just keep going along this story then? I like this. So the first deal, you know, you kind of broke even. It was what it was. Big headache, maybe, you know, learning experience. Second deal was great. You duplicated the original thing that got you excited. The, you know, the rent per room, live for free, make cash flow almost to the number. You're able to duplicate that experience, which is super rad. Then what was the deal after that then?

[Zeke Mangum]

So the deal after that was a. Another primary. So I just hacked house or hacked or house hacked into another primary down in southern Utah county, which yeah, I moved into basement apartment. So just put that in and then rent that out. But yeah, it was still. It took me, it took me a little longer to be able to qualify again because I was doing everything conventionally. I wish I would have dove more into the seller finance stuff, but so I did that one. I. I just saw that I liked the area, I knew I wanted to live there and I just been married for a little bit. A bunch of the ones on the same street were selling for like 100k more. Same square footage, a little bit smaller lots. And the builder put it up like right when he put it up I was confused why it was priced so low. So I hurry and drove over and looked at it and on that one too, I got under contract on it like the same day that.

[Joe Jensen]

Did you ever find out why he priced it so low?

[Zeke Mangum]

I honestly just. I don't know. I don't know why the prices went up a little bit on the. The other ones that they threw up. But when I got like the appraisal back for it, it came back at. I bought it for. I bought it for 520 and the appraisal came back at 5.99. So I was, I was pretty right on it. Yeah, it's got like a daylight, daylight basement where it was easy to throw in an apartment, but yeah, recently build as well.

[Joe Jensen]

Brandon, the builder really knew.

[Zeke Mangum]

Yeah but it was already almost done. So they listed it when it was like a month out. Everything was done. So I felt a little bit less worried about pulling the trigger on that one. Didn't think I'd have the same experience as the first.

[Joe Jensen]

Yeah, you weren't having it built so you Were just buying it at the end because you were able to use your one. You didn't have to get a construction loan and then get long term financing. A year and a half later you just had the one loan and it was all secured.

[Zeke Mangum]

So yeah, no, it's all the benefit.

[Joe Jensen]

Of a brand new place which is great.

[Zeke Mangum]

Yeah. It will lock in rate like when. When we went under contract and through that whole process. But yeah, like finally dove more into the creative finance stuff and we just closed. I just closed on a deal what was it like two weeks ago in New Braunfels, Texas. And like these are actually, this is actually the closing papers right here. Nice.

[Joe Jensen]

Got them right there.

[Zeke Mangum]

Yeah. But it was. Yeah, this was probably like my favorite deal I've done so far. We got it from a wholesaler. He brought it to us. It was. We bought it at 2:55. It was like a kind of a tired landlord who just didn't want to deal with it anymore. She like inherited the property from her dad.

[Joe Jensen]

Okay.

[Zeke Mangum]

Wanted out of it. They don't want to list it or anything. But yeah, we were looking at comps and all the comps were coming back like 3:30 to like 3:50 and got an inspection done. Everything looked good. So we bought it. Only had to put 30k into it which was nice. And right now we're in the process of wrapping it. Like we're just, we bought it seller finance and we're just going to go back in sell it seller finance to somebody else.

[Joe Jensen]

Okay, cool. So. So who's we? Say like we bought it with a wholesaler. Like we is. Do you have a team? Is it just you? Like who's we?

[Zeke Mangum]

I partnered with a kid on this one. So cool. Yeah, we split it. I own 80%, he owns 20. He's the one who brought me the deal.

[Joe Jensen]

Awesome.

[Zeke Mangum]

So yeah, we're wrapping it right now. Hopefully we get what we want but we're trying to get 340,000 and then our interest rate right now is at 3.9 and we're going to try to sell our finance at seven and a half.

[Joe Jensen]

That's cool. So why seller finance instead of hold it long term? Well it's just not cash flow without the extra seller finance incentives for the buyer or. Cause you're not going to end up owning it. Right. If you finance it. So why sell it?

