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- [00:00]
Ashley Kerr
Today we brought on another rookie investor to share their experience and share their story of getting started in real estate investing. It's also a great episode to watch if you're thinking of pivoting or changing your strategy. We'll break it down with Jared as to what you should think about and why he decided to do that.
- [00:18]
Tony J. Robinson
And this episode's also about hustle. If you want to learn unique ways to find off market deals, to find partners, to build your brand without doing social media, without being a podcast host, this is the episode for you.
- [00:35]
Ashley Kerr
Today we're bringing on Jared Hodle. So welcome to the Real Estate Rookie Podcast. I'm Ashley Kerr.
- [00:41]
Tony J. Robinson
And I'm Tony J. Robinson. And Jared, super happy to have you on the show. Thank you for joining us on the rookie podcast.
- [00:47]
Jared Hodle
Yeah, thanks for having me.
- [00:48]
Ashley Kerr
Jared, let's start off with life before real estate. What were you doing and how did you come upon real estate investing?
- [00:56]
Jared Hodle
I've always wanted to be a football coach. So I was a college football coach kind of work, working my way up through some of the smaller schools. And so I was in Madison, South Dakota at Dakota State University and then went up to University of Minnesota, Crookston. Always on the offensive side, you know, working with quarterbacks, receivers, and it was a ton of fun. 2019, Crookston, University of Minnesota, Crookston decided to drop football. So I'm originally from Waterloo, Iowa, and I moved back home in late 2019. And of course, everybody knows what happens in 2020. So I was, you know, looking for a job. Nothing, no one was hiring. And I actually went to a wedding of my cousin and my other cousin was like, oh, man, you got to listen to this podcast. It's about, you know, real estate investing. And so he introduced me to Bigger Pockets at that time and, you know, started just listening and listening. I loved the, you know, Jocko Willink was like, my guys, when I, when he was on the Bigger Pockets, you know, podcast, I listened to that episode. I'm like, okay, this, this is something, this is something good here. So, so kind of the whole time, you know, just looking for purpose, looking for a why, seeing what, you know, skills I had as a football coach and what could be transferable, maybe in a different career. I grew up helping my grandpa. He had about, I don't know, 15 properties probably. So I'd always making extra cash with him in Waterloo here, painting or mowing or doing snow removal. So I always, always had been around rentals, been around tenants, watched his processes, and so it kind of all, you know, came together. When I was listening to Biggerpockets and thinking about being a football coach and, you know, what we did with, you know, recruiting is kind of like. Kind of like sales, kind of like putting yourself out there. And I think someone, you know, mentioned driving for dollars, and obviously I knew Waterloo and had a lot of. A lot of time on my hands, so just started driving around and looking for some places.
- [03:02]
Ashley Kerr
Jared, everyone's gonna think you're a paid sponsor with all those bigger pockets plugged in. So, Jared, you've got your mindset on real estate investing, and you said you're out driving for dollars doing different things to get that first deal. What about financially? Was there anything you were doing to get your house in order to get that first deal, or did you even know how you were going to fund it?
- [03:23]
Jared Hodle
I think luckily, you know, I've always been a frugal person. So, you know, along the way, you know, obviously, as you would imagine, college football coaches don't get paid a ton of money. So, you know, you're kind of needing to budget along the way and, you know, save more than you spend. And so I luckily had those, you know, principals already had some money saved up, you know, but to that point, it's like, yeah, how do you get a loan without a job? And so that was definitely, definitely difficult at that time. And especially at that time, I also started getting into real estate sales, which obviously is difficult to. You don't have a W2 income, so you're not going the conventional route. But for the first couple, I had 20% saved up, and so it kind of worked out just because I had someone willing to take a chance on me with underwriting the deal and seeing that I just started a new career and had the money down.
- [04:16]
Tony J. Robinson
So, Jared, it sounds like as you were searching for that next career phase, you. You became an agent.
- [04:21]
Jared Hodle
Yeah. So I think early on, you know, driving for dollars, you know, looking for deals, it just kind of spoke to me, you know, the real estate investing and. And how. How little there are people out there, you know, aside from, you know, places like Biggerpockets or forums where you can ask questions, there's not a ton of, like, local people in a lot of communities that kind of, you know, what's going on, real estate investing wise, but also, you know, willing to help other people along the way. So I kind of saw an opportunity with that kind of pairing that with my background being a teacher and a coach and recruiting, and so it just kind of ended up being a perfect fit. But certainly, you Know, getting those first two deals showed me like, oh, this might be something here where I can help other people as well. Yep.
