Flipping 30 Houses Per Year All While Keeping Wealth-Building Cash Flow w/ Noah Evans and Jeff Fawson

David:
Hey, everybody. It is David Greene here. As you all know, Brandon’s stepping away from the show at the end of the month. Now we have some great co-host lined up in the new year, and we also want to take this chance to get to know anyone else out there who’s interested in contributing their talent to the BiggerPockets Podcast network. If you think that’s you, you can make a submission to our system at biggerpocket.com/talent. That’s biggerpockets.com/talent. You’ll see a few questions and a place to submit a video reel of yourself. Again, that’s biggerpockets.com/talent. If you’d like to lend your voice to the growing BiggerPockets Podcast network.

Brandon:
This is the BiggerPockets Podcast show 546.

Noah:
Sometimes I feel like is the catalyst or it can become your catalyst to becoming successful in whatever realm it is that you want to go into. It doesn’t have to define you in a negative way. It can actually propel you into something great.

Brandon:
What’s going on? Good morning, it’s Brandon Turner, host of the BiggerPockets Podcast here with my co-host Mr. David Greene and happy holidays, Merry Christmas, happy new year, Kwanza, Hanukkah, and every other holiday going on right now. This is the BiggerPockets Podcast, a show where we show people how to use the power of real estate to reach financial freedom faster, and here with me today, of course, is my co-host Mr. David Greene. David Green, by the way.

David:
Merry Christmas to you. Well, I’m not doing bad, it’s Christmas time, right? This is the best time of the year.

Brandon:
(singing). It is. It’s pretty awesome. Of course, it’s a little bittersweet because as we announced a few weeks ago, this is one of my last episodes for at least a while. I’m going to take a good sabbatical and go explore the world of hanging out with family and business and such. So David, you’re going to be take over as host of the BiggerPockets Podcast, and I’m going to step into the background for a while, but I’m not gone forever, I’m just gone for a while. I don’t know. I’m going to go have some fun.

David:
Yeah, I look at you like Aslan, right? Sometimes he has to leave and go do other things, but he always comes back when you need him, and your beard is like a mane. It fits.

Brandon:
Speaking of… You can never stay away from the BiggerPockets Podcast forever, and to illustrate that at the very end of today’s show for eight seconds, we have a guest coming into the show that many of you know. So you got to stay to the end of the show to hear that one, but somebody happened to walk into my office during the middle of this recording, so you’re going to see that a little bit later, but first we’ve got today’s episode. It is a good one. It’s an awesome one. It’s two phenomenal gentlemen. We got Noah and Jeff, or Jeff and Noah. They own Tree City Home Buyers in Boise, Idaho. Do you know it’s Boise, not Boise?

David:
Yeah, I say it wrong, I’m sure, because I’m from California.

Brandon:
See? Yep. Everyone says it wrong.

David:
I just recently learned it’s not Louisville, it’s Louisville or something that no one ever says outside of there. So I think there’s a lot of things I say wrong, but I feel better being around you because you say even more things wrong than I ever could.

Brandon:
Yeah, I like Louisville a lot, it’s a good place, and Boise also. Boise, Idaho is really good too. So anyway. A good word to talk about them, I’m I’m going to use the word scrappy. They started just scrappy, getting this done, coming from rough backgrounds, both of them, and they go into that today on the story of how they kind of broken that path in their families to create kind of a new future, which is pretty cool. They invest both in where they live, in Boise, Idaho, but they also invest out-of-state and they do Airbnb, they do flips and they do rentals. So they do a ton of stuff, and we go through a lot of details on how they do that, some of the systems they use, how they split their partnership up, how they found each other, which is a great story involving fridge or a stove, was it, and some snowboarding, and a lot more. So we’re going to be covering all that, cold call, driving for dollars, MLS. I mean, all sorts of good stuff today. So hang tight for all of that.

David:
As well as a good piece of advice if you don’t like networking, but you keep hearing people say that you should.

Brandon:
Yeah, that was a good topic of a conversation today was about networking and how just the word networking gets weird, and so we talk about some good ways to do that. So all that and more is coming up. I don’t really have a quick tip plan today. I know that’s kind of a… Sometime we do it last second. So today’s quick tip is going to be simple: I want you guys to go follow David Greene on Instagram, David Greene24. That’s the quick tip. If you’re not following him, he’s a good guy to follow on Instagram. You’re going to learn a lot about real estate and business and just what it’s like to be a good all-around dude, so go follow David. There’s your quick tip.

David:
Also follow BiggerPockets on YouTube, so you can see our special guest.

Brandon:
Yes, our special guest who shows up at the end of the today’s show. With that said, enough chit chatting, David Greene. It’s time to get into the show. So anything you want to say before we jump in?

David:
No, because that would be chit chat. Let’s get to the meat and potatoes.

Brandon:
Here we go. All right, fellas, Noah, Jeff, welcome to the BiggerPockets Podcast, gentlemen. It’s awesome to have you here.

Noah:
Thanks man, we’re stoked to be on.

Jeff:
Thanks, brother. We really appreciate the chance to come on and hopefully share our knowledge with everyone listening.

Brandon:
Awesome, man. Well, I think we should probably start this thing talking about one of the most important past times. At least, Noah, you were there, but Jeff was involved, and that was the time that you viciously attacked me in Maui and tried to choke me out. Do you want to tell everyone that story, Jeff? You want to…

Jeff:
Yeah, it was pretty rad, and I actually have a little nugget in here that I think’s important for people. So we were invited to the Maui master class and we were given some advice by a mentor that, “Hey, givings a good idea,” so we got some cool rash guards with this guy, Tarl’s face on it, and then I think Brandon’s face maybe was on there too, and we gave it to Brandon and decided to throw down some jujitsu on a random lawn in Hawaii, and I’m just saying, only one of us walked away with blood on their face. I’m just going to leave it at that, dude. And it wasn’t me.

Brandon:
It was a good time. It was a good time. We had a good time, but no, I think it does illustrate a good point though of you were… This is very much a Giftology kind of thing where you guys were like, “How do I give something kind of funny, unique, valuable, but also memorable?” And it’s a cool rush guard, so it was cool, and here you are today. So the secret to being on the BiggerPockets Podcast, everyone, is to send David or I a rash guard. Clearly, that’s the one-way ticket.

David:
I just had this very funny idea, Brandon, of somebody making a rash guard with your face on it, but the chin would cut off at the bottom of the shirt and then the pants would be your beard.

Brandon:
That’s a great idea. Oh, all right. So fast forward a few months, and me and a bunch of buddies were going to be passing through Boise, Idaho on a quick trip, and we didn’t book any hotel until like the day of because we’re like, “Oh, there’s lots of places to stay in Boise.” No, there wasn’t because there was a game going on that night, and all of a sudden, we realized we were homeless that night, and so I texted my buddies here and I think Noah, you got back to me and you were like, “Yeah, I got a Airbnb you can stay at.” So I actually got to stay in these gentlemen’s property, which is pretty awesome, and it was awesome. We learned a little bit more about you and your property’s there. So all right, that’s the end of the story, but we got to rewind to the beginning of the story. How did each of you… Why don’t you introduce yourself each so people can kind of get the voice if they’re just listening to this, who you are and how did you get each into real estate? What inspired you?

Noah:
Yeah, for sure. Do you want to go first, Jeff?

Jeff:
Yeah, sure. I’m Jeff. I’ve been investing in real estate since I was 19 is when I got my first house. I got into real estate really by happenstance. It’s kind of a real long story, but started working for a buddy as a office assistant, and found out he had had some real estate holdings and real estate was kind of his passion. It definitely wasn’t what he focused on, but I was like, “Dude, that’s where you make money,” so I started kind of convincing him to partner up with me and get started in real estate. So I started door knocking houses and got a house on a contract and said, “Hey. Look, dude, you got some money. I know you’re loaded. Let’s partner up on this house and let’s make it happen.” He decided to invest in the deal, and so that’s how I got started in real estate. There’s a lot behind it. I don’t know how much you want to unpack and spend time on it, but kind of a rich [crosstalk 00:08:08] type thing.

David:
We got all day.

Brandon:
Keep going then. Let’s hear it.

Jeff:
Yeah, so one, I guess I’ll start off. I was going to college, found a girl, got engaged and she was like, “Hey, I got a buddy who could give you a job,” and I was like, “All right, cool.” So he hired me and my job title was literally called puppy. So on the job application, it was called puppy, and I was like, “Hey, what is my role?” And he was like, “Your role is literally do whatever I tell you to do,” and literally my first three days, I stood and I crumpled pieces of paper and threw them into a giant metal bin and lit his papers on fire for his document deletion. So that was my first step.

