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It's simple math, and that's why I was able to compete with all the big shots out in New York. And the broker tells me, "Oh, you're wasting your time." No, you're wasting my time. Can you talk a little louder? A little more I'm a big mouth. the anger. Welcome, Ben. Thank you so much. much. Thank you very much.
Feel free to grab a seat right here in my $30 Amazon chair here. Oh, you don't want to sit? I'll sit when you I want to sit. Oh my gosh. All right, Ben. Tell everybody, why do they got to buy real estate? You still here? Take it. I've been clean and sober for 30 days. Oh, wait. That's the wrong event.
That's the one That's the one I met him at. How's everybody doing? All right? Boy, we got a lot of people out there. I met a lot of you guys already. I can feel the hunger. The hunger. You guys are the best people I ever want to be around because you're ready to make some money. Okay? And I'm here to tell you that the writing is on the wall.
Okay? I don't have a crystal ball. None of us do. But I can just tell you from my personal experience that the writing is on the wall. Okay? The shit's going to happen. All right? And you got to be ready. I see all the signals. When you see the signals, you got to pay attention to the signals. Okay?
And I've made mistakes. I'll be the first one to admit it. You know, everybody knows interest rates. For most people, they double. For me, they triple. Okay? I didn't I didn't have no clue interest rates were going to go through the roof so fast, so quick, so much. Okay? And now I'm sitting here on owing hundreds of millions of dollars.
Okay? And I'm probably paying 3% more. That's 6 million That's 6 million bucks. That's 500 grand a month, right? Do the math. So, I'm telling you when [ __ ] like that happens, it's a cycle. Okay? You got to go through a storm, but then that's going to lead to opportunity. And opportunity is coming.
I see the signals. I'm looking at people sending me advertisements and offerings. They're They're trying to sell billions of dollars of loans right now. Why? Because when these loans come due you're going to have a problem. All right? All right. Let's face it. In the commercial world, this is the way it works.
When a guy like me or anybody borrows money in commercial, you're not borrowing for 30 years like you do on a house. You got 3 year, you got 5 year, you got 7 year, maybe 10. And it better be like a freaking Home Depot or something like that. Okay? So, everybody that borrowed money at this really great rate 3, 5, and 7 years ago, the shit's going to hit the fan.
Why? Because the property cannot handle the debt ratio and it's not going to appraise out for what it used to, and they got too much debt, and the banks know it. I talked to big shot bankers, and they're all telling me they're all playing the game right now. It's called pretend and extend. They don't know what to do.
If the cat gets out the bag that they're sitting on all these bad loans the bank is only worth what the loans are worth. So, what's going to happen? Their stock's going to go down the toilet and they're going to go out of business. We've seen banks go out of business. That bank in California, Republic Bank, I lost a million dollars cuz I didn't even know I owned their preferred stock.
All right? The bank went belly up, the stock went through the wind went down the toilet, and the everybody who was invested in the bank lost their shirt. You had an advisor that put you in that? I had what? Somebody else put you in that, right? the point is Yes, I have a wealth advisor. because it's like it gets confusing.
blame the wealth advisor? No. He bought it 3 or 4 years ago, and it's been doing fine. And wealth advisors, they're great maybe when they're moving stocks and all that, but they're not watching the real estate market. And the banks keep everything quiet. Everything's a secret with the banks. When bad [ __ ] starts happening, they don't want nobody to know.
It'll It'll shut them down. We've seen it happen. History has shown it many times. But I'm telling you now, you're going to see the [ __ ] hit the fan in the next coming next year and the year after that. They're sitting on so many loans that they cannot perform. Because once those loans are up and the guy's not paying 3 and 1/2% no more, and now he's got to pay seven, his mortgage is going to double.
His property can't handle it. What's going to happen? He's going to have to come in, buy down some debt. Nobody wants to buy down debt. Okay? I have to sit there and figure out which properties I might want to buy down, which ones I can handle it. It's going to be a mess. But you have to start looking now.
Now's the And everybody knows it. Every big deals I'm looking at, right away they put them on the market. Oh, I could buy 200 apartments right now, and I can assume they're Fannie Mae loan at only 3%. Well, that's fine. But that loan is due in a year, then what do you do? The mortgage is going to go to seven.
That property's not going to look so good. So, I see everybody's hurrying up right now. They're putting their properties on the market. They're trying to get rid of them so they don't get stuck. Because it's the shit's going to hit the fan. It has to cuz it's it's logical. Okay? So, that's what I'm going to here to tell everybody today.
And now's the time to come in, baby, and play the game. You got a lowball. And if they don't want to play lowball, then no ball. Don't play with them. But now's the time you got to come in and play the [ __ ] game. Pardon my language. There's kids here. Okay? If the guy wants a million bucks, offer him 700.
It's It's business. That's what you got to do. Everything is in the buy. I don't care what kind of real estate you're into. You could be in any one you want. Multifamily, industrial, it doesn't matter. Everything in real estate are numbers. And you know what the numbers are coming in, you know what's coming in, and you know the money going out.
It's simple math. I'm embarrassed to tell you I never went one day to high school. Why? I knew how to do it. I didn't have to go to school learn. But basically, it's simple math. Money in, money out. Okay? And when the interest rates double, you're not going to have You're going to have a lot more money going out than you used to have coming in.
That's just a fact. You know, it's life. What are you going to do? So, basically, I want everybody to realize, listen. You're at a point right now. It's all about timing. Now's the time to start looking for the deals that you like, that fit your life. Everybody's got a different life, whether it's a fourplex, whether it's an eightplex, whether it's 100 units.
I don't care. Go out there, find a deal you like, and lowball the [ __ ] out of it. All right? What are they What are they going to do? Oh, no. It's not personal. You know, the guy calls me up and the broker says, "Oh, you insulted the seller." I'm not insulting him. This isn't the number I'm willing to pay.
This is the number he wants. Maybe we can find somewhere in the middle to meet. I don't know. It's called playing the game. That's what you got to do with real estate. All right? Just because they're asking for that price doesn't mean you got to pay it. You're going to pay the number that fits right for you.
All right? Cuz you're the one that's going to be on the hook for owning the property and running the property and cash flowing. So, play the game and lowball the [ __ ] out of stuff. And if you ain't got a broker that's willing to write you and go back three or four or five times, then he ain't the right broker.
Okay? If the broker tells me, "Oh, you're wasting your time." No, you're wasting my time because you don't want to get out there and do your job. All right? I'll go back and forth. I can tell you some I just closed on a hotel uh in Tampa just the other day. It took us four or five months of going back and forth, back and forth with the goddamn seller to finally get it at a price I could swallow and he could swallow.
That's the way it works. But listen, the most important day of real estate is the day you buy it, and you got to buy it right. You got to buy it knowing you got some upside. You got some value add there. You got to have a plan where that property's going to be making and worth more money than when you bought it.
That's just a starter. So, what's going on, Kevin? Meet Kevin. Hey, I do want to say thank you, Kevin. He's a great guy. I appreciate you having us down here. It counts as a family vacation, too, to my wife and kid. And we really do appreciate all the hospitality and everything you've done for us. And we've been friends for a long time.
Even though he messed up my house when he stayed there. But everything, you know, it's great cuz he likes to educate. All right. Let me tell you, people like us, we like to help people. If the whole world helped each other, can you imagine what a wonderful world this would be? It would be great. I mean, and let's face it, money Money can solve most of the world's problems.
If somebody's making money and they're living good and they're taking care of family and they're That's That's happiness. So, I'm sorry. They say money isn't everything, try living without it. You know, my wife ain't. Okay? You want to see her get mad? Let that credit card not work. What else is going on, Kevin?
Here we are in Las Vegas, baby. We made it. That's cool. That's awesome. Well, then, uh how What What do you say to folks who are like, "I want to get into real estate. I want to buy. I want to be lowballing right now, but I don't have enough money to start with." Listen, everybody has got their own situation.
You got to sit down and say, "Okay, this is what I got. Do I have good credit?" Listen, your credit You're only a number. All right? The banks don't look at you. They don't care if you're good-looking, you're ugly, it don't matter. You could be a man, a woman, they don't care about gender, they don't care about [ __ ] what color you are.
