BiggerPockets Podcast 145 with Jeremy Jones Transcript

Link to show: BP Podcast 145: Creative Investing in an Expensive Market, Seller Financing, and Buying Foreclosures with Grammy-Nominated Jeremy Jones

Josh: This is the BiggerPockets podcast, show 145.

Jeremy: People are out there meditating or doing yoga, taking pictures and I just think “This is awesome because I’m paying for my mortgage and giving them joy as well.”

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Josh: What's going on everybody? This is Josh Dorkin, host of the BiggerPockets podcast. Here with my co-host, Mr. Brandon Turner. What's up, man? How's the road going?

Brandon: The road is going okay. The road is going okay. I got my wedding tomorrow and--

Josh: You're getting married?

Brandon: Well, not my wedding.

Josh: Mazel tov.

Brandon: Thank you, thank you. I'm in a wedding tomorrow.

Josh: Have you learned who the groom is yet?

Brandon: You know... What's the groom's name Heather? Ha-ha! She doesn't know either. I don't feel so bad. She's looking at me like--

Josh: And this is her friend, correct?

Brandon: This is our friend.

Josh: Oh, this is "our" friend. And yet, neither of you knows the husband.

Brandon: We've only met him one time so I don't feel so bad.

Josh: You're trekking across the country to go to this wedding.

Brandon: We are. She's like one of my best friends.

Josh: Yet you don't know her husband's name! Ha-ha.

Brandon: I'll know tomorrow or tonight.

Josh: What is my wife's name?

Brandon: Julie, like a bed.

Josh: Okay.

Brandon: I'm pretty good at this.

Josh: Ha-ha.

Brandon: I had to stop and think. As soon as you said, "What is my...," I was like, "Oh no."

Josh: I saw it. Ha-ha. Awesome. Awesome. So you're in Minnesota?

Brandon: I am in Minnesota. Visiting my family and hanging out with my mom and dad's house and their terrible internet speed to a really atrocious event. It's actually funny. I am 30 years old. I left when I was 18. The internet modem they have is the one that I installed in my freshman year of high school. It's still what they have in the other room right now.

Josh: Hey, Brandon. Why don't you buy your parents a gift?

Brandon: I might buy them a gift because yeah.

Josh: There you go. Awesome. Hey, we've got a cool show man, huh?

Brandon: Yeah, this is an awesome show. There is a ton of stuff we've never heard before. Just ideas and tips and suggestions that we've never heard. I was blown away.

Josh: It's phenomenal. Let's kind of get through this early talkie talk stuff and jump in on it. I'm going to go to the really quick. Guys, leave us ratings and reviews. It's helpful. This is show 145 of the BiggerPockets podcast. Ratings and reviews help us get the show out there. I want to share a really cool one from somebody called DavetheWave10.

He says, "They could charge thousands for this and you'd still be getting a deal. Josh, Brandon and their guests selflessly share knowledge and experiences from their real estate investing lives in an entertaining passion. I truly believe that actively listening to this podcast has been more beneficial than college and it's free!" Well, all I did in college was... Well, I won't say that. My mom and dad are listening. "Thank you guys for arming me with the education and motivation that has helped me start on the path of financial freedom." Awesome, DavetheWave.

Brandon: That's nice. Thank you, DavetheWave. That's a cool name, too. DavetheWave.

Josh: DavetheWave. Yeah, yeah, yeah. Cool. Thanks for doing that, guys. Today's quick tip, Brandon?

Brandon: Today's Quick Tip!

Josh: Today is BiggerPockets' 11th birthday.

Brandon: Happy birthday to you.

Josh: Alright.

Brandon: Do you like my song? Have I told my birthday? My happy birthday thing that I do every birthday party?

Josh: It's always about you, by the way. We're celebrating BiggerPockets and it's like, "Oh! Have I told about the time when I was..."

Brandon: No, this is great. I probably said it before but I'll say it again cause it's so funny. When you're in a group of people and everyone's singing Happy Birthday, slow down and sing loud. Because everyone will follow the loudest voice in the room subconsciously. So you're like, "Happy Birthday tooo yooouuu". And then by the end, you're like, "Haaaappy Biiiirthdaaaaay," and everyone's looking around like, "What the heck is happening?" And nobody knows what's happening and it's the funniest thing you'll ever do. So that's my encouragement for you guys today is go sing Happy Birthday extremely slow. Anyway, Happy Birthday Josh, to your 11-year BiggerPockets.

Josh: Yeah, 11 years. Thank you guys for supporting us over these years. The tens of millions of people who have come through BiggerPockets, who've come through our podcast, the site, you name it. We definitely appreciate it keeping BiggerPockets and I, personally. I'm honored that you guys spend your times with us and it means a lot to me. So thank you.

Brandon: That's pretty awesome. However, that was not really much of a quick tip.

Josh: You've got to go and ruin it again, don't you?

Brandon: Ha-ha.

Josh: Really? I was having a moment here.

Brandon: You were having a moment and I ruined it twice. But I have a quick tip today actually. A real quick tip, if you will. We said this a year ago and we're going to say it again. If you have an exceptional real estate story that you want to share here on the podcast, we actually have a submission page on the podcast. You can submit your name and we will look at you on the site if we want to have you on the show or not. Actually, Hillary is kind of the person that decides but Hillary will look at it and decide. So BiggerPockets.com/guest. That's it. Go there. Fill in the information. If you've done at least a dozen deals or so and you have a cool story to tell, we want you to go and fill out the information at BiggerPockets.com/guest and we might be in touch with you sometime. That's it.

Josh: Awesome. Cool. Well, let's just bring in today's sponsor and then get to the show. So big thanks to today's sponsor that is?

Brandon: Alright, this episode is brought to you by RealtyShares.com. Realty Shares is a real estate crowdfunding platform that allows accredited investors to invest in pre-vetted real estate deals online. So investors can browse and invest in both residential and commercial properties that yield returns of 8% to 16% annually. As a Realty Shares member, you can also passively invest in professionally managed real estate investments in a variety of asset types and geographies for as little as $5000, all from the convenience of your living room. Excited to learn more and to get started with a free account? Visit RealtyShares.com/BiggerPockets. That's RealtyShares.com/BiggerPockets.

Josh: Awesome. Awesome. Alright guys, let's bring in today's guest. Jeremy Jones. Jeremy is a Grammy-nominated musician who's been investing for a number of years and has done a whole load of really cool creative deals. He's got dozens and dozens and dozens of units. I think he's got 70 plus and his strategy is awesome. He's brilliant. He's got great tips, great advice. He's just kind of a cool guy. So we're really excited to chat with him. Alright, Jeremy. Welcome to the show man. It's definitely good to have you.

Jeremy: Thank you very much. Good to be with you both.

Brandon: Yeah Jeremy actually has an interesting connection to both Josh and I. He is a Denverite who then transplanted out to the Washington State area. Josh is in Denver, I'm in Washington State. So we're trying to find out who you're going to pick on in the show. Who are you going to make fun of the most?

Josh: Oh come on.

Jeremy: My allegiance is split 50/50 between you both.

Josh: Oh okay. So why don't you tell us at the end of the show?

Jeremy: Yeah, I'm kind of trying. I want to see who I gravitate more based on the conversation flow.

Brandon: Okay good. Ha-ha.

Josh: Smart idea. Alright, there's a lot to your story, man. There's a whole lot going on and we're definitely excited to dig in, I think. For me, I formally was in the entertainment business and I always get excited about that kind of stuff. So you are a part that industry as well. Before we kind of get into your real estate, I'd love to just hear about your music and you've won a Grammy. Please tell us a little bit about all that excitement.