- [05:06]
Ashley Kerr
Talk about a great, like, networking opportunity for you to meet other investors by wanting to be the go to agent to help them get a deal.
- [05:16]
Jared Hodle
Obviously Waterloo, you know, where I live, pretty small market. But one thing that I always think about that is like, I got to start the real estate meetup here, you know, in our town, because no one was doing it before. So it's like, you know, some of those other frontiers had already been, you know, conquered if you know the bigger cities. But, you know, when you get in a smaller regional spot, it's like, man, you could be a little bit late to the party and still kind of be the guy doing the stuff. But absolutely, it's been, it's been fantastic networking and meeting people and watching other people grow alongside me and, and doing their thing as well. So that's been awesome.
- [05:49]
Tony J. Robinson
And Jared, I want to go back to the driving for dollars and how that led to your first deal, but I feel like we need to pause on the, on the meetup here just for a moment, because I think when a lot of rookies talk to themselves about building their network, building their brand, they think about social media and they think about becoming a podcast host. They think about, know, trying to go viral on social media. They think about the, the digital age and what it means to build your b. Your brand and build your presence there. But being a podcast host isn't for everyone. You know, being a TikTok dancing star isn't for everyone. But the local meetups, I think, are one of those untapped ways that a rookie with zero experience can still go out there and build a name for themselves, build their network. So you said that you were fortunate enough to build or start the first meetup in your area. What has been the impact of starting that local meetup on your life and on your business?
- [06:49]
Jared Hodle
I've been saying that NonStop. I mean, AI, it's a tool. It's helpful. You know, everybody has got this new way of getting a deal and new lists that no one else has gotten. And at the end of the day, it's like it's a contact sport. It's pounding the pavement, it's turning over stones. And I think it's kind of exciting to me because the more AI solutions that come out, the more people can pound the pavement and make a difference. So it's like you're sabbat on with that. I mean, it's like if you can have the meetup, and you can have the physical thing, but we're still humans, and we still want to talk to locals in our area. We still want to talk to humans. And so I've always been a believer in that. I mean, especially if you can, you know, be an honest person and. And follow up. When you say you're gonna follow up, it's just striking how. How many opportunities there are out there for those people. But certainly the meetup for me, you know, I think every once in a while, it was being run before I started it. You know, it would be. I don't know, there wasn't really a cadence to it. So, you know, when there's no cadence, it's kind of the. Kind of the kiss of death to me, because then no one knows when you know the next one's gonna be. So I just said, me and a buddy who's a banker in town, I told him, like, we're just gonna do it, and if it ends up just being me and you, then it's just gonna be me and you, but we're gonna throw it out to people, and we're gonna do some programming. And I could go through my list in real estate sales, but I would imagine 30% of my sales have come from some connection there. And certainly, you know, helping people out there, inviting my clients there, but also people showing up that said, hey, you know, so. And so was talking. They said I needed to come meet you because, you know, you know how to do real estate sales. So it's been awesome.
- [08:28]
Tony J. Robinson
Jared, I think the key of what you said was, hey, we're gonna throw this thing. And even if it's just me and you, who cares? And I think there's that, like, teenage person inside of each of us. It's like, what if I throw this party? Nobody shows up. But like you said, it's like, what the worst is going to happen is that it's just you and your good friend having a beer, and then you guys just talk about real estate. So I think more rookies who are listening should start local meetups, because I think it's the easiest way to start building that network. So thank you for sharing that, Jared. But now going back to the. The driving for dollars, how long did it actually take? How much driving do you think you had to do before you found that first deal?
- [09:05]
Jared Hodle
Well, you know, luckily, I. I grew up in. In Waterloo, so I kind of. I knew the areas that I would invest, and I. It's funny, my mom's got two rentals And I was still kind of looking at being a football coach. And so we, I sat down with her and I said, if I end up getting a spot, a duplex, whatever, and I get another job and move away, like, will you manage it for me? And she's like, I will, but I am not going here, here, here and here. So it became easy to look at the spots that, you know, I could invest. And I think, you know, obviously not everybody has a mom that's going to do it for you, but I think that's a great conversation to have with a property manager is okay, I want to own a property where you're willing to manage and then kind of reverse engineer that and lead that to where you can drive for dollars. And I don't know how other states are set up. You know, we have Beacon Schneider is our tax assessor website. And so, you know, I call it driving for dollars, but a lot of times it's virtual driving for dollars. Just going down the, you know, the tax list and streets that way and seeing who owns what. And you know, certainly if there's a property in there that looks good, I'll, I'll drive by and make sure that it's, you know, the one that would be worth calling on.