All they care You're a number. So, you know, your credit score represents you, which, you know, you got to expect that. Listen, if you were loaning somebody money, you want to make sure that somebody you could trust, right? Well, you got to prove that you're somebody that can be trusted to borrow their money.
And you got to get your resources together. Sit down and say, "Okay, I got this, I got that. Maybe I don't need this, maybe I'll sell it and and and get the cash and invest it in something." You know, you got to know what you what you can do. Don't waste the time looking at stuff you can't do. I don't.
There's a lot of big deals out there. I can't do them. It would take up too much of my money. I I can't waste my time looking at stuff I can't do. Figure out what you can do. All right? If you're just starting out, FHA, 3 and 1/2% down. You can go up to four units. I tell people every day, "Okay, listen.
People that are starting out, oh, I'm going to go buy a house. I'm 25 years old, 30 years old." Why? Why don't you wait? Okay, it's not going to be your last house. Why don't you buy yourself a fourplex and let the tenants pay all the bills and you live for free. Try it for a year. Right now, you're paying $2,000 a month rent.
If you save $2,000 a month, that's 24 grand a year you're saving. Saving money is making money. So, you know, figure out what level you're on, what kind of property you can qualify for, whether you got to go FHA, whether you got to go 20% down to typical for a regular deal. If you know, if you got 100 grand, well, 100 grand is 20% of half a million, right?
Right? Yeah. Yeah, yeah, yeah, you're right. So, look for what you can do. And right now, look for the deals that you feel you can handle. You know, technically, you know, it's good to have properties in in where you're at. Cuz I like to get my hands on stuff. You know, it's a lot easier for me to accomplish things 20 or 50 miles from my house than it is buying them across the state.
You know, I mean, that's just me. But we're talking about, you know, commercial assets. So, buy stuff that you feel you can get in there, get your hands dirty. Let me tell you, you can always find deals where you're paying for a property and you can raise the rent a couple of hundred bucks a month. But, you know, maybe you got to come in, put some fresh appliances.
You know, he came in there and he told me what to do with a house that I was buying or that I bought to flip. And he had some good ideas and I took his ideas and it definitely made the place pop and it helped me with the sale. You know, figure out what it's going to take to make that place give it a little pop so you can charge a couple of hundred bucks more a month.
Okay? You can always find a property that you can improve a little and raise the rent and it's worth more money. It's simple. What else? Linked it down below, you're going to find a link to meetkevin.com where you can access the wonderful courses on building your wealth. You'll learn options, stocks, zero to millionaire real estate investing, do-it-yourself property management, rental renovations, entrepreneurship, making YouTube content, social media, being a sales agent, you name it.
Take a look at the programs of building your wealth linked down below. And we have an expiring coupon code linked up below, so get in before that expiration. How did you first get into property management? Can you help people see that? Because you just said you didn't go to high school and there are a lot of folks saying, "How I'm going to get that hands-on experience?" you my quick story.
My quick story was I grew up as poor as you can be in the most dangerous neighborhoods in New York City. I didn't have a pot to piss in and my family was wacko. All right? So, I got into trouble when I was a kid and I luckily joined the army. I joined the army and um I kind of got a little taste of real estate while I was stationed in Germany in the army.
Cuz I was a hustling kid. You know, I might have been 14 years old, but I was out there hustling with 20-year-olds. You know, that's the way it was in New York, you know? So, basically, I would go out there and work with a guy that used to rent apartments to GIs. He'd give me a few bucks every time I'd bring him a GI to rent apartment.
That worked out pretty good cuz the army didn't pay [ __ ] Then, they sent me to California. I rented an apartment apartment building. The old lady that was managing the building, she was having trouble. So, and this is back in 1987. 1987, my rent was $500 a month to live in this apartment. The lady said, "I'll tell you what, I'll give you 50 bucks a month off the rent if you just go around the property every day and pick up garbage." 50 bucks was a lot of money to me.
So, now my rent was only 450 a month instead of 500. Every day I'd get up, go around, pick up some garbage. Good, fine with me. Then I started helping her more and more and helping her turn apartments over, helping her fix things in the building, and I got into property management and I liked it. It's simple.
You got a place to give somebody to live, you fix the place up, they pay you rent every month, if something breaks, fix it, you collect the rent. It's It doesn't take a brain scientist to figure that out. And it was a good business because you're creating, you know, you're creating value in property.
So, I met the owner, he liked me, he started giving me more and more work to do, I started getting into property management and he I was going to re-enlist in the army and he said, "No, no, no, he's making more money now, he's got me helping him." He offered me to not re-enlist in the army and stay working for him.
So, basically, you know, I worked for him, I made him money and then I said, "Well, wait a minute. If I can do this for this guy, this guy's driving around in fancy cars and mansions and living large, you know, why can't I do that?" Okay, I'm doing all the work, he ain't doing [ __ ] All right? So, basically, I had to get in where I fit in.
I started going and buying up the worst [ __ ] anybody could imagine that nobody wanted in Oakland, California. Crack houses. All right? These places were the worst, but they were salvageable. They just needed some love. I came in there, I scraped up whatever money I could. I had hard money lenders.
I used my VA loan once. Whatever it took to get a deal, but I'd buy what nobody else wanted. I'd stand on the courthouse steps. Back then, they did the auctions on the courthouse steps foreclosures. And all you guys are pretty tough, but some properties came up that were so rough, these guys, when that property came up for auction, they'd all back away.
And I'd be the one. I'd be the only one. You know, because I grew up in New York, I can handle a rough neighborhood. You know, I get along with anybody. I don't care. I don't think I'm better than anybody. I can relate to anybody from the bum on the street to a guy that's worth a bunch of big bucks.
So, I'd buy up all the worst stuff in the world. I'd fix it up. I was managing property for him and then I was buying my own stuff. And the hard money lender actually told me, "If you're really smart, don't touch the money." When you When you When you When you want to fix it up and you flipped it or you you know, you refi Well, you can refinance.
That I would do that to raise more money. I get in there, I fix them up, I refinance, I take that refinance money, go buy the next deal. If I sold a property, I would In 30 years, I have never touched the money from a flip. I 1031'd it into the next deal. And I was in California. So, in California, you not only got 20% capital gains tax, you got 10% of the state tax.
If I would have made 100 grand on a deal, I'd have to give 30,000 away. Screw that. I'm going to flip it into the next deal. So, I just kept doing that and doing that and and that's what worked for me. All right? So, I highly encourage you to always try to 1031 and defer your capital gains tax and any state tax because that's more money that's going to help you grow and buy the next deal.
One of the things you just said was you were making the person money that you were working for. A lot of people feel bitter about that. Like, "Oh, they're making all the money or whatever. He's got the fancy car." How did you get over that? I mean, you were learning from him, but you were also providing him value.
How did you get over that feeling? Listen, if he didn't give me the opportunity to work for him, then I wouldn't, you know, feel so confident in working for myself. So, I appreciated the fact that he gave me some tough stuff to do and then eventually, he became a partner because he saw that I knew what I was doing, so he was willing to back me up with money.
I mean, it's all about, you know, creating relationships with people. And if you're going to make somebody money in life, that's fine. But eventually, at a certain point, they either got to share with you in the wealth or you got to move on and do it your on your own. Or, like I did, a combination of both.
Okay, everybody needs to exceed in life and everybody deserves to be rewarded. Okay, and the harder you work, the bigger the reward. And luckily, he he saw that he could sit back and be a big shot and I do all the dirty work. He said, "Sure, you need money? Here." Here's money. I mean, plus I did my own stuff.
So, he private party sort of lent to you. Huh? He he lent money to you, sort of like a hard money partner. no, we were partners. He he he had the credit, he had the money to put down. We go to banks to get loans and we'd be partners. He gave me some good advice, but I was out doing the one doing the dirty work.
Uh-huh. But at first, I didn't have to put any money up. But as soon as he saw me starting to make some money, oh no, we got to be partners, 50/50, which was fine. I ended up retiring the guy and um you know, and I grew to be much much larger than him. But um For you. I mean, you know, property management can be a good way for you to get into real estate.