Jeremy: Sure. Well, I studied at Duke University, both music and computer science. So that's my education background.

Josh: Two very different things, by the wa.y.

Jeremy: Yeah, ha-ha. The music, it was always a joy for me and something that I gravitated towards and really wanted to do with as much of my time as possible. But when I went to school, I felt really clear I wanted to have some other angle with the computer science. I've always had other stuff going on, but music's been the common thread. When I graduated from school, I came out to Seattle and dove into music scene pretty much full bore. I'm a drummer and I play jazz and hip-hop and any other kind of music. Soul, world music, percussion, groups.

The Grammy reference - I play in a trio called The Teaching and we're composed of upright bass, me on drums and a keyboard player and we all sing. We collaborated with Macklemore and Ryan Lewis on a track called BomBom on their album The Heist. The whole album was nominated for album of the year, so we all got Grammy nominations and walked the red carpet last year. That was really neat and it's also opened up a lot of other doors, musically, since then. It's been a great for music and real estate.

Josh: Fancy. That's great. I'm a big fan of Macklemore. He's one of these guys has a positive spin in his music and I think he's great. Well, it's positive and he kind of stands up for some folks who need to be stood up for. That's awesome. Well, cool. Congratulations and I hope it expands your musical prowess and power.

Jeremy: It's a nice tagline to have, just to say "Grammy-nominated musician" and it kind of carries with you for the rest of your life. So I'm thankful.

Brandon: We should have Grammys for podcast. We should be like Grammy-nominated podcasters. We're going to submit that. Do you have any ins on the Grammy industry to get us in? Ha-ha.

Jeremy: I do. We can talk about that offline.

Josh: Only if this is the "Josh Dorkin Podcast". The "Josh and Brandon"? I don't know, man.

Brandon: I don't know. I think we have a shot. So we're doing it. 2016. We're going for Grammy-nominated podcast. Alright, so real estate-wise. How's you get into real estate? How did that become a thing?

Jeremy: It's actually related to music because when I moved out to Seattle, I thought, "Okay, I got to have a place where I can practice my drums 24/7." So that eliminates apartment, condo. I got a job at Microsoft which I kept for four years, from 2002 to 2006. I just bought a house on the strength of my potential W2 income from Microsoft and a very tiny down payment and bought a house as close as possible to my office building. I built out a practice room in the garage where I could practice music.

I just kind of threw out that I had extra rooms on this classified called "Micro News". So it was only Microsoft people. And I got both my rooms rented in about two days. That was about it for real estate for a couple of years. I bought the house for $240,000 and then a couple of years, I decided to sell it and roll the proceeds into a bigger house. I sold it at $300,000 and I realized, "Wow, I'm getting my mortgage covered by the rent. It went up 60 grand. This is pretty neat." So I'd like to experience more of the power of real estate.

Josh: Awesome. Hey, what'd you do at Microsoft?

Jeremy: I was an SDET, which is Software Design Engineer and Test on the Visual Studio product. After two years, I went to a new role called program manager.

Josh: Nice. Brandon, do you have any idea what the hell he's talking about?

Brandon: No, not a bit. Not a bit. You worked in Microsoft. That's cool enough for me.

Josh: Yeah. Ha-ha.

Jeremy: Visual Studio is a product for people who make software. So it's a little bit esoteric.

Josh: I know. I'm just, you know, busting your chops.

Brandon: So you started by renting the rooms. My very first house, I rented out the rooms to a couple of buddies that I worked with. It's a good way to start. Do you recommend that for other people, going that same route? People who are listening to the show who might be new, unsure how to get started. Do you think that's a good to buy a single-family house and rent the rooms out? And why, or why not?

Jeremy: You know, if you're willing to have roommates, it's a really powerful way to find out about real estate because you kind of get to develop just the idea of being a landlord. I think a lot about that when it comes to real estate investing is that there's kind of a consciousness of being an investor, a consciousness of being a landlord. If you can take a small step in that direction and just build a habit and just kind of feel what it's like to have this thing where like every month it gives you some money.

So it's slow, but it's also steady. And you kind of get used to the rhythm of it. I think renting by the room is an easy way to do it. Of course, you have to share your personal space. So that depends on if you're willing to. But for me, I lived in the dorms at Duke all four years, so cutting down from like 60 people to 3 - it wasn't that big a deal. It's not like an upgrade, you know?

The second that I got, I bought one that was really suited to rent by the room because it had this huge master bedroom that I can almost turn into a little apartment suite and then rent out the other three rooms and still have my own private space. Financially speaking though, I find that the smaller you incrementalize the units, just like with multi-family, if you divide up into a one-bedroom, when it adds up you tend to make a bigger gross rent.

So renting by the room is a great way to chop up a single-family home and maximize the overall income. And it doesn't take a lot of skill because you're right on site and you can manage it yourself. And then once you get kind of tired of doing that, or get the resources to get out of that, what I did is I kept it going for about five years and then I realized I wanted to live on my own and not have roommates. And then I moved on to having rentals that I don't live in.

Brandon: Okay. So let's talk about that. What was the first rental? Or what was the first non-owner occupied investment property you bought?

Jeremy: So after I sold that first rent by the room home and rolled it into the second one, I lived there and then I moved out and I rented a place for myself just to experience extracting myself out of my rental. So that became my first external rental. It was basically, I just moved out and then rented out the master. And so I was still doing rent by the room but I wasn't there anymore. So that helped me to remove myself and experience a little bit of distance from the rental property.

That was in 2007 or 2008 that I moved out. The market was on a downward trend. So pretty much I just sat back and did other things. Music and teaching yoga and I had just left Microsoft. So I was kind of starting this new lifestyle of not being an employee and got into that for a while. I was just kind of watching the market and doing a lot of reading about real estate. In 2012, when the market started to tip up, I got into buying foreclosures with my younger brother. That was how I started with the business that became the successful business that we have now. It was in August 2012, buying a duplex in a city south of Seattle called Auburn. It was $117,000 for a foreclose on a duplex and that was my first rental property that was not rent by the room based.

Josh: So you've done, so far if the math is right, somewhere around what? 22 deals? Is that about right?

Jeremy: Yeah. I counted 27 including flips and then rentals.

Josh: Okay. So 27 deals. You started with the first few rent by the room. Got out. Got back in. Let's about this transition. So you're doing this foreclosure. It was a duplex. I'm assuming you did a buy and hold?

Jeremy: Yeah, it was a buy it on a hard money loan at 12%. Get it fixed up. Get it rented out and then refinance it into a 30-year fixed.

Brandon: That's what I call the Brrr strategy, right?

Jeremy: Ha-ha yes!

Brandon: Yeah, Brrr. But you did it. It works.

Jeremy: I'm pretty much a Brrr investor. Yeah, your terminology, I didn't know that term. But that's [inaudible] [16:31]

Brandon: I didn't know that term either. I just made it up last year. Ha-ha.

Josh: Nice. Nice. Okay, so you got the duplex. You Brrr-d it. Why would somebody do that? You know for newbie investors, why does that make sense to do? And why kind of timeline are you talking about on the purchase fix up? I mean, you're not flipping it but you're kind of flipping the note a little bit, right?

Jeremy: Yes. And I wrote a blog post about this idea of long-term flip where once you do the acquisition, fix-up and get it re-fied - after you hold it for a year or two, your options really open up for selling it and rolling it into something else. It doesn't mean that when you buy something and do this method that you have to keep it forever. But by holding it a little bit longer, the flip is a little bit more advantageous because you have some time to get it in better shape and build up potentially some equity or market appreciation before you sell it.

