The Titanium Vault hosted by RJ Bates III

Steven Morris: How to Start Investing in Apartments and AirBnB

April 06, 2020 Steven Morris Episode 121
The Titanium Vault hosted by RJ Bates III
Steven Morris: How to Start Investing in Apartments and AirBnB
The Titanium Vault hosted by RJ Bates III
Steven Morris: How to Start Investing in Apartments and AirBnB
Apr 06, 2020 Episode 121
Steven Morris

Steven Morris is a real estate investor based out of Cleveland, Ohio that primarily focuses on apartments and short term vacation rentals. In this episode Steven breaks down how he made the transition from single family investor to a commercial investor. RJ and Steven cover the importance of understanding your unique skill set and utilizing those during joint venture opportunities to increase your deal flow. Also, they cover the impact of COVID-19 on Steven's business and the adjustments he has had to make so far. Remember, if you enjoy this interview please leave us a 5 star rating!

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Show Notes Transcript

Steven Morris is a real estate investor based out of Cleveland, Ohio that primarily focuses on apartments and short term vacation rentals. In this episode Steven breaks down how he made the transition from single family investor to a commercial investor. RJ and Steven cover the importance of understanding your unique skill set and utilizing those during joint venture opportunities to increase your deal flow. Also, they cover the impact of COVID-19 on Steven's business and the adjustments he has had to make so far. Remember, if you enjoy this interview please leave us a 5 star rating!

For the best Skip Tracing in the industry go to

To join the #1 Online Real Estate Mastermind visit

For more video content from Titanium Investments subscribe at

Connect with Titanium Investments at

spk_0:   0:01
It's not real estate investors, entrepreneurs and agents. You're in the right place. Unlocking the secrets to real estate investing in entrepreneurship. Welcome to the Times Young vaults hosted by R. J. Bates The third years. Hey, guys, Welcome to the titanium vault. I'm your host, R J. Bates. Today I'm sitting down with Stephen Moore. So you go, man.

spk_1:   0:31
Good man. Really good.

spk_0:   0:33
Yeah. I appreciate you taking the time to sit down with us today. Uh, you know, I say that Sit down, take the time. But we all have a little bit extra time on her hands right now. S o for the people that don't know who you are. Give Ah, brief introduction of what it is that you do in

spk_1:   0:47
real estate. Sure. Um, I was a college athlete, basically went to school to play a sport and get a degree. And then, uh, right after shifted to focusing on education a little more. I went back to school. I had a business degree in underground, back to school and got an MBA in finance. I had a couple cousins that had been out of school for, you know, 34 years I've been flipping houses. So I came out of school with that little a small advantage, right? Could just ask people questions or no properties and stuff like that. And, uh, my first private money loan was, like 80 grand transition in the flipping some of my own stuff and buying some mild stuff in that, and I'm sure we'll get into that. But when you're helping other people make money, I mean, there's a there's a lot to learn. But you do see your checks compared to theirs and then wonder if you know what. Can I do this to sort of thing? And it was just that transition helping people least their stuff, helping people flip their stuff, helping people buy and hold their stuff. And, you know, he talked a lot of people in this game. It's almost like learn, implement, learn, implement so wanted to get paid more, wanted to see some of the checks they were saying. So I just figured a these guys aren't that much smarter than me. So I'm doing it myself and, uh, ran that up to a bunch of, uh, we're flipping a lot and we were wholesaling a lot. And, um, we went from wholesaling, too. I started a consulting company, Bulletproof carts out. We got, like, 70 local investors that, you know, pay a monthly fee that we do a lot of lending to deal flow to. That's running. Um, went into the apartment game, uh, blossom apartment buildings and other people because I didn't really know what I was doing or have the capital at that point to do that. That's up to, like, 650 units with J B partners and then about 50 Airbnb Zay. No, we're just talking about this, but that's been on the fritz here for the last 30 days. So we're looking at a short term pivot. But I do really like that piece, and I'm not gonna give it up because the returns are pretty crazy. So we're just trying one of the storm and see what's going on right now. So that's kind of the whole story.

spk_0:   2:58
I know you're based out of Cleveland, Ohio, right? Is everything that you do in Cleveland, Ohio. There's another other markets,

spk_1:   3:04
a lot. I know some of my J B partners air, you know, in 788 states, and they picked them kind of politically as well as you know, cap rates and our wise, all these real estate terms as well. But we gotta be like 90% Cleveland. So, uh, most like on our, you know, we have some stuff that's like an hour and 1/2. I don't know why, but it just feels like I've looked at. I've been on a contract for 200 units, 500 units of stuff that the exit didn't pan out due to due diligence in other states and stuff like that. But that one hour drive or whoever the property manager just seems to be this, like, weird point where you can really keep honest tabs on it. If you're not gonna be that close, I still think it's very possible, and I would do those deals that I was talking about that didn't shake out in the past. I would do him again. I would just I just know a little more, a little more savvy now, so I would deal structure and Javy partner, I guess more efficiently or take less of the deals. I had less because it's just impossible. I know one of them was the Shreveport, Louisiana, and I ripped being the majority owners, you know, kind of young and dumb back then, just thinking I could greet it out. That probably won't out so sometimes, right? Blessing in disguise that, you know, something doesn't shake out when you start, you know, starting to get the hang of it.