Sales also. You know, you get a sales license, let me tell you, a sales license is a license to make money. I pay out millions of dollars a year in commissions and I'm happy to. If it wasn't for the brokers, I would never have anything. They feed me the deals because once they know that you're a closer, okay, they're going to keep feeding you deals cuz they want to close more deals.
And I'm loyal. All right, if a broker feeds me a deal and I make money on it, when I'm ready to sell that deal, I'm going to give it back to him so he can resell it. So, he's got future money coming in. All right, that's that's the way I grew. Every broker in town knew that if Ben Mallah wanted that deal, you better sell it to him.
Why? Because it's going to pay now and it's going to pay later. And that's why I was able to compete with all the big shots out in New York and all the other big shots. They have all these, you know, they're not loyal. Loyalty, you know, cuz we're all human. All right, you got to connect with people and when somebody can help you and you help them, then you work on you work on that relationship and everybody grows and everybody makes money and that's the way it worked for me.
How do you start now with the high rates? Just more down, get a better deal, lowball more? to buy them at the right price. I don't know about the rest of the country so much, but Florida, we're getting crushed right now. Not only we got 7% interest rates, insurance is double. Everywhere labor has gone through the roof.
I mean, there's no more paying anybody, you know, 15 bucks an hour or something. I mean, this guy wants 25 now. I mean, people working at offices and you can't blame them because the cost of living so much. So, you got higher labor costs, higher material costs, higher insurance costs, higher interest rates.
You got to factor all this in. And the biggest mistake I've seen people make when they buy real estate is they don't consider their property taxes. You might buy a property and the guy shows you what he's paying for property taxes. Uh-huh. But that doesn't mean you're going to be paying that. They're going to reassess the value of that property when you buy it and they're going to jack it up.
You're not going to have the same cash flow. So, you have to make sure you know. That's the beauty about real estate. You can pretty much predict everything in the future that's going to happen. You know, you know, if you buy that place for a million bucks, but this guy's got it sitting on the tax assessor's office for only three or 400,000, they're going to record that sale, they're going to see that sale, they're going to reassess it at about 80% of that million bucks and charge you whatever the millage rate is.
So, you have to allow for all your expenses. That's why you have to sit down, do your homework, calculate every single expense you have and make sure you lowball the [ __ ] out of them when you buy it. You got to have that cushion room, too. You know, so you can't you can't play things too thin. You got to have that breathing room.
Is the election going to matter? Yes. I mean, I'm not a big political guy. I've met Trump. Um and I grew up in New York. The problem is this. Life was good. I go I I I live my life based on facts and logic. When Trump was president, I was living damn good. Interest rates were low, my poor employees could afford to go out and buy dinner, you know, uh things didn't cost so much.
Gas was cheaper, food was cheaper. You can't go to McDonald's today and spend less than 15 bucks a person. How how how can anybody afford that? It makes no sense. So, you know, when Trump was president, I felt like he was concerned about people growing, keeping costs down, keeping interest rates down and uh as far as uh socially, I mean, Putin, I didn't hear [ __ ] about Putin when when when he was president.
Okay, Putin was doing his drinking his vodka, sitting back and doing whatever the hell he was doing. He wasn't invading countries. Uh North Korea, you didn't hear [ __ ] about him. Now they're all flexing their muscle. Why? Because we got a corpse as a president. I mean, listen, I'm not attacking him personally.
I'm stating facts. All I can tell you is what I see and what I can know is true. Okay, we can't have the Democrats, number one, are not business people. They never have been. Okay, and they just like to work the system. Their business, in my opinion, from what I've seen, is just running running things and milking the system and that's their life.
The Republicans are more business people. Okay, and they believe in in in everybody making money. So, you know, I I hope to hell that he wins cuz we got nobody else that stepped up to the plate. I met I met uh Robert Kennedy right down the block here back uh 6 months ago and I'm sorry, he might be a nice guy, but I never heard of him.
He's he's right on his name and I couldn't understand a word he was saying to me. I mean, you know, you can't be a president, you can't talk. I'm sorry. So, we got a corpse, we got one guy can't talk and we got Trump who's, let's face it, the guy's ego is big, but who else do you want to represent us?
I mean, the Middle East, you didn't hear [ __ ] about the Middle East, the terrorists and all that [ __ ] You didn't hear it when he was president. Why? Because they knew he was going to react. We need a cuckoo to handle the other cuckoos. It's life, you know? It's like me. I wasn't a tough guy, but I always hung out with the toughest guys in the neighborhood.
That's what made me kept me safe. You know, you got to you got to you got to stand up to these people cuz they don't think right. You know, I don't want to go into the whole political thing, but uh us leaving at We were just talk I was just talking to a guy that works for you. He was stationed in Afghanistan.
In Afghanistan, when right when when Trump was president, we were there and I don't care about what agreements we had to leave, whatever. It's how we left. When we were in Afghanistan, women could go to school, they could go to work, they could live like normal human beings. Now, they're treated like pets.
They're not allowed to leave their house. They have no rights. Okay? These people are living like it's thousands of years ago. It's not logical. So, you know, I I I think Biden's past 4 years have destroyed us. The whole country looks as as weaklings, you know, and while Trump was telling everybody, "Listen, NATO, you got to step up to the plate.
These guys in your backyard, you got to spend money like we're spending money." Everything seemed logical. All right, yeah, he's got a big mouth. He's a New Yorker. People just don't understand him. You know, they don't understand. He just likes to be dramatic, you know, but deep down inside, you know, he he's a tough guy and he's logical.
So, that's the end of my politics speech. And last, this man here, he ran for governor. Until he dyed his hair or something. I don't know what the hell. California's a different place. In fact, when when somebody first told me, "Hey, this guy you should meet this guy. This guy wants to meet you. Meet Kevin." Meet Kevin?
It sounds like a dating site for men men trying to meet men. And then when I saw a picture of him, I said, "Yep." And he's from California. But otherwise, that's the story. So, real estate is great. I love it when you buy a piece of real estate because you can put your hands on it, you know, and you can make it better and you can make it make more money.
You just got to find a deal and you can't get discouraged. Everybody's asking a fortune. I'm asking a fortune for my properties and some of them most of them I mean, that's the way you start out. I'm here, the buyer's here and every day I'm negotiating and we're finding a a middle point to meet and I do it every day.
I might I have a Home Depot for sale right now. It's on the market. Go to 1031save.com. You'll see all my assets for sale. You'll see it probably, I don't know, couple hundred million up for sale right now. Okay, but if somebody offered me and said "I I'm asking 25 If somebody came here and showed me some real money, maybe 23 and 1/2, maybe 24, I'm taking it.
Oh, you know, another thing about real estate is terms. You want to get a good price, give them good terms. The reason why I get a lot of deals, people call me up, "How'd you get that deal?" Well, number one, I got nobody to answer to. I got no partners except my kids. I got no board. So, that gives me a lot of leeway, a lot of power.
But, I shorten my due diligence terms. I come in, I inspect the property. Let's say I'm I want to buy 100 units. I tell my kids, "Go walk every single unit." And they do it in one day. You walk in an apartment, and you see what the condition is. You go over the numbers. Listen, I tell the guy, "In five business days, I'll go hard with a million bucks." Everybody else wants to tie them up for 30, for 45, for 60.
They got financing contingencies. I don't do that. You know, I put my money where my mouth is, and then that enables me to get a better price. Terms are very important. Sellers want quick deals that they know they're going to close. So, if you have the ability to shorten your terms and do a quick due diligence and not have to depend on a financing contingency, I still financed, but I knew the bank was going to back me up.
So, you know, but I didn't have a contingency in there. So, the sellers always want to go with the sure thing. Plus, if I screw up and don't meet my obligations in the contract, he gets my million bucks. I've never given up a deposit yet, but I'm going to tell you, I've kept some. I had no choice. The guy wanted to buy my hotel, he put a million bucks up, he couldn't close in time, I'm sorry.
And by the time he couldn't close, somebody came along and offered me more money. He lost a million bucks. That's business. So, you know, terms are very important. Should somebody start today with a 30-year fixed-rate mortgage on that one to four or Can you talk a little louder? A little more I'm a big mouth.
the anger? Okay. Good anger. Positive anger. 30-year, one to four, or hotels and commercial and like your world? What about? Your world? My world. Or one to four? One to four? You mean one to four units? Listen, you do whatever you feel you have the tools and abilities to do. All right? If you can find a hot deal on a house, and you know damn well you can buy this house, you can put some lipstick on that pig, and you can flip it, then you do it.