To answer your question, the reason that I think that's a really powerful method is because this huge built-in discount when you buy something that's just not in good shape to start with. Because most people are trying to buy something that's ready to go and in good shape. You can either jump in and live in it or just start renting it out right away. And then the people that are willing to do the work, for something like a foreclosed property, there's no way that you can finance it with a 30-year fixed out of the gate.

So you chop out all the competition on property that would be paying market price and financing it long-term. And you're only dealing with people that have access to short-term financing. Which is not necessarily hard to get, but it just indicates a willingness and some savvy to participate that way. And so like this duplex, I think we had run the numbers and we thought it 'd be worth around $200K or so when it was fixed up. And that we might need $25,000 to get it fixed up, So getting it at $117,000 - just doing the math and then beyond the fix-up, there's something holding costs and some interest.

But once you do the math, you realize if you're willing to have kind of a delta of about three to five months to just get it in shape and get things dialed in, then there's this chunk of equity that's disproportionately high that you generate just through kind of going through that process. And a big part of it is just the willingness to just perform a set of tasks over kind of a patient-- I think of it as like it's a long term. Because three to five months can feel like a long time, but it's also pretty short because once it's done then it's locked in and it's good to go. But you've got this built-in nest of maybe $40 or $50K of equity.

Josh: Love that explanation.

Brandon: Yeah, it was great. Can we take it down a little bit more? Like I want to talk about some of the terms that you used in there, just for people that might be completely lost at this moment. First of all, hard money. What are we talking about when you said hard money you used to buy the property?

Jeremy: Yeah, so hard money for me refers to a high-interest loan that is based primarily on the strength of the asset and not so much on a deep dig into your personal financial life, like you would have to do for a 30-year fixed. So a hard money lender that I used, they're basically just coming up with a value that they think the property is worth, and then they'll say, "Well, I'll loan you this much on it." The one that I was working with would actually loan up to 100% of the purchase price, knowing that you are going to have to fund your own rehab and additional value there. And they split it into an 80% and a 20%.

But basically, I could go to the auction and they would supply the cashier's checks to buy a property outright. But the trick is the term is five months long. So basically, you've got five months to get out of it. And after the fifth month, you either have to purchase an extension and you're kind of at their mercy at that point or double to 24%. So in order to do that method, you have to feel really comfortable that you're going to successfully exit the deal. And the way that I can see to that is to feel like, "Okay, I have a good idea that I can refinance it."

And that's where my partner, my brother, came in because he has a real job and earned a W2 income as an engineer. So he would be the point person for getting a pre-approval with the mortgage company and getting the refinance to go through. And then our backup would be to run the numbers of what it would be to flip it. So if it's done and the refinance isn't going well - which we've never failed on a refinance - but it's nice to feel that you could just put it on the market and recover if you had to. Before it balloons from 12% to 24% interest.

Josh: So you've got those exit strategies in mind ahead of time. You're planning for all the possibilities and you're not just sitting there and saying, "Oh, we're going to burn this thing and if it doesn't work out then we're in deep trouble." You know what's going to happen if it doesn't work out.

Jeremy: Yeah, I would usually think, "Okay, I want to refinance it but if I need to sell it, I can sell it." And then I even have maybe a couple of other ideas of things to do. Like being able to hand it over to another investor. I like to just have a few things in mind when I get a property. If a property meets my criteria to buy it, it's usually because it's got built-in equity and cash flow which means you can get out of it through refinance or through selling it.

Josh: So you've got five months. That's not a lot of time and in there, you really need to go ahead and make that decision way before month five on what you're going to do. Walk us through the timeline, if you don't mind, on one of these deals. At what point are you, "Okay, well if we don't hit this, we're going to put it on the market to flip," or kind of think that through?

Jeremy: Yeah, so my brother Nick and I would sit on the computer and do something like this. Like a Skype or a phone call the night before the auction. So the auctions would happen every Friday, these foreclosure auctions. So Thursday night, I would go to the investor meeting of this company that investigates foreclosed properties and just go to this Thursday night meeting where we'd walk through all the properties. And then I'd come home and we'd sit there and just walk through them and see which ones we want to bid on. And we would already decide whether it's a flip or a hold.

And our hard money company actually required 20% for something you intended to flip and you could do up to 100% for something you intended to keep. You didn't have to stick with that, but it was intended that you would specify your choice. In every case, we were able to execute our first choice of exit strategy. But the five months can be pretty tight if it's not vacant. If it's vacant, pretty much we can buy it and just start working on it. And within a month or six weeks or whatever, we're ready to rent it.

And then as soon as it's rented and there's tenants in there, we would consider it to be a completed upgrade and then we would seek a refinance. But if there's tenants in there that aren't paying or a tenant that's on the way out and we want to give them some time to get out. And that's one thing, we try to be firm in situation's like that where someone's not paying, but also to have an element of kindness and communication where we understand we're kind of throwing a sledgehammer in their lifestyle even if they're just living in there freebie for a while and we'll say, "Hey, it's June 10th. Can you be out at the end of July?" And so give them a nice runway or something like that.

But then that means that our whole schedule is pushed back quite a bit. Thankfully, we've been able to purchase extensions on hard money loans when we've needed to so that five months is really come up quick a few times. Ha-ha. And we've purchased extensions. We've probably have of them in under five months, and half of them we've had to extend a month or two or three.

Josh: What does that look like, the extension? The purchase of an extension? What does that mean?

Jeremy: You know, I'm doing one right now where it was a five-month loan and the loan principal is $173,000 and I requested a three-month extension at one point, which means I basically just had to pay him $1,700 and then it continues for three months at the 12% without ballooning.

Brandon: Almost everything that I do is a Brrr strategy. I buy a lot and I refi with private money or hard money or whatever. I've been running into this problem a lot lately and I want to know if you've seen it to is the bank that I go to refinance the property, to get a new loan, those banks are requiring a year of seasoning - which means they don't want to touch it if it's been sold or refinanced in the past few years.

Jeremy: Yes, I definitely have run into that and I've found two banks here in the Seattle area: Guild Mortgage and Caliber Mortgage.

Brandon: I used Guild Mortgage.

Jeremy: Okay. Ha-ha. So that's all, we've used either Guild or Caliber or we've used Pacific Crest. Savings bank for commercial properties and we're going to do our next one with Coastal Community bank. And the commercial refinances , they're a little bit more looking at the asset and don't have as many rules to do with seasoning and things like that. So we've found a lot more flexibility. And of course with that, they are not giving a 30-year fixed. It's a five-year fixed period and it's a higher interest rate. But generally, we're making more spread on the fiveplexes and up. So it works out either way. We're just happy to get financing on anything, almost any way that we can. So the commercial has been a good option as well.

Brandon: Yeah, that can definitely be a good avenue. I've had to do that a couple of times as well, the commercial. It definitely works. Just to elaborate a little more on some of the dangers Brrr because you know obviously we talk about how cool it is, it really works really well when it works. You mentioned it yourself, if you run into that problem, what are you gonna do if it doesn't refinance? Let me ask you this question, how much will they give you? When you said earlier, it was worth $200,000 that duplex? The bank won't give your $200,000 though. They'll give you a percentage of that. Do you remember what you ended up getting on that one?