spk_0:   4:29
So let's talk about these these Javy deals that you have in the multi family. So I will get the Airbnb later on on the multi family. You know, you say you're J being with people. Are you mainly the operator or are you ever passive on some of these

spk_1:   4:42
deals? Um, his pass. It is possible. I don't know if a a lot of listens their listeners and followed me on Instagram or Facebook, but I like to travel. I like the golf and I have a finance background. So when I operate like, I don't have any construction background, so it gets kind of ugly quick. So that's another thing that I would kind of tell people that I learned very, very quickly is, uh, the logistic thing you want. You know, you see a deal. It's a big deal to may be the biggest. You ever done. You get excited and you want to do it. You're not thinking how will this work? You're just thinking, How do I do the deal? Not how do I operate the deal? So I kind of went down some roads where I was just trying to buy big stuff that the numbers work, but I don't have any systems in place. Like I said somewhere, 1000 didn't luckily, some dinner because I think it would really rocked the boat. Didn't student, but even locally and I know we talked about this, but you said you had Timmy on and he helped me by my first apartment doing ever. Whoa. It was the 1st 1 we bought. Help me and have it flips and smaller stuff. A 12 20 unit buildings that we do, right? Well, just due to the way that that structure and we bought this one sitting in his office and, you know, we know each other's operations pretty well, and I brought the deal. I'll sign alone. He was signing the loan zoo, and then I wanted to operate at a fairly high level in the day to day, especially do, uh, renovations. And you know he and me are very close and honest to each other. It was like, Dude, take less of the deal on Don't operate. I was like, This is my deal instruction. I wanted structure. And, you know, I tried to get more than deal on Operate Day today, To be honest with you struggles. I've never done apartment buildings before. One. I don't have a construction background, too. So I think one thing I learned super quick is obviously Tim's got like 3700. Do this. Listen, the people that that's not an exit, right? So listen to people that have done more than you. There's a reason they've done more than you and then to the joint venture stuff In apartments. There's so much like juice and squeeze. There's so much residual every month. There's so much grief. I've proceeds, you know, if we end up way, might sell that now that the markets a little different and the debt structure is a little different. Owner finance, sell it. I know he's working on the deal there, but there's some of these deals that you know, if you get him right, there's $1,000,000 tax free re fired. So you no argument over our 27% are you? 35 really, you know that 35 months sound great, but there's so much juice and squeeze like you're still gonna get compensated fairly and well, and you don't have to give up your life. So I was out there, you know, like going out there 23 times a week doing project management. And I wasn't even doing it well, because it's not something unique ability, you know, It's kind of myself saying I wanted to do it. I don't like doing it either. So that was the 1st 1 A learning curve. Now, when I get a contract in place, a lot of times will do is ah, you know, if I have a good I think we were negotiating on my buddies. We had 65 units. Uh, mustard. Ginny and I was gonna pass the contract off, and he was, uh, asking me how much I wanted to make on a wholesale fee. I said I want to stay involved in this stuff because we were talking before the cameras rolling is like we didn't want a ping on the virus. The whole time. Because then this interview's irrelevant stuff happen. It doesn't have to be a virus. That could be a war. Could be. You know, a

spk_0:   8:20
different direction that we all bought was coming anyways.

spk_1:   8:23
But just a pass. Yeah. So

spk_0:   8:27
you know him.

spk_1:   8:29
I wanted to stay involved in the deal because this residuals, the key to freedom like that cash flow is gonna come in. So I was gonna take a feet. Now when I structure the stuff I was trying to take a $40,000 acquisition fee on it was going to say something in the deal for, like, 15 to 20% and be, like, completely, completely passive trust this got operated, right? That's how I like to do the deals now. Yeah, I'm cutting my body, maybe 1/2 fish of what I typically would have gotten in the past. But, uh, you know, West Virginia, Although a cool, cool state, I don't need to be going down there. A lot of fielding calls from from West Virginia when I don't have a great network down there and stuff like that, you know, give it to someone that does and can operate in that state and try to take some cash on the front. And because we're talking about this to before we started, you know, cash reserves can, um and you want to get him invested in you can. You don't want that when you sit on the silence that this reminds you like reserves were pretty important when everyone stops making money for 14 to 21 days and they're just trying to let the you know,

spk_0:   9:29
Yeah, you know, and you bring up the equity piece they're arguing over, you know, 27 or 35%. I have been in so many larger deals or partnerships where that becomes such a toxic conversation, where it almost kills things before you even get started. And I always say, Look, we're arguing over mythical money that doesn't exist yet, you know? And people get so wrapped up over a number, you know, And like you said, you your unique ability was not an operating side of things. And so what was the kind of when did you decide to have that mind shift where it's like, Hey, it's better to take less and partner or someone like Tim Braatz,

spk_1:   10:15
I think What draws that. I think that's a huge take away that you just said that if people are obviously watching listening, they should write down. It's like I will not And it's crazy. People like her like, Well, how do I know I'm gonna get fairly compensated? I think I'm pretty, you know, I know, I'm pretty honest. And, uh, you know, you don't get to 700 units, 80% of the joint ventures by screwing people over, But you just wouldn't get the deal global brought to you get a bad reputation of people, wouldn't bring your stuff. So I tell people that, but also and I don't mean this disrespectful because I was in the same boat. Ah, while back is like, I would find 50 unit buildings, 100 unit buildings. I would take him for granted. He's a friend, and I trust him and, like, you know, go over to his house and vice versa, creating a little different. But, uh, I would take him a deal and not necessarily the first thing you talk about. The equity split. It was more like, Does this deal work for us? Yep. You know, and we're not arguing. It's not like I haven't. I have a deal locally. That looks good, but I need 35%. He's like, I don't even know what 35% is even worse off that 35% on the deal that we were just talking about. It's kind of up the street and it was, You know, if you start arguing about these numbers, you're right. The mythical like now we're done with the project in the middle of like, an economic crisis. So now we're probably give it, and we're still gonna make a bunch of honey. But there's different ways to make money and there's gonna be different outcomes and different numbers, like arguing about numbers 18 months in advance. But you said I don't even know if I do deals with people like that. You know that, Bill, some emails would be like, you know, sign this and it's, you know, that's crazy non disclosure, and we're not giving you any details until you sign it, come to terms. I'm like, How would this work? You know, and really,

spk_0:   11:58
how I look after become the terms

spk_1:   12:01
because it's almost like I don't want to do business right now. This is so abrasive.