But, make sure you do your homework. I don't care what you buy, as long as you know that you're buying a good deal, and you know you got upside. It's all in the comps. The comps tell you what that house is worth per square foot in that location. You know what it's worth if you put some paint on it, maybe put some flooring in.
He knows all that stuff. He likes to come in and decorate. Oh, you got to put crown molding up here. I did. I listened to him, and it worked. And you got to paint this car different color. He's right. He came in, he gave me some pointers. All right, it was my fault I didn't get what I had originally wanted.
I sold the house for like 9 million. It was supposed to be like 11 million, but that was the market. Interest rates control everything. Okay, there's no way the average guy used to go out and buy a house right now at 3% interest, every 100,000 will cost him $3,000 a year in interest. Well, now it's costing him seven.
Okay? It just It doesn't make sense right now for a lot of people. Find a deal, make sure that, you know, you do your homework, look at the comps, look at recent sales on it, have a construction budget on what you're going to spend to fix it up, and make sure the equation works. It's simple math. And whenever you go to Home Depot, right?
Go to Home Depot, get a bid on something, then go to Lowe's, and and and and and and let them They'll do it for 10% less just to get your business. There you go. Get the credit card, get another 5%. Uh would you manage properties yourself first if you were just starting, or hire a property manager first?
I never hired a property manager in my life. That's what I did. Plus, you got to be careful with property management. I'm not saying it's all bad, but it's not their property, and it's not their money. And nobody better will control your money but you. Nobody's going to protect you but you like you will.
All right? If I need a toilet replaced, I'm going to make sure I'm buying stuff at the cheapest price. Okay, management companies, you know, they they got their own way of doing things, and they're all, you know, the point is, if you can avoid management, you should always try to do it yourself if you can.
If you can't, then watch the management company. Watch what they're spending, make sure they're bringing in the money, make sure they're keeping your properties full. You got to be on them. You have to supervise the management company on what they call an asset management level. If you were starting over, would you rather be an agent or a lender?
You know, I'm not really a lender. I don't like to loan money. I like to borrow money. Because I'm borrowing your money, and I'm making money with it. Okay? When you're a lender, you know, you basically you bought You're loaning money out, you get your your return, you know what's going to happen. And there's there's no there's no upside, really.
It You know, but it's it's a lucrative business, you know? But, you know, it's not for me loaning money. Plus, you know, if things go bad, you're the one on the hook. That person flew, you know, flies the coop, and you're stuck. And you know, you know all kinds of other problems get triggered. Uh as far as being an agent, an agent is a great way for you to get into real estate, especially if you're young.
And every single person that you encounter is a potential client. Cuz, you know, uh somewhere during life, most people either want to buy or sell something. You know, everybody wants to buy a house. If I was a young agent today, I always tell young agents, they call me, they consult with me, and they say, "Well, how can I get some business going?" I say, "It's simple.
Go find the most expensive apartment buildings in your neighborhood. And then, go to the post office. Even in today with all the electronic stuff, go to the post office. All the mailboxes are in one location. And it costs nothing to do a bulk advertisement to have the mailman put a card of yours or an advertisement, "Stop renting, start buying," in that mailbox.
And you'll get some calls. You're guaranteed. And then, you have to sometimes some people need help. Then you have to find them a lender. If you're a good agent, you're going to take that person that has the ability to do something, but they need a little help, go get them financed, take them to the bank, refer a broker to them that loans them money, show them houses, show them stuff that they you know they can afford, and put the whole thing together, and make your fee.
I mean, let's let's face it. You know, an average house in Fort Lauderdale where I live where I have a house, I was talking to agent the other day on the last video we did, it's a million bucks for a dump. He gets 30 grand on every million. So, if he sells something for 3 million, he makes 90 grand in one deal.
Okay? Imagine if he built himself up to doing one deal a month. All right? He could make a million bucks a year just selling houses. But, if you are thinking about selling real estate, go where the money's at. Don't waste your time with with with being in an atmosphere. Listen, you got to surround yourself with people that are making money.
It's all in the company you keep. You want to make money, get around other people making money. That's how I started. I got around this guy who owned the apartment building, he was making money, I got with him, I started getting involved with him, and I became someone making money. I loved your anal- or your suggestion to mail tenants a letter at high-end apartment buildings.
One of the first things I did as an agent is I did exactly that, and I put a picture with a a little statement, "Thanks for paying my mortgage," with a picture of someone who looked just like you. I think it was you. "Thanks for paying my mortgage." Listen, there's always going to be renters, but at some point, sometimes a lot of people they don't You know, they're busy.
You know, they could be for professionals, and they just They need that little push. Yep. So, if you think about selling real estate, find people that just need a little push to get them into home ownership. That's great. And then, maybe, you know, if it fits their bill, sell them a duplex, sell them a triplex, sell them a fourplex.
You know, it's one to four is residential, five or more is commercial. We all know that. Even Kevin knows that. Great suggestion. Now, I I want you to fight this thesis I'm cuz I know you're going to have a lot to say about this. California is cuckoo. They don't build homes, which ironically makes the property values go up in the good areas.
So, I like buying there because they're so dumb they don't build. What do you think about that? I mean, unfortunately, you know, listen, whatever Every town is different, every area is different. They got different politics, they got different everything, industries. You got to find what works. And whatever works, work the [ __ ] out of it.
Okay, you know what I say? I He's talking about California, I got out of there after 18 years. But, I always tell people, "Where can I find a deal?" Well, go somewhere where there are, You know, everybody's seen these big developments go up where the guy comes in, KB or you know, all the the big home builders.
They come in, they'll throw up what? 300 hou- 300 houses at a time. They've done their homework, okay? So, they're going to They've invested a lot of money in looking at those areas. No one knows if there's going to be growth. Who knows? Maybe Amazon's coming in. Who knows? That's where the growth is at.
Go and ride on their coattail. Find the older homes and the fixer-uppers around them. For everybody that is coming to that area, but maybe can't afford that brand new house. But California, if that's what works in California, then you work whatever you can work. If if it's fixing up older places, then you got to fix them up.
And yes, it does keep the values high in those properties because they got no new product to compete with. Would you ever get into development? I've never done any ground up. We've done a little retail here and there. I've always been, you know, take something, put it back in the shape it should be, or improve it, and work with what's already there.
I've never been a big construction guy. Uh it just wasn't my thing cuz I had so many fixer-uppers to do, why start building? Plus with building, let me tell you, my son got an education in building. He builds a building and he probably He said, "Holy [ __ ] if I ever do this again, I'll save hundreds of thousands of dollars from all the mistakes that I made." You got to deal with engineers, you got to deal with zoning, you got to deal with architects, you got to deal with the fire codes.
There's all kinds of [ __ ] going on when you're building stuff. So, you got to know what you're doing and you got to have the right professional people helping you cuz nobody knows everything. You know, and then the GC, the contractor, you got to be careful cuz you know, he's going to take you in as far as he can.
You know, he's going to sub out all the work, he's going to make money off the subs, he's going to make money off of this. You got to have a budget, you got to have your [ __ ] together, you got to be very careful when you're building stuff. But yes, you can make money. What I've done is I look at things and say, "All right, this place is failed." I bought I have a a tourist place called John's Pass.
A lot of tourists come there. We got boardwalk, we got all kinds of water activities, pirate ships, dolphin tours, fishing boats, you name it, we got it. And we had all this retail that when I bought it, it sat on the second floor. Retail does not work on the second floor. Nobody wants to go upstairs in elevators to go shopping really.
It's not a mall. So, it sat empty ever since they built the place. So, I walk in and I see all this empty space. It makes no sense. It's just sitting here empty. What can we do to repurpose it? Sometimes you got to think out of the box. So, what do we need here? We got all these tourists, but we got no hotel rooms.
We went to the city and we said, "Hey, you mind if Is it Is zone okay? Can we convert this empty space into hotel rooms?" They said, "Be our guest." So, I threw up every room cost me $30,000 to turn into a hotel room. I I took that whole empty space and we turned it into 10 hotel rooms. 30 grand a piece it cost me.
