Getting to the point of action is the hardest thing for most people, especially when it comes to investing. It takes a certain tolerance for risks and the strength to overcome the allure of safety and comfortability that comes with a regular 9 to 5. Arguably, investing may not seem like it’s for everyone. But once you’re able to figure out the right reasons, your deeper purpose, that’s when you can start appreciating the benefits that real estate investing can offer towards the pursuit of your goals. Take it from real estate experts like Dave Holman! Dave’s journey as an entrepreneur did not start in real estate. Fresh out of college, he made a major investment in a retail chain in Bolivia, The Spitting Llama Bookstore and Outfitter, with the hopes of improving the country's social environment and ecology. Five years later, Dave entered the world of real estate investing and brokering with a similar mission: to help benefit residents, investors, and the planet. Dave now co-owns 94 rental units in Southern Maine, enjoying his time working with investors, owners, residents, and contractors to help with energy efficiency, syndications, and property management. All of these were made possible when Dave figured out his true purpose. He wanted to get out of the rat race, build wealth, and be in a position that impacts communities. He believed in the potential of REI and that’s what got him to his success today. Interested in pursuing your goals through real estate investing? Tune in to learn more about the hottest and most relevant information on real estate investing!
Getting to the point of action is the hardest thing for most people, especially when it comes to investing.
It takes a certain tolerance for risks and the strength to overcome the allure of safety and comfortability that comes with a regular 9 to 5.
Arguably, investing may not seem like it’s for everyone. But once you’re able to figure out the right reasons, your deeper purpose, that’s when you can start appreciating the benefits that real estate investing can offer towards the pursuit of your goals.
Take it from real estate experts like Dave Holman!
Dave’s journey as an entrepreneur did not start in real estate. Fresh out of college, he made a major investment in a retail chain in Bolivia, The Spitting Llama Bookstore and Outfitter,
with the hopes of improving the country's social environment and ecology.
Five years later, Dave entered the world of real estate investing and brokering with a similar mission: to help benefit residents, investors, and the planet.
Dave now co-owns 94 rental units in Southern Maine, enjoying his time working with investors,
owners, residents, and contractors to help with energy efficiency, syndications, and property
management.
All of these were made possible when Dave figured out his true purpose. He wanted to get out of the rat race, build wealth, and be in a position that impacts communities. He believed in the potential of REI and that’s what got him to his success today.
Interested in pursuing your goals through real estate investing?
Tune in to learn more about the hottest and most relevant information on real estate investing!
Thank you all for listening and I will see you on the next episode. When you are ready head on over to https://billyalvaro.com or go grab your tools to help you at https://billyssecrets.com
[00:00:00] BILLY: What's going on everybody. This is Billy. Alvara the unstoppable BA and this is unstoppable REI wealth episode 51. And today I'm interviewing real estate expert. Dave Holman from all the way, the hell up in Maine. This dude has only been investing for about eight years. He has a portfolio of over 150 units under management. His whole thing, not fixing flip, not wholesale. He focuses on one method to build wealth his net worth and that is buying and holding, went from single family assets to apartment buildings over to mixed use. Now he's in commercial and his next venture. He sought in a build-out apartment buildings on a national level. You're not going to want to miss this interview as a young guy, 30 years old, and brings a lot of energy and a really good speaker. I hope you enjoy.
[00:00:45] Welcome to unstoppable real estate investing wealth. My name is Billy Alvaro, AKA the unstoppable VA former billion dollar mortgage banker gone bankrupt turned professional real estate investor where each week you'll [00:01:00] learn the tools, strategies, systems, and secrets myself and other highly successful real estate investing entrepreneurs use to start, grow and scale their businesses, creating massive profits and how you can too. And we'll teach you how to put those profits to work. So you no longer have to get ready to finally experience financial freedom and generational wealth. Now let's get started.
[00:01:25] Welcome back everybody toanother episode of unstoppable REI, wealth I'm your host, Billy Alvaro, the unstoppable BA and I'm here today with a special guest, Dave Holman Dave lives over in Maine, all the way up in the right-hand corner of the united states got a lot of wholesalers that come on the show, a lot of fixing flippers that come to the show, but we all know the wealth is really built when you buy? And you hold for cashflow and Dave, you have a great story. You have a nice portfolio. So I want to get right into who you are. And I want to get into your story. And then what you actually do with real estate investing.
[00:01:55] DAVE: Absolutely. Yeah. Thanks for having me here. Appreciate it.
[00:01:58] BILLY: Sure man Clean cut and [00:02:00] everything you look different.
[00:02:01] DAVE: I like to change my disguise, you know, throws people off the trail every now and then. But yeah, I grew up here in Maine and got to travel the world, you know, when I was younger, but ended up coming back, you know, cause it's a place I love and never thought about real estate investing, you know, until maybe my late twenties. And even then.
[00:02:19] BILLY: College Dave? Were you a college guy?