- [10:13]
Tony J. Robinson
So, Jared, give us just like a quick breakdown. What are you looking for as you're going through the county's website on this tax list?
- [10:20]
Jared Hodle
You know, initially I didn't really great plan. You know, it's been refined over the years. You know, at this point, I love the, the 50s and newer single family homes now is kind of my, kind of my bread and butter. I think the 1950s, you know, brought a lot of things, you know, modern foundations and, and you know, at least 8 foot in the basement. Modern wiring typically, typically does not asbestos siding or insulation. So that's kind of just, you know, where I start. And then, you know, all different, you know, ways to look is, is it vacant? Is it, you know, is the lawn getting, you know, long? You know, talking to a neighbor who might, might be out, I mean, just getting ready to close on one that was a Facebook marketplace. So I mean, it's like just kind of looking at all these different little tiny avenues that, you know, aren't going to be the greatest honey hole. But when you, when you get the sum of the parts together, you're gonna, you're gonna have some good, you know, I guess yield from it.
- [11:19]
Ashley Kerr
Another great thing to look at too on those TAC records is the actual mailing address for the taxes and you know, if the owner is out of state, maybe more motivated to sell to or doesn't live at that property, maybe it's a rental or you know, they want to get rid of it. So that's another great indicator. But that's just such a, such an old school way nowadays, you know, to go and look. But you can get so much free information. So if you are a rookie investor and you don't want to pay for all these expensive, you know, different programs and softwares to actually go and find a deal like sit down and go through, you know, the tax rules. Before we get into five ways that rookie investors can get 5% interest rates, let's hear a word from our show sponsor.
- [12:03]
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- [13:11]
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- [13:47]
Ashley Kerr
When I bought my first rental, I actually thought collecting rent would be the hardest part. I was completely wrong. The admin never stops. Expenses, receipts, tax forms, tenant issues. I didn't expect the behind the scenes work to take up so much of my time and headspace. Every night was another round of paperwork and I started thinking, if it's like this with 1, how do people handle 5 or 6, 10? That's where baselane comes in. Baselane helped me get out of the weeds. It's the official banking platform of Biggerpockets and it handles the whole back end. Expense tracking, financial reporting, rent collection, even tenant screening. It's the first time I've felt in control. And now that I'm not drowning in admin, I finally see how my real estate business can scale. If you're starting out, do yourself a favor. Sign up at Baselane today and you'll get a $100 bonus. So, Jared, how did you find this deal and what was the asking price on this property? And did you do any negotiation to get to a purchase price?
- [14:52]
Jared Hodle
It's funny, I got two duplexes about back to back, you know, right in the same week. You know, it's always funny. When it rains, it pours. It seems both good and bad. But one of the deals that I wanted to take you guys through was a duplex fairly close to my, you know, the house. I grew up south of town in Waterloo. I think it's the best area in Waterloo at the time. I did too. And there's about three duplexes built right next to each other. So I called on all of them and didn't hear anything for months. And all of a sudden I got a call one month and the guy said, well, I got a call from you. Are you actually interested in buying it? I'm getting, you know, older and want to sell it. And I said, yep, I just want.
- [15:32]
Tony J. Robinson
To add something there too, because you said that you called on it for months and I think that's the part that rookies are going to just kind of gloss over. But it's not like you called this person the very first time they picked up and said, hey, can I sell you my house at a really great deal? Right? It took, it took time of building that relationship. So I just wanted to make sure that we pointed that out. So please continue 100%.