And they got rented like that. And they're still being rented today. We just built 10 more. All right. So, basically, I took $30,000 investment into dead space. Those rooms are probably worth at least 200 to 250,000 dollars a piece because of the income that they make. So, you got to think out of the box, you got to look at something that's not working right, and come up with an idea that will work.
How soon do you get into stocks if you're starting with real estate? Stocks. How soon do you get into stocks? I only like to talk to people about stuff that I know. All right? I played with stocks, it's not for me. Okay? I'm not saying it's bad. I've seen a lot of people make a lot of money, but if you want to be in the stocks or a guy like me, you got to be in it to win it.
You got to be on it. And I just don't have the time. You know, I've I've lost money, I've made money, you know, but I like real estate. That's what I know. Okay? Investing in other companies, that's a great thing, but I'm in no control of those companies. I'm in control of everything when I buy a piece of real estate.
I'm I'm I got it right here in my hands and I'm in the driver's seat. But stocks are good investment. I got a wealth manager, you know, uh Merrill Lynch. He can't I you know, they loan me a lot of money, so I give him a little money to play with. I gave him like 10 million bucks maybe about, I don't know, a year, 2 years ago.
I gave him 10 million bucks about 2 years. I looked at my account, the 10 million is 15 million now. That's great. But the year before that, I think it was the opposite. So, you know, stocks are They've been around and they're going to be around and they're a great way, but you got to put your time in, you got to know a little something about them, and you got to follow stuff.
It's like everything else in life. It's all in what you put into it. You know, I don't really think anybody can wave a magic wand and make all our dreams come true. You know, I I haven't yet. I've only met one Indian in a bottle. And that's the guy that works for me. He's an Indian guy and his name is Happy Nook and he runs all my hotels.
That guy's like an Indian in a bottle. You popped open that bottle, Happy comes out, he'll take a piece of [ __ ] hotel and he'll get it working right and, you know, cuz that's what he does, you know? But it's very hard. You really got to know what the hell you're doing your money. Any tax write-off strategies?
A lot of people looking for how to save money from the IRS. Nobody wants to pay taxes. I mean, listen, if you're making money, you really need a good accountant. You got to have a CPA that understands you, what you're doing, and make sure he's capturing everything that he can legally catch capture to to eliminate your tax bill.
All right? I went many, many, many years without paying taxes. Why? Because real estate is depreciated. All right? If you buy a building, if you buy any kind of residential apartments, let's say you pay a million bucks for it, you're going to divide that purchase price minus out a little for the land and divide it by 27.5 years, correct?
I don't have a calculator. Whatever that number is, you get to depreciate that from your rental income. So, basically, you're really not paying tax on your rental income. You're deferring it. If you sell, you will have to recapture it down the road. If you 1031, you can keep deferring it. All right?
Cuz then it falls into your basis. I mean, I don't want to bore everybody with accounting, but you definitely got to know what the hell you're doing when it comes to taxes. And you got to make sure that you write off and keep track of all your expenses that are legitimate expenses. You know, travel, tools, equipment, you know, a lot of guys, I don't know.
I don't I I I mean, I've heard of these guys. A lot of these guys, they go out and they buy planes. And they're brilliant. They go out and buy planes right before during that tax year because they get to write it off, correct? All of it. You know, so if this guy made millions of dollars and he goes out buys a plane for millions of dollars, the plane's still worth millions of dollars.
He can sell it anytime he wants. You know, I mean, if he can afford to do that, hey, he just eliminated paying Uncle Sam all that money. I mean, you know, you got to you got to know your taxes and you got to make sure you account for every dime coming in and try to capture every uh deduction you can for every dime going out.
But always have a good CPA. We're going to do some Q&A now. Uh it We're going to have to throw a mic up here in the middle and we'll let the audience come join for some questions. When you're dealing with multi-family in whichever state, mostly Florida I assume, how do you What are the eviction laws and how do you, you know, flip a property like that?
Every state, even I think I believe correct me if I'm wrong, eviction laws can differ even by county, I think. Okay? And you you know, a lot of states are more landlord friendly. Okay? But evictions are becoming a a serious issue now, okay? A very serious issue because it's all about people's rights.
Well, I'm sorry. If you didn't pay your rent, then what right do you have? I still got the bills to pay, the mortgage, the taxes, the insurance, and all that. I don't get it. But I got out of California because of the evictions. Okay? Cuz it got so ridiculous that, you know, the tenants had so many rights and so many ways to cost me a fortune and delay the process that I just threw my hands up.
So, you got to be careful wherever you buy real estate. You got to know and look into what the eviction laws are. Okay? Because you don't want to get stuck in a place like the Bay Area where I was in California. It'll take you 6 months and $10,000 in legal fees and still lose all that rent for 6 months just to get rid of a tenant.
It'll be very costly and has ruined a lot of property owners. So, you really got to know what the eviction laws are and I always try to specialize with an attorney that only did evictions. A guy that knew the ropes, okay? Always try to find specialists when you have problems like doctors. So, you got to be very, very careful with evictions.
You got to make sure you got a good lease. You got to make sure Listen, if the rent ain't paid, don't delay. Lay that 3-day notice on them. All right? And you got to be You know, I used to be real lenient. And my son said, "Wait a minute. You got to stop doing this. You're giving people breaks and you know, a lot of them are jerking us around.
You're feeling sorry for people. You got to run it like a business." All right? They got a contract with us. They got to pay. I'm sorry this happened. I'm sorry your car broke down. But we got bills to pay. But yes, you should be very, very conscious of what the eviction laws are in the area that you own real estate.
Do you ever do cash for keys? What? Cash for keys? Pay them to get out? Oh my god, I'd cut any deal I could. I would go out and rent a U-Haul truck with my money, get the movers to move their stuff into the truck, go rent them storage in their name just to get get rid of them because if I had to go through an eviction, it would cost me thousands of dollars.
It's always easier to try to make a deal with somebody and avoid litigation, avoid courts. I paid people to get out. Whatever, you know, whatever the situation is, evaluate how bad that situation can get and try to make a deal whenever you can. I put people up in hotel rooms. I've done it all. Next question.
Hi, Ben. Hi. So, let's say this is a real situation. You buy a property for all cash. It throws off about a 7% cap rate. At what point would you finance that money? Or would you be never? No, it'd be like just keep the cash in there. What's What's your advice on that? Okay. If you're getting a 7% return on that cash, right?
Yes. Yes. Okay. You're getting 7% on that money. I mean, it depends. Number one, if that If you went out and got a loan, there goes your 7% in today's market and even more because you'll be buying down principal, whatever. Your payment's going to be more. You're going to be negative cash flow, right?
But you will be able to write off that expense of the interest that you're paying, which you're not doing right now. So, you have to sit down and figure out It's all math. I used to sit down with calculator all the time. I figure out what is the best scenario for this situation. You need to see if it benefit you tax-wise.
Maybe that's why you got to talk to your accountant. Maybe it would benefit you to to get the tax benefits from borrowing money. But then, what are you going to do with the money? The money you have in the bank you're paying 7% on. All right, yeah, you can stick it in a money market at 5%, but that's taxable, too.
You got to look at the equation and figure out the good, the bad, and what makes sense. What is the bottom line? It's all about the bottom line. All right? You could take the money, put it in 5% tax-free municipal bonds. Am I working? No, it is. Working? It cut out. You could do that. I'm a big I'm a big fan of tax-free muni bonds because I can get 5% in a fund or actually in a bond with no tax.
And I'm in the 37% tax bracket. So, you know, that's what I do with money that I'm stashing away and I can always borrow against that, too, if I want. But you got to sit down and figure out every scenario. What makes the most sense for you? But at 7%, it doesn't make sense right now. Okay. Thank you.
All right, next question. How you doing, Ben? Hi, how are you? I'm doing pretty good, thank you. So, going back to that same topic is I I live in California near Los Angeles and I'm having a hard time just with the tenant laws that are coming up and passing. So, I'm trying to justify continuing to buy property and so one of the laws that's going to be passing in July is we can only ask for 1 month of security deposit and it used to be, you know, up to two two months, three months if it's furnished.