[00:02:22] DAVE: Did. I went to college, you know, I think it's not right for everyone, but for those that it makes sense for they should do it. You know, I think it's a great networking opportunity. People underestimate that, you know, I think all the knowledge in books you can learn, you know, on YouTube and anywhere else or through those books. But I think it's the relationships, you know, that's one of the key lessons in my life. Uh, my seventh grade teacher taught me this. He said, it's not what, you know, it's who you know yeah, and I think that's really true. So yeah, I went to Carleton college out in Minnesota. Uh, had a great cultural experience out there. Learned a little bit about architecture, green building real estate. Um, that [00:03:00] kinda got my juices flowing. Thinking about it more from an environmental perspective. I didn't really know anything about investing at that point, but you know, just started to scratch the surface of learning about economics at the end of my time there again, I had kind of grown up, not, I worked a lot of jobs. I had been on the wrong end of the economic spectrum. I was a great dishwasher making five bucks an hour, but didn't really understand wealth building real estate, anything like that until much later in life.
[00:03:26] BILLY: So between, so, so how did you actually get started with real estate investing? What was the breakthrough? The aha moment, like how did that happen?
[00:03:34] DAVE: Yeah, it, it, there was no one moment, I guess it was all gradual. I started a chain of camping stores down in south America. Like most of your listeners have as well, and just kidding and ended up falling in love with a Bolivian woman. So I've gone back down to Bolivia to see where that was going. Ended up spending four years there, starting this chain of stores together. And doing that, it kind of dawned on me. I was like, you know, this rent thing that these landlords are collecting is [00:04:00] pretty sweet gig. only they have to do nothing and we'd get to do, you know, almost everything. So it's been a really good experience getting to do that. And down there,
[00:04:11] So let me tell you, you have had this entrepreneurial
[00:04:13] BILLY: bug in you for awhile. I mean, you don't just go to Bolivia and start a, a chain of stores. So you had this entrepreneurism that I guess has been in you since a kid?
[00:04:23] DAVE: Somewhat. Yeah. I think entrepreneurism is a little bit more innate than plot you know? So I think that is one of those things that you sort of have, or you don't, and some wonderful people are just more happy as a worker bee, you know, working with someone else's team. And that might be some of your listeners that, you know, but that might be fine. And so some people. They want to start things. They want to be involved in leadership and do their own thing. And that's definitely something I feel. And it gives me a lot of pleasure when I can create something that benefits other people, both the team that's helping me create it. And the people that are using that [00:05:00] product or service. So it's been a lot of fun to be an entrepreneur challenging, especially, you know, in a, in a developing country like Bolivia, where there's a very weird mix of like no rules. And way too many rules. And it's very confusing because like there's tons and tons of weird laws and rules, but like no one follows them. And so it's like, which one do you follow? And as you grow, you kind of have to follow more of them. And you know, it's true similar to some extent in the U S but I actually love our business environment here because it's shockingly simple to start a business. I mean, you literally just fill out a piece of paper, you mail a check to your, you know, secretary of state and you have an LLC and you're like, whoa, I'm in business and you can start, you know, buying and selling things. And the rules are pretty simple. You know, if you're starting on a, on a basic thing, especially like real estate. So I think when I was younger, I thought of it as a very intimidating, obscure thing. Ha you know, these business people, they must have some secret knowledge or, or, you know, skill sets or, you know, who's allowed to do that. And as you grow up, you realize, [00:06:00] oh, you know, I've started like 20 different LLCs now. And, and it's, it's easy. It's not a big.
[00:06:04] BILLY: Yeah. You know, there's a lot of people that are listening that start the LLCs to start flipping properties, but they actually never do anything thereafter they start a company, but they actually never take the real action to get the work done, which is driving in the business.
[00:06:18] DAVE: Exactly. Yeah. Having, having your business card is nice, but you have to do business with it. Not just, you know, have your face on it or whatever. Yeah. I think, you know, getting to the point of actual. Is the hardest thing for a lot of people. And that I think really takes a tolerance for, for some kind of risk. And we're all taught throughout life to avoid risk and to do the safe thing and to stay in the safe job. And I had those same golden handcuffs, you know, I, I worked in non-profit fundraising and leadership for nine years and it started the real estate track at the same time, first passively, and then actively. And it got to the point where I had 32 units and I was still working a full-time day job. I kind of got to the point where it's like, all right, I need to pick a horse. You know, [00:07:00] you can't ride two horses with one, uh, behind, I will say you don't know how much bleeping we do on the show, but.
[00:07:07] BILLY: Nah I'm a New Yorker, curse away man.
[00:07:10] DAVE: I can't ride two horses with one ass, Billy.
[00:07:13] BILLY: Exactly, keep it real.