[Zeke Mangum]

Just to go try to take that capital and go get a different place. It won't cash flow like within like my cash on cash return buy box and a few other things like it cash flows a couple hundred bucks a month, which is, which is cool. And I know it's going to appreciate and do all that stuff, but if I can get like I put in 30 after closing costs and everything. If I can get like 30 to 33 back in a down payment.

[Joe Jensen]

Yeah, you get all your capital back and then you're. You get cash flow for.

[Zeke Mangum]

It'll cost 800 like with the numbers as those. It'll cash flow 800amonth for the, the loan term. We sell the note for 70, 80k more than we have one for. Then. Yeah, just, just go buy another place that's going to be a little bit of a better rental.

[Joe Jensen]

That's cool.

[Zeke Mangum]

But it was, I mean it was so discounted and it's like a pretty new home is 2017. Didn't really make a lot of sense to not buy.

[Joe Jensen]

That's awesome. And so the note that you have on it, you're. You, you said you're doing seller, buyer finance or whatever. Seller finance. The sellers are financing it to you balloon on that or how long is that for?

[Zeke Mangum]

No, yeah, it's 25 years.

[Joe Jensen]

Oh, no way. That's great.

[Zeke Mangum]

I guess it's subject to. We're buying it subject to. So not. Not seller finance. But yeah, I bought it subject to. And then gonna go seller finance it.

[Joe Jensen]

Awesome. And so are you, Are you putting a balloon on the, the seller finance that you're doing out or are you just gonna let it roll and just make money for 25 years off this baby?

[Zeke Mangum]

Yeah, not planning on it right now.

[Joe Jensen]

Because there's no real benefit. The money's made in the interest. Right. Because if they give you cash, you're just going to pay off a loan that's not even in your name that you know, you're like, you want. I have a note like that too. I don't do a lot of seller financing, but I did one and, and like, I hope they like, I, I don't want them to pay it off. Right. Because I'm making all the money off the interest. If they just cashed it out, I'm like. And it's a wrap as well. I'm paying a note on it. So it's similar thing. And it's like, yeah, I don't, I don't want them to pay it off. I want them to keep paying interest. And he keeps going late and so there's late fees and then he'll catch up and pay it. So then I'm making late fees on it. His interest is going Even higher. And his principal is going up because he's paying late, but then he ends up paying. So it's like he owes him almost more on this thing than when he started years ago. And I'm just like, yeah, just keep paying your payments, dude. Like never pay this off. I'm making all the money off the interest rate.

[Zeke Mangum]

Yeah. Especially with how, how low our interest rate is on the debt that we have. Yeah, we don't want to pay it off.

[Joe Jensen]

What's the interest rate on the, the subject to loan you're taking over? 3.9. Yeah. That's great. And then you can go around offer what someone 6% or 7 and they're stoked because they don't have to qualify for a bank, but they get the same or lower. What are you, what, what interest rate are you guys planning on selling it at?

[Zeke Mangum]

We're planning on seven and a half is what we're shooting for right now.

[Joe Jensen]

Which for someone that doesn't have a huge down payment, it doesn't qualify at a bank or something. That's going to be, they'll be stoked because that's what they'd be paying virtually at a bank. Maybe a little less, but for the right buyer, they'll be happy to do that.

[Zeke Mangum]

Yeah. Not having to qualify. And then also like we're selling it just under what all the comps look like. So there they should technically be walking into equity as well.

[Joe Jensen]

Cool. And the cool thing is obviously we're talking theoretical, right. Because you just closed on it. You haven't done this yet. But, but there's enough wiggle room there that like, if you're wrong, you know, you could go down a percent or if the, you know, you, you have wiggle room there and it's still going to be profitable one way or another, which is awesome.

[Zeke Mangum]

Uncovering our bases on it like it, it will cash flow a couple hundred dollars a month. So like the worst, worst case scenario, we just throw a renter in there and we just let the tax benefits happen and the appreciation happen and the principal pay down happen. Especially with the note already five years in. Like, I mean it's not a crazy long time, but our amortization schedule is already five years in, which is nice. We're getting way more principal pay down. So yeah, worst case scenario, it's still a decent case scenario, but we would definitely love to wrap it if we can.