And so that really as a landlord I'm going to take more risk and now there's another law coming out possibly we can't even ask about pets anymore. That hasn't passed yet, but again, that's just I feel like Los Angeles is just so pro-tenant that I'm now reconsidering continuing to buy property there.
But like you, I like to get my hands on things and I follow the 30-minute rule. Is that something I should reconsider altogether kind of like how you left or what would your thought process be? I mean, if you're getting if if you're if you're in California and you got to be there and that's that's life, then you got to make life best out of it.
I mean, basically if they have lowered the amount you can charge a security deposit, which I don't see how they can do that because I used to charge security deposits based on credibility. If somebody had bad credit, can you still charge a last month's rent on top of the security deposit? I mean, then you're going to have to tighten up on your screening.
You're going to have to really screen the hell out of people. You're going to have to really look at their credit report. You're going to have to look at their income, the stability of their income, and their employment. You're going to have to look at their history. You're going to have to make sure that you're getting really strong quality tenants that aren't going to want to screw up their credit report.
But I mean, that's why I got out of California. There's too many goddamn rules that make no sense for a business person. But you're going to have to tighten up on your your your screening and who you're going to rent to and then throw one chair in there and call it furnished. Yeah, it's it's interesting.
A lot of the policies in California that that they're counterintuitive because that hurts lower-income tenants. Now a lower-income tenant can no longer rent from let's say Ben Mallah because you're saying, "All right, I can only collect 1 month of security deposit. I'm going to take a higher quality or higher or more qualified tenant." Now the other person doesn't get a rental anymore.
On the flip side, Well, I actually when when, you know, when the market was like back in We're talking uh early 2000s, late '90s, when it was tough, you know, to find tenants in where I was at in the Bay Area, I would waive the security deposit. Why would I do that? Because I only rented to Section 8 cuz that's what I needed, that guarantee.
I knew that if I rented to a Section 8 tenant, number one, it was a tough area. So, I I really like Section 8 because if you're in a rough area, you got to be careful who you rent to. People don't have a lot of money, you know, you're not going to get your money that easy. So, I always was I was probably I was probably I was the biggest Section 8 landlord in Oakland back in the day and I would say, "Forget about a security deposit.
I didn't need it. Just give me that voucher. I fill out the paperwork and every month my rent was guaranteed." So, you know, it depends on the situation. You know, if you're in a area where it's hard to find tenants, you know, that you're sure are going to pay every month, you might want to look into Section 8.
There's a lot of good families that are on Section 8 that just don't have a lot of money, you know? But you got to screen people no matter what. But you really got to screen them if they're limiting the amount of security deposit that you can charge to protect yourself. So, be good on the screening.
Yeah, it's a good question. Pick and choose. Mr. Mallah. Yes, sir. put my glasses on real quick. Put your glasses on. Now we're right in line with Now we're in line with each other. So, you were in the same burgundy, green, gray, right? My most Beyond that, in the theme of surrounding yourself with people making money, your first mentors besides him, were there other notable mentors and biggest lessons learned besides that first Was he at our meeting the meeting, too, or what?
Yesterday. Yesterday. Yeah, yeah, yeah, yeah, yeah. Exactly. Tell me what you're talking about, please, so that Right. Okay. Mentors. Okay. Beyond the first one, What are we talking about? Mentors. Mentors. Knowledge. Mentors. Money. Yes, sir. I mean, you know, so what about mentors? Beyond the first one, were there other notable mentors and lessons you learned from those other mentors?
I I mean, you're talking about me personally? Yes. I mean, listen, I took advice from people that I felt they knew what they were talking about. All right? Cuz the proof is in the pudding. All right? If I see a guy's doing something and he's doing it and making money at it, then I'm going to listen to what he's got to say.
You know, but honestly, the way I learned basically by doing stuff and I tell my kids this is do it. All right? Learn basics about it. There's no better experience than living the experience. Yes, you try to do educational things. You try to, you know, gather your knowledge on a subject, but get your hands dirty.
Get in there and do it. Are you going to make mistakes? Yes. But that's part of the learning process. But, you know, as far I never really, you know, I used people for what I thought they were good. I had a good broker who was always feeding me deals. He was my mentor to go to, if you want to say it, when I needed foreclosure deals.
I went to that guy. I had a good insurance agent. I utilized him. I went to this banker here cuz he was always loaning me money without being a pain in the ass. I mean, you find tools. People are tools. Okay? And then you take all these tools and you start working these tools. You're the guy in control.
But, you know, I'm sure there's good people out there like myself that you can take advice from, you know? So, you know, anybody you feel that has valid, good, strong, solid advice and can back it up, I mean, you can go to my websites and see all the [ __ ] I own. It's not [ __ ] you know? So, I'm not just telling you, I'm telling you real life experiences here.
So, be careful who you mentor with, you know? Good question. You know, there's an old saying, "Those who can do. Those who can't teach." Those who can't Those who can't teach teach, Jim. I wasn't making any personal uh Kevin, you're very well to do. Yes, sir. Hey guys, I'm James. It's really uh fortunate to have both of you in front of me, Ben, Kevin, and all of us.
Uh It's This is a kind of what would you do if you were in my situation? Uh real quick, unfortunate chain of events, lost my business in LA right when I was about to sell it, starting over, new chapter, boohoo, whatever. I've got a real estate license, I've got my mortgage lending operator's license, I've got rentals that have Each of them have between 50 and 90% equity.
God, accumulate about two 2.5 million. What would you do if you were starting in my situation, starting over where I'm at? You want to answer or you want me to answer? Uh we can both answer. Do you want to start or do you want me to start? All right. What do you like to do? Yeah, that's what I was getting at.
What do you got a passion for? going, yeah. What's going to make you money that takes up the least amount of your time, that you really enjoy? What? Selling real estate, selling loans, or working on your your your your rental properties? The third one. I love working on them, getting my hands dirty, and taking a piece of crap, fixing it up, and making it, you know, adding to the community.
All right. Now, listen. Can you find a deal? That's what it's all about. Anybody As long as you find a deal. Now, yeah, you're you got a lot of equity in your properties. And yes, interest rates are high. But If you could pull that pull that mic pack out a little and just put it next to the wherever the pack is.
Is it Pack? Yeah, just put it in and not not not the cigarettes. No, this. Yeah, put it on the table. I'll just put it on your lap. Hello. Hello. Hello. Hello. All right, listen, seriously. It might pay, even at 7% interest, for you to take some of that money out of your properties and invest it if you could find a deal.
Well, hold on, you don't have income, so you can't qualify. Right. I have a lot of equity, no income. You got to start start with income. You It's nice to fix up your properties, but Not at 70%. You have no income? I just lost my business, was about to sell. California Prop 13 laws, whatever. So, I'm just starting out.
You know, I could do Don't you have this cash flow? Yeah. I've never had a job in my really most of my adult life. All my All my Every loan I've ever gotten was because my tax return showed my rental income. So, what do you get? I mean, you you you probably need to you know, talk privately to me, but what do you know, do you have an income for your rental properties?
Yes, all of them are positive cash flow, but you do have an income, but how much? Yeah, not listen, a guy like you, if you have rental income, they look at that you have enough money coming in to take care of yourself. Commercial loans or commercial lenders base a loan on the property that you're buying.
Does that property you're going into going to cash flow? Is it safe for the bank to loan money on it? Okay, you don't have to have a job to borrow money. You don't have to have a W-2, but you do have to show that you can support yourself, and the deal you're buying's got to have cash flow. You're talking about doing flips.
I mean, have you ever sat down and looked at your cash flow versus if you did sell one of your assets off, what that can do in your life? If you got 50% equity in a property, or you said even 90, right? Yeah. It might pay for you to sell certain assets because maybe you could take that equity you got and turn it into something that's going to be far more better than the cash flow.
You got to sit down. Everybody's got a different menu in a different life. What's best for you? Do I refinance? Do I sell? Can I find another deal to take that money and put it into? What's your next move? You got to have a plan. What should I should I use the the real estate license or or the mortgage lending to help If you got a real estate license, have you ever sold a house before?