[00:07:15] DAVE: Yeah. And at a certain point, you're, you know, if you have a successful side hustle, which is a great way to start, it's a low risk way to get started, you know, get your, get your feet wet, get your foot in the door. But at a certain point, I kind of realized from listening to shows like yours, I think I'm costing myself money by sticking with my golden handcuffs day job that has great healthcare and great benefits because the ceiling is very limited you know, it's like, okay, I can make 60 something grand every year for the, for my whole life, you know? And I can maybe get up a little higher incrementally 5% this year, 3% that year, you know, but that's not going to transform your situation until you're basically ready to die. So
[00:07:55] BILLY: you actually did it the smart way, Dave, cause there's two different frames of thoughts with jumping in [00:08:00] and starting any type of business, whether it be real estate or something else. Right. There's the one mindset which I believe in. That you know, you start your side hustle, you keep your day job. And then once your side hustle becomes to a point where you're actually making as much or a little bit more money than your day job, drop the day job, and then go all in with your passion, which is whatever business you're going into. And then on the other, the flip side, there's those people who are like, look, I'm going a hundred percent all the way in on entrepreneurs. And whether it's flipping houses, starting a business, fuck the job. I'm going to focus a hundred percent. My back's against the wall. I have no choice. What to produce and get the results. And so depending on the person's personality, either one can work. The bottom line is you just have to go out there and do the work and get started and not have the fear. I just go make something happen. You sit back in the sidelines and waiting for it to happen and dreaming about it and wishing for it. You're going to be doing that to you. 60 70 years old, one day, you're gonna be dropping dead like what the hell did I do to myself
[00:08:54] DAVE: yeah, that's a great point. And I think in my own life, I followed both of those different paths. When I started the [00:09:00] stores in Bolivia, I spent my life savings. I had no cushion backup plan. There was no extra parachute. I just did it knowing that I could always work a different job if this failed, you know? And so I was very, uh, willing to kind of take a high risk. Whereas later, the reason I really got started in real estate investing is when my wife got pregnant with our first child. And I was like, you know, this nonprofit thing is very non-profitable for me. And at certain points I need, I need to be able to provide more for my family and have more opportunities in life. And I want to give back more to other people, you know, I'm in this giving industry, but I don't have much to give myself. And that motivated me
[00:09:36] BILLY: What age range about that time. How old were you when you decided like wife's having a baby? I got to start full-time
[00:09:43] DAVE: 31
[00:09:44] BILLY: 31 years old, How old are you now?
[00:09:47] DAVE: 38.
[00:09:48] BILLY: So not too old
[00:09:49] DAVE: No, th that's the beauty of real estate is you can start very slow and you can have, you know, geometric growth. You can have exponential growth in real [00:10:00] estate. You don't have to cause. My original plan was like, oh, I'll buy like one unit per year. You know, one house per year. And then in 10 or 20 years, I'll, I'll be kind of passively wealthy, et cetera. No, you can double the amount you have each year, each month, if you want to. And that can really allow you to scale up quickly. Uh, it's not right for everyone. And I think there, there are safe ways to scale and risky ways, but ultimately that is the path that I chose was using leverage, uh, working with investors, uh, scaling up quicker. You know, if you don't start with money of your own life, like I didn't really, you know, you need to find friends, family, you know, who believe in you who want to partner with you to do something together.
[00:10:38] BILLY: Yeah I want to get into thatthe whole syndication side raising capital. So, so when you got started doing this, your whole. full process, your strategy was buy and hold we practicing the birth strategy. Did you flip it all? or you went right into buy and hold?.
[00:10:52] DAVE: Yeah, it's a great question. I've never flipped. I've never burned. I've always bought and hold, which is part of why Billy, when I was quitting my day job, [00:11:00] even though I owned 32 units, I did not have enough passive income to live on. I was maybe skimming like a thousand bucks a month off the top of that, but the vast majority was getting reinvested in improvements to those properties and managing those properties. Getting rents up. I was making remodeling apartments and that kind of thing. So I didn't have a big cushion to fall back on. What I did is I got my real estate brokers license because I didn't want to just stop working. I needed transactional income. I wasn't ready to rely on passive income yet. And I thought, you know, being a broker, I think I'll be pretty good at. Um, I have a lot of knowledge that I've built up, you know, through my own investing. I love the broker that I've been working with and he's invited me to join his brokerage with him. And I learned so much helping other people, you know, make their investments as well. So that was sort of the bridge that allowed me to have enough income. To get through, you know, to a place where I am now, where yes, I have enough passive income. I also have plenty of active income. And for a little while, I'm going to, I'm going to ride two horses with one [00:12:00] ass.
[00:12:01] BILLY: So your active is all coming in from your brokerage company. That's the active income.
[00:12:05] DAVE: Yup. As a real estate broker. So, and it's nice. Cause when I buy an investment for my own portfolio or for investors or that kind of thing, I'm getting a commission on it, but I'm then managing it and keeping it afterwards, which is very different from what most brokers are doing. They're involved in the transaction and often don't have the experience of what comes after the transaction. So I always tell people starting out, if you can find a broker who owns their own rentals, even just a couple units. I think they'll have a little insight into the, the next steps that a transactional kind of broker is not necessarily going to know.
[00:12:40] BILLY: Yeah. Good points. So the strategy you have is you buy and you hold and that's it. You don't liquidate, you you don't flip anything.