[Joe Jensen]

Yeah. Which is cool. I love that. And that's deal number four.

[Zeke Mangum]

Yep, that's deal number four.

[Joe Jensen]

That's cool. Yeah. So you're, you're, you're, you're new to the game, but you're making some big moves. Super exciting. What are some, like, what are some of the things that really, like, kind of stuck out to you or blew your mind? You're like, man, like, this is why real estate's so cool. Or maybe some things when you're first learning, you're like, I didn't understand this, but soon as I did, it was like, that was kind of a game changer because I feel like you're still young enough in it that that's probably all still fresh in your mind. Oh, for sure.

[Zeke Mangum]

I mean, the biggest thing, especially recently, has been creative finance because I work 1099. I, yeah, don't have, don't have any W2 income. And also I don't want to pay a lot in taxes. Like, taxes suck. So I try to write off as much as I can, which is a big reason why I try to invest in real estate as well, so I can get all the tax benefits from it. But being able to come in and buy a place without like having to have my credit ran, have the long, drawn out process of working with a bank and trying to get a loan. Like this place, like, nobody asked for a bank statement. Like for on this last one, nobody rank credit. I literally just showed up to the closing table with the cash and was able to get into it. You're able to move so much faster. And yeah, it's just, it's. You save so much in taxes that even if you like are barely overpaying for a property or anything like that, you're still way positive compared to what you'd be paying in taxes to try to invest in as many deals as you want to.

[Joe Jensen]

Because you're saying the tax savings you're having is you're able to write off more as opposed to like trying to go, oh, I make enough income to qualify for a loan. You're like, I don't qualify for loans because I write everything off. But that's saving me so much that even if I pay a little premium on a couple of creative finance deals, better than paying a ton in taxes because I didn't write as much off. Is that what you're saying?

[Zeke Mangum]

Yeah, completely.

[Joe Jensen]

That's awesome. I love that. And the cool thing is with like the creative finance stuff is like you said, it moves so much faster. There's so many lessons, just the unknowns and headaches because you're not, you're just take the loan stays. I'm Closing on a subject too this week as well. And it's just so nice because there's not this month of lenders being like, we need this, we need this, we need this, we need this. It would come such a headache. You just close, you just give them the money and, and it's. And because I'm not getting a loan, I do a lot of mine remote as well. It's like I didn't even, we don't even need a notary. We don't even need to go in and do anything. It's just like DocuSign done. It's like, it's crazy.

[Zeke Mangum]

Yeah. No, it, it just makes it way nice for like I'm hoping to be able to close on a couple more before May. And if I was doing this conventional, there's no way even just time wise that that would, that that would ever work.

[Joe Jensen]

Yeah.

[Zeke Mangum]

So it's, yeah, it's Anybody who's in a 1099 job, if they're want to invest in real estate and they're not looking at creative finance, they're. They're out of their mind. That's like the route they should be looking at.

[Joe Jensen]

Yeah. And you can do multiple things at once. Right. Like what I really liked you said you're like, oh, I didn't, I didn't have the two or years of, of 1099 income. So I went and got a co signer, which is like cool. Like that's the. So many times people are like, oh, I can't buy anything for the first year or two years, you know, so I'm gonna wait, save up. And it's like, wait. You don't need to wait. Like get a co signer, get creative, do seller financing, do find a way, get a DSCR loan. Like there's ways to do it as opposed to sitting on the sidelines for two years until you get the, the 1099 income to show. And if someone listening is not 1099, they're W9, but maybe they just don't have enough qualifying income. So they're waiting until they make a, get a raise or whatever. It's like, don't wait. Like get creative, find ways to make it work. And I always say, like you can do multiple everybody. You should be doing the conventional loan and that one's going to be long and drawn out. But then also be doing the creative stuff. You know, you can get two or three creatives done while you're trying to do that one conventional, don't just sit on one option. You know, do, do all of it, you know, for sure. That's super rad, man. So what's, what's next? And so you're, you want to tackle a few more of these creative finance deals in the next couple months, it sounds like, before you get into your heavy selling season.