- [15:50]
Jared Hodle
And even at that point, he still was like, I got two people that are also interested, so I got to call them too. And it's like, okay, there's never a done deal, even when they call. But it gets you excited, of course. So ended up going through the property. It looked exactly like I thought it would. It's funny because I didn't do an inspection. I don't necessarily recommend that. I think this was built in the 50s, so I think I got bailed out a little bit because the few things that I've had to do have been fairly simple repairs, just with the way the house is laid out. But I think one of the funniest things about it is he's like, my assessment just went up. My tax assessment just went up. He's like, I think it's probably what the house is worth. So if you paid me that, you know, I would, I'd be happy. And, you know, so now it looks like I paid like a random number. Everybody's like, how'd you get that number? It's like, I don't know. It was just assessed at that, at the time, and I thought it was pretty close, you know, so. But I think it was about $131,000. And he had tenants in there both paying 600. And so the funny thing about that is, you know, what's everybody say, well, that's not the 1% rule. But I knew the area well enough. I knew his rents were low. I knew I was going to put. I think I put 25% down on that. So I knew I was going to be okay and I could work rents up, and I knew it was going to be a great deal down the road. So that's what I always tell investors, too, when I'm helping them out is like the 1% rule is a rule. It's not like an end all be all. So make sure you make sure it makes sense for the area and kind of what you're trying to accomplish. Because if the area is better than that and you think you can get rents up, I think it's just a blip on the radar if you're paying a little bit, bit, you know, less rent when you first get it. So.
- [17:32]
Ashley Kerr
So with this deal, did the. The seller ask for any pre approval or to see that you could actually close on the deal at all? And did you end up using agents or you guys just did it yourself?
- [17:44]
Jared Hodle
Yeah, he did not. Which is kind of. Kind of wild to think back about that. But no, we did not use agents. I wasn't licensed at the time. He did not have an agent. I use my, my friend who just started as an attorney here in town, he drafted up the purchase agreement, which has been really cool, you know, adding him to part of your story. It's always fun when you can work with, you know, some of your friends on, you know, different pieces and it kind of connects you guys even more. So that, that was cool. And, you know, there was an appraisal and all that, but of course, you know, getting it with tenants was also a little bit of a learning curve, you know, for me because, you know, as my, my first property, I didn't know. You know, you hear people talk about the estoppel agreements and stuff like that, and I'm like, should I do that? Should I not?
- [18:28]
Ashley Kerr
And now you have to explain what an estoppel agreement is and then we'll have Tony spell it because he. That's how he learned how to spell it.
- [18:35]
Jared Hodle
I'm just happy I can say it, at least close to being right. But, you know, when you talk to an attorney, a lot of them, and that's what I really, I appreciate about my attorney is, I mean, there's the legal jargon and then there's also the, you know, kind of the common sense approach, I guess you could say. And so the estoppel agreement, essentially the way I understand it is you're basically asking the tenant, you know, here's what I have that you signed. Do you agree with this being, you know, what you signed? You know, sometimes they try to pull a fast one or sometimes the landlord's pulling a fast one and, you know, it's not exactly what the lease says or there's been some side agreement along the way that you got to iron out. But for me, I just, I just felt like I did not, I did not have them do it. I didn't want to take that initial approach, kind of coming out, guns ablaze. And I thought any potential, you know, issues that would pop up would be short lived just because, I mean, in Iowa, you know, you don't really sign a longer than a year lease and you know, your rents were already low, so I mean, it wasn't like it could get much worse that way either, so.
- [19:39]
Ashley Kerr
Well, we actually do have an estoppel agreement. It's@biggerpockets.com estate stoppel, and I literally just created it like two days ago. It got uploaded to the Resource hub, so perfect timing, Jared, to mention that. So if anybody needs a copy of an estoppel agreement, we've got one@biggerpockets.com estoppel.
- [19:58]
Tony J. Robinson
Jared, I'd love to hear a little bit more about the deal and what happens next. So you, you find it, you negotiate it, you get it under contract. Now, tenants are already in place. So on day one of closing, is there any action that you need to take? Are you, are you planning on doing rehab and kind of shifting the tenants around? Like, what's your, what's your action on day one of getting the keys?
- [20:19]
Jared Hodle
Best laid plans of mice and men, you know, go awry. I feel like that was my situation on this. You know, I study in bigger pockets and just, you know, having this like, elaborate plan and then you get closer to the day and you're like, oh man, what, you know, what, what am I going to do? So the first thing I knew I wanted, I knew I wanted to do was I don't want to accept, you know, checks or cash or have to walk by and pick up checks or anything like that. So I sent a letter saying, we're going to set you up on apartments.com, i believe I used at that time, and you can pay on there. Luckily, the tenants are pretty tech savvy, so it wasn't. Well, one of them signed up right away. The other one must have been doing bill pay out of his bank account because the old landlord would bring me a check for about two or three months saying, oh, here's this check, here's his check. So I got lucky that the guy was just a great guy and was willing to help me, you know, that he was handing his money over. But, you know, obviously the utilities were in their name. But in, in our area, you can make a landlord account where, you know, if the utilities were to switch for some reason or they weren't going to pay the utilities for some reason, it would just go default back into the landlord's name. So the power stayed on versus, you know, cutting the power off and potentially having an issue, you know, with frozen pipes or something like that. So I got, I got the landlord account set up fairly early on and lawn mowing, I bought it right in the middle of summer, so I had to get, you know, lawn mowing set up. And then for me, it was just a welcome letter, you know, sent right to him saying, here's the number to call if you have issues, I'm the new owner. And then just kind of waiting out the leases. And I think there's a little bit of give and take with leases. I think if you hit them right, you know, I know, I know some other people have probably better strategies than I do on this, but I didn't feel like hitting them right away with, you know, you know, 20, 30, 40% increase was right. But so we kind of kind of worked out a plan to get there, you know, over a couple years and, and have done that so much like you.