Jeff:
That was my first ever job outside of fast food stuff, and I had grown up super poor and had family in the hood and I got a father in prison and was just like, “Man, I’m not going to go down this path that everybody else has gone down to my family of not having a solid future. I don’t want to live bill to bill. I don’t want to just not have any money or have a future set up.” So I started studying what I could do to make money without a college education because I met this cute girl and dropped out. So I was like, “All right. Well, don’t have a college education. I better figure something else out to do.” Heard this seminar about real estate, started talking to this guy, Scott, and then we became business partners for two or three years in Portland, Oregon and flipped about 10 houses together, and that was kind of my introduction into real estate.

David:
All right, man.

Brandon:
Well, it’s cool to see kind of that… I don’t know if poverty break is the right word there, but the family you came from or the life you came from was very, very different. You said, “I don’t want that for my future,” and you made that generational change that will probably affect generations on. It’s one thing we love about real estate.

David:
Yeah. Absolutely, man. That’s the whole point of why we got started was to switch up the trajectory, right? Let me ask you a very quick question on that before we move on, because I just don’t want to forget. Is there any advice you have for other people in a position like that, that historically, you would understand feelings of, “I don’t belong in that world. That’s not for me. That’s what people with college degrees, backgrounds, connections I don’t have.” What would you say to that person who’s listening to this thinking, “I think real estate’s cool, but I just don’t think I can break in.”?

Jeff:
Yeah, I would just think it’s like you got to understand that that thought is really a limiting belief, right? I still struggle with imposter syndrome today, even being on the BiggerPockets Podcast. I’m like, “Whoa, this is crazy,” but you really got to be conscious of that limiting belief and know that it’s a limiting belief, and that it doesn’t define you, and where you came from doesn’t define you, and then you just got to look at the real life out there. There are so many people absolutely crushing it, whether in real estate or started their own business, who didn’t go to college, so you don’t have to think that that college degree is something that’s a necessity to start your business, and then just surround yourself by people. So for me, it was surround myself by this gentleman, Scott, and really form a relationship and be like, “I belong in this circle and I’m going to figure to make sure that I actually do belong.” So kind of manifesting and then getting rid of those limited beliefs are definitely the two things I would say helped me do it.

Noah:
I really want to add something to that that I think is interesting, especially as we’ve met more people in real estate that have become really successful. Sometimes I feel like adversity is the catalyst or can become your catalyst to becoming successful in whatever realm that you want to go into. It doesn’t have to define you in a negative way. It can actually propel you into something great.

Brandon:
Yeah, that’s a really good point, man.

David:
I like that you mentioned that and then the last thing we say. I feel like when we tell people, “Hey. Here’s what you go do.” Like you were saying, Jeff, “I went and knocked on doors,” right? It’s that simple. What you’re doing is you’re looking for a person that owns a property that doesn’t want to own it anymore. That doesn’t take a college degree. Regular people everywhere own properties. Because you had that, “Well, what else am I going to do? I don’t want to go work fast food.” You were willing to go knock on a door.

David:
It’s sometimes people who said, “Well, I went to a good school, I have a good degree, it’s beneath me to go look for overgrown lawns and knock on doors,” that they actually talked themselves out of doing what it takes to get ahead, and that’s just what… I like what you guys both mentioned there, you made a really good point too, Noah, that adversity is almost like a required ingredient in this cake, that if you want it to be cooked right, that has to be one of the pieces.

Brandon:
Yeah, really good point. Really good point, man. This is getting off to a strong start. I like it. Noah, let’s see if you can live up to the hype of Jeff here. So Noah, how’d you get into real estate, what inspired you?

Noah:
Yeah, so I was a very troubled teenager, I got into drugs pretty early on and got into a lot of trouble. I think a lot of times we look at people that are really successful and we think their life has always been great, right? So at 18, I decided, I was like, “Man, I’ve got to get out of California. I’ve got to move.” So I moved to Utah and I started going to school and I ended up getting a full ride scholarship. I mean, even though I was getting in trouble, I still had really good grades for my community college. So the Southern Utah University took me on a full ride scholarship based off my good grades from my community. So I was like, “Great,” because I was not going to go into debt. I mean, even though I was, again, a troubled teenager, there was still some financial education that I put myself through at a young age where I was like, “I don’t want to go into debt. I’m not going to risk that to just get my degree.” So it all ended up getting taken care of in that same timeframe.

Noah:
Just like Jeff, I met my wife while I was in college, and then she ultimately ended up dragging me out to Washington for her to go to med school there. During that process though, I’d gotten really involved with the business department at my college and realized that that’s the realm I wanted to be in was entrepreneurship and business, and when I moved out to Washington with my wife, I quickly realized that I absolutely hated the corporate job that I landed myself. So I was like, “This is not for me. I’m capped. They’re going to tell me when I get promoted and how I get promoted, and it’s more a personal choice than it’s based on merit,” and so I was like, “There’s got to be something better for me.” So during that process, I was like, “Okay, my time’s very limited.” I mean, the job required 55 hours a week, and I started looking into real estate.

Noah:
I found BiggerPockets and I found someone that was actually really close to where I was at. So to me that made it very real. Elliot Smith actually was only an hour and a half away from me in another town, and I was like, “Okay. Well, if he’s doing it and he’s successful, then I can do it,” and I liked the whole aspect of wholesaling, which is ultimately what I ended up getting started in because it required no money down and I didn’t have money. So called Elliot up one day, I was like, “Hey, how do I get started in this?” He’s like, “Dude, before you call me again, go listen to the first 80 episodes of this podcast,” and it was Tucker Merrihew’s Real Deals podcast.

Brandon:
Oh, I thought you were going to say the BiggerPockets… Come on, man. Come on, man. Elliot’s one of my best friends and he didn’t recommend my own podcast. I’m offended. Offended. Offended.

Noah:
So I called him back and I had done the homework. I’d listened to the first 80 episodes, he gave me a few pointers on how to get started, and then I started doing driving for dollars while I was actually driving around and picking up customers while working at Enterprise. I guess the moral of that, what I hope people take away from that is there’s always a way if you’re willing to look, but I could have easily been like, “Dude, I work 55 hours a week. There’s no way I’m going to have any time to do this.” At the same time, I’m taking care of my wife, cooking dinners. I took care of the whole home. She’s doing 70 hours plus a week in med school. It took me eight months, two failed partnerships and sinking five grand that I didn’t really have to get started to land my first deal. I stuck with it.

Noah:
I’d actually gotten to the point where I was like, “Man, I’m done. I’m not going to do any more driving for dollars. I’m not going to do any more cold calling. This doesn’t work,” and then I was like, “I’ve got two good leads. I’m going to follow up with them until they tell me, ‘Do not ever call me again,’ or they sell their house to me.” Well, one of them ultimately ended up selling her house to me. She lived in my neighborhood, oddly enough, and I was able to cash a $10,000 check, and from that I was like, “Man, this is real. I can actually do this,” and then that $10,000 check was equivalent of three of my paychecks from my corporate job, and I had done this while still working. Literally, the corporate job was paying my hourly wage while I went and drove for dollars. So I was like, “This is totally possible.”

Noah:
So I ended up… One of the people I was trying to dispo that first deal to didn’t end up taking the deal, but I formed a great relationship with them. They had an at scale flip and wholesale company in a different part of Washington, and they were looking to expand into the area I was already in, which was Yakima. So I ended up linking up with them, he became my mentor. He mentored me for two and a half years and I gave up a lot of my deal, but this is another important part that I want people to be able to take away from this: Sometimes it doesn’t actually matter how much you get from each deal, just that you’re learning and becoming better on each one.

Noah:
I see a lot of people getting started, they’re trying to go for six figure assignments, they’re trying to do the $250,000 profit on their first flip, and it’s like, “Man, just getting the motion and getting the confidence to know that you can consistently do deals is more important than the dollar amount tied to it.” So I gave up, I gave up 70% of my deals. I only got 30% of my deals for the first two years, but I learned how to wholesale at scale through this mentor, and that was kind of my journey. The next part of it, I think we’ll wait on.

Brandon:
That’s such a valuable point. I just want to emphasize this idea of whether you’re trying to be a real estate investor, you want to be a real estate agent, you want to go be an insurance agent, it doesn’t matter, any commission type business or some kind of line of work where you earn the more you produce, people are so shortsighted and all they can think of, “How do I make the money right now?” But if you spend a year or two learning from a rock star in any of those industries, it’s such a investment in the next 20 years of your career, 30 years, 50 years of your career. I wish more people thought that way kind of with a long-term vision, and some people do, and some people do, and that’s why it opened our capital. We built our entire team off mostly interns that we move into paid positions, and now I’ve got 20-some people on staff, but so many people are just worried about, “Well, how am I going to get 250k on a flip this year?” Yeah, it’s just shortsighted.