[Zeke Mangum]

Yeah, so I've had a goal. Like it was the same guy who I lived in his place. I. Yeah, he, he had owned a couple properties and then he did a lot of hard money, kind of private money lending stuff. And he had a check sitting on his, sitting on his like counter in the kitchen. And it was for $7,000 from a company. It was just the monthly check he got paid out for the money that he had lent them. And I was so confused what it was. I had so many questions about it. So at that point I was like 19 because like by the time I'm, by the time I'm like 22, I really wanted to have a hundred thousand dollars a year passively. And then I thought I could just look up and kind of pick what I want to do after that. Like, it's like, oh, hey, that's kind of my retirement number in my head. If I can hit that, then I can just work on what I want to. So I focus a lot on like the private lending stuff. And then obviously, like I've done some real estate deals, but mostly private lending. So I hit that number a couple months ago, which was awesome.

[Joe Jensen]

Dude, congrats.

[Zeke Mangum]

But I'm realizing too, like, I care a lot more about having that number in real estate instead of the private lending stuff because pretty much at any time the companies can just give me their money back. And also I look at the property, even just that one by uvu, how much it appreciated my returns exponentially.

[Joe Jensen]

Better.

[Zeke Mangum]

Not just from a cash on cash return, which it also is, but just from the appreciation way better than any of the private lending stuff, from the tax benefits, better than the private lending stuff, from principal pay down. Like, it's great too that I definitely want to start transitioning from that into more like hard assets that are going to pay me in multiple ways. But also it's like, hey, this company's not going to go out of business. This company's not going to be like, hey, we don't want your money anymore. Here, it's all back. So yeah, I'm trying to transition to get that number from my private lending stuff just into mostly real estate stuff. And yeah, like, that's, that's my goal. That's my goal by May is to have that done.

[Joe Jensen]

That's exciting. That's cool. Let's talk about the private lending, the money lending. So because that's a little, that's a little more rare, especially for someone who's like so new in the game. How did you get into that? I guess that same mentor guy was doing it. And so that's what gave you the idea. Are you lending hard money to real estate investors or businesses or what kind of hard money are you lending? What kind of returns are you getting on that?

[Zeke Mangum]

Yeah, so never actually lent any hard money to real estate stuff before. It's always just been businesses.

[Joe Jensen]

Oh.

[Zeke Mangum]

That same guy allowed me to come in and do some, do some deals with him when he was doing them and was lending some money. But yeah, the returns, it's super simple. Like, I mean terms are different on each one but usually like 10 to 15%. I usually am shooting for around 15 if I'm going to put money into something like that. And yeah, it's just, they pay me, they pay me monthly. I get a check every single month from it. And like, like when we talk about truly passive stuff, that is a lot of fun because it's not like, oh shoot, something broke. I get a call from a property manager, I gotta fill everything. It's literally just in the mail. Go, go cash it. And it just comes every month.

[Joe Jensen]

Yeah, it's not only totally passive, but it's actually the return is what it is. There's no other expenses. Right. Like because you got this deal like, oh, get a 22% cash, cash turn and then you know, the furnace blows up and you're like, okay, I went down to a 6% return this month. You know, it's like, it's, you know, there's so much more money that goes into it. But with these financing lending deals, it's like you don't put any more money in. If you did, you get a return on that. Are these long term or short term loans that you're doing?

[Zeke Mangum]

Most of them that I've done have been kind of open ended. It's like, hey, you can get your money back in 90 days or you can hold it for as long as you want. So like a big thing with it is I wanted flexibility with it. I didn't want to tie my money up in something that wasn't a hard asset like a real estate where I know I'm going to get paid in all the other ways for years or whatever. So yeah, it's usually, it's usually a 30 day thing. And if I ever need it back, I just say, hey, I need this amount back. And I get it within. Within the 90 days.