- [22:20]
Tony J. Robinson
A lot of investors don't want to necessarily jump in and increase rents tremendously right away because sometimes you end up losing good tenants. And that cost of turnover could be more than the incremental increase in rent. But We've interviewed Dion McNeely a few times on the Real Estate Rookie podcast. So if you guys just search Dion's name on Bigger Pockets, I'm sure you'll find the episode. But he has what's called the binder method, where he basically makes a presentation to the tenants and gets them to explain why they feel a certain rent increase is either fair or not fair. And he's used it to pretty good success. And Dion will actually also be speaking at bpcon this year. So if you guys want to see him live on stage, which I think will be fantastic for the rookie audience, head over to biggerpockets.com conference. You guys can check it out there. And sunny Las Vegas. So let's get back to the numbers on the deal though, Jared. So you have these tenants in place, you start to stabilize a little bit, make some improvements around the management side. You said the rents were initially 600. What were you actually able to charge after those increases and what was your net cash flow?
- [23:20]
Jared Hodle
I got lucky because I got a. I got a 30 year fixed mortgage right in the heat of COVID and it was fixed at 3% for 30 years. And so my payment is virtually nothing. I would say, I don't know, 900 bucks or something like that, all taxes and insurance included. So that's been fantastic and allowed me a little bit of a Runway to work on getting rents up and doing some improvements over there. Certainly the downside is if you ever have to recapitalize it, the banks are going to be very excited to get that off their books. So trying to just roll with that as long as I can. But, you know, rents were initially 600. I think the one had just signed a lease and one lease was due in January. So I knew the January lease I'd have a little bit leverage with because no one likes to move in the middle of Iowa in January. So I think I worked her to up to 750 in January. She ended up staying a couple more years and then actually bought A house. So that was exciting to see. And then I was able to move rents to market. I believe they're at 8:50 now. So that's kind of that side and then the other side has been a same person and just slowly every, every year just adding a little bit and add a little bit and we, that one is up to 850 as well. So yeah, I think that's what, that's cash flow and 7 or not cash flow and that's, that's grossing 1700. And you know, I like to set a little bit aside for you know, maintenance and, and things like that. So I like to, I like to say it's probably, you know, cash flowing about, you know, target is 300amonth and just not that I'm using that money for anything. Just kind of rolling it all into an account, using it to buy or improve other properties. And you know, I learned, you know, last year especially, you know, it's like if you take care of your properties, they'll take care of you. So you know, I don't want to SAP everything out and have nothing for a big capital expenditure. You know, it's great to at, look leave money in there and then it's just a minor annoyance. When you have to do a roof. It's not a catastrophic, you know, situation if you're doing a furnace or a roof or air conditioner or have an eviction or whatever. So that's been, that's been great for me and obviously everybody's got a different plan. But I, I love helping people with real estate sales so I don't necessarily need the money with the investments right now and I, I, you know, that's just a blessing to me.
- [25:41]
Ashley Kerr
So I think we're seeing more and more common, especially now as deals get higher. Harder is where people aren't rushing to quit their job and get full time into real estate, but actually using their W2 or their other traditional income to fund their deals and to continue and grow and to build long term wealth instead of quitting and finding out they actually need to work harder and longer than when they did at their job too. So I'm seeing like just going into the biggerpockets forums and different things on Instagram seems to be, that is more of a growing trend where people are becoming more patient to actually quit their job and to stick with it instead of just going full time real estate.