Jeremy: Good question. I think we've been getting 75% loan to value on residential and 70% on commercial. So the cool thing is for that property, if our purchase price is $117,000 and we spent $30,000 on it, and it appraises at $200,000, if we can get 75% loan to value - we can borrow $100,000 on it which completely wipes out the hard money loan. So that's how we've intended to do it is where because there's so much built-in equity, by the time we get it appraised, taking that percentage - 75% of the appraised value - is still greater than what we owe on the hard money loan. And then we may be out of pocket on the renovations.

Brandon: Yup. It really just comes down to really knowing your numbers, your after repair value. What's it going to appraise for at the end of the day? You really gotta dial that in really well. I mean, if that property would've appraised for $130,000 then you're looking at a 70% value or 75% on $130,000. You're not even getting $100,000 at that point. I don't think or whatever.

Josh: You have to come up with cash to [inaudible] [27:35]

Brandon: Yeah, now you got to come up with cash to pay off the hard money lender and that really sucks. So you really just have to be confident in that and watch the seasoning thing. Make sure you understand that. There are hard money lenders that would go one year, I know some that will go two years. But whatever. Those are things just to be cautious if you're going to get into Brrr.

Jeremy: My brother, Nick, is really good at kind of walking through the worst case scenarios. "Okay, what happens if this thing appraises at $130,000," and we'll say okay. Then we'd either have to say come in with 20 grand to close it. Do we have 20 grand? And then if we do, we say, "Okay, we can cover that." But I think that another way that's really powerful is I use the Redfin website and I just look for comps in the area using map nearby homes. And there's a couple of comps that I'm basically saying, "This is the comp. This is the same kind of deal. It sold for $180,000 or $190,000. So why would ours appraise at $130,000?" You could still have unexpected appraisals, but if you have some comps in mind, you can increase your confidence.

Also, I think, a way to hedge against those problem scenarios is to have like-- right now we've got 14 buildings and we have three hard money loans. So we have enough of our stuff on long-term financing and we have only three hard money loans. So we could afford for basically all three to go sour and still cover ourselves either by extensions or by selling a property and covering the losses. But I wouldn't want to have 14 properties and eight hard money loans. I want to have basically like three max and we're about to get out of all three of them. So we'll be at zero.

Josh: Right on. Cool. Hey, I want to go back. You mentioned this foreclosure. I think you had said that you've picked it up at auction, is that right?

Jeremy: Mmhm.

Josh: okay, cool. Let's kind of dig in a little bit on foreclosure auctions because buying a foreclosure at an auction is very different than just buying an REO property, correct?

Jeremy: It is.

Josh: Okay so really quickly, just for the listeners, what's the advantage of an REO over a foreclosure auction? What's the advantage over a foreclosure auction over an REO?

Jeremy: So what I've experienced was that an REO property refers to a bank-owned property which is available on the market and can be seen on the MLS. So it may have the common factor that it may be pretty beat up and need a bunch of work. And in fact, we have done at least one REO and maybe a couple. In fact, the company that would research our foreclosure properties in preparation for the auction, they would sometimes put some REO properties in the packet that they would present to investors just so you could kind of see those as well. Because it's a similar kind of deal.

But the foreclosure auction, it has a little extra spice to it just because there's no chance really to see the property ahead of time. There's a certain element of creativity of like, you can look at pictures of it, you can drive by it. If it's vacant, you wouldn't really know for sure if it's vacant. You know, I heard on a previous podcast that Brandon likes to peek in the windows so there's people that do that.

Josh: Ha-ha. You got a reputation there, peeper.

Brandon: I know, I do.

Jeremy: Ha-ha. Well, you know, I couldn't help but think when you said. It's like I have done that before where I drove by a property that was going to be going to auction. And the neighbors just out there watching this parade of people driving by. And sometimes someone will just realize it's vacant and find an open patio door. Then you got people peeking in the door. So it can be kind of an instinct dynamic. But other times it's clear that people are living there and you're not going to see what's inside. You have no idea what the scope of repairs is. So you have come up with a common sense and have a big enough buffer to be able to encompass those unknowns.

But the benefit that comes with that is just the potential for getting huge discounts based on just interesting dynamics. I'll give you one interesting dynamic at the foreclosure auction. So in this Snohomish County which is north of the Seattle area - the auction where I've done the most purchasing - the dynamic at the auction is there'll be multiple trustees which are the companies that are hired to conduct the auction and sell the property in behalf of the bank. So there'll be like four trustees out there and a trustee is basically just a person that's just standing there saying, "This property's going to be auctioned. It's at this address. Who wants to bid?" And then they look at the checks to make sure that you've got cashier's checks that if you won the auction, you could actually pay for it.

So sometimes, there'd be all four would be auctioning properties simultaneously. And so sometimes there would just be a dynamic where one of the lesser trustees that doesn't have a lot of properties just calls a property. Their main obligation is just to say it out loud. But they don't have to make sure everybody heard them. So one of the properties that I got, it was a condo that I was really interested in and basically there was a lady there that had driven up from Portland and she was acting as a trustee. She very mildly just indicated that this property was about to be sold. The hard money lender that I was working with, they bring checks made out specifically to all the different trustees or banks that are doing the sales.

Nobody else had checks made out to this specific loan. Just bring a check, a generic check and they want to fill in the name or they'll bring a check mailed out themselves that they want to sign over. But not all the trustees would take that. So I ended up taking this condo at a huge discount for a dollar over the minimum bid. It didn't bid up at all.

And it was really just due to this kind of weird dynamic of just checks and simultaneous properties. And so that's what's interesting about the foreclosure auction is that you can get disproportionate discounts based on the dynamic and the fact that someone else may have wanted the condo but they bought a property ten minutes ago and now they're done and they're going home because they were only going to get one property that day. Whereas the REO properties on the market, it's just a wider umbrella people that are looking at it.

Josh: And on the REOs, one of the biggest advantages that the liens are all wiped out, right? How do you investigate an auction property for liens or do you just not worry about it?

Jeremy: The company that I was buying foreclosure through called Vestus - they would perform a title search of all the properties. And in fact, that was one of the benefits of working with them because there's a price to pull the title report on a property. And since they're pulling all the title reports, I could access that information and they would ensure that they wouldn't recommend that you bid on anything that didn't have a potentially clean title.

The caveat there would be that the utility companies would often place a lien. The water and sewer companies. Or there could be some other taxes. Like an IRS lien that would sit there for a while and go away. So I pretty much would do the best I could with the information that was available and also just kind of be ready that there could be some unknowns.

And thankfully, with all the foreclosures I bought, they all worked out well. I think every property, every deal that I've done out of those 27 was successful. And one of them was a negative $4000 for me. It was a flip that had an extraordinarily weird low appraisal and then I had to kick the can out and sell it later. But every other property worked well. So even though I have contingencies for disaster, the disaster hasn't really happened. But challenges have happened on every property. Ha-ha.

Josh: So every property you purchased has been a foreclosure?

Jeremy: No. That was kind of the first wave of purchasing. But at the end of 2013, the amount of inventories started to dry up and there just weren't any multi-families available at the auction. And there were big hedge funds coming and basically they come a day and purchase like 90% of the properties. So instead of having all the investors there, basically get one zero to two and go home, everyone would be maybe fighting for just the scraps and a larger company would outbid everybody and get a whole bunch of properties.

So at that point, we shifted into buying undervalued multi-familys on the open market or through word of mouth and using seller financing and getting discounts. We've still done hard money where the you go and property's on the market. And by using hard money, you can do a cash offer and not have to worry about appraisals and all that stuff and still do the Brrr strategy. But instead of doing the foreclosure, you're doing it on the open market but it's the same kind of deal. Your cash offer and lack of contingency on financing can earn you a discount similar to what you'd get at a foreclosure auction as well.