[00:12:47] DAVE: It's really boring and it's really effective. So what, the way I look at it is that, you know, when you buy something and you start building up equity in that property, you know, your loan to value ratio is going down over time. You know, you [00:13:00] start at 80%, perhaps if you're working with a bank and you might pretty quickly go down to 60 or 50%, if you just manage that building a little better than the last manager you're driving, building value. You're, you're forcing appreciation. You can do remodeling as well, things like that, but if you sell the building and you, you are currently at a 50% loan to value ratio, great. You get to capture the whole 50 other 50% of value that you built there. And you can go reinvest it somewhere else, but you're paying brokers like me for the privilege. You might pay five or 6%, you know, broker commission. If you're doing it with a broker, you're going to pay taxes, you're going to pay a ton of capital gains taxes. You know, there's a lot of fees that come along with that. If you tap all a hundred percent, you know, if that property, if you sell it, but if you refinance it after, you know, two years, five years, you know, whenever you basically don't get whacked with a big penalty for refinancing, you can tap 75 or 80% of the building values. So you're still going. You know, if you're down to 50% LTV, you might get 30% back [00:14:00] instead of the full 50%, but you're getting it. Tax-free number one, and you get to keep the freaking building. You get to keep the property. You don't have to get rid of it and you can do it again in five years. So
[00:14:11] BILLY: You get the cashflow you get the depreciation, you get the tax and the tax free cash coming out. I mean, it's a win all the way around.
[00:14:16] DAVE: I think so. I think the shiny object is the 10 31 exchange. And to me that is one of the most dangerous and deceptive elements of real estate is people think, oh, I can sell now and I can go scale up and I can trade my 4 unit dog gone or eight unit. Not realizing that like they're, they're, they're kind of hidden costs to doing that. And one of the ones I like to point out to people is the management cost. So once you know, once you buy a building, the first, like for me, six to 12 months are very management intensive. You're meeting the tenants, you're learning the building. You're getting utilities figured out you're remodeling, you're doing all this stuff to kind of reach cruising altitude. And once you reach cruising altitude, you're a hundred percent occupied. You've got a good tenant mix. You've got the [00:15:00] buildings, you know, mechanical issues figured out. It's not that hard at that point. You've reached this kind of Nirvana and you can stay there for decades if you want to. But again, the temptation is like, Ooh, shiny object. Now that I've reached the easy stage, I'm just going to trade it in and go. To the hard stage. Again, and you know unknown buildings with unknown tenants can have a lot of pitfalls. You know, the, the past managers don't always screen them for felonies. So you don't always know what you're getting into, uh, when you buy something new. And I think it's kind of better to stick with what, you know, versus something new. If there all of other things being equal.
[00:15:34] BILLY: Yeah, everybody has their own strategies. I have some guys, they just, they bank on and they, their whole plays 10 31. I have other guys like you, like, look, I buy, I stick with it. I refinance. And I'm just going to stay status quo for the next 30 years and then liquidate the whole portfolio when I'm like 70 years old. So let's get into it. How do you acquire your properties are most of your properties online? MLS. or you going off market?
[00:15:56] DAVE: It's a really funny combination, Billy of a [00:16:00] few places, you know, one is obviously off market. I think that is a really fertile ground for real estate investors. I don't have any big lead fumble. I'm all relationship-based. So I just have brokers or friends or other people who will call me because they know that I buy things and they know they might get a commission or they might, you know, help in some way. Um, and it's like, you know, maybe a third of the things I find that. Uh, third might be things that hit the market right away. And I think it's a great deal under priced and I might make an offer. That's actually the worst way to buy. I find that's not great usually. And another great way that I think is totally overlooked are things that have languished on the MLS for a year or two or three and everyone has passed them over because based on the listing, they look terrible. The photos are bad, the numbers are bad, you know, there's just issues. And a lot of times when you go and visit that property, you might realize like, oh wait a minute The numbers, like the way they've configured it and conceived it or of it are really [00:17:00] bad. But what if you make this an office building instead of, you know, a restaurant or, you know, whatever it may be. But if you think about it a little differently, you can be like, oh, whoa, wait a minute. This is actually half price. It's not half price the way they've priced it. But after a year on the market, they're going to be pretty desperate. They might do a hundred percent seller financing for a lower price. They might take a third off of the boost price right now, you know? So those are really interesting opportunities that people often completely dismiss that I think are worth looking at.
[00:17:30] BILLY: Good thinking right there. But yeah, that's a good point. That's a golden nugget right there. You know, having the, the leads that are sitting on the MLS for prolonged period of time. If you make the right offer for those people, they could be in a desperate situation. Just be like, look, I want to help. And we've gotten properties. I'm not a big MLS guy buying off the MLS, but the ones we have, they've always been traded at a discount because they were sitting for six months, a year, year and a half, or there was some issue with it that other investors looked at. And like, I'm not going to get involved once you peel back and go in [00:18:00] and see what the asset really looks like. You can maybe make a good deal out of it.