- [26:25]
Jared Hodle
I kind of have a little bit of a hot take on that because I think it's what we do as humans. It's what we're leaving to the rest of the world. And I think it's a little bit selfish to say I'm just going to have 10 rentals and go coast off into the sunset. And obviously a lot of investors, you know, go and do great things after they leave their W2. But sometimes it's like, I mean, the hard things that we have to do as a real estate sales in your W2, doing your own, you know, business or whatever, it's like those are so important to your community and to your life and to your purpose and to your legacy that I think it's like I, I feel like don't be in a hurry to, to get rid of those because that's kind of, you know, kind of what matters in life.
- [27:06]
Ashley Kerr
So, Jared, since you got that first property under contract, what does your portfolio look like today?
- [27:13]
Jared Hodle
I bought two duplexes basically back to back, you know, right around that time. The other one was fully vacant, so vacant in September and October. That was always a shocker, trying to get that filled. And then I bought a personal residence that I kind of house hacked with a roommate. And then that's when I met my, a couple of business partners, you know, right about January, February. And it kind of kind of exploded after that. We got more into, you know, doing the BRRRR strategy, single family rentals. I became a little bit more bankable. So it became an option for us to do that and did a couple flips and, and use that money to kind of just recycle into BRRRR single families and a couple smaller multifamily and recently a couple smaller commercial buildings, which I'm pretty excited about. But right now portfolio is sitting about 25 doors, I would say, and, and some storage units. So that's been kind of exciting growth for us. But yeah, obviously using the BRRRR method, as long as, you know, you have some reserves and you're doing stuff right, I think it obviously still works and still is a great way to, to grow.
- [28:17]
Tony J. Robinson
And Jared, first, congratulations on, I think a lot of success in a relatively short period of time. But two things you mentioned, right, you mentioned partnerships and you mentioned Burr, and I think both of those are strategies that rookies should at least consider. Let's talk about the BRRRR strategy first. So I guess first, for folks that maybe aren't familiar with that phrase, can you break down exactly what BRRRR means?
- [28:44]
Jared Hodle
Buy, rehab, rent, refinance I think is what it stands for. But I mean, in practice it's finding a house that needs some, some love and needs some work and, or a duplex or whatever and fixing it up. Talking to a bank that's willing to do either a cash out, refinance or cross collateralization or something where you can realize some of your sweat equity and rent it out. Hopefully you're renting it out for less than what your debt service would be and just trying to rinse and repeat it and doing it over and over again. Right now it's difficult. But I think as long as you're having a little bit of at the end of each month, you're going to be doing okay. When rates someday will come down, hopefully.
- [29:30]
Ashley Kerr
So Jared, we have to hear your prediction. When do you think rates will come down?
- [29:36]
Jared Hodle
Oh, I, you know this is going.
- [29:39]
Ashley Kerr
To be live on YouTube. People are going to hold you to this guest.
- [29:44]
Jared Hodle
I don't know, I'm, I'm just, I'm happy when there's some discourse in real estate because it's great. I love it. It makes some of the people that are, you know, just kind of half in, half out, get out and more deals for us. So I'd be happy for rates to stay high. You know, two more years, three more years, doesn't matter to me. So once it goes down though, I'll.
- [30:03]
Ashley Kerr
Be feeling because you're willing to put in the work and you've taken the time to get the knowledge and the skill set to actually find a deal where you set it perfectly. As to the investors that aren't serious or don't take that time to learn or just trying to get rich quick, they're going to fall out, they're not going to be your competition anymore and they'll be deals for you. I think you said that perfectly.
- [30:25]
Tony J. Robinson
It's funny you mentioned that Ashley, about like when will rates drop? And it's hard for us to know when, but I think the impact when they do drop is something that we can all agree on. I was talking to my lender a couple weeks ago and he said that when rates dip below 6%. Right. So we're, you know, sevens ish right now. Right. So point in some change lower. But he said once rates drop below 6%, there's an estimated 3 to 4 million people who will then be able to start buying homes again. Right. And we're already in like a very supply constrained environment and imagine what happens when we add in another 3 or 4 million potential buyers into that pool. And I think he was even more so talking about like people just shopping for primary residences. So think about what happens when you expand that out to folks like us who are real estate investors. Right. Like what does that look like? So I couldn't agree more Jared, that I think there's a very unique opportunity for real estate investors right now today to have more leverage when looking to purchase properties. You can ask for things like let's negotiate on the price. You can ask for things like can I get a seller credit? You know, so like I think we are in a very unique space. So I appreciate you sharing that. But I want to go back to the burr though, right. Because I agree with you that I think there's some headwinds for that strategy today. But when you talk about building long term wealth, when you talk about what does your portfolio look like five, ten years from now, I still think it's one of the best tools to build with that portfolio. But the challenge right now I think is in a few of those letters within that acronym, the first one being the buy. Finding good deals has gotten, I think harder today for a multitude of reasons. So what are you seeing as the best way to find good deals today?