David:
I heard a really good argument somebody made, it might have been Peter Schiff, I don’t remember, but he was talking about how for the most of the time the world’s been spinning, apprenticeships is how you learned a trade from someone else. So you wanted to learn how to put a horseshoe on a horse, there was a person who had to do it and they would teach you, and that’s really the way our minds operate best is I watch someone do it, I listen to them, they show me the right way, I slowly pick it up, and then at that point I either work for them and take over the business or I go off and do my own thing.

David:
And it was actually when minimum wage was introduced that killed the apprenticeship because now you are required to pay somebody a minimum wage, and if they didn’t have a skill that was worth that, you couldn’t keep them. So the apprenticeship died and that’s where the idea of building skills kind of went away, and it’s sad because the people like you two that are going to go crush, are ones who put that investment in, that learn how to do this and don’t worry about what they’re giving up, they worry about what they’re going to gain, whereas a lot of other people would’ve had opportunities to get into what we do and don’t because now there’s no one apprenticing.

David:
So I bring this up to say, when the whole world is zigging, you want to zag. When everybody else is saying, “I’m just trying to get mine. I’m trying to get paid. I want to make a hundred figures on my first deal,” if you go the other way and you say, “I don’t want to knock somebody out on my first punch, I want to learn how to fight.” It’s a completely different mindset and it’s very hard to not succeed when you take that path.

Brandon:
Yeah, that’s a good point. Well, let’s go to the end of your story, and then I want to go back and know how you guys met each other and build it together, but just so people have an idea of what you do today. What is it you do today? What do you have today? What’s your current life look like, and then we’ll backtrack.

Jeff:
Yeah, for sure. So we have a couple different entities that we have set up, but our primary focus is that we are a fix and flip company. We go direct to seller for most of our deals. We’re not those guys who are really buying from wholesalers. So we go direct to seller, we have a off-market portion of the business, do a couple wholesales, but really primarily fix and flips, and then we buy long-term holds in Midwest markets as well as in our local market here in Boise, Idaho, if the deal makes sense. We use the BRRRR method. We take that deal down, and then we are starting to set up a couple of Airbnbs. We should be at about eight Airbnbs by the end of this year, early January. Yeah, so we flip about 30 houses a year, and now the main focus is really just long-term generational wealth, so we’re really starting to hold onto a lot more stuff.

Brandon:
That’s awesome. Any multifamily in there, or mostly single family, or?

Noah:
Yeah, so in the specific Midwest market that we’re in right now is South Bend, Indiana. We have 14 doors out there and they’re all small multifamily properties, duplexes, triplexes, fourplexes.

Brandon:
Okay. Why South Bend? What brought you there?

Noah:
That’s a great question. A little bit of it was the competitive and the other part of it was realizing how different of a market it was from the market we’re in. So we’re in a highly appreciating market, it’s very expensive. It works great for flips though, right? So the average-

Brandon:
This is Boise, right?

Noah:
Yeah, Boise.

Brandon:
Yeah, it’s crazy there.

Noah:
It’s wild. It’s insane. We appreciated 44% over the last year, and so the average purchase price of a home is 400 grand out here. It’s great for flips, but it makes it really hard to do successful rentals because the rent really hasn’t caught up, but in South Bend Indiana, we already had some connections, we liked that there was a major university, felt like that created some additional draw to the town, but the average purchase price of a home in South Bend, Indiana, we picked up most of our fourplexes for under 150 grand and the rents are still $700 a door. So cash was so much better, and it took so little of our actual capital to go take that down. I mean, that’s a whole nother thing we can go into, but we actually didn’t even use any of our own capital to go buy those. We used other people’s money.

Brandon:
So I know Indiana in particular, South Bend specifically, they’re very popular with out-of-state investors. This is one of the places that everybody goes to, to get started. I know the strengths of it would be the lower price point and the high price rent ratio, you mentioned those. What about some of the problems that you’ve encountered? Can you share what some of the challenges have been with making investments work there?

Jeff:
Yeah. I mean, I would say the hardest part has been training the property manager that we have there to operate on the system that we utilize. So when we went to that market, we didn’t want to just go, “Okay, we’re going to hire you to be our property manager, and you have your system.” We really believe that we get people to kind of bend to our rules, for lack of a better term. If you’re going to manage my properties, you’re going to do it with the system and process that we’ve deemed the right process to run our properties. So really getting them on board and doing that properly with the tenant base that they have there.

Jeff:
In Indiana, you get a lot of people who are paying weekly because they’re really poor with their money and they can’t pay all at once, you get a lot of Section 8 tenants. So really navigating difficult tenants, getting new tenants placed has been one of the hardest hurdles and then getting that property manager on par with what we want to do and how we kind of run a professional business, not just kind of a side hobby, how it was being ran before.

Brandon:
Yeah, that’s smart. That’s smart. So what have you considered your secret to success in that long distance thing? I mean, maybe even before you answer that question, I’ll stress a point here that we talk a lot about here on the show and on webinars and all across BiggerPockets is that when listening to the show, if you’re getting started, there are things that work in your market. If you’re in LA, Seattle, San Francisco, Boise, it’s expensive, but there is something that works there, but if it’s the thing you want to do, it may not work in your market, you may need to go somewhere else, and I think your guys’ story illustrates this perfectly in that you are doing what works in your market, which is flipping and vacation rentals, and then the other thing you want to do, which is term generational wealth through rentals, you found a location that that works. Rather than trying to fit a square peg in a round hole, you’re making it work where it works.

Brandon:
I just want to commend you guys, and a lot of people don’t figure that out for a long time and they’re trying so hard to get something working in their market when it’s just not going to work there very well. So that’s awesome. But then what’s made it work long distance? I mean, is it the fact that you have a lot of them that makes the kind of economies of scale work better, or is there anything else that just really made that work?

Noah:
Yeah, I would say as far as the long distance rentals go, what made it work was, one, the ability to find good deals, and a part of that was investing into our team out there. So we did spend a lot of time training our property manager, she had some flip experience as well, but investing into the team first, so we’re like, “Hey. Look, here’s how we look for off-market deals. Here’s how we negotiate them. These are our parameters,” and setting that all up front so that way there was no frustration, there was no, “Oh, you didn’t communicate that you wouldn’t buy because it was in this area.” So she also helped us to better understand there’s some war zones in South Bend that you really don’t want to go in. On one of our trips out there, we were sent a 17 package portfolio of single family homes for 350 grand, and I was like, “Oh, my gosh. We have to buy this.” It was the FOMO of missing out on such an awesome and deal.

Noah:
Well, luckily we were out there. I was like, “Let’s just go drive it.” Oh, my gosh. If you’ve ever played… I don’t play a lot of video games, but it does remind me of Call of Duty when I’m running through the map and there’s just houses that look like they could just be pushed over. All 17 of those homes were like that. So that was a very good eye-opening experience to realize we need to stay away from those areas, but I would say the trade off between the two of us of both, she educated us on the local market, we educated her on what’s a deal for us. That is what really allowed us to go so quick because we picked all of those up from… Basically, I think our first one was really is kind of at the end of last year.

Jeff:
Yeah, it was December of last year.

Noah:
Yeah, so December of last year till now, being able to pick up 14 rentals and then the total cashflow on that little portfolio is a little over three grand a month. That’s the actual cash flow back into our company.

David:
Yeah, that’s cool. That’s such a good point because to Brandon’s point, how do you make it work in a different area? One of the areas of bias when you’re out-of-state investing you have to be aware of is when someone says this is a house, immediately everything that I’ve seen in my life relating to housing, I then project onto whatever that property is that I was just told about, right? So I live in California, the land itself is going to be worth half a million dollars. So they put a lot of time and effort into the housing. The code and restrictions are very high. The quality of craftsmanship is going to be really big. So when I hear someone say house, I’m immediately thinking about this wood frame, really nice roof, great foundation, expensive stuff. Maybe the finishes are outdated, that’s a bad house where I am, but you go to some of these other places and it was built before they had code.

David:
Who knows what’s been done to it since then? It’s literally rotting it’s way apart. The septic tank it might be on is completely corroded. It’s not the same thing as what you’re thinking, and what you mentioned where you said, “We just went there and looked at it,” completely changed your perspective, and I know I’ve often said you don’t have to go look at the house, and I just want to highlight in the book, Long-Distance Real Estate Investing, that is under the assumption that there is somebody there that is watching your back, that you already understand what you’re getting into. You don’t have to look at the house. You do need to understand the area, the condition of the property, and to someone in South Bend, house might mean something completely different then to somebody that’s in Boise.

David:
I only say this because as technology grows, it becomes very easy for companies to market to out-of-state investors and people that live in Idaho or California, or New York, Texas, some of these areas that they traditionally have made a lot of money, that’s who they go to to sell this product, and if you’re thinking that house is what you saw growing up, you can find yourself in a world of hurt. Do you have any stories you can share on some of the learning experiences that you picked up when you realized, “Oh, we’re not in Kansas anymore. This is completely different.”?

Noah:
I’ve got a couple related to just the difficulty of getting financing and some stuff like that.