[00:18:04] DAVE: Exactly. Yeah. It depends on what the issue is. There's some where like, oh, I found the issue and I don't want to get involved. So you shouldn't just assume that anything is a good thing, but there are often a lot of opportunities. You know, another interesting opportunity. This is more for like mid stage or more advanced investors or just people who have a big cushion or backup is that buildings that are fully or mostly Vacant can often trade at a huge discount to what they would have traded for sold for. This is what I mean if they were fully occupied. And so you as a manager, need to look at that and say, wait, can I fill this? Can I get some decent market rents in this building? How quickly can I do that? Can I tolerate six or 12 months of vacancy or low-income while we're doing that? And if you can. Then you can get a building for half price and, you know, either flip it, if you want to, or refinance out of it, out of the cash you put into it is what I mean after a [00:19:00] year or something like that.
[00:19:00] BILLY: Yeah. I agree. I think the repositioning and value, it's this big money in those places, really big money.
[00:19:05] DAVE: Big money and big benefits for the community. You know, you're, you're looking at a building that is not at its highest and best use. It's mostly vacant. And if you can put that thing to use and make it safe and comfortable for people there, you're, you're doing a great thing with your investment. So I think that's what. Way to, you know, position yourself rather than just a quick transactional mindset. When you're transactional, you're selling your time for money. And again, that's what we want to escape. If you're trying to escape the rat race, don't think of flipping or wholesaling necessarily as, as the best way to do it, unless you're building a big business doing that, that you can later step back from, then it can become passive income later on. But you know, if you're in there swinging hammers, Living off each transaction. You're still basically paycheck to paycheck. It's just that your paychecks added a zero or two to each one. and Now they're spaced out three to six months.
[00:19:58] BILLY: Yeah, I agree. I see a lot of [00:20:00] guys that we sell to because we have a real estate investment business that wholesales that renovates rental portfolio. And I'm basically removed but a lot of the guys that I see that pay us a high trade amount for the properties. They're usually contract. That use user own money. And they're really just giving themselves another deal, which is another job right there. Just the daily deal we're making there X amount of dollars at the end of the year. And they're really, they're really paying themselves a few dollars an hour to me, the writing of these parents, but to them, they keep themselves. In real estate, there's a lot of opportunities to buy yourself a job. And sometimes that's how you have to kind of start, but you need to have the vision get out of that phase because that's a lot of people stay there and I see them in their, in their later stages of life and that's all they ever did. And you know, if they're happy doing that great, but it's not a way to build wealth. So Dave, let's get into how you analyze a property to see if it's a good deal. Now, before I ask that, are you a single family guy or multi-family or combination?
[00:20:56] DAVE: Uh, a combination. I started in single-family and I've moved to [00:21:00] multifamily. And then I moved to mixed use and commercial, which is a whole other realm that I think is a great pond to fish in because the single family pond is the most competitive. Anyone can do it. It's very intuitive, simple, easy prices are relatively low. You're going to have a ton of competition and that's, it's harder to find good deals. It's harder to find bad. We mispriced. Multifamily is a little more complicated, but there's still a lot of competition, especially in a hot real estate market. Like now, you know, that's not an easy pond to fish in either, whereas mixed use and commercial. There's not a lot of players in those markets. You know, it's, it's much smaller amount of competition and, and it's a little easier, I think, to find good assets there. So I kind of progressed. You know, through that chain. And I would still look at any one of those, if it's in the right location, like something that abuts one of my properties, I have this like monopoly problem where it's like, well, if it's a next door neighbor property, I should buy it because, you know, put all the snowplow in one place. And there's certain efficiencies of management and so forth. But, uh, I, I [00:22:00] try to be opportunistic. I think if you lock yourself into, like, I only do single family, you're going to miss this amazing duplex deal you know right next door or whatever it may be. If you only do multi you're going to miss this great mixed use building. That's 90% residential, but that one commercial unit made you turn it down because you think it's going to make your head explode. And it's not, the leases are the same idea. You know, they're slightly different. If it's tripled
[00:22:23] BILLY: It depends on how you analyze, how do you go about analytical problems?
[00:22:26] DAVE: Yep. Um, first to me is going to be the location. Uh, where is it? Is it in the path of progress? Is it in a great kind of well-established downtown or is this not so great in area and area that might not change or an area that's very dependent on one source of employment or one thing? How's the school system, you know, so I look at a little bit more of the intangibles before I would even look at the numbers. Then when I'm looking at the numbers, the most important thing. It's not the asset price, you know, forget about the price, like cover it up. Don't look at it, look at the rents and look at the [00:23:00] expenses. You know, cause if you're an investor, you need to be thinking about the profit, the building makes and the income, the cashflow it's going to generate. And that's where you can find good deals. If you see that the rents are way under market and it's priced based on those rents, not the actual real market rents. Then you need to be ready to strike, you know, you may have a good deal on your hands. Whereas brokers will often do the opposite. They'll have terrible rents and they'll price it as if they had market rents and they'll say, okay, you go get it up to market. It's like, yeah. I don't like that, you know, only if it's a great location that kind of justifies, you know, quote unquote overpaying, you know, is that something I would consider? So I really look at the numbers of it and ultimately I want to be able to have a good cash on cash return, which to me, you know, will be anywhere from eight to 20 or 30 percent. You know, year over year, you know, I would only pay the 8% if the building is just a crown Juul, brick building on main street kind of thing, great asset, everything [00:24:00] else. I want to be able to get it in that, you know, 12, 15% range, if it's not as great of a property, you know, in a different kind of area. But those are, you know, prices from a tertiary market like Maine. If you're in, you know, New York or San Francisco, you're going to be looking at a lot lower return. So it depends on what your, what, you know, what pond your fishing in.