- [32:11]
Jared Hodle
Brandon Turner always says it best. You know, it's the large funnel I think is important. Multiple different avenues of ways to get deals. I think, you know, another thing he says is run, run to hard. I'll try to make this a short story, but one example that we're doing this summer is the food bank in town approached us, they're expanding and they had two houses that would have to be torn down. And so they wanted to see if anybody would move them. And so we're moving them, you know, do it.
- [32:39]
Ashley Kerr
You're moving the houses.
- [32:40]
Jared Hodle
Moving the houses. So not a lot of people can, can, you know, do something like that or have the capacity or the willingness. And so you know, I'm like, well let's, let's try to take it down. So we're moving them across town to some city owned lots. And obviously there's a lot of work and a lot of question marks that come with it. But you know, we're expecting to have a perfect burr on both of them by the end of the, you know, by the end of the process.
- [33:04]
D
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- [34:44]
Ashley Kerr
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- [35:51]
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- [36:53]
Ashley Kerr
So, Jared, one thing we haven't touched on yet that you mentioned was making the pivot to self storage. So I definitely want to get into that asset class. But first, why did you decide to make a pivot from your original, you know, multifamily strategy?
- [37:09]
Jared Hodle
That's a great question. And you know, you listen to a lot of people out there that are, are, you know, once they get into one strategy, they're, they're very good at it and they're, I would say, disciplined enough to stay in it. I might not have that discipline. You know, I get a little bit of shiny object syndrome and want to do other stuff. I've convinced myself that, you know, I'm, my strategy is, you know, Waterloo and Cedar Valley specific, that I know this area better than anybody. And so, you know, that's kind of my competitive advantage. But certainly the self storage kind of fits in with that. Kind of knowing the area, obviously running numbers just like you run on anything else. You know, making sure your debt service is going to be covered and just someone I know in town was building them and going to be wanting to sell them and gave us a price and we're like, that's not too bad. So that's kind of how that route went. And in the course of that the neighbor also had some self storage and he's like, oh, I'd sell this self storage. And we, we worked out a number there. So obviously it's always terrifying. You know, you want to make sure that your numbers make sense. But I think it's important to, you know, stretch yourself a little bit every day and learn a little bit more. I've been down trying to get the Google, you know, Google to acknowledge me as the owner. So it's like you're sitting down on a live chat with Google at the middle of downtown Waterloo. It's stuff you never expected you'd be doing, but you know, that's part of the, part of the fun too.
- [38:29]
Ashley Kerr
So with these self storage units, kind of walk us through how is this been a better investment, worse investment and kind of compare and contrast. Why maybe a rookie investor would want to change their strategy to self storage.
- [38:45]
Jared Hodle
Yeah, I, I mean it's new for me so I'm trying to hold out judgment. I would say at this point I'm not, you know, just the day to day of it is a little bit more difficult. I mean you got 52 people that are, you know, obviously there, it's not their home but you know, it's, it's, you know, it's still something that they have and something that they care about. So you're, you know, you're still fielding calls still, you know, talking to people who, you know, I can't pay rent this month. It'll have to be, you know, twice next month and working out, you know, the deals that you have to work out. That's difficult. Not a lot of, you know, like people doing it I guess in town. So there's been a little bit of a learning curve on what a, oh like a lease agreement looks like and what the process is if they're not paying. And so we've been having a little bit of learning curve that way. You know, I certainly think it goes well with someone like me who's kind of connected in the real estate world, connected with property managers. Seems like you have a great built in clientele that way. Just marketing to other managers in town, you know, your own rentals, stuff like that. And of course, you know, Amazon and stuff like that is, I, I just think it's, you know, people want stuff, people are always going to have stuff and, and so I just feel like bullish overall on, on storage for sure.
- [39:57]
Tony J. Robinson
So Jared, one last thing. I want to pick your Brain about here, before we let you go, is the partnership side as well. You said that was a kind of key moment in your investing journey that allowed you to, to scale a little bit more aggressively. What was the deciding factor to make you say partnering up with someone else actually does make sense for me again.