Jeff:
Yeah, those would be good. The one thing I’ll add real quick before that is in those other markets, you got to understand that street by street, things can change. So to David’s point, it’s really important either you understand that neighborhood or you have somebody that does. In South Bend, for example, there’s a street called Portage Road and you don’t go west of Portage Road. If you do, you’re in a war zone, but if you’re literally one block in, you’re going to have a decent house that you could probably flip and sell for 150. So you really got to understand that in those secondary markets, you got to make sure that somebody is an expert in that area, and if it’s not you, then you need to go and find somebody to be that expert for you.

Noah:
Yeah, I definitely agree with that. And then to speak to David’s earlier question, I would say one of the big learning lessons we had was we originally picked up a really awesome package of four single family homes, but they were completely spread out, but it was honestly a great deal. It was probably 70% of value on the home, and we didn’t have to do any extra negotiation. So we got this great deal, but they were spread out and they were in rural areas. So when we went to go and try to get… We bought them cash with someone else’s cash, and then we went to try to go get loans on them, pull the cash out and go buy more rentals, we found out that there was no lenders that wanted to do these properties because, one, the value of each home was under $60,000, so they all had minimum caps of your home had to be worth at least $50,000 after the loan was put on, so that included your down payment, and then on top of that, they just were too rural.

Noah:
They’re like, “No, it’s too far out.” So what we ended up doing is we ended up selling those, reusing the cash to buy stuff that was more condensed all into South Bend. We were kind of all spread out around there within a 30 to 40 minute drive in either direction, but by condensing it down, it became easier to finance those properties, and so my big takeaway from that was we’re already going into other markets, but now we’re starting the relationships with the lenders in those markets first and we’re getting their criteria for what they’ll lend on, and then we’re meshing that with our criteria for what we’ll buy so we don’t run into that same issue again.

David:
That’s hugely important and I’m so glad you brought it up because refinance is at the end of BRRRR, it’s easy to do it at the end, at last, but you always want to start with the end in mind. So I’m always telling people, “You need to go find the bank or the lender, whoever first, get pre-approved for what conditions you could get a under and then sort of work back. Okay, now what rent do I want to get? Okay, what’s my rehab budget? What houses can I look at? Then you know what your buy criteria would be for the be.” So this is really good advice. It’s kind of embarrassing how many people will message me and say, “I did everything you said. I bought it. I rehabbed it. I rented it out, and I went to refinance and the be said, ‘You haven’t had a job for 12 years, you can’t get a loan.’ The BRRRR doesn’t work.”

Noah:
Yeah, in our local market in Idaho, Idaho’s this weird state where it has some really weird lending regulations, and so in a lot of markets, you can do a BRRRR, you can do a cash out at 80%. In Idaho, just to speak on that point, that doesn’t happen in Idaho. There’s actually a state law that caps you out at 75% loan the value on a cash out refi. So if you didn’t know that going into it, well, then you’re looking at doing a BRRRR running it out 80% trying to get your cash out and your numbers might not work. So yeah, you definitely got to know how the lending works in that area to make sure that you’re making the right decisions.

Brandon:
That’s such a great point. Do you guys have any advice for studying a market? If somebody’s trying to find a good market to go to, like South Bend or whatever, how do you begin that search for a market and then how do you dig in and really get that insider knowledge of the lending rules and all that? Any tips for people?

Jeff:
Yeah, so this is actually… Noah. I will say Noah is a stud in this area. He has this full Excel sheet built out with 40 different points that we look at before we go into a market, so I’ll let him answer that, but I want to give him a quick shout out on his expertise in that area.

Noah:
Thanks, brother. I mean, we could go really, really deep, but I would say on a base… I would rather go really surface level and give people some tangible steps that they can actually take literally during this podcast to go do. So the first thing I would do is I’d go add myself to all the investor Facebook group pages, and I’d try to find things of value to post, right? Because you just go on there and you’re just asking for help, or you’re just asking for other people to invest their time into you, it’s not likely it’s going to happen. So I would go figure out like, “How can I add value to these people in this group?” Can I call 10 banks in that local area? Can I go find what their terms are or what their lending requirements are on single family and multi-family properties, and then can I post that in the group and then kind of say, “Hey, would anyone like to hop on a Zoom call and talk with me, and go deeper on this?”

Noah:
And then start forming relationships with those people and going really deep and getting connected in that market. I feel like relationships above all else. I mean, you could study all the data, you could figure out population trends, and are rents increasing or decreasing, is vacancy increasing or decreasing over the last five years, is our new business… You could figure all of that out and those are all great things to know, but at the end of the day, your relationships in the individual market, I think, are probably the largest determining factor of whether or not you’re going to be successful.

Brandon:
That’s really good. That’s a great point. Very practical. You can get in there and you can start having deals come your way. The next logical step is that people are going to send you deals and you are going to have a very difficult time knowing what to do with them. So what advice can you have for what your matrix looks like when you’re analyzing something, where you start and what the steps are that you’re taking?

Noah:
Yeah, I feel like that’s probably the same no matter what market you’re in. Maybe Jeff, you’d like to talk to that because you’re definitely involved on that aspect of helping us underwrite deals.

Jeff:
Yeah. So I mean for us, I would say the first thing, you guys talk about this all the time on the show, is you got to understand what’s a deal to you because what’s a deal to me and then what’s a deal to a guy in California trying to place 1031 money or buy assets for depreciation is going to be very different, right? So you got to understand what’s a deal to you, create your buy box and then stay within that box, but when you start getting deals sent to you, again, make sure you have an expert in that market that knows the areas, so you’re not spending time… We probably get sent 20 deals a week in South Bend that I open it, I see the street and that is as far as I go on underwriting because I know that that’s an area I don’t want to be in. Actually, one of the things we do and this is on our off-market stuff and when we underwrite deals is we go for no. I would rather just give myself a quick no right away and move on.

Jeff:
I don’t want to spend a bunch of time being like, “Oh, let me see if I can tweak this to be a deal in this way.” So we go for no right away, we try and eliminate stuff that we’re underwriting, and then if it kind of passes the test and we can’t get a no on it quickly, then we’ll go deeper on it. But yeah, a couple of things we look at is inbound moves to outbound moves, vacancy rates. One of the things that we love looking at is what are the major infrastructures in those areas. So South Bend, you have university, you have a big medical arena, I guess you could say. One of the markets we were in for a little bit was Warsaw and they’re the orthopedic capital of the world, so they have a ton of people coming in, which it sounds weird, but it led to a need for nurses to stay for three to six months, so it created a little niche market. So just kind of understanding what supports that local market that you’re investing in is super important.

Brandon:
So let’s move on a little bit. I want to go back to how the heck do you flip 30 houses a year? What’s your systems look like? What’s your team look like? What’s that process like?

Jeff:
Yeah, for sure. So first I will tell you, you learn how to flip 30 houses a year by failing it trying to flip a couple houses. So we learned a lot through our failures. I have some stories of losing a ton of money starting out, but what I did is I took really good notes to why I had my failures and spend a lot of time being honest with myself and being like, “Hey, why did this flip not go well? What can you tweak to be better?” But so today our team, it, it looks like this essentially: we have a ownership stake in a general construction company. There are exclusive contractors for our flips. They have about anywhere from 10 to 14 guys at any given time. Idaho is a large turnover market. People just will jump to another job to make 50 cents more an hour. It’s kind of crazy.

Jeff:
So we own a stake in that company for their exclusivity, for them to do our flips, and then we have built out another team of two or three smaller GC teams to do some of our cosmetic stuff, but I would say the way we’re able to do 30 flips a year is that we keep it simple. We’re those guys that when you see my flips, you’re going to be like, “Wow, he used the same paint color on the outside. Wow, he used the paint same paint color on the inside. It’s the same floor in every house.” Yes, it always is. I have three different packages. If it’s a sub-300 house, it looks this way. If it’s a three to five, it looks this way, and if it’s over five, it looks this way.

Jeff:
And then just spending the time on a front end to set that up. We talk about systems and processes a lot, and that’s not something that we just kind of say like, “Oh, people say systems and processes.” I mean, I won’t say we have a relationship with Tarl Yarber and his systems for his flips, blow mine out of the water. It makes me feel really dumb, but I still have a full list of everything that we buy per house. Everything is labeled out in the steps of operations and who’s doing what, who our subcontractor teams are. So being prepared for it going into it, it’s almost like playing a little game. When I buy a flip, I fully visualize that flip before we even purchase it. I walk in, I get it under contract, I’m looking at my paperwork and I can map out exactly how that flip’s going to go based on what I’m seeing on my spreadsheets and how that’s going to then translate, and then just having good communication with your teams.