No. Have you ever sold anything before using a license? No. I like to buy. Well, you got to be a sales guy. If you're going to use that license, you got to go to an office and let them hold your license, and you got to find buyers, you got to find sellers, and you got to work that license if you want to do that.
I mean, you can if you got a license, but if I was you, I'd go to the most expensive real estate office there was, give it a try. Like I said, in California, you buy you sell something for a million bucks, you got a $30,000 commission coming in. Right. What was your prior job? I owned a private security company for the entertainment industry in LA and uh you know, California.
Prop 13 laws. Uh wiped that out. The issue I see is So, you said you had roughly $2 million or so of properties at at even if I took sort of equity in the property. That's the equity. Okay, great. So, so, you know, and these are in California? LA, yeah. Okay, so uh I mean, if if if I run this at like a a four cap, it's 80k of income.
I It's not enough to qualify on uh for more property. So, we got to get some income in the top line. Sure, you could sell a property, but then you're paying selling costs. It's a pain in the ass. Why why? The point is, if you buy something, you're going to need 20% down at least. Right. And you need cash.
And I like to buy and keep. I was thinking about using the MLO license to help other investors find deals, and therefore, you know, I'm I'm hooking up with investors that are the smart money that and find my own deals, and that's how You need income. You're a lender. Sure, you can do that. Yeah. But you need income.
Right. Got you. You get that income coming in, you can go buy as many deals as you want. You're not going to retire on two mil. Right. All right, thanks, guys. Appreciate you. Go buy a suit and go sell some real estate. Now, but seriously, you got to sit down and see what makes sense. You're The The problem with him is you're probably not sitting on a lot of cash, right?
Yeah, I got retirement. I mean, you know, you got to have money to make money. All right, let's face it. Go out, find a deal, raise the 20%, and you know, or maybe if you you know, if the bank makes you or you know, you may have to put 30% down. Find a deal where you can can get a loan. You can always get a loan, you just got to put more down, right?
The less the bank loans you, you know, the more they're happy. Yes, ma'am. Hello. Hi. Sorry, I'm a little loud. Um so, I was wanting to know it's it's for both basically both of you. Um your growth curves um instead of being linear like most investors, where you know, you pick up a deal every couple of years or um and grow your wealth over time, you guys are on almost on it like an exponential growth curve.
And I wanted to know, what do you guys do differently than other investors? What was the question? About I don't hear it good. Basically, how do you snowball your wealth so so well? Snowball. That's a good word. Snowball. I mean, you know, the what what With me was if there was a deal out there and I knew it was a deal and I knew I can do it, I did it.
All right, I used everything I had within my resources to just nonstop. Even today, I wake up every day, I get hundreds of emails of opportunities, and hopefully I'll pick that one deal out of them that's going to make me, you know, move up the ladder more. All right, you got to you just got to constantly use all your resources, constantly look for deals, and never get comfortable until you get to the point where you feel like, all right, I'm going to take a break.
You know, but you want to snowball, you just got to keep rolling that snow, you know, any way possible. Growing income is a substantial way to really help grow investments. And I know that's it's a boring answer, but it's also true. It's It's a lot easier to buy a home every year if you have more income.
So, what can you do to get that more income? If If somebody else is out there and they're making 500k a year as a real estate agent and you're making 50k a year, what are you doing that's different from them? And how can you do half of what they're doing? Great, now I can buy another one to two properties a year.
So, What are you doing right now? Do you mind me asking? What do you do right now? So, I live in a rural area, but um I have a real estate brokerage. Um we have 15 agents, and we do uh have a property management arm. We have 600 units under management. I also do uh fix and flips flips and have personal rental Okay, you're in a rural area, correct?
Yes. Well, the problem in rural areas, which are great, I just bought two apartment buildings in the middle of nowhere. Um the problem is you're limited. There's only so much money going on in these rural areas. So, the only way that you're going to be able to grow is to spread out. What what Where are you at?
Do you mind me asking? What what area? It's Ardmore is the town. it's southern Oklahoma. Oklahoma, okay. You're going to have to just spread your wings and you know, I always tell people, listen, they always call me up complain, I can't find a deal, I can't find a deal. Well, draw a bigger circle on your map.
You got to that's what you got to do. You got to expand your radius because there's only so much going on in one area. Did you start looking at bigger deals um as you got more equity? I always looked at whatever I always bit off as much as I could chew. That's what I did. If I could chew it, I bit it off and I tried never to bite off more than I could chew.
But if you're in a small area and you feel like you've exhausted all the opportunity there, okay, then you're going to have to expand. If you're doing property management, get more accounts. Maybe go into some you know, bigger properties or are you doing multi-family type property management? Um ours are mostly single-family that we manage.
Okay. Mostly single. Single-family. Single-families. Well, then start marketing to another area that you can travel to maybe. I mean or or if you have to travel or you know, you have to expand and you're doing brokerages, you're doing sales too, right? Yes. Well, then you have to start getting in other people's territory.
You don't nobody owns a territory. You know, you can go anywhere you want. So now, if you typically you're probably going about what, 20 miles out from where you're at right now? Uh yeah, 30 miles in each direction. Well, you might have to jump that up to 50. I don't know. I don't know what's the next money place in your area that you can start trying to get listings on, trying to market to.
I mean, you got to expand your area. Oklahoma's a big state. Okay, thank you so much. All right, good luck to you. Thank you so much Kevin for having this and Ben, it was great. My son's back and he's just wrapped attention listening to what you have to say. I want to circle back. You started out with something about the signs and we've had three people talked and one was very much about the hotels are full.
So everything's good. What are you saying? I missed it. He's he's he's asking about your worry about the market crashing. We had somebody who came here called Ross and he said, look, Vegas is busy, the hotels are full, there's no recession coming. Right and then we had Kathy Wood who who looks at all the numbers and says there's cracks in the foundation or at least the way I looked at it and and you talked about the signs and I think a lot of times when we do business it's about our outlook on what's coming down the road as to how we position ourselves.
So could you sum up what you see is going to happen over the next year or two as far as the economy, recession, not economy. There's opportunities in every market I believe, but you got to know what you're looking at. Okay. You already said it. There's cracks in the foundation. Okay. It is no possible way that people or or the banks are going to be able to refinance the the all the loans that they gave at today's rates.
It's impossible. Okay, I'm going to tell you something and the and the bank may not like me telling you this, but I'm going to tell you anyway because I ain't got nothing to hide. They sent me documents having me sign saying that I no longer have to meet the covenants of my loan. Believe that? No. You know why?
Because I can't. Okay? I borrowed that I borrowed millions of dollars based on certain covenants that the property was going to cash flow. And at today's interest rates, it's impossible for them to meet those criteria. So what's going to happen when that now that what I see what they're doing is they're playing pretend and extend.
They're pretending everything's okay and they're extending things out as long as the guy's paying. But sooner or later, the banks can't sit on these bad loans forever and people are going to stop wanting to have properties that don't cash flow. Okay, luckily I'm strong enough to handle it. But a lot of guys aren't and a lot of partnerships are not going to want to come in and make principal buy downs.
They're not going to make principal contributions. They don't do that. They're going to walk and they're going to say the hell with it. And anything that's non-recourse, okay, they're really going to walk. So I'm seeing Wall Street money all going up for sale right now. You got to look at the signs.
The signs are there. The writing's on the wall. Opportunity is coming and you got to be ready. But it's moving slow, but it's going to happen soon because it has to. Every loan is on a clock and sooner or later the clock is going to be up. Was that your question? Yeah. Yeah and I guess the real question is, you know, you look at that and you see the banks are how does that affect your day-to-day guy that's renting your properties and and that you're looking to it to you know, the the the are your clients and and are they going to suffer or do you think there's the demand in rentals is going to stay high?
How does that I mean, because homes are so expensive right now, it is a known fact, at least where I live, it's cheaper to rent than it is to buy. Yeah. I was just talking to a fellow the other day. He wants to buy a house and settle down. He's out looking for houses. I and he's looking at houses, you know, it would make sense if he could at least pay the same as rent, you know, with his mortgage, his taxes, his insurance.
But right now it's actually cheaper to rent. So the rental market is very strong because it's so expensive. We are from what I've read, we are at an all-time high of the lowest amount of applications and loans being processed. And all the bankers are starving right now. The poor real estate agents are starving to close the deal.