[00:24:18] BILLY: Yeah. Yeah, for sure. as you look at the cashflow. Is there a certain number you look forward to achieve on a per deal basis? Do you have a formula that utilize when you're looking at the at the cash flows?
[00:24:29] DAVE: No, like I said, cash on cash to me is the most important um the cap rate, the price, you know, all of those are easily manipulated by brokers and sellers. So, you know, another, I guess nugget I'll put in here is just always assume that the numbers you're given are wrong. You don't need to assume that it's an intentional malicious, uh, reason that they're wrong but maybe they're outdated. Maybe they made a mistake. You know, maybe so many times we'll buy a building. And the rent a tenant is paying is not the rent in their [00:25:00] lease. You know, usually because the landlord forgot to make the annual increases that the lease called for you'd be amazed at how many lazy landlords there are out there. You know, cheat themselves of money even after the tenants agreed to pay it. So, you know, I think looking at leases is a really key piece of it. I don't have a magic number, you know, I don't have like, oh, every single family needs to net me 200 bucks a month or, you know, that kind of thing. And I think the more rigid. And black and white, you make it? Yes, it's a mechanical kind of system, but that's just not me. I don't like being mechanical and robotic, you know, I like kind of looking at each property as something like, would I live there? Do I like this area? Do I want to be there? I'm not a typical investor who just, you know, is willing to like blindly send money out to get chase the highest return. Because I think oftentimes, you know, if you just assume that, oh, I have to invest in the south because that's where the best returns are nationally. Or I have to. We're the highest population growth is occurring. Yeah. Guess who else has that idea? Everybody. [00:26:00] And the returns are not going to necessarily be as golden as you might find right. In your own backyard, which you know, better than anyone. And that is where you might have a competitive advantage, even if it's not the south of the Midwest.
[00:26:11] BILLY: alright So this is good. All good information. So now I want you to walk us through, you found the property, did your analysis for these buying holes. How are you going about funding them? What's your strategy for taking them down the finance life
[00:26:23] DAVE: yeah, I have a couple of different options. Um, if they're big enough, you know, and right now in the one to 15 million range, I work with investors. So I'll find a good deal. I'll put that deal under contract. And then I'll go out to my investor list and say, Hey guys, I've analyzed this deal. We've got it all figured out. Or so we think, you know, I think for investors, it's going to generate about a 15%. You know, IRR, which means internal rate of return, basically your cashflow plus your appreciation. So one might be 7%. The other might be 8% in our estimate. So over the life of the project, we think you're going to make 15%. What do you want to invest [00:27:00] in this? Because we're closing in 45 days and you know, we need to raise a million dollars or something and people will put in their different chunks. You know, we send out, uh, you know, offering memorandum a legal document. They can sign on to, um, and they become part owners of the building with me. So that's the way I would buy bigger things right now for, for a few smaller things that I might buy in my own portfolio. You know, I would either use my own money and I am typically now able to get some seller financing from sellers. Cause again, I'm either finding sellers that are willing to do that or assets that have languished long enough that that's a price they're willing to pay. And I can get my down payment down from 20% down to five or 10. With a bank, which just makes your, your own cash goes so much further. I don't advise overleveraging unless you have big, uh, reserves. So I have a big liquid cash reserve that I can plug any hole with. And so for me, 90 or 95% leverage is not necessarily as dangerous as it would've been for Dave five years ago, who did not have a big cash [00:28:00] cushion to fall back on and should not have been overleveraging properties because then if something goes wrong and you don't have a cash. cushion boom, you know, bankruptcy, your credit score goes down. You're giving up the property for closure. I mean, there's all kinds of problems that can come from kind of getting out over your skis. But now, you know, when I'm buying for myself, I am looking for opportunities. Where can I put a little less down if possible, or is it just a good enough property? And I have enough reserve that I can put the 20% down and make that all work because the 20% very quickly. Gets reduced as you increase the value of the property. So what was 20% loan to value? If you start managing it well and remodeling it, getting the value up becomes 10%. So that's a nice feature of value. at realistate.
[00:28:43] BILLY: I love it. How many units do you have now on the management?