Jeff:
I’d say the other thing is motivating people. You got to motivate your teams. Why do we have a GC that exclusively does our flip in a highly competitive and expensive market? Because we motivate them to be a part of our team. We make sure that we’re constantly buying deals, that their guys never have to worry about not working. We give them a percentage of profit. We even allow them to roll over a portion of that profit to stay on as a small percentage owner in our short-term rentals that we keep here in our local market. So adding value to those guys and making sure that they’re staying motivated is definitely one of the ways that we’re also able to do that.

Brandon:
That’s awesome. So you have in-house construction. What are some of the pros and cons of doing that, of having it in-house?

Jeff:
Yeah, I would say pros is, I mean, exclusivity. The day you buy a flip is the day you start a flip, whereas if you’re hiring a GC, it could… Because this is how my business model looked four or five years ago. I didn’t have a in-house to team. I would buy a house, then I would get the GCs to go and give me bids, and normally I’d have two weeks to a month owning that, paying interest on that before I even got started. So I’d say the speed. It definitely cut… Our cost is lower. We pay their hourly rate, so you’re not subject to their markups. It’s definitely a huge win. On the con side, it’s a ton more of paperwork.

Jeff:
I don’t just run a flip business, I also run a GC business and part of how I get those guys, my partner, in that business to be motivated and do my flips is he doesn’t want to do paperwork, he doesn’t want to talk to the bookkeeper, he doesn’t want to talk to the lawyer, the accountant. So now that’s my job or somebody on my team’s job. So it creates a decent amount of a work for us, but I would say the of pros definitely outweigh the cons, and being able to go quickly and keep your costs low, which is really the two keys to success in flipping, or I guess three. Buy the deal, do it fast, do it right, and then get a good cost on it.

Brandon:
I like it. I like it.

David:
So the con would be if you can’t have enough volume to support that, that’s when you’re going to get in trouble, right?

Jeff:
Because then you look at being that guy that then has to go and lay people off, which like me, I can say to this day I’ve never fired anybody. I’ve been able to hire people who have to fire people for me. I don’t think I could ever actually lay somebody off. Yeah, it’s definitely like that. That’s a big con is if you can’t keep up with them and then say you can’t keep up and then now you get a flip, and you’re like, “Okay, guys. Come back.” You’re not getting them back. They lost that trust for you. They’re gone, and they’re onto somebody else’s job.

David:
That’s always been something I’ve been drawn to as well. I think I always start off contracting with someone else, so I would refer people to real estate agents, and then my friends would come back to me and say, “The agent doesn’t know this and I’d have to do the work,” and I said, “Screw it. I’m going to get my license.” And then I’d refer them to a lender and they’d come back and say, “The lender didn’t return my call, or they said they can’t do this,” and I’d call the lender and say, “Hey, you can do it this way.” “Oh. Okay, cool. I didn’t know that.” And they got a commission and I got my time wasted, so then I started a lending company. And it’s slowly sort of been the way that I’ve done things is that I go learn it and then I look for a partner and I bring it in, and in-house is not… It’s not an end-all, “Hey, take this magic pill and everything’s good,” because you got to actually build those businesses.

David:
You have to train the people and run the books and build the infrastructure and create the systems and get the good client or the good employees, not the bad ones. It takes some time, but once you’ve got it, just the measure of control it gives you over how quickly you can move from thing to thing. I wish more investors that got good at something would do that, that would actually expand that knowledge they have. I’m really good at flipping houses. Now, how do I take that and use those same systems to get a construction company going on and make a space for someone else to take over their home flipping business? Is that something you guys have planned for the future where you can see yourself expanding?

Jeff:
Yeah, and I don’t know if it’s necessarily going to be on the GC side, but yeah, we’re definitely looking at how can we vertically integrate a little bit more so we’ve actually just kind of by happenstance and I guess necessity kind of like you’re saying, we’re frustrated with agents, we also buy on-market deals and the key to buying on-market deals in a competitive market is being quick, coming across professional, and when you’re working with an agent that’s an outside agent, you can’t really control how quickly they get you the information, write up their agreement, send it over.

Jeff:
Noah has his license, so we brought an in-house agent onto the team, and that’s a team that naturally… Just as people see our company and how attractive it is and how much we’re doing, we’re big culture guys, they were to be around us more, that is starting to build out. Yeah, we’re looking to vertically integrate that team. The GC will mostly just do our flips, but then also some property management, Airbnb management stuff is definitely on the table as well. Like you say, you start to do this stuff and then you’re like, “I’m pretty good at this. Why would I spend my time and not get the upside for making the money on it?” So yeah, I definitely see us vertically integrating a little bit more moving forward.

David:
I think that’s very cool. Also, I like that it creates job opportunities for somebody else who’s maybe good at construction, but they hit a ceiling, right? They can only lay so much laminate flooring. Now they have an opportunity to start managing the other crew members and then ultimately leading that arm of the company. So that’s something that’s shifted for me going into 2022 is I’m now looking for the right partners.

David:
I want the right partner to start a short-term rental property management company for the whole country, the right partner to start a tax accounting business with, the right partner to start a construction company with because the measure of control gives you with how quickly you can move, how you can control your profitability of the deals is really kind of next to none, if you think about it, and that’s one of the reasons Brandon and I talk about more than just here, so you analyze a deal and buy it, because I think that in the future if investors want to compete with some of the big hedge funds that are going out and buying houses that have insane resources at their disposal, we have to be able to run at better margins so that we can make a profit when we’re going against someone they can pay more than we would normally would be able to.

Brandon:
Yeah, I think that’s a really good point. All the people that we look at, we’re those guys who we just copy the people who are better than us, and we have a couple of guys we’ve been meet with lately and that’s been the consistent thing that we’ve been seeing is people who are vertically integrated, like turnkey providers for other investors, which tends to means they’re taking off kind of the best deals that work for their buy box. Anything that doesn’t work for them, well then they’re still getting the upside by being the realtor, the contractor, and then being a property manager. Yeah, for sure.

David:
So when you were with Brandon at his masterclass in Maui, what did you learn about either business or real estate that you didn’t know before you went?

Jeff:
I didn’t learn anything. Noah?

Noah:
Yeah, nothing actually, to be totally honest. No, we’re totally kidding. Actually, to be totally honest, the biggest thing that we took away was the connections that we got, and I think that I’ve hit on this a few times, this game is so relationship-based. For example, from that Maui Mastermind alone, we are looking at partnering on some multifamily in Texas with someone from there. Not want to give too much away, but I think she may have already recorded her episode here as well, and then let’s see. We started actually doing cold calls and acquisitions in another area of Texas for another person from the Maui Mastermind because we found out they were buying all their deals on-market and I’m like, “Man, we got a whole sales team that’s really good at finding off-market deals. We’ll just go freaking be your outsource sales team and we’ll sell all the off-market deals to you.”

Noah:
And then in Indianapolis, there’s somebody for Indianapolis. Well, Jeff and I are already in Indiana, we’re not in Indianapolis yet, but now we’re going to be partnering up with them and we’re going to build these little pods of short-term rentals in different states. So somewhere between five and 10 properties. It’s very interesting on the short-term rental side, how much the revenue can change state by state and the cost of which you can get into some of those properties is insanely cheap. But there’s a lot of partnerships that came from it and that’s only some of them. We also raised a significant amount of money for our flip business. We fund all of our flips using private money for the down payment and rehab. I think we’re up to just about 800k just from the Maui Mastermind, which is crazy. So there was a ton of value in the relationships.

Brandon:
I don’t believe he won. I believe it was a tie. We’re going to go with-

Jeff:
It was a tie.

Brandon:
All right. So this actually brings up a good point. I want to talk about networking for a second. People have heard us talking about the Maui Mastermind or masterclass before, and whether you go to something like that, or you go to a BiggerPockets conference, you go to any of this stuff, the truth is what you said, it’s like yeah, we do some educational stuff, there’s some teaching that goes on, but that’s not the goal. The goal is to get outside your life into another situation. Abraham Maslow, the famed psychologist calls them peak experiences.

Brandon:
It’s getting outside your normal day-to-day life into a mountaintop experience, something cool, where you meet other people working on their goals, and in that setting is when your life pivots, when your life changes. So sometimes people think of what’s the ROI of me going to this conference? I’m going to go spend $1000. Am I going to get $1000 back in return? I just don’t like that thinking at all. By attending things in general, that’s what pivots your life so 10 years down the road, you’re like, “Oh, yeah. I’m a different person because of who I met and how I thought because of these events I attended.” Agreed?

Jeff:
Yeah, 100%. Yeah, networking can drastically change the future of your business if you do it properly.

Noah:
Yeah, one of the major things I took away, this is something that’s kind of been rattling my brain for the last couple weeks, it’s just by being around those other people, it relates a lot to what you said is changing your day-to-day environment and getting out of the habits and rituals that we’re in sometimes is really healthy, but man, I left with this clarity of no matter what’s out there in terms of whatever crazy goals we set for ourselves, we can actually do it. We’re only just a few actionable steps and a few more relationships away from making it happen. One of our really big long-term goals and we thought this was maybe five, 10 years down the road was to build a really awesome office space for our team, 10 to 12,000 square feet. We could also sublet out some other space and reduce the office cost ourself, office hacking, I guess, and-

David:
Office hacking, there you go.