Okay, because things aren't moving. We're at a standstill. That's the problem when you know, government comes in and they do things and and it triggers things to happen and now they don't know what to do. You know, they claim they're handling inflation. I don't know what the hell they're doing. Buying down a debt.
I don't know. I don't understand the economics of it, but I can will tell you this, it's it costs too much for everything. Okay, now we we should be worried because rents have gotten extremely high. Of course, living's extremely high. Wages are going up which may be good for the the working person, but the business owners are going to get hit hard with that and if the business owners fold, then the workers get screwed and it's just it's a domino effect.
That's why we got to we got to regroup and go back to four years ago. We're going to go into a renter nation, 10, 20 years, more renters than owners? I don't know. I don't know. I mean, with interest rates being where they're at today, you know, people cannot afford to buy a house. It's a fact. I mean, even with that FHA low money down.
Yep. So you know, right now it's time to focus on what you can do to make some money in the future and I'm telling you, start lowballing and looking for deals and buying them at the right price. That's what you need to start doing. Good question. Okay. Thank you. It looks like we got about maybe three more questions here and then we're going to wrap up.
So go ahead. Hey Kev, hey Ben. Good to see you guys doing this. Uh quick question. So when constructing like a real estate portfolio, do you think it's important to have a balance between appreciation properties and like cash flow properties or how do you look at those different markets? Do you think it's important to have a balance between both in your portfolio?
You should have a diversified portfolio. I mean, you know, every asset is different. Okay, typically I always do this. I look at my asset. I run about 25 different properties at all times. They could be all different types of assets, hotels, apartments, triple net, shopping centers. I look at the asset, okay, and I say, okay, how much money is this place going to bring me in every year?
All right? Now I know that's and how much money do I have invested in it? Okay, so what's my return? Now, my ultimate goal in life was always to own real estate that cash flowed with no money invested. I always tried to buy a property, value added, refinance it, which is not a taxable event, right? Get my money back and in some and still cash flow.
Because you know why? That's an infinite return. Okay? I got a hotel right now. I paid 20 million for it. I borrowed 28.5. I'm already 8 million I'm already up 8.5 million bucks on the place and it still makes a million bucks a year. That those are the kind of real estate deals I always look for. It was a piece of [ __ ] when I bought it.
Yes, we fixed it up, but luckily the revenue paid for the fix up. I mean, I got that magic Indian, you know. But anyway, the point is, you want to look at what's best for you. To sit back and cash flow on this property or if you sold it, how much money would that get you versus the cash flow? I would much rather have a million bucks in my hand than a hundred grand a year.
That's me because it'd take me 10 years to make that a million bucks. But I could take that million bucks and maybe turn it to 2 million buying the right deal. Everything has to do with what's best for you, what kind of deals you're open to and if or you could refinance it, what's your cash flow going to be if you refinance it, pull your money out, are you still going to cash flow?
You got to sit down and look at every asset Every asset is different. I've never seen, you know, the two dissimilar assets, but every asset is different. You know, look and see what's the best thing to do with this property and what's going to make you the most money and what's going to let you grow.
If you sit back and you got a good cash flow, that's fine, but you ain't got no goddamn money to go buy the next deal. So, what good is that? All right, you make it 5 grand a month, that's great, but it can't do no more deals. That's the position I was in. I couldn't sit back with 5 grand a month. I couldn't grow.
So, I went out and I borrowed against that property. I may have gave up the cash flow. I might have sold the property cuz I don't want to own property with no cash flow. You got to do whatever is going to help you do to make you grow. But if you can have cash flow and have properties that will that are flips, you got to do it all.
Whatever makes sense. Whatever is going to put the most money in your pocket and enable you to grow. Fair enough. Good answer. Appreciate it. Excellent. All right, last two questions. Hey, my name is David. Thank you for the opportunity to speak to both of you guys. This is awesome. Great. Um my business is in uh providing facility services for retail and restaurant companies like multi-location companies.
Uh retail uh services for retail companies like restaurants and Yeah, retail, restaurants, multi-location companies. What kind of services? Um handyman, electrical, plumbing, things of that nature. Like maintenance checks. Yeah. I know the owner, okay. Okay, great. Um are you finding it hard to put tenants into your strip malls and your stand-alone commercial buildings?
Cuz that's what I'm wondering if that's a good place to even buy into because I look at some of our customers. We watch some of them go under and then I see those spots not being filled. Retail can be very tricky. Now, what happened to us was we didn't know anything about retail. We were strictly apartment buildings.
We did the C class. We did the B class. The problem is we couldn't keep growing. The prices went too high. Everybody and their mama got into multi-family. The prices went through the roof. All the California people had all their money. Anyway, what are we going to do? We got to We got to buy something.
Well, we won't be able to grow. We We couldn't find none for our 1031s. I don't want to pay the government millions of dollars in tax. We went into retail. And we went into everything. And now I can safely say I have experience in retail. And I got a lot of experience. So did my sons by learning. It's not that easy, but it can be very profitable.
It's just like every other aspect of real estate. It's all about supply and demand. You have to own property where there's a demand. Now, yes, the beauty about retail is if you go out and you find a shop a strip center that has about five or six shops in it, right? Typically, hair, nails, food, necessity, things that even COVID can't kill or the Amazon or online can't hurt.
Things that people can't live without. That's typically what strip centers are or should be. Now, if you go out and you find a six-unit one and two of them are empty, well, ding ding ding, baby. You get those two spaces for free and you got instant value add. And that's what we look for. But what does the place need to get them rented?
You need to have maybe get a leasing agent that specializes. Maybe you need to contact other people that are doing well and see if they want to open up a space. You need to put up a good sign. You might need to fix the parking lot. You might need to paint the place. You need to figure out what you can do to get somebody in that space of what's not there cuz you can never compete with your own tenants.
They have special things in the leases anyway that prevent it. So, hair, nail, food, believe it or not, child care is very big now. Whatever you feel you can do to get that space filled. Or what we've had a lot of success with is a lot of big boxes, you know, having trouble renting. Everybody's shrinking down because of the internet.
Best Buy, they don't take big stores anymore. You know, look at what happened uh Bed Bath & Beyond. They went belly up. All right? So, what do you do with all these big boxes? Nobody wants to rent them. So, we've had a lot of success in coming in and reconfiguring them into smaller spaces. We had a bank we bought in a shopping center we could never get it rented.
Nobody wants this big ass bank. So, what do we do? We went in. We tore a goddamn wall down the middle. Now we got two smaller spaces which were in demand. So, instead of 4,000 square feet, now we got two twos. We rented them like that. One went to a veterinarian. One went to a smoothie guy and we lived happily ever after.
You got to You got to look for opportunity in retail. All right? The money is in the vacant space and you getting it rented. Because when you buy it, you're getting it for free. You buy retail based on a cap rate. And that's based on the income that's being generated. And you're mostly renting to the small businesses and stuff like that.
You're staying away from the national guys mostly. Maxx. I rent to Ross. I rent to everybody on every level. I've rented to medical marijuana the other goddamn couple of weeks ago. Why months ago? Because they offered me a big [ __ ] rent, pardon my language. They offered my son a rent that was just ridiculous.
Take it. Problem is the banks don't like loaning on it so much. So, we're not going to get no leverage on that place, but that's okay. They pay me like double rent. Every property has a different story. You got to find the story that makes sense for that property. So, look for opportunity in retail in the vacant space.
And then figure out how to get that space filled. And we pay leasing agents. We're happy to pay them. We pay lots of money to leasing agents. You got to find the right people that are doing the right job that you need. And that's it. Yeah. But always check the roof. Especially all those flat roofs on the strip malls.
Yeah. Every 5 years. It can cost you a million bucks. I Anybody here you ever heard of Publix? Publix grocery? Oh my god. I had to put a new roof on a Publix. A million bucks. What am I going to do? I had to do it. I was responsible for the roof. Uh what's one of the reasons I like uh single-family myself like a three-bedroom, two-bath.
Always rents. Instantly. I don't have to I don't have to wait. There's always somebody wanting a three-bedroom, two-bath. It's tru and .
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