[00:28:46] DAVE: About 150. Most of which are ones that I'm a co-owner of, but units is a little deceptive because one of those is a law firm. That's got, you know, 12,000 square feet and they pay, you know, five figures a month in rent, you know, another or [00:29:00] others or big restaurants or offices. So it's a mix of things. It's about two thirds residents. One third commercial, but the commercial stuff's fun. Cause it's very different. It's, it's really neat. And even some of the residential is different. We have, you know, little tiny, 200 square foot studio apartments and buildings from the 17 hundreds. And we've got a palatial 3000 square foot luxury apartment in another building. And we didn't build a leader of those. And I wouldn't necessarily recommend either of those sizes, but what you inherit and what you get can make for some interesting places
[00:29:32] BILLY: so now this is good. Dave, talk to the listeners about property management. Is it house? Is it, are you subbing it out to somebody else? And what does that whole process look like?
[00:29:42] DAVE: Yeah. Great, great question. You can be successful doing either one or you can fail doing either one and it's really all up to you. So you need to always, always, always manage the manager. No matter if you're doing it yourself or doing it with a third party. Um, you know, I've chosen to do it myself, which at first command, I was [00:30:00] literally going and setting mousetraps and fixing floors and doing physical things myself. Now I've, I've started my own company, Katahdin property management, you know, we have five employees and my business partner, you know, so we're working as a team. I'm not directly managing more than two units right now just to keep my skin in the game a little bit. But I think, you know, self-managing has a lot of advantages. If you have that kind of entrepreneurial mindset and you like. The risk management being directly in your hands, because I started with third parties. I had one that I was with for about a year and it was just not working. I was getting C and D grades and, um, I want to be an, a student, you know, so I had to switch, I moved on to what I thought was a professional management company that was going to be much better turned out nah again, I don't feel like they're filling the units fast enough. They're not doing the bookkeeping. Right. There's just issues here that I don't want to tolerate. And I knew that starting your own management company again from shows like yours, that is a great route for a lot of people. And so that's what I did with my partner, uh, from business school know, I said, Hey, you don't want a job. I think I have enough units to kind of make [00:31:00] this a job. If you want to come manage them with me, I'll give you all the profit from it. If you do the work. And you know, after that, we'll build a business and we can start splitting profits as we grow. But that, to me, it's about risk management property management it's not a profit source. You know, you shouldn't be trying to like, you know, become a millionaire through property management, per se. To me, it's all about the control that we have over our investments to make the, put the right tenants in there to screen, you know, the Dickens out of them and make sure that we're building a great community in these buildings that is going to help the rents thrive and the buildings thrive because if you're just letting any old person in there, you know, watch out, uh, it's not always going to go the way you want, or if your third-party manager is not treating your portfolio like a top priority, it's going to languish and you're going to under perform.
[00:31:47] BILLY: I mean, they have so many different people that they're dealing with. They could give you the Speal but, you know, to your experience, same as mine. They just don't give you that level of professionalism that's really needed. And a lot of guys that have rental portfolios after [00:32:00] over years, like, look, I'm done. I'm just going to create my own, my own management company, hire my own team and do it myself because I'm going to best serve myself better than anybody else out there.
[00:32:09] DAVE: Exactly and that way we're still gonna make mistakes. You know, we're not always going to get a grades, but that way, at least it's my fault. I know whose fault it is, you know, I can't blame it on anyone else. And I, I prefer that feeling. I'd rather be the one to blame, you know, for when things go wrong or if we haven't performed the way we should, because then it's on me to fix it. You know, whereas again, if you're in a third party, I mean, you're just, you can only. Push the horse so fast and, and you don't have control over that. So, but, you know, I know plenty of successful investors that work with great third-party management companies and that works for them. So I don't want to be on here and just bash the whole concept, you know, laterally as much as you have to watch them and you have to be in communication with them. You don't, can't let a month or even a week go by where you're not in touch with them, figuring out what's going on and just making sure that they're doing what you need them to do.
[00:32:55] BILLY: Yeah. So, Dave, what's next for you, man? Like what do you, where do you see yourself in the next five years of this whole [00:33:00] real estate thing? Five, 10 years out.
[00:33:01] DAVE: I want to build buildings that are going to be around 500 years from now and are going to be great places to live for the next 500 years. So we're starting our first new construction project. It's going to be very sort of tip of the spear innovative, you know, with energy conservation. With tons of natural light balconies, we're going to be doing some cool things, you know, for people. And that to me is exciting because up to now my portfolio I've described it as all fixing other people's mistakes, but now I get to make my own. Again, it's a similar kind of trajectory. So, you know, we have a huge housing housing shortage in the United States, at large. We've not been building the number of units required. That's why all my fellow millennials are living in our parents' basement. You know, we just, the supply and demand is out of this. You know, why are places so high lack of supply? I mean, very, very simple that, and, you know, federal reserve money printing, which we can get into later, but your reality is that we need to build more housing in the places that are going to be thriving in the future, which I think is a little [00:34:00] deceptive. And I'm not convinced all the places that are really hot right now are going to be really hot 10, 20, 30 years from now. Cause I think some of them are driven by. Temporary tax incentives, not permanent kind of structural factors, but be that as it may, regardless of what state you're in, it's almost guaranteed that there needs to be more housing. So that's an exciting opportunity, but it's slower. It's harder. And it's riskier quite frankly.