Noah:
We planned on this being five to 10 years down the road, and just by going to that Maui Mastermind and having our mindsets changed and realizing that we can do stuff that we didn’t think we could, we’re actually already laying the groundwork to go ahead and build that office in 2022. It’s just been kind of crazy to be around those people that are out doing way bigger and better things than we are.

Jeff:
Yeah, one of the things too on networking that I actually listened to a BiggerPockets podcast right before going, and David, I believe it was you, you were saying you’re the networker that kind of sits back in the corner and you don’t really go and talk to everybody unless you think you can actually add value to them, and that was my entire motto at the Maui Masterclass. I was actually way more… Which this may surprise Brandon because I’m very loud and obnoxious, but I was actually way more reserved at that event than I’ve ever been at any event. I’m normally loud and bullish and I didn’t change who I was, but I definitely kind of sat back and watched and was like, “Who do I…” I’m not a big note-taker, but I took a ton of notes on what does this person do, what market are they in, what did they say their need is, and then based on that, who am I going to spend my time going deep with?

Jeff:
Because I think when people go to these networking events, it’s like, “Oh, I want to shake hands with everybody. I want to go away with 30 friends.” Well, yeah, I got 30 friends, but I also have five people I’m doing business with, and that was strategic. I heard what they had to say and knew how I could add value to them, how they could add value to me and made sure that it was something that would work. So I think when you’re thinking about networking or spending money on these events, you really have to go into the mindset of I’m not just here to take, I’m here to add value and strategically think about where you’re going to spend your time at those events and who you’re going to spend time with.

David:
Yeah, that’s a great, great point. When it comes to networking, I think one of the biggest mistakes people make is operating under this mindset that I have three hours to show that I can bring value to this person’s business, who I just met, and you end up in this rabid psychotic, “How can I bring value to you?” And you’re just throwing as much spaghetti against the wall as you possibly can, and hoping that one of them sticks and then magically, you guys will end up starting a business. You don’t realize it, but you’re swinging for that home run, like we were just saying in the beginning of the show. That’s not how it works.

David:
When Brandon and I became friends, which I can say quite humbly is probably one of the biggest powerhouse teams in the world of real estate, we became friends. We didn’t become business partners. We didn’t even talk about business until we had gotten to know each other at a personal level and realized like, “Oh, we actually get along pretty good,” and we have very similar values and we had different roads to get where we went to, but we were heading in the same direction and we could very clearly see that. So before he ever tried to help my business or I tried to help his business, we were getting to know each other personally. I knew about his family, I knew about what mattered to him, I knew about his strengths and weaknesses, and he knew a lot of mine.

David:
Then the business side became a much easier decision if we were going to do something together or not, and in what capacity we were going to do it. And so networking should probably just be replaced with go make friends. That’s what you’re really doing, right? You obviously, Jeff, you made some kind of good impression on Brandon that he was willing to put on a rash guard and roll with you, and Noah, he obviously liked you because you guys are here on the podcast right now.

David:
That wasn’t something that had some slick marketing trick that you worked an angle no one else could see and wiggled your way into Brandon’s life. You just became his friends, and I think if more people understood that’s what you’re going to do in an event, you’re going to show someone where your heart is and try to know where their heart is and you start it from that, the business stuff will fall into line. If you start with business, nobody’s ever really comfortable with the other side. I bet if you guys told how you became business partners, it wasn’t based on business. You got to know each other as people way before that happened.

Noah:
Yeah, 100%. Should we actually give the little tagline to our partnership, how it started? It’s kind of funny.

Jeff:
Give it, bro.

Noah:
So our partnership is really based off of the exchange of a stainless steel stove and a snowboard lesson. That’s really how Jeff and I really became business partners.

David:
That’s how it got started. And on that ski lift is when you two fell in love, right?

Brandon:
All right. Let’s hear the story. How did you guys connect as partners?

Jeff:
Yeah, so I was doing some flips here in Boise, just really one at a time, and then our GC business was built out and we were running flips for other investors. So I had had some stuff in Portland where I had a really successful three years and I had a really bad year, and so when we moved to Boise, I was kind of like, “Let me be a little more cautious and focus on how to build a business.” So I spent most of my time studying how to build a business and didn’t rush into flipping, but knew I needed to still make money. So I just did one flip at a time instead of running other people’s stuff, and Noah had bought a duplex that he wanted to house hack and reached out to a couple of investors saying, “Hey, who’s the go-to contractor who’s not going to gouge me?” And I was the cheap contractor in the valley because that was my business model was make it work for investors and they’ll take care of you in the long run.

Jeff:
So then we got in contact with Noah, went and gave him a bid, and then our company got hired by Noah to turn his basement of his house into a duplex unit, and then just very quickly, I think we actually got locked out of his house one day and we were sitting on the porch waiting. I’m like, “Dude, I’m doing this job super cheap because I kind of like this guy,” and next thing you know, five minutes later, we’re talking about how his dad’s a POS and my it’s sitting in prison and we’re just like, “Oh, this is cool. We have similar stuff going out of life,” and the next thing you know, it’s 30 minutes and I then found out I locked myself out of my truck and we’re trying to break into my truck and it’s just this whole saga.

Jeff:
But we just opened up really quick, and I was like, “Man, we have so much in common,” and we also started talking about this wholeselling background and I was a flipper, and I really realized that the hurdle in my business before was I wasn’t good at finding off-market deals. I would just buy whatever came along, so we went deep and we formed a friendship, and then also at the same time, we both acknowledged that the other person had a missing piece of what was kind of holding us back, but then we still built it really slow.

Jeff:
When we were doing that, I was like, “Hey, I know your budget’s pretty tight for this flip or for your house hack. I have a stove and a flip I just bought. If you want it, I can just bring it over, but I know you used to be a snowboard instructor. I really want to learn a snowboard. Will you teach me how to snowboard?” And so we swapped, we did that little exchange. I gave him the stove and he took me up and taught me how to snowboarder, and to Noah’s credit, he’s a pretty good teacher. I’m actually decent at snowboarding now.

Noah:
Yeah, I’m actually afraid that he’s going to be better than me.

Brandon:
All right. So let me ask you a question. I want to ask how you split roles. However, I want to do it in an interesting way. I’m going to start with Jeff. What does Noah do and what does he just do so well? What is he amazing at? I’m going to reverse that. Noah, what does Jeff do? Let’s start with Jeff. What does Noah do in your business, and what’s he just incredible at?

Jeff:
I feel like this is a two part question, right? So his role is that he’s the acquisitions and marketing guy. So he handles all the off-market acquisitions, he trains our sales team on how to talk to sellers, he reviews calls with them. He is very good at that, but I don’t think that’s the thing that he’s the best at. I think the thing that Noah is the best at is motivating people to do what’s best for the vision or what’s best for the culture. So Noah’s the guy, I’ll sometimes listen to his conversations with the sales team and I’m like, “Bro, that sounds so cheesy,” and then at the end of the meeting, they’re like, “Yeah, man. We’re going to do it!” And they’re all fired up. And I’m a pessimist. So that’s just not me. I’m like, “Dude, I can never do that,” but Noah gets all these guys just lined up on his vision and they get stoked and they’re texting him at 10:00 at night talking about work that they’re not getting paid to do, and everyone’s just excited.

Jeff:
So by far, Noah’s best superpower is that he motivates people to do things, and ultimately, the thing I will also give him credit on is it’s never take advantage of this person. We have a long-term vision. We’re able to look ahead and be like, “I know if you’ll just stick around and do these things and add value now, then ultimately here’s where we will all be.” We’re trying to build everybody on our team up, and he’s really good at communicating that in a way that gets people motivated to do it and to stick around through the long run to makes sure that they’re around for the upside on the backend.

Noah:
Man, that gave me chills. That was really nice, man.

Brandon:
All right. Well, let’s see if you can now return the favor. What is Jeff’s job? What does he do and what’s he awesome at?

Noah:
Yeah, so Jeff is in charge of basically, I mean, to simplify it down, the minute a property is locked up to the minute it’s ready to be resold or dispo’d, that’s Jeff’s role. He’s everything in between. So Jeff is the transaction management of getting that thing actually to close through title. Jeff also is a huge part of lining up all the private money that we use to fund those flips and making sure that everyone’s secured in the right way and their interest rates are all lined up. Jeff has an amazing brain for organizing a massive amount of moving parts and putting it all into this funnel where it flows smoothly.