[Joe Jensen]

Oh, that's cool. That's awesome. Which would be good for you transitioning out. If you want, you find something, you want to put it in, you request it, you can pull it out and move on with it. And that's the thing. Like, there's no right or wrong way to do this. You know, there's syndications, there's hard money, There's a million different ways to make money with your money. But I like that you're, like realizing for what your goals are. The bigger picture isn't just passivity. It's like, oh, I want all the benefits of real estate, the appreciation, the depreciation, the tax benefits, as well as the return, the cash on cash, return off the cash flow. It's like, you want all of it. And that's where so many people get. They miss the big picture of real estate. And I was there, you know, at one point where it's like, I miss the big picture. It's not about just the cash flow. It's not about just this one piece. When most other investment tools, that is just. That's all they have is the return on the money. It's like. And if you buy stock, you make return on the money, you lend money, you make return on that money. That's all there is to it. But there's so much more with real estate. But it takes some foresight, Right. Because it's going to take 5, 10, 15, 20 years before you really see the huge upside. You know, some people bought it just right time. In a year or two, they're like, killing it. But for the most part, especially if you buy now, I'm guessing it's going to take five or 10 years before you see anything cool. But the time will pass either way, and you'll be stoked that you have something that's really going up in value, you know?

[Zeke Mangum]

Yeah. Even if you have a deal that just like breaks even every month, from a cash flow standpoint, you just hold it for 30 years. Like, that's a phenomenal asset. It's all paid off and now you're definitely cash flowing. Assuming nothing goes up in 30 years, which is definitely going to. Yeah, yeah. I like, in, in every way. Like, I know I said earlier, like, I'm trying to transition my money from the private stuff into more of the real estate, but I just, I. I think whatever way you try to cut it outside of maybe a little Bit of a time standpoint. Like, real estate makes more sense than anything that I've seen in five years of doing it.

[Joe Jensen]

Yeah, well, it's, it's really. I, I agree. I mean, I love it. There's a reason why it's like my huge focus. But it's like, it's also, it's also so safe. Like, it's, it's, it's there. It's not a business that can go out. It's not a stock that can just drop overnight. Like, even if the technical value of the home, you know, plummeted because of some Covid or whatever, crazy thing will happen next time they manipulate our lives. Like, who knows what's going to happen next? But it's like, I still have a rental contract, it's still renting. You know, I mean, like, even if they say the home's worth less, like, I'm still making money off of it. I don't care what you say the house is worth, as long as I'm still cash flowing, then, like, I'm still cash flow, you know, which is cool. Well, I love it, man. I want to dive into some of our content questions or our final four questions and, and get some of your thoughts on that. But what, what kind of, you know, what, what do you, what do you see yourself doing in the next five or ten years with real estate? What would you love to look back like, oh, man, this is what I've been able to check off.

[Zeke Mangum]

Yeah, that's. Yeah, that's a good question. I, I mean, I definitely want to hit that number. I hope to hit it soon. And I, I've like partnering on deals with people way more than I like doing it myself. So I'm assuming most of the deals I do from here on out will be. Be partners. It's fun being able to bring a lot of the guys that I work with too, in on deals where they only make 30, 40k, which, I mean, is great for a summer like their first year, but a lot of guys go and blow that all on a car or something dumb. After they go out and do well, being able to have them come in and invest some of it in it where they normally wouldn't be able to get a property is what I've had a lot of fun with.

[Joe Jensen]

That's cool.

[Zeke Mangum]

We'll do more stuff like that. And that's what I think it'll look like from here on out. My, like, number one deal I'm. I'm wanting to do within the next couple years, though, is I really want to get, like, a big cabin on just a lot of acreage and, like, try to get as close as I can to break even every month. But just having a place where I can go with, like, me and my family and, like, enjoy on the times it's not being used, that's, like, the dream, dream purchase for sure.

[Joe Jensen]

That'd be cool. That's awesome, man. I like that we'll put it out there, you know, it'll happen sooner than realize, probably. Well, that's great, man. So if people want to follow you, if they want to reach out to you, if they want to partner with you, I don't know if they have to, you know, work for you to be doing your partnerships. But if people did want to reach out to you, what's the best way for them to keep in touch?

[Zeke Mangum]

You can find me on Instagram, which is Zeke underscore Mangum. I'm not very active on there at all, but I check my DM sometimes. So if you ever want to reach out, I'd love to meet new people and chatting, but that would be the best place to do it.