[00:34:23] BILLY: So do you have a background in building or no?
[00:34:26] DAVE: Nope.
[00:34:27] BILLY: So You, are you going to be the lead on this or you bringing somebody else in that has the experience?
[00:34:32] DAVE: When I don't know what I'm doing. I always try to build a team around me so that I'm the only dumb one in the room. And so with this project, I'm partnering with my best friend from college. Again, kids, you can go to college and it's what it's, who, you know, so my best friend from undergraduate became an architect and then a developer. And he's built over 3000 units. So he knows what the hell he's doing in a big way. And I'm learning so much from partnering with him. I'm the local guy, boots on the ground. We're doing a project in [00:35:00] Maine. He's based in Minnesota. He's got a great team of architects. I mean, he could build this building himself. He has so much knowledge and it's really exciting to work with someone like that. Otherwise, you know, I would not invest with me if it was my first project with new construction and I'm doing a 57 unit apartment building. I would have Wanted to invest with someone who's starting with a single family or a four unit, or, you know, start small and work your way up to bigger projects and new construction. Because, you know, I think Grant Cardone described this really well, you know, new construction instead of getting on an existing airplane and flying somewhere. It's like building your own airplane. To fly. It's much harder. There's so many more steps involved in the process. There's higher risk. There is a little bit higher reward, I think in some cases, but to me, the reward is going to come more from just driving by that building and being like, I built that and I know how we built it and I know we built it. Right. And I know it's going to be a great place for people, you know, basically indefinitely. If you build a building really well, it ought to last for hundreds of years.
[00:35:58] BILLY: You know There's a lesson. What you just [00:36:00] said, if you don't know what you're doing. Be the dumbest guy in the room and surround yourself with the smartest people out there. And that's great advice, Dave, because a lot of guys try to figure it out on their own. And to your point, like your network is your net worth. And you know, if you combine yourself with others who are experts in their area and you go out, you be the boots on the ground guy to find the asset, raise the capital and leverage your partner or your friend to actually do it. He's the best at architect and build that property out. It's a marriage meeting having, you're going to get an education of what to do more importantly, what not to. And I see you in the next 10 years being a major developer, the area. Cause you just have that personality style, like you're going to learn it. You're going to own it. And then you're gonna grow it..
[00:36:38] DAVE: The goal is not to eat all of a very small pie. The goal is just to go bake, bigger pies, and then you can share this license, you know, with other people on your team. And that's what I love, like with our real estate team, our property managers, I just gave all of them part ownership of our recent syndication for nothing, you know, because they work for me. And like, I want to be able to do that for people on my team. [00:37:00] And I think sharing in what you're creating and the wealth you are generating is critical because if you're doing. Coveting it all for yourself. And you're not bringing other people up with you. Like you're going to be one of those people that dies with regrets. You know, you don't want that. You want to be able to see other people doing well as you do well. And to me, that's really important because it's about happiness. It's about being happy. You know, I'm not doing real estate to get rich. I'm doing it to get happy and to make other people happy. And it's so tangible. You can see when you rent a unit to someone who really wanted it really need it really deserves it. You know, that's a really great feeling and it's hard to do that in other professions.
[00:37:38] BILLY: Dave this has been great, man. How can people find you online?
[00:37:41] DAVE: Holman homes.com or you can email me directly. It's just dave@holemanhomes.com. Love to chat with you. Get to know you and, um, be involved. Let's get in touch.
[00:37:51] BILLY: Awesome brother. Really appreciate you coming on Dave. You've been a wealth of information. You're a very good speaker, by the way, very fluid in how you speak.
[00:37:57] DAVE: Back at you BA
[00:37:58] BILLY: really good [00:38:00] getting to know you. Appreciate you coming on, bro. I will see you again.
[00:38:04] DAVE: Thanks. Sir appreciate it.
[00:38:05] BILLY: Thank you.
[00:38:05] DAVE: Bye
[00:38:06] BILLY: bye.
[00:38:07] Thank you so much for listening to today's episode of unstoppable real estate investing wealth. My mission is to give you my listeners, the blueprint for success inside the secrets for starting growing and scaling. Real estate investing business, So you could experience and live unstoppable lifestyle. I've made it simple for you to catapult yourself to success. Go to Billys secrets dot com@thebillyssecrets.com. There you will find every single tool. Trick strategy system. And you used to make millions of dollars as real estate. Everything my team uses and my guest views all in one place for you to tap into, you could start, grow and scale the real estate investment business. I really hope you implement what you're learning. I [00:39:00] hope you utilize these tools, tips, tricks, strategies, and secrets, and I hope to see you on the next episode god bless. Bye-bye.