Brandon: Cool. So you just mentioned seller financing. I love the touch on that. What do you by that? What is that and how have you done that?

Jeremy: Seller financing is the niche that my brother and I really focused on after foreclosure started to dry up a little bit. On the MLS, there's a financing field where it would actually tell you what the seller is willing to accept for financing. It would usually say "cash-out conventional". But sometimes it will say "owner financing", and the meaning of that is that instead finding a bank that will loan you the money for the property, the property that owns the property is becoming the bank and they're loaning you the money.

The mechanics are really similar but it requires that that person either owns the property outright, or that you're going to give enough of a down payment to wipe out whatever they owe on it so that they have the right to carry that seller financing. And then of course they have to be willing to do it and it's a different dynamic because they become kind of like a partner. If someone sells and cashes out, they're kind of out of the picture and it's your property. But if someone seller finances you, they want to make sure you're going to take care of the property, make your payments, successfully refi at the end of the seller financing and that kind of thing.

So some of the properties will say owner-financing and the reason someone would want to do is because they might say, "Hey, rather than get a big chunk of 300 grand and pay taxes on it, I will spread this out by offering financing at 6% and I'll earn 6% on my 300 grand and I'll spread it out to make the tax burden a little bit less". And some people would rather have a stream of income than a big chunk and feel like they're earning money on their money. So some people want to do it.

But on most of the cases where we've seller financing, we would come in with an offer on a house that isn't offering seller financing - or I shouldn't say house, I should say multi-family or apartment - and maybe it's been sitting for a little while or maybe we find out that they don't have debt on the property, and then we'll show them that, "Hey, if you give us three or five years of seller financing, in that three years you're going to earn X interest. And during that time we're going to make all these improvements and then we're going to refinance out and pay you, or extend with you if you want." But we'll show them the gross proceeds. So we'll say, "Hey, our offer is $875,000 for this eight-unit apartment building. But if you finance us for three years, you actually are going to make $955,000 when it's all said and done." So sometimes they'll look at that $955,000 and say, "Hey, that's better than what somebody else is offering."

Brandon: That's a fantastic tip right there. You know I talk about seller financing a lot because I'm a huge fan of it and I've used it as well. That's how I bought my 24-unit. I Brrr-d my 24-unit with seller financing to begin with. It was great. But I don't know why it never occurred to me to explain to the seller that number. Because you know when I get the mortgage, I see that number and it's like I'm getting a mortgage right now for like $100,000 and it's like, "You'll pay $285,000," I'm like, "Whatever." But yeah. Explaining that to a seller? Brilliant.

Josh: Tip of the day. That's unbelievable.

Jeremy: Yeah and what we'll do is we'll say, "So, there may be someone else." Like the last apartment building that we did is that is was an eight-unit apartment building. I knew that there was another cash offer at $800K. So they could just get totally out of the deal $800K. We offered $875,000 plus we asked for some seller financing. But the sellers were living in one of the eight units and they were about 90 years old and they had owned it since the mid '60s when they bought it. And they had let all the other units become vacant. So it wasn't optimized immediately.

But we said, "Hey, if you can give us a few years to get in, get all of it rented out, cleaned up - we're going to raise the value of this and the refi is going to be a piece of cake. And in the meantime you're going to make some money." And so we showed them that number that was in the higher 900s compared to that 800. Even though that one was cashed, they were willing to work with us. And I also met them in person and that helped as well because they could put a face to the offer.

Brandon: Which is another awesome tip when you're buying the property from people. If it's not like a bank, go meet them in person. Get them to like you. Don't be weird about it, but just build relationships. This stuff is a relationship game. Some of the people are just sitting there in their little cubicles or bedrooms and go send out letters. But at the end of the day, if you're willing to hustle and go talk to these people, you can pull off some amazing stuff.

I love that. I love your strategy, of you doing that. The seller financing. Is that still what you're doing today? I mean is seller financing still your main thing? I know you're still doing hard money, you said. What's kind of your main thing today?

Jeremy: So this year, we've purchased an eight-unit apartment with seller financing. Another eight-unit apartment with seller financing. A commercial unit with seller financing. And then a five plex that was undervalued as a value-add investment, buying it on a hard money loan. Fixing it up, refi-ing. And then one short sale that we purchased with hard money. And that was pretty cool. It was listed as a triplex but it was actually a house in a duplex on two separate parcels tied together with one mortgage. So we bought it. But through the purchase, we liened each property separately. And so we're flipping one and keeping the duplex. And so we end up, after flipping the house, the duplex has very little debt left on it.

You know, they're all a little bit different. But the theme I think is to find a creative way to finance it and find something that's really undervalued but the reason it's undervalued is because it needs someone to come in and improve it and strategize. So most of the properties that we've bought, they kind of have this six to twelve-month timeline from initially purchasing it to when it's like fully healthy. So we have to have some patience there. But then once that year is up or the six months is up and it's locked, then it's like it's a really good contributing member to the portfolio.

Josh: Right on. Awesome, man. So where are you focusing? Are you focusing solely close to home, everything local? Are you buying anything at a distance? What's your farming strategy?

Jeremy: Close to home. I was living in Lynwood which is about 20 minutes north of Seattle. I've since moved to Edmonds. I'm now about 30 minutes north of Seattle. And the first one I got was in Auburn, about like 30 minutes south of Seattle. So it was a huge drive, but at the time I was just really excited to get a property and the deals were pretty ripe out there.

After two deals in Auburn and one in South Seattle down by the airport, I made a choice that just for my quality of life, I'm just going to buy stuff that's close by. Especially not having to go south through downtown. Because it could take a whole afternoon just to go and see if the yard got mode and I like to have that option. Even though I don't visit my properties every day or every week, I like to have the option.

And what happened is the first few properties I got with the King County Auction which is Seattle and the nearby Seattle. My home is just in this area north of Seattle. That condo that I told you I got for a dollar over the bid that was a sweet deal? That was the first time I went to this Snohomish County auction. And I just said, "You know let me just do this. I like the dynamic here. There's less investors. There's more deals." And it's all north so the traffic isn't as bad going south to Seattle. Then the property manager that I hired, my leasing agent lives in downtown Everett, which is another town just north of Edmonds, where I live.

So basically, we just started buying properties in Everett. Because it's like close to me, my property manager lives there and I can keep an eye on it. It gives me a lot of peace of mind to know that all the properties are within striking distance and I can really get tuned in. You know, I've heard you guys talk about investing in your backyard and niches. And I believe that's been invaluable. Because all the properties I see, I see the address and I know what street it's on, so like, "Okay, that's three blocks north to that other one I looked at."

There's just a certain context that I can put to it really quickly. I know my property manager can meet me there in five minutes. He can go do showings really quickly. And then my brother, who lives in Denver, he can do kind of the side on scene stuff. He does the spreadsheets and runs the numbers and figures out our cash on cash returns, does the worst case scenario stuff. And I kind of try to pick up the intangibles. Looking at the property and thinking about some of those things that can only observed when you're nearby. So that's kind of our balance. To answer your question, only stuff nearby.

Josh: Right on. That's a good answer.

Brandon: You know what I love about that, is I'm obviously in the western Washington area and I live about two hours south of Seattle. When I talk about my numbers, whether it's here on BP or on one of the webinars or on the podcast, i say things like, "You know, I just put an offer on a house for $75,000," and people are like, "That's crazy. I live in Seattle and you can never find properties up here. I can't mess with real estate in Seattle." I love that you are investing in real estate in that market. Granted you're a little bit north, but you're making it happen. And people are complaining they can't do it. I mean, how many units do you have now?