spk_0:   12:05
Gravity 30 Maturity is what it is. It shows how that relationship could possibly be down the road, where it's like, Dude, if we can't come to an agreement on something like this where we're just analyzing a deal, if that's the most important part, really know if this is a deal or not? You know it's crazy to have that conversation that early on, and I'll share a quick story about that. So I went to Tim Braatz one of his first trainings that he ever had. This is this is back before the commercial empire was like a day. It was just at the broads manner and ah, and I went with one of my local buddies. Austin. Good. Yeah, we came back. Um, I listen to exactly what Tim did. You know, he said, you know, blast out this e mail to your buyer's list and see who's willing to sell some commercial units, right? And we got several storage unit deals sent my way, and I immediately sent it to Austin, said, Hey, let's analyze this because Austin would be my Tim brats in this scenario, right? Like Austin, someone who's in the commercial space he has experience. I would want to j b with him so I could just watch. We never once had the conversation about equity all the way up until it was time to make our offer. And he said, Hey, look, if we're gonna do this, I'm going to give you 20%. Uh, I said awesome. And he goes, You don't wantto know anything more about that. Nope. Yeah, it's my deal. But I'm going to give up 80% of it because hate. If I get 100% of this, I'm just gonna go lose a bunch of people's money and I don't waste my time. I don't know how to do this.

spk_1:   13:48
Give yourself headaches, man. I think the one thing that people don't realize too is like, you know, that more money, more problems like more equity, more headaches that you gotta answer the phone. You gotta talk about these tenants that, like, you know, I get these emails on some of stuff I am majority owner on and smaller building, like 24 units. Uh, you know, some of these buildings that a majority 70 units on and property manager, they email you. I don't care what system you have in place. What? You know, higher, creedy. And you're somehow you end up on these things, see seed or second decision. Then you get a call, and it's like, awesome. You know, you're gonna have to once in a while, take down the deal and be the guy. But you can make some pretty cool businesses or a lot of your portfolio off. You'll

spk_0:   14:36
find your structuring

spk_1:   14:38
networking. And you know those checks they hit a little different when you haven't seen. So, like, for example, that one that was very involved in weekly caused. And I'm OK doing that. Like I'm not scared of work but weekly calls, huh? Early on in the project, 2 to 3 times a week. Me and my team going out there, uh, you know, a whole list of problems with the building now. We bought it so well. It's still gonna make a bunch of money. We fixed it. So if we have to hold it and we choose to hold it, these air, you know, brand new gross brand new zoom brand new plumbing. So, like you're thinking, maybe now it's headache free which is great. So there's positives and negatives, but that that check comes in, we'll be a little different than the 70 units I got. Josh Steinberger. He's got a construction company. I'm awful destruction, you know. He's got this huge construction company. We got a guy in place that does the property management that we inherited from the purchase. I went down there and walked the building like two or three times and got 27.5% of the deal. And, uh, you know, that's, I think, 30 days out from refine. And before they switched up that commercial lending requirements and some of the Fannie and Freddie you know, we were going to re fly out and chop up like 600 grand tax free, long the street. I've got six hours into the project like I was why it's like that. That hits a little different than a year of project management or property management, whatever that looks like. And, uh, you know, it was it's gotta be, you know, hourly. One of the best deals will ever do and went down there for the inspection. I went down there for the Walker and I haven't I get? You know, I get maybe wanted to text messages a month. I log into the bank account. You know, again, one of my good friends Trust him, but trust and verify lot of a bank account. Look at 34 things. Look at a report is over with. You know, I probably said have, like, six real hours over a year, then the project, and it's gonna cash out. Plus, it's 70 units for the rest of your life, you know? So it's a

spk_0:   16:41
proposal in that what we all talk about anyways, that's what we're trying to create, not hey, I want to own 100% and work these thousands and thousands of hours to own all of this, right? That's that's the message that we all try to get across in freedom of time and trading financial freedom. Getting to that point where it's I do were refinancing, were chopping up $600,000 on something that I've got six hours. That's the dream, right? And so for the people they're listening, and they're like, OK, hey, that sounds amazing. But right now I'm a wholesaler, I'm a flipper, and I'm doing everything myself. What are some of the things that they can do to kind of break into this and find a way to leverage whatever skills that they have to get into the commercial

spk_1:   17:30
space? And you know what's crazy? That's I don't think we could have planned that transition better because the deal actually ask someone in the deal that had never done a rental property before. Nice. So that's like, this is a great example. That's another person that I know. I'm gonna kind of coming off. Uh, I usually don't talk about who I want to do deals with. Um uh, I get these People were, you know, they find me a happy hour, they see me out Indians game or whatever, and they follow some stuff online in the last How you get started or what deal are you working on? I'll just tell him either one. How I got started, which is just simply I bought a new blacks that works. I bought more on. And then when you buy something that works, you try to make it bigger. Yep. Let's you know. And then, you know, the other question is, what deal you working on now and I'll tell him, and they kind of you kind of seem Clay's over, like I don't know how I'd do 70 units or I don't know, How do you know? How would I raise a 1,000,000 bucks to pull down a $4 million apartment building? I used to have a lot of those thoughts, but it scared to do business with people that are like Sounds good. But it sounds too good to be true, like those air dangerous people. And I get that a lot. Or if I tell people about 10 like my body's 34 Yes, 4000 units side. No, I'm like, Well, yeah, works next door to me every day. You know, I've seen his balance sheet all this stuff, but that's a dangerous person. But I think I have real life examples. That's what I like about Consulting Group is when I you know either pitch that people ask about it, I'll never hard sell it, but there's some people in there that are very relatable, like God blessed him and GM and some of these guys. But like you tell success stories about them or, you know Mark Evans, email company and people kind of like get intimidated or fuel fishy like Okay, so he's making money off, you know, selling data on all this stuff. So I got some guys in that. The consulting group, the bulletproof stuff that, you know, a year ago, zero rental