Noah:
I can’t imagine keeping 30 projects rolling around in my brain and knowing that this project is the project that needs appliances today and this project getting paint and this project over here is not doing windows, but this one is. The fact that he can figure that all out and put it and conceptualize it into a system that other people can follow is a little insane to me. So I would say that that’s Jeff’s superpower, he can strategically take multiple moving parts, funnel it into something that the rest of the team can understand, even if they don’t have a hand in every single part of that process, they can still know what’s going on.

David:
I love it. Would it be fair to say then in terms of the book, Traction, or the EOS system, that Noah you are more the visionary and that Jeff, you’re more the integrator? Is that a-

Noah:
Yeah, I think there’s a lot of bleed over in both sides, but yeah, I would say that’s a good alignment.

David:
Yeah, that’s awesome, and it shows why it works because a lot of people only have vision and they can’t actually get the work done, they can’t manage projects and other people are really good at managing stuff, but they have no ability to drive the business forward, and so when you have… I mean, I know you guys well, so I know that both of you have both those pieces in you, but I can definitely see the strengths on both sides and that’s what makes your partnership work so well.

Jeff:
I would say on the operation side, shout out to all my other people with ADHD. I just realized ADHD’s a superpower. That’s what I have. There’s so much crap going on in this brain that if you could get it on the paper and formulate it, you got a chance at doing some big stuff with it.

Brandon:
So what are some of the systems or even tools, software, what are some things that help enable your guys’ business to run so well?

Jeff:
Yeah, so we’re actually… Again, I would say simple scales. So there is a ton of systems, actual software that people use that we could probably use and it would help us out, but we’re really simple, so a lot of it is just Google Drive is all document storage, all our scopes of work, all that kind of stuff, and it’s not so much that we utilize software to make it easy, we just make sure that we are putting a ridiculous amount of effort into the details and our scope of work on the flip side. So you’ll see a scope of work from somebody that’s exterior, demo, landscape, blah, blah, blah. That’s not what ours looks like. Ours is like you are demo in the kitchen by removing the cabinets and the flooring, but you’re leaving the trim, you’re leaving the door, and it’s very detailed out.

Jeff:
So when we say system, scope of work is just very detailed out points to where if that gets handed on to anybody on the crew, I’m not getting a call that’s like, “Hey, they ripped out the bathtub and they weren’t supposed to.” No, they know they were leaving the bathtub because it was very specific on there. In terms of actual software that we use, we have monday.com. I know a lot of people use Asana as well. It’s really just a checklist. I think checklists are way overlooked with the insane amount of power that they have because they can hold people accountable to missed steps, and then you can realize where you missed your step and how to go back and tweak it. So we use that for our checklist. So when Noah says, “From the day we get it under contract, Jeff takes it over.” There is a 25 point checklist from the day that it gets under contract to the day that we technically own that property and close on it, and all those items have to be checked off by somebody on the team.

Jeff:
So we use that, Google Drive for storage, and then we have this little app called Meister. It just is a picture app, and that’s my way of not wasting my time going to projects. You can build tasks per job within that app, and then you could just see like pictures of that, so I don’t have to go, “Okay. We use hard money, so we get a reimbursement line. Okay, is the floor done? Well, I got to drive to this house and see if the floor’s done.” No, I just get on the app, look at the pictures, and then it’s a live update type of thing. And then we use RentRedi for rent tracking. So we have a couple of systems that we use, but really, I would say checklists.

Jeff:
It sounds really dumb and basic, but this doesn’t have to be some grandiose complicated thing. It’s actually real. That’s why I love real estate. I actually joked about this with Brandon, and if you need to bleep it out, bleep it out, but I’m writing a book called Dumbest Shit because I believe that the only reason I am successful is because I am dumb and I know that I’m dumb and I make checklists to make sure that I’m not missing things because I’m not smart enough to remember at all. So don’t think you’re too smart to follow a checklist.

Brandon:
Dude, that book would be a best seller. There’s a lot of those books right now that have the kind of provocative titles and they always do well, but I love that title. That’s amazing. All right, guys. It’s been fantastic. We’re almost done, but first, before we get out of here, we want to talk about a specific deal you’ve done. So it is time for the Deal Deep Dive. All right. Well, good. It’s one of my last Deal Deep Dives for some time. So for those who don’t remember, a few weeks ago we announced that I’m going to actually be stepping away from the podcast for a while. Going to be focusing on some open door capital stuff, family stuff, maybe some surfing and tennis. So kind of a sad maybe my last Deal Deep Dive. Maybe I’ll do one more next week. We’ll see. But let’s get into it. Deal Deep Dive, this is the part of the show where we dive deep into one particular deal that you’ve done. Question number one, what is the property and where’s it located?

Noah:
Maybe let’s go over it in our actual roles. We’ll talk about the parts that we were responsible for.

Jeff:
Yeah, so this a Glendale project. It is in the Veterans Park area of Boise, Idaho. It is a duplex that we converted to a townhouse.

David:
Okay, and how did you find it?

Noah:
This actually came from a previous seller who had already sold us another house that we had actually flipped. We stayed in contact with them. We continued to nurse that relationship. He found that he basically was like, “Hey, can I actually make money by bringing you other distressed properties?” He was a guy that liked to flip houses on the side. He was basically retired and he brought us this lead and was like, “Hey, would you want to buy it? And what would you pay me for doing it?” So he connected us to the seller, we ended up working out the deal and we paid him a $10,000 wholesale fee.

Brandon:
So what’d you actually then pay, what was the final price for the property?

Noah:
$340,000 total.

Brandon:
340 for a duplex. And that was in your area, right?

Jeff:
Yeah, in Boise.

Brandon:
Okay. All right. Cool.

David:
And how did you negotiate that price?

Noah:
So the seller… So his name is Brian. We actually used him. He kept the relationship up with the seller since he was already friends with that person, and we basically told him kind of where we needed to be and what we could afford to pay for the property, and he went and worked it out for us. It was a really easy negotiation.

Brandon:
That’s great, man. How did you fund the property? How’d you finance that thing?

Jeff:
So we actually negotiated a seller carry on that property. So we had to bring $20,000. It’s actually the deal of a lifetime.

Noah:
Yeah. We won’t probably ever have a deal like this again.

Jeff:
No, it’s home run. So we had to bring $20,000 down and the seller carried 320,000 bucks for a payment of $800 a month.

Brandon:
Oh, wow. Okay.

David:
All right. And you said you turned it into a town home. So how did that process work?

Jeff:
Yeah, so really it’s just paperwork, and then there was a little bit of construction on the backend to create a firewall between the units, but really, so it’s you go through… And this is different per market, right? But in our market we do what we call a planned unit development. It’s a PUD, and so you have to go to the city and say, “We are converting this duplex to actually technically a subdivision. So it is now called the Glendale Common Subdivision,” and what it did is it made it to where now you can individually sell the sides to a retail buyer rather than just as a duplex. Yeah, it’s just a bunch of paperwork. I will say the seller carry was a necessity of this deal to work because it kept our holding costs so low. It took nine months to get the survey, the engineering, get all the paperwork pushed and approved by the city. It actually just got approved two weeks ago, the final approval for the townhouse. So it took a long time. It took about nine months to get that paperwork process done to have those legally be considered townhouses.

Brandon:
Wow. All right. Well, then so that’s what you did with it. What was the outcome? Did you keep it then, I’m assuming?

Jeff:
Yeah, it’s essentially a BRRRR. I guess not essentially, it is a BRRRR. We put about $20,000 into both sides on rehab, and then we inherited a problem tenant in one of the units. So our original goal was we were going to buy it, it was downtown, we were going to put it on Airbnb, but there was this weird little scenario where last minute there was supposed to be no lease and the owner literally or the seller signed the new lease with the tenant the day we bought the property. So then when we bought it, there’s a lease all the way out to January, and he was like, “Oh, I didn’t know I was not supposed to sign a lease.”

Jeff:
So we’re like, “All right, we’re not going to Airbnb it because we have this problem tenant.” So we were underwriting the deal and we realized that we could place a tenant for 1800 bucks into one side. So we remodeled it for 20 grand, put a tenant for 1800 bucks, and then we actually just got the other tenant out last month and they’re actively renovating that unit right now, and that one is going to be put up on Airbnb.

Noah:
One point that I wanted to add that was pretty cool, and I’d actually give Jeff credit for this, but he actually went I to the seller once we found out that that new lease was signed kind of behind our back, and he’s like, “Hey. Look, we actually think that the fair market rent,” and at the time we thought it was $1,300 a month, “Was 1300. She’s only paying eight. We’re kind of short at about 500 bucks a month from what we thought we’d be able to get. I don’t think that that’s fair for us to have to eat that because we didn’t sign this new lease.”