Jeremy: 65 total.

Brandon: That's awesome. Congratulations.

Jeremy: And you know, any kind of niche you can get into. You can get into Seattle if you find a way to finance it and find a way to do the deal. I just found that a little bit further out, there's this kind of sweet spot where the rental demand is still high so you can rent them out really easily. And in fact, there's more people that rent in some of these, like in Everett. There's more home ownership in Seattle Redmond Bellevue. So there's kind of a sweet spot where they still demand, but there's more deals to be had, less competition. The way I see it, there may be less of the really snowballing market appreciation that might happen in the really concentrated areas, but it's easier to get into the deal and there is still market appreciation. It's just spread out a little bit because you're further out of town.

Josh: Right on. Hey, really quick. You had mentioned the property manager? Are they doing everything? Do they have control of all those units or are they just kind of doing the leasing side? What is it that they do?

Jeremy: They are available to do everything but I manage all of the maintenance myself. I have a contractor and this has been one of the biggest blessings in my recent real estate history. A musician that I worked with and went on a tour with last year. On the tour, he shared with me that he was really developing his contractor skills and he was getting in the contractor business. And then this year, I ended up starting to give some work to him and he has turned out to be an incredible contractor. Very timely, good work, good communication.

And so basically, he's doing all of my repairs, fix up. The whole contracting side which, as many investors have experienced, can be a really difficult thing to get stable people that communicate well. And you can go through contractors every month or two, if you don't land on a long-term stable contractor. So our contractor, he does all the maintenance. So it comes through our property manager. But then, when I get the notification from our system, I just forward it over to him. And our leasing agent also communicates well with our contractor. So sometimes, he'll just call him up directly and say, "Hey, we need this at unit."

So we have a little team where it's like the leasing agent and he is backed up some other help within the property management company. But it's mostly my leasing agent, my contractor and that's kind of the three-prong. And then me and my brother manage the property management and manage the contractor.

Josh: Really quick on the contractor. Obviously, we all complain about dealing with contractors. It's tough. You found somebody that you really like. How do you keep them? Is it you're just lucky because you found a great contractor and once it happens, keeping them is easy. Or is it? I mean, is there some special skill because I'm not alone in never, ever, ever being able to find good contractors that I love. I mean I found a handyman. The guy was great, he was reasonable. Worked with him for a couple of years and then off the deep end right? So it seems like that happens or you just have a bad experiences overall. What tips do you have of helping me and everyone else here?

Jeremy: You know, on one hand there is a certain element of good fortune there because I wouldn't have predicted that it would have gone as well as it has, these last few months. But one of the things that I think helps if you do find a contractor, there's this other side of the coin which is that for the contractor, if they're running a crew and keeping people employed - they want to have a steady stream of work. And they want to know they have a steady stream of money coming in. And so one thing that my contractor, Eric, has shared with me is that when he does a one-off job for someone besides me, there's this whole phase of communicating about the job and coming up with the bid and then when the work is done when is he going to get paid. People don't want to pay sales tax and they come and look at the job and they're not please with how it was done.

Whereas with me, he knows that we can handle our communication in a very streamlined way. He trusts me that I'm not going to nitpick him. I chose him that he's going to do a good job. We pay out the invoices he gives us as quickly as possible, because we know that he needs to pay his guys and we don't delay on things. And we both use common sense when it comes to any kind of quote disputes. We haven't really had disputes, but just discussions about how to deal with unknowns and stuff.

So he pointed out to me a cool thing which is that it's an advantage for him to work with me because he doesn't have to waste time just to find what he did and going back and fixing stuff that was really done the right way but there's a miscommunication. Or me nitpicking on price. Because I was thinking, I'm not really trying to get the price down. I want him to be flourishing. So I want to pay him enough that he can flourish. Of course, I want to get a good rate. But I also want to make sure that the people that are the life blood of my business can flourish.

So I really don't try to push the price down and part of that is because he's already reasonable and it's not necessary. But sometimes, there's something where maybe I could try to lobby for some money to be taken off. Then I just say, "Hey, don't worry about it. You're doing great work for us and we're just going to pay this." And other times, he makes a little-- maybe some kind of miscommunication or something comes up and he says, "Hey, I did 15 hours of work over there, but I think we should account it the first time we were there and I'm not going to invoice you for that."

So it's a relationship. I think good communication and respect. I always see them, the contractors and everybody that I work with, they're a human that are trying to have a good life and do good things. It's not like investors should be flourishing and everybody else shouldn't. So I really try to think like I want everybody around me to flourish and I think people feel that and appreciate it and want to work together more.

Josh: Right on.

Brandon: Yeah, that's awesome. Alright, cool. Before we get to the fire round, you mentioned earlier before we started recording that you just bought a new house and that you're doing Airbnb. I just want to know what is that about? I thought that was kind of a cool wrap around from how you kind of started with the house hacking and you're kind of ending with it? Can you kind of tell us about that?

Jeremy: Absolutely. You know I did the rent by the room. It was just so cool to be like owning my own home and just having the mortgage paid for. Because most people it's their biggest bill. They own a house and they have to pay their mortgage payment. But I had gotten to the point where, lifestyle wise, I didn't want to be sharing my personal space with a conveyor belt of renters and roommates. So the same concept though can be leveraged if you rent a space that's a separate dwelling on the same property.

My goal that I set kind of earlier in this year, or even last year - I was looking at properties on the coast between Seattle and Everett. So this north Puget Sound area looking out on the Puget Sound over to the Olympic Mountains. And it's a little bit of a dream but I figured if I just looked at every property that comes up, it can kind of get my thinking going about how could I afford one and how I could get one.

So this house that I moved into popped up and it was really intriguing because it had a main house and then it had a guest house. And I started looking at Airbnb because the more you chop down the units of rental-- for example, if you rent by the room instead of renting the whole house, you might be able to rent four rooms at $650 each instead of a whole house at $2000. Same with the concept of why multi-family tends to gross more income than a single-family house. You can apply the same thing to renting. If you rent on a monthly lease, if you rent on a daily rate, the amount tends to be more if you're willing to do the turn-over and do the work to keep it full and so on.

So I kind of looked at Airbnb and VRBO model and, "Well hey, what if I take this guest house and instead of having a roommate, I just rent it as a nightly rental." And I ran the numbers based on some other comparable properties, and the way I ran it out is that the amount that I was paying to live at my previous house which I was renting there, even if I own all these rental properties, I was renting my own house. I didn't own my own house. And I was wanting to move in and buy somewhere.

But you know once you get into the idea of cash flow, it's like, "Yeah, but do I want to be paid in three or four grand for the mortgage payment?" The fact that it had a guest house and I could make two to three grand a month meant that the leftover mortgage was basically similar to what I was paying to rent my other house. And so I moved in. I got the financing together, which was a Herculean effort in itself. And now that I'm here, I moved in on August 14th. It took me a few weeks to get it all dialed in - the guest house. And I started renting it on September 12th. Now it's October 8th and I've made about $2,500 of Airbnb income and got like super host status on there and people are loving it. So it's just been awesome.

And I get so much joy out of sharing the space. I'm not sharing my home. They're on the property and they look at the views and people are out there meditating or doing yoga or taking pictures and I just think, "This is awesome." Because I'm paying for my mortgage and I'm bringing them joy as well.

Josh: Fantastic.