spk_0:   19:25
property, family house where the

spk_1:   19:27
family was living. And he was an agent and reached out to me and said, You know, I wanted to kind of start getting involved in what? You know something. The other guys in this market is for Cleveland are doing this well. How do I get started? We point him in, like, 34 directions. He's one of those guys Smith damage if anyone knows who he is, that song. But he's one of those guys like you. Tell them to do it like he doesn't go read a book to clarify how to do it or come back and ask five different new questions on how it's like you get off home and this kid is doing whatever you told him to do. Don't don't. It's like jumping jacks. She's doing right off the phone call. So I told him three or four things I thought he could. D'oh! He didn't own one. Investment Property started calling four rents and offering not to rent them, but say we love to buy the building. And obviously that sounds crazy. Simplistic to some people like that would work too good to be true, right? They're already saying they want to rent out that they want to sell. Right? Guy was a little older. He's like, Yeah, consider it. Dan throws out an offer again. He's a real estate agent that own zero runs up Properties, and he's offering to buy like, a $4 million part like, I don't know if I would have done that, but he did it, you know, shoot me. An email is like They accepted. I'm accepted what, like I was not on. He didn't

spk_0:   20:41
show me the address. Google Earth

spk_1:   20:43
that he's like the 70 unit apartment. Let's go look at, you know about down there and people talked a 70 year department building, and he is the smallest owner in the operating agreement. But he put up zero capital. I made a phone call and then he's probably got about the same hours I got. He's just not all alone, he did say that your guy did. So he's got smaller equity again. 600 grand and 70 units chopped up for a kid that basically wasn't scared to try. You know, we're just to sit in a corner and say that sounds too good to be true. So this kid went from zero units, 70 overnight, Um, and now me and him own 125 years together in the first year of him. You know, partner with me and being in that consultant group. And, you know, multiple air babies, um, two or three apartment buildings of one where he, you know, he was like, very minority ownership on the 1st 1 Obviously proves that he's willing the work and had value, bring us really good deals, the next one. And I think he jumped up like 30 35% knife. You know, that's the kind of progression that you want to see if you're doing business with the right people add value, they give you more accurately at value that give you, you know, more freedom, stuff like that. So those air cool stories, where or if someone's just listening like it's not impossible. I mean under it. I remember I got another store where I was in East Cleveland and I was trying to buy houses that I probably could've got when I was really young and broken dumb. I was trying to buy houses where I could have got shot in the front yard. Or, you know, they would have just been headaches for three years coming after I told this story in a different podcast with the guy wanted 11 grand for like, a turnkey duplex that was fooling around with it, like six or 700 aside. I was so broken, so scared to actually do deals. I think I try to negotiate him down. A seven grand in the stockyard was like, now and, uh, he was telling me a story like this is the last one I gotta sell out off my 60 doors. And I remember thinking when I was 24 years old, I think I probably had, like, six doors, you know? But it felt like a lot of the time, and I'm standing in the front yard. I could think about it. I could get the 60 doors like I'd be rich forever. I'd be a huge investor like all the shit. And then you get around the right people. You're watching your buddy get 4000 doors right now. 60 doesn't seem like that much. Or you watch your buddy coming to a consulting group that you run and he gets 125 year. I mean, you know how long it's by five years to get over 100 you know? And then it exploded. But watching people do that, I think, is really powerful. Those are the stories where people can see it and say, All right, he had zero. We went to 100. I could do that. It's hard for people to see human. You know, A A decade ago, he had zero. He went 300 then he went back to zero. Then he scaled it again. Then he wanted 4000. That's kind of like Tim story, right? It's overwhelming. A decade. They can't wrap their heads around that. They can't figure out how they would get their 1st 1000 So I like to tell those stories where it's like someone had a job, um, and replace their income or someone had zero properties and they got 100. Or, you know, there's people that are in our group that have done really cool wholesaling, you know, months where they they're firefighter still our fire fire. And they did over 200 grand. And, uh, we'll sell fees and 30 days. It's amazing. Yeah,

spk_0:   23:59
And look, I know we've referenced a couple of people and and they've been previous guests on the podcast of your interest. They go back. Tim Braatz was an interview. Incredible story shares how, you know, he basically bought his first property using credit cards

spk_1:   24:14
at the one

spk_0:   24:15
that just awesome and then Mark Evans, d m for anyone that's ever listened to the mark Talk about anything. He's an incredible mind. One of the most difficult interviews I've ever had do in my life. Guys so damn smart. I'm like, I don't know what questions that I can't even ask this man. But both incredible interviews and and I appreciate you bringing them up because they're people that hope you get to where you are today, right there. They're your buddies, knew your mentors. And I think that's important Toe latch on to people like that and and you've opened up that opportunity for people with, you know, the bulletproof cartel and allowing that toe create this this guy who never owned anything. And now he owns 120 doors. I mean, that's that's awesome. And and look to your point. It's not about how he went and did it by himself. What was he found a way to add value to you, right? Yeah. And then you reciprocated that back to him. And now he's in multi family and Airbnb ease and all these different things with you and that opportunity just going to continue to grow for him. So let's transition a little bit from the multiple, because I know we also want to talk about what you're doing in there being be. So how did that out of those two things correlate together? You know? How are you going out and saying, Hey, I'm gonna buy this 100 door, you know, multi family and then say Okay, now I'm gonna transition to I want to buy this one house. That's a vacation rental. How do those two things correlate?