[Joe Jensen]

Awesome. Well, sweet, man. All right, so I'm going to go through a couple final four questions here. If you could send a text message out to the whole world, everybody's going to get their phone blown up. Buzzing, beeping. They have a message from Zeke. What's it gonna say?

[Zeke Mangum]

Probably just try to do the right thing. Like. Like, I feel like everybody deep down knows what the right thing is, and they choose not to. Try to add more value than you take, and I think everything will go a lot better. I know in my life, I definitely haven't been perfect at it, but whenever I operate with other people and, like, business or relationships or whatever it is, I definitely try to treat them. Not how, like, only I want to be treated, but how I know they want to be treated. And, yeah, you just have better relationships. Relationships serve what I really think make people happy. I know they're what make me happy. So, yeah, just. Just add more value than you take.

[Joe Jensen]

Add more value than you take. I love it, man. Cool. All right, so book or podcast recommendation?

[Zeke Mangum]

Yeah. One of my favorite books I've ever read is Atomic Habits by James Claire. I don't think I've read another book that, like, I could implement as much stuff into it, like, into my life from a book. I feel like it's had a big. Yeah, it's just really benefited my life. I like the idea of adding friction whenever you're trying to stop a habit and getting rid of friction whenever you're trying to create one. Like, I've. A big thing for me this year has just been more accountability and. Sorry. A big thing this year has been more accountability and just having people make sure I hit my goals. For example, like I have. I'm not drinking enough water and I realized that like just recently. So I bought a smart water bottle. I don't know if it's going to be for. But they can like track how much you drink on your phone. I just gave my buddy my login to it. And whenever I don't hit my water goal, I have to Venmo in 50 bucks for the day. So just doing things like that, like you can move so fast if you have to. You just want like the pain of not doing it to be more than the pain of doing it. Yeah, like anything. You want to move fast in your life. Like if you do that, you'll. You'll move.

[Joe Jensen]

I love that. That's a great example. Atomic Habits is such a game changer book. Like, it's so applicable. I mean, it's a classic. It's one of those ones everybody should read every year. If anybody's ever read the Compound Effect, it's kind of a similar book. I read that one before, Atomic Habits, but same thing. They're just like so powerful in and applicable. Like you said, you're able to actually go implement things right away. I keep hearing that book brought up again. It's been a while since I've read it. I'm like, I need to go reread that one because it's money. I love that. All right, cool. What's one of the most expensive or interesting mistakes that you've made in real estate investing or hard money lending, if you want. If you've had any stories there.

[Zeke Mangum]

I've been super fortunate in the hard money lending stuff. I haven't lost any money yet. I'm sure that day will come eventually. But for sure, that first deal, I mean, yeah, I didn't really lose any money technically, but having money tied up into something where I couldn't really do anything else for a year and a half, two years, I. I missed out on probably two or three deals. I could have bought at like two and a half percent interest rates and that would have been nice. It was an awesome lesson. I'm grateful that it happened. But yeah, that was for sure the most expensive mistake I've made. Fortunately in real estate.

[Joe Jensen]

Yeah, like you said, it's like a lot of these Stories. The most expensive take people have made, they still like, didn't lose money on or made money on, which is funny. But like I said, the opportunity cost of, of a year or two years, you know, that there's so much that could happen during that time. So the opportunity cost really is, is the biggest pain a lot of us face. You know, a lot of times I'll ask you that question. If they've been doing this for 10, 15, 20 years and it's like the biggest mistake they made was not buying more.

[Zeke Mangum]

Right.