Brandon: I've been thinking that same concept. I talked about it on the podcast a year ago and I haven't done anything for it. But I want to do that in Hawaii. I want to buy a house, a guest house. And maybe I'll start in the guest house. I'll live in the little one and rent the big one and eventually maybe switch it up. Yeah, I love that idea. Anyway, cool.

Jeremy: Yeah. Speaking of, you know, exit strategies. That's another thing. I thought if I move in here, if I'm ever a little bit under water, I'm moving over to the guest house and I'll rent out the whole house. And I always love having those little backup.

Josh: That's a great idea.

Brandon: Yep, me too. I love it. No, this has been awesome. But we're not quite done. We're going to move this part of the show over to the world-famous Fire Round, which is sponsored by...

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It's Time for the Fire Round!

Brandon: Alright, the fire round. These questions direct from the BiggerPockets forums, which people can get to of course at BiggerPockets.com/forums and you probably should be jumping in there people. Go on. Let's get in there. Alright, question number one. So the first question was actually similar to the rent by room kind of topic. So where's the best place to post your ad for the rent by the room? And I'll add if you don't work at Microsoft? Ha-ha. Where's the best place to advertise and get a roommate?

Jeremy: I've done Craigslist alone. That's been my full method.

Brandon: Okay.

Josh: Quick and easy. Right on. Alright, question two. What would you consider to be the first move towards buying a multi-family property? So if you've never bought a multi, only bought single-family. Before you got into the multi-space, what would you do first?

Jeremy: The first thing that I would probably do is - and this is one of your tips from the 22 and Half tips podcast that I listened to - is to ask your agent to set up a search criteria for all the multi-family properties that are on the market in the area that you're interested in. So you're going to get an email that shows all the properties in your criteria. We have it set up.We're excluding duplexes right now and we're looking at fourplex and up. And we're looking at between $300,000 and $2 million.

So every property that comes on the market, I see it. And a person that wants to get started could start from zero to $200,000. Just look at every property that comes on the market and it starts to get your mind, get the juices going. You start seeing, "Okay, that's how much that was." And the way that I did this is I went to the foreclosure auction a bunch of times before I ever bought anything, but I made own bid sheet on Thursday night. And then I went there and I pretended, "Okay, if I was investing today with real money, would I have gotten that house? How much did it go for?"

And a couple of times, it's like, "Well, I was going to bid $180,000 and it went for $170,000. That means I would have got that." Maybe, you know. And people can do the same thing. You basically run your numbers and then I know you guys talk about that as well. Just run the numbers on what you think it would rent for and what you would pay for it. And then see if it goes to somebody else, see what it went for. That's a good step. Of course, there's all sorts of other things to do with financing and all the other plans of how to get it. But I think just looking at what's there is a great first step.

Brandon: I love that. Love it, love it. That was a cool tip. I never heard anybody say that before, that they went to a foreclosure auction with kind of their bid sheet and it's just a practice.

Josh: Gamifying it, right?

Brandon: I used to that with stocks. I used to play stocks.

Josh: You used to do it with socks?

Brandon: No, stocks. Like stock market.

Josh: Oh, stocks.

Brandon: Yeah. I used to like make-believe. I pretended I bought it for this much and then I realized I did not like stocks. Which is why I got into real estate.

Josh: We should create the "Fantasy Foreclosure" wall.

Jeremy: Yeah, that's what I was doing. Someone said, "Oh, yes. Which ones are you going for?" I said, "Oh nothing. I'm just practicing."

Brandon: That's awesome. I love it. Alright, well speaking of foreclosures. The question is I'm driving around looking at property. I found a property. It looks like a foreclosure. How do I find out who owns the property? Do I contact them directly to make an offer? What do I do with that property that looks like a foreclosure?

Jeremy: Okay, so meaning they're driving and it just looks like it's vacant?

Brandon: Yeah, stuff on the windows. Yeah, you see those obvious signs legal proceedings going on.

Jeremy: If there was a "for sale" sign out, then you could simply just look on MLS through your agent or Redfin if you're not an agent. I'm not an agent. Any property I look at, I just type it into Redfin. And then I go to the county, Snohomish County and I'll go to SnoCo.org/propsearch and just type in the address and then I'll just see what information I can learn there about it. The way that I've generally figured out if something is on the foreclosure track is that company that I was working with best is through their website. They record all the properties that are through foreclosure.

So I might search for it there if I thought it was a foreclosure. If it was already an REO, a bank owned, then it would be on the MLS, listed as a foreclosure. If it was still l owned by someone and just kind of junkie but not really on the foreclosure track, that might be the case as well. I think just looking it up on MLS or Redfin, and then looking it up on the county, and learning how to decipher all the information that you find there - it's just amazing how much you can learn just by learning some tips and tricks on deciphering public information. And then anytime you want to go a step further, you can always call a title company and just ask them to run a title report on that property.

Brandon: Awesome.

Josh: That's great. Alright, next question. Why don't you like Christian Laettner?

Jeremy: Ha-ha! Okay, that's funny that you ask that because when I was at Duke playing drums in the jazz program, Christian Laettner used to come back and visit and he plays guitar. And he would call the jazz director and say, "Hey, do you have anyone that will come and play with you?" And so I played music just jamming with Christian Laettner. So your question was don't you like Christian Laettner and it's a void question because I do like Christian Laettner. I met him and he was a nice guy.

Josh: Oh, you know. It's just people, they're so mean to that guy. I don't get it. He was great. I saw the ESPN thing. It was fascinating. But anyway, the real question is not about Christian Laettner. It is: can you get a bank loan to buy a foreclosure home from an auction? Can you get a bank loan to purchase that property?

Jeremy: No, not in my experience. You need to show up with cashier's checks made out to the trustee. So that's basically a cash purchase and there are lenders that are set up to do that, but generally the term bank refers to lenders that are going to do a longer process of vetting out that asset. So you need to find a hard money or private lender or have your own cash.

Brandon: Is that the train that you're telling me about?

Jeremy: Oh, there it is.

Josh: Really that’s nice. So while I'm meditating in your guest house when I rent it out next month, I'm going to have to hear the cargo train go by?

Jeremy: I'm pleased to hear that you're planning to come visit me. I'm so excited, I hardly heard the other part of the question. So the answer is yes, you can hear the train go by. Ha-ha.

Josh: That's cool. Well, hey. That must be a very scenic train route.

Jeremy: Yeah, I mean if you want to have a coastal property here, you got to be by the train because it runs all the way up to coast from Seattle.

Brandon: There you go. Alright, moving over to the world-famous...

Famous Four!

Brandon: Alright, these questions come every single week as the same questions. You've heard them before. You know what's coming. Number one. What is your favorite real estate related book?

Jeremy: Okay, my favorite real estate related book, I'm going to say Cashflow Quadrant by Robert Kiyosaki. And the reason is when I had quit my job at Microsoft, the concept of the quadrants - the e-quadrant for employee, s-quadrant for self-employed - I kind of thought I had already achieved this kind of freedom because I had left Microsoft and I was a yoga teacher and a musician and had one rental property. But when I looked at that other side of the quadrant that he explains in the book, the b-business and i-investor - there's this whole switch to the idea of passive income. And so I realize I wanted to keep myself employed lifestyle like doing things that I'm passionate about but I wanted to learn to be an investor and earn passive income. And that book and that concept helped to inspire me to do that.

Josh: Right on. What about business books? What's your favorite business book?