spk_1:   25:44
Yes. So it's funny, actually, one. I just you know, I just turned 31 so I feel like I have some. What about, you know, finger on kind of what? The young group and young people are spending their money on her how they value the booth. A lot of times there's this American dream to get the house, get the no wife car dog and, you know, it seems like my generation or definitely underneath my generation seen the value that travel bees and that lifestyle piece a little differently than my parents did. Our generation that so, you know, just obviously trying to stay current with what the world is or wants to do. Um, that was definitely something, but I won't act like again. We were talking about this before we got on, like, you know, the way the market swings and translating. I don't think anyone's real profit. So it was funny. I was actually at a master bomb. It was Tim's mastermind two years ago. And, uh, there's another thing people gonna talk about honestly, with my family is like a first year kind of sucks because these are huge projects that take your whole time. Like I said, I was going out for the product it three times a week. I was trying to find new deal flow. Or if you're gonna raise the money for it like it could take weeks, a lot of conversations to raise the money and paperwork because you might be raising half a 1,000,000 a 1,000,002 million bucks. So these air, like time consuming bangs it for 12. 18 months might actually not pay you anything unless you're flipping it quickly. That's why we did flip some of the smaller ones. There was actual, you know, payouts in those these big properties you can't legally brief while you can leave even legally, re file in ah, and soon and 12 months. But a lot of times you need that 12 months to take out excess long proceeds will just like the cat spacious. So I'm sitting in a mastermind with, you know, I forget it two times two years ago said multiple hundreds of units and ah, a lot of them are either cash flowing or, um, we weren't We were using the cash flow to continue the renovations on the project because they're so large. So, you know, I'm sitting around and you go around a lot of those masterminds people ask you what? Your biggest hurdle is what your biggest opportunity is. And I remember thinking, you know, usually, you know, it makes my words too much. They got to me and I was like, It's going to happen to say out loud, but liked for what you see on my P f s like that personal financial statement net worth all that stuff Cool to get to me. Like what? You bring a circle. I'm like I'm broke, you know, like, I don't care what this network number is or what you guys here, how many units I got? Like, I'm cash broke because all my stuff is 12 month projects, 18 month projects, and it's gonna pay out. You know, some of them were projecting a 1,000,000 bucks. 600 grand. We already talked about that stuff. That's cool, but it's you gotta get to the finish line, right? You can't just This is no time to sky D months.

spk_0:   28:38
It was, ah, a lot of trying to

spk_1:   28:40
follow the trends, but also like, dude, if you're broke, you'll do some stuff that makes a lot of sense in short term capital. So these, you know, instead of refined out 18 months. A lot of these have kicked off 30 40 grand. That was tax free, the Airbnb side and three or four months. So now you've got these re fires that are hitting basically every month because we do important want. We're just like a nice job to keep the lights on and pay my employees and stuff like that. But more importantly, once you get him up running, you got a house that would probably rent for 12 13 1400 bucks ran for, like, $3500 a month. Because you're getting daily rents like 1 50 a night stuff like that. Airbnb pays you every 44 days after someone checks out. So it's not the first month, or it's not every 18 months on a commercial re fights like constant cash flow. Yep, sit in a room with a bunch of guys and, like you said, there's some smart, wealthy people in the room, like I don't want to be like going broke. I don't care if it's cash broke or not like I got a lot of pride, and, uh, I said it and, uh, you know, a couple of people that obviously No, my lifestyle. Hang out with me. Multiple leagues like bullshit. You're broke. I'm telling you, like I need I have plenty of assets. I need cash flow. So it was like this Weird, um, watching the trends, noticing that young people like to stare, stay in air, babies and hotels and then, you know, a little bit of a survival thing, right? Like if you can't get cash flow off your other side, your business for a year, then what? What can you give Yin yang with that? So you've got constant, you know, little wires or distribute. You know, they distribute here your rent four days after the person checks outs. I thought that was a good pairing, and I don't think I ever sat down and thought about it. It was like, You do? I won't pay my bills next month. And how am I gonna do that? You know, So

spk_0:   30:33
I appreciate you saying that, though, because I used to say the phrase I'm the the most broke rich man in the world. I fill out these personal financial statements from the banks, and it's like, Oh, man, that looks amazing in the day, you know, when it comes time toe Look in my own personal bank account and things like that, it's like, You know, I just I don't feel like I'm living the life of what that personal financial statement says. And And look, sometimes it's not sexy. Say those things on podcasts, right?

spk_1:   31:09
And I get that. I wish I wish someone would have told me that before. Um, you know, like I said, it's fine. You know, you can't fake 4000 units. You can't fake being in business for 30 40 years. And I remember walking out of the gem when we had just ain't that first day on me, you know, Like I said, I get all the projections. If you do the right analysis, you know what? You're gonna make it 12 right? He's close now. You got like, I don't even know what I was 27. 28 year old kid. We're walking out the jam with these projections. 12 months. I'll tell my dad about the deal I was doing and he was like, Don't give up. You know, the whole sailing piece in my adult life that, you know, like I'm gonna give it up I'm gonna home 20,000 units. I'm gonna be rich. And, you know, obviously he knew something I didn't. Being in business and working for huge companies over like cash flow is massively important. Just like projected, you know, Dividends, sir. Cash flow gets you to that

spk_0:   32:03
finish line. Cash that

spk_1:   32:05
big check. So it's gotta be eating anything. Another strip that I don't know which one of my mentor say it. I think it's Lee Carney says so many people go broke, making a lot of money. You know, they're like they're making money two years out. There's no money to keep the employees there to get to that that project, that payday or, you know, that refined or that, you know, business, sale, whatever their whatever industry, whatever exit strategy they have, you gotta get there, right? Can't just be on paper because

spk_0:   32:36
there's a reason why people say you need multiple streams of revenue, you know? I mean, and this is this is the reason why. I mean, you're you're sitting here and you're talking about when you're breaking in 12 18 months. You're not seeing basically any cash flow. Any money at all