Noah:
So he actually got the owner to come down $500 a month in their payment that was owed from us to them. So we are actually only paying $300 a month to that owner for this owner carry because of the mistake that they made, which was signing a new lease. I still don’t know what the intent of that was, it was probably to help that tenant stay, but I thought that was really cool of Jeff to be like, “Hey. Look, let’s take lemons and let’s go make lemonade. How do we take this bad situation and make it good? Look for the solution and not just at the problem.”

Jeff:
Yeah, so during that nine months, we were getting 1800 for the one side and then she was still paying 800, so we were getting, what is it, 2,600 bucks a month in rent, and then… Is that about 2,400 bucks a month in rent? I’m bad at math. And then we were paying 300 bucks. Meanwhile, while we were actually flipping this property, we were cash flowing pretty high on the property and now it’s being submitted for refinance, and here’s the reason we made it a townhouse is because as a duplex, the value would only been 550 to 600, but as a townhouse, now I get individual values per side and the appraisals just came back at 375 a side. So whereas that would’ve been a 550 to $600 unit and then my BRRRR method really wouldn’t have worked out by making it a townhouse, now I got a $750,000 valuation that they’re going to give me 75% loans of value on, which my loan should be somewhere around 600 and we’re all into the property for 400. So we’re actually going to tax free make about 200 grand, and still hold this asset.

Brandon:
Wow. All right, and then you’re going to turn one side into Airbnb. You said one that you’re going to keep as regular?

Jeff:
For now. He’s lease was a short-term. We were smart. We set it up as a six month lease because we knew we’d get this tenant out. So when his lease is up in the end of January, that’ll become a short-term rental as well.

Brandon:
So what are you expected to do with a short-term rental? What’s the potential there?

Noah:
Yeah, so as a short-term rental, we have a couple other ones to kind of base the projections off of, but we won’t actually know until we get them up and can start seeing what they produce, but we’re projecting anywhere from 2k a month in the slow season to 4k a month in the peak season. So for Boise, peak season’s summer, slow season’s January basically through April. So as far as what that actually means, what goes into our pocket after taking out the mortgage, taxes, insurance, capex, budget and repairs, and everything like that, and property management, which on the short-term rental is really important to think about because it generally ends up being 20 to 30% percent of your cash, it’s actually really cool numbers. We should end up pocketing somewhere between 800 and $1,400 a month per side as a short-term rental, after all expenses are paid.

Brandon:
That’s awesome, man. That’s really good. Really good. All right. Last question then. David, is this yours? I won’t cry. I don’t know who asked the last one.

David:
Last question: What lessons did you learn here?

Noah:
I would say, again, relationships. So the key lesson was that this deal came to us by a seller that we could have just assumed, “Hey, he’s selling us a distressed property, therefore he’s a distressed seller, therefore we buy the property and we moved on,” but instead we formed a relationship and we kept that relationship intact. So not only did this guy bring us, he’s actually now a private investor in our company and one of his family members works as our operations manager. So relationships are key. Not only did it get us this awesome rockstar of a deal, but it also influx capital and built our team out as well.

Brandon:
Yeah, that’s great. I love it. Love hearing stories like that. Very good job, guys. All right. Well, let’s get towards the end of the show by wrapping up with our world famous (singing). All right. The Famous Four is the part of the show where we ask the same four questions every week to every guest. So we’re going to throw them at you guys. So question number one: Do you have a current favorite or all time favorite real estate related book?

Noah:
Oh, that’s a good one. Specifically real estate related, I actually loved the book that David Greene wrote on BRRRR investing. I thought that that was a really awesome book that definitely helped us to get started as far as picking up properties and starting to hold them. It definitely seemed almost impossible in our market at first, and that book, I think really opened the doors of how we make that work.

Jeff:
Yeah, I actually don’t read a ton of books, so I’ve only actually read one real estate book and it was the BRRRR book and I’m now working through the Multifamily Millionaire, and that’s really just because I like to read books that my friends write, so I guess I’ll read those, but BRRRR was not only just cool for me, but that’s been a book that a lot of my family members have been like, “Dude, how do you do this?” I’m like, “Well, actually you can do this with no money down and pull your money out and it can be awesome. You can just keep doing this,” and they’re like, “How?” So I buy them all the BRRRR book and send it to them and it’s been really cool to now see my family also start to read and understand what we do and hopefully start to take action steps into doing that as well.

David:
That’s awesome. All right. Next question: What is your favorite business book?

Jeff:
Mine is, and I guess you call it a business book, it’s related to business, Go-Giver by a landslide. I try and operate within that mindset. I try and let the five laws in that book really dictate how I make decisions in my everyday life, in my everyday business, and so that one, if you haven’t read The Go-Giver, you absolutely have to read it. It’ll change the way that you think about business as a whole.

Noah:
All right. Yeah, I like that. I would say mine is… It was actually the first business book I ever read as well, and it’s How to Win Friends and Influence People. I feel like that’s what we built our business off of, was taking care of people and relationships.

Brandon:
Yeah, that’s a great one too. Awesome, guys.

David:
Okay, what are some of your hobbies?

Jeff:
Well, like I mentioned, I like to snowboard. I like to snowboard. I’m a big sports guy, so I love playing basketball, football, Ultimate Frisbee, and jujitsu is a big passion of mine that I stopped doing for two years, but recently got back into. So that’s what I like to do outside of work. And then hang out with my family. Love watching my kids learn. My little guy, JJ, is starting to learn how to ride a bike, so that’s fun.

Noah:
Hobbies, let’s see. Man. Snowboarding. Actually, everyone on our team snowboards. So we’re super excited this winter to have this [inaudible 01:10:07] team, be able to go take them and get out in the mountains. I’m really passionate about my dogs. One of our Airbnbs is actually named after one of my dogs and then I love coffee. Man, we spend a lot of time at coffee shops.

Brandon:
I spend a lot of time at coffee shops too. For those watching on YouTube, you might just notice that a half-naked man just walked into my sea shed. This is Josh Dorkin. Yeah, he says you’re ripped. You are kind of ripped. What’s been going on, man? Look at this guy. This is Josh Dorkin, founder of BiggerPockets. Crazy.

Josh Dorkin:
What’s up, everybody?

David:
Is this what happens when you drink BeardyBrew Coffee. Is that what Josh is on?

Brandon:
When you drink BeardyBrew Coffee, Josh Dorkin shows up at your house. It’s amazing.

David:
No, I’m saying Josh looks like he’s been juicing. That’s the body you get if you get on that coffee bean, and beard hair.

Jeff:
Just to clarify the coffee love, I told Noah I wouldn’t let him get out of this show with saying he’s a coffee lover. He’s a white chocolate mocha drinking coffee lover. He’s not a pour over drip coffee type of guy, just to clarify.

Brandon:
Well, I was a peppermint hot chocolate guy forever, and then I had to force myself off that. Now I’m a coffee drinker. There’s hope for you still, Noah. There’s hope for you. That’s funny. Yeah, Josh was picking up a surfboard. He texted me and said he is going to come grab one of my surfboards, so that was him randomly dropping it on the podcast. Yeah, no shirt and everything. So if you guys are listening to this right now on your podcast, you should go check out the YouTube video and just fast forward to the end and say hi to Josh and see how ripped is. All right. Yeah, that’s what financial freedom does for you right there, a lot of time to work out. With that said, we got to move on to the last question of the day. Wait, you both answered. Yeah, you both answered. Okay. So last question the day from me, and you can each answer this separately if you want, what separates successful real estate investors from all those who give up, fail or never get started?

Jeff:
For me, it’s action, consistency and humility. One, you got to take action, you got to get started. Don’t get stuck in analysis paralysis. Two, consistency. You can think about it all day long and you can take action, but if you don’t follow it through nothing comes. Three, this is a big life lesson for me, was humility. For me, I’m a believer in Christ and God really corrected me in my humility. You got to be humble, and you got to just understand that all the blessings that we have in life come from God, and so you got to reciprocate that out into the world. If you haven’t read Go-Giver, read it, it will change your life. So action, consistency, humility. That’s how I try and operate in my daily life.

Brandon:
And Noah?

Noah:
Okay, I would say you have to start with the end in mind, so what is it that you’re actually trying to achieve, and then you need to break it down into little tiny chunks that make it a little bit more easy to absorb and to take action on. So start with the end in mind, break it down, go backwards and then decide what it is you’re going to do today to get started.

David:
Okay, last question of the day: Where can people find out more about you?

Noah:
If you guys want to find out more about us and if you want to get that downloadable spreadsheet where we talk about breaking down how to analyze out-of-state markets, you can actually go to Noahandjeff.com. We’re also really active on social media. So you can find me at noahevans_realestate, and Jeff, what’s your Instagram?

Jeff:
I am jeff_fawson, F-A-W-S-O-N. Keeping it simple.

David:
All right, guys. Thank you so much. This has been a great interview and I’m glad that I got to meet each of you. We’re going to let you get out of here. This is David Greene for Brandon Brazilian-Jujitsu-On-The-Beach Turner, signing off.