[Joe Jensen]

It's like the opportunity cost of sitting on the side or getting tied up to things and losing, you can't invest that. That's huge. You know, so, you know, anybody sitting there listening, it's like, that's the expensive mistake, is not buying something doesn't work out. It's doing nothing. You know what I mean? Which is virtually what happened to you. You got stuck doing nothing, trying to do something. But that was the pain is you weren't able to be making big moves during that time, which is it's always, always going to be better if you're taking action with real estate than sitting on the side. Sidelines. Yeah. Even if right away it doesn't work out. Awesome. Like, I, I kind of a side note, but I, I buy in like small rural areas and I feel like the first deal I ever buy in these areas, like, the numbers work on paper, but it's, they're just like, it ends up just being okay. And I'm like, it's not even that good of a deal. But because I took action, I always end up finding one or two more deals in that area. Now that I get like a handyman or a property manager, somebody in the area that knows what's going on. They're like, oh, well, here's another deal. Like, that one is like half the price of what I just paid for the same kind of home. And I'm like, geez Louise. But if I didn't take action and buy that first one, then I wouldn't be in the niche in this small town where then I could get the, the off market, better deal. And so it's like, I almost look at that first one is like, it's not even. That one's just to get in the door. And then the next two or three deals are where I get my good deals, you know, taking action.

[Zeke Mangum]

Yeah, it's momentum. It's like if you're not moving at all, it's really hard to get moving. But if you're Moving fast. It's really easy to just pivot and change the direction in which you're moving. You just got to get going.

[Joe Jensen]

Yeah, I love it, man. All right, what's a one word or short phrase to encapsulate why you love real estate investing?

[Zeke Mangum]

Understand it? I don't know. Like, it's what I understand better than pretty much anything else. Like, I don't know who I heard say this, but honestly, it might have been Dave Ramsey, funny enough, but they were talking about how you should invest. It was. It was. It was probably. I actually think it was Graham Stephan. Graham Stephan was asking him, hey, what should I invest? Like, my portfolio? And he's going through, like, stocks, like, how each of them should be portioned out. And Dave Ramsey said, like, well, what's your knowledge in mostly? And pretty sure it was Graham who said it's like, 80% real estate. He's like, all right, well, then 80% of your portfolio should be real estate. Kind of goes back to, like, the richest man in Babylon Principle, which don't invest in things that you don't understand. Like, don't. Don't give money to the. To the blacksmith to go buy diamonds, jewels, or whatever, because you're going to lose your money. So, yeah, I like it because I think it's safe. I think it's a great investment vehicle, but it's like, what I understand better than anything else, but I've had the most practice in. So, like, it should be the thing I focus on the most.

[Joe Jensen]

I love that, man. I. I feel the same way. I think that's a. It's a safe principle to run on, is like, invest in what you understand, you know, and if you don't understand anything, go learn enough until you do understand something. So you cannabis, don't just be like, oh, well, I guess I don't know enough to invest in anything. It's like, no, go read every book, spend six months, read 20 books, listen to 50 podcasts, and you're going to know so much about that subject that you'll be able to confidently make moves within that space. But so many times we just digest junk for months and months and years on end and we don't know anything. But if we hit that time, focus on one topic, it's amazing how much you can learn for sure.

[Zeke Mangum]

Yeah, don't get super bad shiny object syndrome. Like, focus on one thing. Get good at that one thing, and then you can branch out eventually. But, like, nobody. Nobody ever crushed it trying to know 10% of a hundred things.

[Joe Jensen]

Yeah, yeah, I know. It's so true. It's so funny. And I feel like more and more in this day and age, it's like our attention just pulled a thousand different ways. And it's like the greatest strength you can have is if you can just like, say, focus for long enough to really learn something, it'll just pay dividends in so many aspects of your life. But, you know, we have all the opportunities at our fingertips of the world. You can literally learn anything on the Internet with ChatGPT and YouTube and all these things, but it's like, who's going to take the time to actually do it? And, and some people are, and it's awesome. And they create a amazing things in their life and some people don't. And, and that that gap's just getting bigger and bigger the more opportunities we have. And it's interesting to see where that's all going for sure. Well, sweet, man. This is great. Appreciate your time. Thanks for coming on, sharing your story about the. The real estate you've got into. I'm excited to get with you next year and see where you're at then and what deals you've done. So thanks for being here.

[Zeke Mangum]

Yeah, thanks for having me. It's always fun talking.

[Joe Jensen]

Absolutely. This is Joe Jensen signing off for the Real Estate Investing School podcast, reminding you that it's closer than it seems.