spk_1:   32:53
of them. Have sunk expresses. So, like again on paper, you borrow X from the bank to buy it, you raise the down payment, you buy the Barlow cap expenses and, uh, then I mean, you are buying value. Add buildings a lot of time, especially in the market that we're in. So they mismanaged their, You know, I'm not seeing them Owners hid stuff from us, but you start opening some walls and these owners aren't selling pristine building, right? No. You know, you start opening walls that have been hoping in 30 40 years, and what you borrow isn't enough to fix the problems. Maybe that you found it doesn't always sound like tone, but, like on this 24 unit building narcotics, 40 grand of my own money. I think my partner has 100 jesu his money, and, um, we were out 30 40 50 grand on a 30 unit building the other day. We actually were able to restructure and pull it out. And, uh, I got a buddy that's I think, like, 50 grand out of He's the minority owner. 50 grand out of pocket on eight unit Airbnb building. Um, like, awesome. Awesome building wants to be all said and done. But, you know, you start pushing that money out and, uh, you know, not only not getting paid, but you start to add it all up and you got multiple six figures out your your projects or other people doing it cannot get Harry. So I think you have to lead with revenue. I think riel business owners back into door there solutions by their problem. So I was on a private coaching call with Advisers Council, which Tim and Lee kind of run and a lot of other people involved in running it. But, you know, I was telling him our current problems are very similar to my problems 12 months ago is like we got all these bills and really good, really good overhead because you need that in the market that we were just in. And now the market switches. It's like, How do you keep paying your overhead? Because you don't want to just blow up a business working so your overhead while you create new revenue or different revenue? Because some things that were working aren't working. Tim was, you know, oversimplified is like just back into it. Like if you need more cash for, like, how would you get more cash flow today? And I usually say things less polished than a lot of those speakers. But my script for that is like you put a gun to my head, and I'm gonna make 10 grand today. I'm not doing, um and I think that's really powerful, you know? It

spk_0:   35:21
is it isn't. And I love that, you know, going back to what you just said. You know that sometimes problems make us create solutions, right? And what's funny about that is is as entrepreneurs and business owners, we should be thinking about those problems before they just come out of nowhere and slap us in the face. Right? But nobody could have predicted what we're currently going through with the Corona wires. Right? So what is what has kind of been that impact on both the multi family and the Airbnb side of things? For you has that

spk_1:   35:52
impact. You want to talk with technical pieces that Freddie and Fannie they're basically requiring anywhere from 6 to 18 months ish reserves on. You know, a lot of the loans be the storage apartments. Ah, you know, probably warehouse space. Any of that stuff seems like to retire in 6 to 18 months of betting on what market and what kind of asset you have their payments to themselves. Basically, which one makes me feel if you write like when many smart people in banks are saying, Hey, we don't even know if the big guys they're gonna pay us, right? You know, it made me at least kind of take a step back and evaluate the market. But so when we go to refire, that building 70 units and we're supposed to get, you know, 5 600 rand out, they're gonna hold 152 100 grand of that for themselves. So if free miss manage our money or our building that they can pay themselves for months, you either come out of a bottom of a market and be able to exit or just did not believe 12 months when they're not getting paid. So that is a unique difference that you gotta be underwriting. If you're getting to like new deals, you gotta be underwriting, assume that that's gonna be around even when your project's done or right, you're taking it on the front end of the construction longs to see a lot of those construction value. Add lungs, air 2345 years with the balloon. And, uh, you know, they're taking that same that same interest reserve on those as well. So now with the verifies, they take it for you. And obviously, if you're a good operator and have a good operator, Jake, joint Venture partners, you're paying your bill the whole time A year, they snap it right back off. So it's almost like a two to refi. Yep. Well, you just gotta be aware of what changed as far as that's

spk_0:   37:37
actually not Not too terrible of a bad thing, because if you think about it, you. But you said if you're a good operator and you're gonna pay your bills in 12 months, you're gonna get another pop.

spk_1:   37:47
Another pop. And again, if you follow me on his screen, or Facebook or Snapchat or whatever, like you give me a bunch of money that I don't need life. It's like a two tier. It's like a safety net for people. So, no, but usually I'm pretty good again. My money back working. I just liked with the traveling stuff. It's like I always tell my mileage. I like having my bank account. I think it got cut in half over the last 21 days, Like my operations account, because you pay a dollar bills and, like, you don't have the Airbnb coming in and we are pivoting. But, um, you know, it doesn't happen overnight. You gotta you know, some people work and somehow you're down man hours. Right? So, um, you know,

spk_0:   38:25
what are some of the pivots that you're making with Airbnb?

spk_1:   38:28
Yeah. So Airbnb just gets its teeth kicked in that door and where they don't trust that they're getting clean properly and all this kind of stuff. So, um, you know, I read a couple of things that if you're going to continue to operate as Airbnb, uh, units throughout this little virus or correct basis or whatever, that you want to change just some of the wording, like secluded, cleaned, professionally cleaned, like some stuff that we used to, Matt, you know, it's almost, like, so unsexy that I would never put it into the search bar. You know, you know the words that mattered before this is like, walkable too. Uh, what's 25th life? That's a popular street walking west six. Like these places where people know, like maybe the Browns stadium there, all the bars there are gonna be able to walk there. Um, downtown views all the stuff that used to be cool and sexy. Now it's like, you know, sparkling clean, this infected like all this shit. Like marketing one. No one but the other side of it,

spk_0:   39:28
right That was close to anybody.