Jeremy: Okay, I'm going to mention two business books that have been really inspiring to me. In fact, I have them sitting here. With people watching the video, I could just hold it up. This is the Power of Full Engagement. This is a book that I read while I was at Microsoft.It says: "Managing energy, not time, is the key to high performance and personal renewal." And I think a lot of people they try to manage their manage to put maximum time towards something. But that books kind of says, "You can actually get more done in a half hour if your mind is crystal clear and you're refreshed and you're inspired than maybe two hours if you're a little bit irritated or low energy. And so that concept was really powerful for me and it really helped lead me to getting into yoga and meditating and things I figured if I can increase the caliber of my mind and my concentration, then I can leverage my time more.

The other one is this book: The Law of Success and it's by Paramahansa Yogananda. It's this little booklet. I pick it up all the time and just read a few paragraphs and it really inspires me to cultivate a mindset and a consciousness of success. Little tips and tricks and ways of thinking. Especially thinking positively all the time and being thankful for the successes that you've had as a way to roll into the next round of successes. As opposed to focusing on the things that you don't like and feeling your energy diminish by worst-case scenarios and fears and things.

Josh: Right on. I don't think we've ever had that one recommended before, have you?

Brandon: I don't think either. Those are both new.

Jeremy: Oh, good.

Josh: There you go. Awesome. Alright, cool. Lastly, hobbies. There's yoga, there's program. You're like the jack of all trades here. What do you do for fun?

Jeremy: I have to say programming has kind of fallen off the map as something I do for fun. I kind of satisfied that during my four years at Microsoft. But I'm a musician, I love music. Drumming. I like spending time doing meditation and chanting. I play an instrument called harmonium. That's a drone instrument and I do devotional chanting with that. I like to get out in nature, hiking. In the last six weeks since I've just looked out the window or sit on the deck and watch the birds and relax that way. I like doing recreational sports. I've been playing some tennis lately and getting into that. Also, attending Seahawks’ games. That's a regional specific thing that I like to do.

Josh: Do you have like a video of you playing this harmonium?

Jeremy: I do.

Josh: Yeah? Can you send us a link so that we can share it with people? Seems like something that'd be fantastic. Fascinating to see.

Jeremy: Absolutely. Absolutely. I kind of thought you would have asked for a drumming video. So that's an interesting request. How would you like me to follow up with that?

Josh: Just shoot it to me.

Brandon: Just shoot it to me or Hillary and we'll put it up on the show notes.

Josh: I mean, we've all seen somebody drum. I've never seen somebody chant to the harmonium. I've never even seen this harmonium. It sounds like a fantasy instrument so I'm excited to see it.

Jeremy: Your end of testing to see if I'm just holding up a wall or if there's anything behind it? Okay, I'd love to provide you a video of me. Thanks for asking.

Josh: I would actually like to see it. Please do. That'd be awesome.

Brandon: Alright, my final question of the day. Jeremy, what do you believe sets apart the successful investors from those who give up, fail or never get started?

Jeremy: Okay. I'm going to start by mentioning that in your question that you said "successful investor"? When I think about success, I think about not just having purchased properties and doing well financially, but being all around success in the sense that you're happy, you're at peace, you're contributing in the world, to others and those kind of things. The word that comes to mind to me is balance. To be a successful investor you need balance because if you only know how to put all your time into real estate activities, you may have a lot of properties, but you may also lose sight of the fact that the reason you probably got into real estate because you enjoyed actually living life and you thought that it could help you to fund your life.

And so I think successful investors would apply balance. Of course, I agree with some of the other answers that people have given that you gotta take action and persevere. And I agree with that to get started. But I think the idea of balance - and I also like this concept of dynamic will, which means that you have a goal. You have an idea. And you dynamically revolve your willpower around that goal over and over. It turns into intuition where you can perceive things almost automatically and quickly. So after you've done it a bunch of times, you may meet people and you see properties, you can perceive a lot deeper because you've been using your will around this goal and this idea of being an investor over and over and over. And it gives you a deeper perception into things.

Josh: Awesome. You're a deep insightful guy man. Not bad from a guy from Duke.

Jeremy: Ha-ha. Oh, thank you, brother.

Josh: Ha-ha. Yeah, it's funny. We've got somebody works here, it's Allyson. She went to UNC and yeah I'm going to force her to listen to your show and she's not gonna be happy.

Jeremy: Well, UNC is a beautiful campus as well. They're like eight miles apart and Duke is absolutely gorgeous and UNC is absolutely gorgeous so I think she did well to go there too.

Josh: But they're big old rivals.

Jeremy: Big rivals on the court. After every game while I was there, like if Duke won, someone from Chapel Hill would come over and vandalize something on the Duke Campus.

Josh: That was probably Allyson.

Jeremy: Yeah, if you could ask her, does she have anything to do with it? We've been looking for the person. Ha-ha.

Josh: Ha-ha. Awesome, man. Alright, before we let you go, where can people find out more about you?

Jeremy: Okay so my website is jeremyjonesmusic.com. Of course, I'm on BiggerPockets, so you can shoot me a note there. And I also want to invite anybody who would like to pay me a visit, look for my Airbnb overlooking the Puget Sound in North Edmonds and come book it and we'll talk some real estate while you're here if you wanna visit the area and have a great experience.

Brandon: I might take you up on that. But will you play drums with me if I do?

Jeremy: I will play with drums with you and I should definitely give a little discounted rate to any BiggerPockets friends too. A big discount rate to VPs at BiggerPockets.

Brandon: There you go, there you go.

Jeremy: I'm not going to specify how much but --

Brandon: We're hanging out sometime. We're doing it.

Josh: Awesome Jeremy. Well listen, man. Thank you so much for coming on board. There were like a handful of things that were completely awesome, we did not hear before. And that's why we keep doing this. We keep interviewing and talking to people. It's amazing. The guys who think they know it all, they don't know anything. The little bits of wisdom that one creative individual can come up with can completely change your business and that's why this is so much fun to do and it's so much fun to talk to folks. So thanks for being on the show, we really appreciate it.

Jeremy: Thanks for those kind words and I really am thankful for what you guys do and I appreciate everything that you bring to the BiggerPockets community and your podcast. I really appreciate it and admire it.

Brandon: Well thank you. We'll see you around the site.

Jeremy: Okay. Be well. Bye-bye.

Josh: Alright, guys. That was Jeremy Jones here on the BiggerPockets podcast. If you did not walk away from that show taking something away, you were not listening. It was awesome.

Brandon: I would agree. And I was going to say what I just took away: Greg. That's his name.

Josh: Who's Greg?

Brandon: Greg is the groom-to-be. The wedding.

Josh: Oh, Greg! Ha-ha. Oh.

Brandon: It's his name. My wife just whispered it to me. She said, "Greg."

Josh: Oh. Oh. Thanks Heather.

Brandon: Yeah. Go Jessica and Greg. Thank you, Heather.

Josh: Congratulations Greg and Jessica. Now that we know who you are, we won't look foolish when we walk up to you and have to stand next to you in the wedding.

Brandon: But in reality, yeah, in today's show it was great. There were so many things that I will definitely apply to my business right away and hopefully the listeners, you guys will as well. So cool.

Josh: Yeah don't just listen. Take action guys. Listening to these shows and making things happen is what's its all about. So that's it. Listen. Thanks Brandon. Have a good trip. Enjoy your parents. Enjoy the wedding. Let me know how Greg is.

Brandon: I'll let you know how Greg is.

Josh: And we'll see you soon, guys. Show 145 on the BiggerPockets podcast. You can check out the show notes at BiggerPockets.com/show145. If you're not a member of our site yet, jump in. Create an account today. BiggerPockets.com and we'll look forward to talking to you next time on the BiggerPockets podcast. I'm Josh Dorkin, signing off.

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