- [40:20]
Jared Hodle
I just am blessed and got, and got lucky because, you know, I, it just made sense at the time and I probably took it a lot lighter than I should have if I would have thought back. And nothing has gone bad. It's been great. But I've seen other ones go bad just from people that I've helped. I think it is like a marriage, as weird as that sounds, I think you're with them until death do you part. And I think you always want to be giving 50, 51%. If both sides feel like they're always given 51%, you're going to be in good shape. I, you know, one of my partnerships, you know, we just, the sum of the parts is worth way more than us individually. You know, we can run interference for each other and have different skill sets. I'm probably the guy out pounding the pavement, seeing deals, finding stuff a little bit more. He's way better at operations and getting some of the bird stuff done and working with the city and things like that. And, and then, you know, my other one is kind of the same thing there. He's way better at doing, you know, construction stuff and management and I'm better at, you know, finding deals and doing that way. I think we're, you know, financially, you know, conservative. You know, we're not spending. You don't need all the cash flow from it. I think that's an important part of your partnership. If one side's thinking that they're going to need to use it for income and the other side thinking that it's a long term investment, I think you're going to have some major issues at some point with that. But if both sides are making good money in their W2s or whatever else they're doing, and it's just kind of part of their investment portfolio, I think you can make some serious money and investments with a great partner.
- [42:04]
Tony J. Robinson
And for the rookies that are listening, you may or may not know, but Ashley and I actually co authored a book on real estate part partnerships called Real Estate Partnerships. If you guys head over to biggerpockets.com partnerships, you can pick up a copy of the book there. But Jared, for you, it sounds like naturally each of you had your own skill set that you leaned into. But I, I, I still think that the biggest question that Ash and I probably get when it comes to partnerships is how do we structure the partnership? How do we divvy up the, the profits? How do we divvy up the, the cash that we put in? How do we divvy up the ownership in this partnership? So what did that conversation look like.
- [42:42]
Jared Hodle
For the three of you to that point? And not everybody's going to have this opportunity, but if you can start off with just a quick in and out, you know, a flip is what comes to my mind. Or just one rental where, you know, you don't have to have all that stuff hammered out with an attorney right away. It's, you know, maybe you set up an entity just to have one, but if it's something that, you know, you can see if you can work, work well together, and if you can't, it's, you know, no harm, no foul. We'll separate this. Sometimes I, you know, as the same with, you know, an individual getting into real estate investing. It's always the, you know, what insurance should I have? What, you know, what LLC should I set up an llc? Should I not? What this should I do? And it's like, you know, none of that really matters until you're really going, you know, obviously you want to try to do it right, but, you know, I think that's such a barrier to a lot of people. So I would argue, you know, just start, start small and kind of, you know, if you have a friend that's an attorney, that can be a great resource to kind of get an idea how to set stuff up. And if you don't do it right the, the first time, but you just have a, a small, you know, deal or one house or whatever, you can, you can fix all that down the road, but, you know, you don't want to spend a bunch of money and time and, and mental energy on something and then it doesn't, you know, you never end up buying something either.
- [43:54]
Ashley Kerr
So we actually just did an episode with Bonnie Glam. It's episode number 561 where she actually goes through, like, if I think you said that exactly correct, Jared, that a lot of those things are barriers to getting started. So if you do need some clarification on what you do or don't need, this is a great episode with Bonnie to listen to. Real Estate Rookie Episode five, six, one. Well, Jared, thank you so much for taking the time to join us today to tell us about your story. Can you let everyone know where they can reach out to you and find out more information.
- [44:29]
Jared Hodle
Pretty active on LinkedIn. Jared Hottle Pretty I do have a TikTok. It's pretty fun. I think it's, you know, I don't know what it is actually. Jared. Hotel CRE or something like that. You'll find, you'll find me.
- [44:40]
Ashley Kerr
We will link it into the show description for everyone.
- [44:43]
Jared Hodle
I'm on Biggerpockets. Pretty fairly active on there, so just reach out. Would love to chat with people and help anybody that I can.
- [44:49]
Ashley Kerr
Hey, yeah, we'll link all your information into the show description description. So if you're watching on YouTube you can find it down below or if you're listening on your favorite podcast platform, you'll find it into the show notes. Well, thank you again, Jared so much for joining us. And as Tony mentioned during the episode, we will be at BPCON this year in Las Vegas. Go to biggerpockets.com conference. Thank you for watching this episode of Real Estate Rookie. And a big thank you to our sponsor, Baseline. I'm Ashley and he's Tony. We'll see you guys next time.