spk_1:   39:32
Yeah. You love you have no neighbors, no foot. You safe? It was Ah, that was a little changed. I don't even think we did that much of that. Because I don't think that I think this is gonna get. And I don't want to go down this weird virus, ram, but this is gonna get a little worse before it gets a lot better, right? And, uh, I think what we're doing with the pivot is which makes more sense is that it just like bleeding this, You know that we are still getting Airbnb requests and stuff, but it's like, you know, we're going from 20 out of the 30 nights being booked at six. You know, it's a real head. Um, you know, we just reached out to some possibles and stuff like that. We buy a lot around the hospital because they're huge in Cleveland by a lot around stadiums in the bars, which those are obviously taking big, big hits. Um, you know, trying to get traveling nurses into the 123 month leases when they're gonna be helping out of the big hospitals or businessman. Or here's another thing people that are exposed to stuff essential workers that if they have some disposable income

spk_0:   40:33
Hey, Dad, that's working

spk_1:   40:36
in the hospital is a doctor. A lot of times they don't want to go home to their kids, and that's a sad world of right. They're gonna grab Airbnb for two months right around the clinic and be very diligent on when and how they see their kids so they don't get sick or they don't get them sick. They're coming in and out of essential or high risk areas. We've been reaching out to people and just trying to fulfill that need on what we're trying to do there because all our houses air furnished and what now is, you know, whatever Mark run is we use random eater dot com to kind of try to find that out really quickly. You know, if it's and you're out number 1000 bucks a month for a little three bedroom unfurnished. We got a three bedroom over there furnished. We usually charge like 1500. We're trying to get like 1.5 x will get that for three months. And then I think the cool thing is is we are very, very aware of being able to go back there. So I was on alive or podcasts and someone asked, I think was alive because there's life questions. Come on, guys. Like, have you considered, uh, you know, whatever section ater going back to 12 year lease is stuff that not because the returns are so good on Airbnb that I want that ability to pop right back in Not only because the returns are good when normal travels happening, but I think people are going to blow money when this thing is done. I think like sanity is taking a hit, right? Like, uh, you know, wonder list. That's, like huge for me. So daily lift this travel ban almost will be back in a while for 90 days. So I'm open that everyone else feels the same way. And I want those, like, 123 month leases to be They have a lot of flexibility. So when it gets the green light to go travel and have fun, spend money again that we're at the forefront of, you know, a CZ hard as we probably gonna hit that the tune three months that people didn't travel. I think those 23 months right after we're gonna see, like, almost no vacancy. So I want the flexibility there to take advantage of.

spk_0:   42:32
You know, it's weird because everybody talks about how this is gonna hit our economy and our we headed for a recession and things like that. But it's like think about how many people are in unemployment right now, right? Well, when the lights get turned back on the's cos we're gonna have to hire people back fast, eh? Yeah, exactly. It's

spk_1:   42:54
amount before the camera started recording were just talking about very similar numbers to the away, but a different reason and happiness from speed that it happened. So the speed that it happened that you said I think these companies are gonna have to rebound just fast, cause it's not like it's not like, you know, we're in the same kind of actual economic restraints that we were in a way like there's gonna be a lot of people that do ever money that want to get out of the house and stuff, like, you know, So I

spk_0:   43:23
mean, I just I'm looking at everything. I mean, I'm I'm talking about me Take it to like something that you and I both enjoy it. We both love sports, right? I mean, Howard of the NBA and NHL gonna respond to this and major league baseball, I mean, right. I mean, when when they turn the lights back on, it's gonna be just a rapid fire. We got to get the season's over with. We do the schedules, arenas. There gonna be a bit. I mean, if this all turns out to be, you know, something that can be contained and we go back to normal life. But travel was gonna pick right back up

spk_1:   43:57
by then. And I think sporting events like those ticket prices would be three acts like strolling on. You know, my gallery on my phone of, like all these games I went to when planes I was running right. Where is I saw him just sitting in the house like I can't wait. And I'm hoping, you know, for a lot of reasons. Economic boost. Um, around. You know, I just think that, like you people, you people are, you know, the final stage kind of animalistic. You put me through Wallace too long. I think it messes with a lot more than the economy. So I'm excited. Thio take advantage of that in the air. BBC also enjoy, you know, being a little more reflective of my own personal life like that. Things that especially my late twenties And now my early dirty is that a lot of people don't get to do and kind of be in the an asshole about it. Because I was life to me. And now trying to realize that, you know, you could be a little more respectful of that. Only I have an opportunity to do it. But like putting yourself in a position to continue to do that like you felt like it. This market to agree Good business models like, how would I ever get hurt. You know,

spk_0:   45:07
we all felt like Superman,

spk_1:   45:09
right? I mean, a rising tide floats all boats and right there some things now that I realized that I could still do financially, but no one will let me do it logistically. But if I don't continue to do the right logistical stuff business, there might be a time and day that I'm I'm not able to travel that I'm not able to pay, you know, from my parent's tough to fly somewhere to see me when I'm speaking, whatever that looks like in the look,

spk_0:   45:31
you and I both are big on having mentors and being a part of mastermind. You thought about multiple masterminds that you be there attended or you're a part of. And one of the questions I've always asked was Okay, you survived away. What do you think's gonna happen in the time being? Well, here's the reality. Every single person I talked to was wrong, Okay? No one said there and predicted there was gonna be a worldwide pandemic at Corn. Tina's all and shut us down. All right. No one predicted that, but it's what happened. And so now here we are in this unknown time No one was. It may be people were prepared for some kind of correction or slow down or whatever, but no one was prepared for this. And at this point time, Yeah, they look, we're both younger guys. I'm getting a little bit less younger as every day that goes by. But, you know, you know, you sit there and you're grateful for the opportunities that we've had to be able to do this, that we're gonna be able to come out the other side of this better for it. And I think everybody agrees that when we do come out the other side of this that our economy is gonna rise very quickly

spk_1:   46:36
from this. Yeah, I think I think it will. And I think that's just good for everyone. You know, when I was, uh, there's a brewery right up the street. I can't. It's like I was, You know, I go up there 23 times a week when it's open and they're still doing take out and grab some food. And like this big growler beer and trying to give the guy the biggest tip I could like just because, like much is like, you know my business getting hit like you're watching a bartender, Philip Prowler for you but no one else in the bar. It's like the writer zombie movie where it's like an apocalypse. Just you. In the bartender, there are only two people left. I give you know as much as I could on and he looked me an artist. It was completely grateful. But you just feel grateful that, you know, my industry is not human, but it's not shut down, right? I have the ability to create my own jobs on my own paychecks, which you know that that guy's at the mercy of the government right now. Absolutely CDC and I understand they're doing what they think is right. But like, man, it's it's tough to see other people struggle like this. Hey, guys,

spk_0:   47:36
look at the end of the day. I've been able to sell properties in, like, four different five different states since this started. I mean,

spk_1:   47:45
every blessed that we operate Stone, you know, is at

spk_0:   47:48
full price. I mean, it's not even like I'm selling them on discounts. So not really. A whole lot has changed in that regard for our company's yet, and I see a lot of people kind of hitting the panic button, and I'm right there with you, man. I'm grateful that we're going to do what we're doing because it, like you said, Man, there's people out there that are just at the mercy of this. There's nothing that they could do to support their families or

spk_1:   48:10
the nose. No, we're probably somewhat close to wrapping up, but I think a couple of things is like the residual is You know, you're guilty of this sometimes, like, you know, I would see like businesses are kind of like a plant. Sometimes it's over water and some underwater sometimes got into the sun. And, you know, I love the residual side and in the lifestyle freedom side. But, you know, I definitely either for good or bad reasons, I need the cash because you know, my plan needs some water or I'm just greedy wanted, wanna vacate to spend. You know, I'll take that whole sales check or whatever that looks like. And you know that that residual piece is what I think gets people in and out of this stuff. And, uh, also speaking on another big big reason that real estate or become your own boss from best in yourself was like even if they shut down real state like you can't be out showing selling houses and we're not gonna process title and or deeds or whatever that looks like, they never what? So that's right. But do If they did, you know I could virtual wholesale. Or I could get involved in some deal flow where I could work some, you know, I could scale my consulting piece, you know? So I feel blessed that, you know, and I feel very bad and try to do as much as I can for the local. You know, economy is like, I don't wear that many asked what my hair looks like Shit, because no one can cut hair. You know, I try to take well when I'm out, but I'm trying to look better when I'm out grabbing food now because they've been told they can't work, and I think that'll make you, you know, these guys that are entrepreneurs or investors or whatever. That's hopefully making people go harder when it opens up again because, like you want to be in a position where no one can shut you down, Duncan. Even if they do shut you down that your residual is so strong that it doesn't affect you, like maybe affects other people again. You know, with how great everything, Woz, I think sometimes we take advantage. Like, you know, you're kind of set your own hours and your own paychecks and stuff like that. I think it's made me, uh, more grateful. You know that when this goes back to normal that I need to structure some stuff and, you know, basically just not take it for granted as much, too. So definitely reflect ful. You know, it's clean

spk_0:   50:25
know about busy barbershops are gonna be when this is all over

spk_1:   50:28
with. Yeah, I'm thinking about I've had the same haircut, same style for, like, 34 years longer. And I'm thinking, like by the time this is done, I might have to switch it up to you so long. That would be a good time to transition. Like I got a different options out. But I've had hat songs like 56 days. So it's not even at, um

spk_0:   50:49
And, uh so, Yeah, I'm I'm pretty bald and, uh, my my kid came up to me yesterday and he goes, then are you trying to grow here? Might know it shits. Ah, there's nothing I could do about it, man.

spk_1:   51:04
That's That's, um it's a different. I actually was gonna try to get my barber to come or, uh, my hairdresser to come over. And she's like, I don't wanna get sick on something. I'll take a temperature. You can cut your roundhouse, but do it outside. I don't care like just I need something done right now, but it's a different world. I think it a lot of a lot of the high level guys, you know, Um, and now I'm kind of going back to something. 30 minutes ago, you talked about Mark Evans being a crazy archenemy. I could see that there's people have unique abilities like Tim is so locked in the multi family. Want to see your families later? Laser focus. I love having you as a mentor because that shows you how powerful at it. Yeah, to me is like, not that he's not laser focused, but he's so knowledgeable in so much shit that when I bring him a problem or I sit down with them. We just like one on one. It is like he's talking to you about this is your model. How do you scale it and sell it as a business? He doesn't see real estate as a business. He sees it almost kind of like a headache. I know he makes a lot of money on it, but he likes to get in those fields that you could like, package this up, sell it. So I just think that's that's kind of powerful in this, Like, whole thing has made me really conscious of like what I need to do when everything kicks back up. What a real exit strategies are my producing things that I could sell it like 455 x 10 x like his email marketing business for a mind eating things that maybe aren't just headaches that get you some cash like, I think it puts it in retrospect of like, What are we doing? We get out of this. So if anything else ever happens, Iris, not war. Whatever, uh, why am I in a better spot next time that I was, you know,

spk_0:   52:45
absolutely, Man. Well, on that note, there's no better time for us to wrap this up. I appreciate you so much for taking the time. And, you know, I know you're putting out content more regularly and tryingto, you know, as as best, you possibly can get people, you know, educated in this And, uh, you know, it is weird times. I'm happy that, you know, you're gonna be able to come out better on the other side of this. I appreciate you taking the time, Guys, if you're listening on iTunes, make sure you give us a five star review. If you want to give us less stars than five, give them somebody else. We only accept five star reviews watching on YouTube. Make sure you have the stones up and hit the subscribe button. We'll talk to you guys next week. Thanks so much for listening to the titanium vault with your host R J base that there are more imposing. To stamp the date, visit www dot podcast on the titanium vault dot com and on facebook dot com slash the titanium vault. If you enjoyed the episode, please rate in review and we'll catch you next time. On that time