Making Connections Through Local Real Estate Meetups
Young Park is back for his second appearance on the YFP Real Estate Investing Podcast to share encouraging stories about his achievable wins and how to make connections through local real estate meet ups.
About Today’s Guest
Young Park currently serves as an Ambulatory Care Clinical Pharmacy Specialist at the VA Pacific Islands Health Care System in Hawaii. He moved to Hawaii for this specific position after completing a PGY1 residency at the VA Sierra Nevada Health Care System in Reno, NV. He completed his undergraduate study at the University of Georgia, then completed the Doctor of Pharmacy program at Philadelphia College of Osteopathic Medicine (PCOM) in Georgia.
Young started learning about financial independence and investing after making the far move to Hawaii. His big “why” is to help provide financially for his parents and to be able to spend more quality time with his family and loved ones. He’s working towards financial independence through investing in out-of-state cash-flowing rental properties using the BRRRR strategy.
When he’s not working, he serves at his church on the Sound Team, enjoys Hawaii’s beautiful beaches, and learns about personal growth and investing.
Episode Summary
Welcome back to the YFP Real Estate Podcast! In today’s episode, we catch up with Young Jae Park, our first two-time guest on the show. Young is back to share some encouraging stories about his achievable wins and some sage advice that you don’t need a home run in every deal. Young’s strategy is something anyone at any stage of life could learn from, that the binary mindset of failure versus perfection will only limit your pathway to learning, and that “Growth only comes from being uncomfortable.” We begin the conversation with an update on his three recent successful deals, including some specific numbers and where he learned the negotiation style he uses. Discover some valuable insight on transparency and the benefits of open communication with your tenants, as well as how Young approaches each deal as if taking it down for himself. We also talk about re-entering the world of physical meetups; you’ll hear some super helpful advice for newbies who are nervous to enter the crucial scene of networking, as well as how to get started. From the ins and outs of delayed cash-out finance to the tripod of due diligence and trialing your general contractor, we cover a little bit of everything you want to hear. And make sure you stick around for the final question that he answers because he knocks it out of the park! If you are a pharmacist just getting into real estate, or someone more experienced and just interested in a refreshing and growth-driven take, look no further. This episode is for you!
Key Points From This Episode
- Young updates us on his three new purchases since his last appearance on the show.
- Living proof that you don’t have to only go off market to find deals right now.
- Young explains the ins and outs of a delayed cash-out refinance.
- Using a general contractor when you invest in a different location from where you live.
- He reflects on his experiences of needing to trial a new contractor.
- Young explains his negotiating technique and shares the numbers on a recent purchase.
- How the BRRR game shouldn’t be viewed through the lens of failure versus perfection.
- How Young always makes the deals as if he’s taking them down himself.
- Bringing down the fear at the offer stage, and walking away when it’s not the right fit.
- Some crucial questions you need to be asking and working into the contract.
- Young outlines the three big things for due diligence; legal, physical, and financial.
- A golden tip on transparency when it comes to working with and learning from tenants.
- Some great advice for nervous first-timers preparing to join the networking scene.
- Hear how a meetup connection of Young’s resulted in a win/win situation.
- How comparison is the thief of joy; don’t compare yourself to veterans of real estate.
- The best ways to find a meet up near you.
- Young’s parting wisdom; “Growth only comes from being uncomfortable.”
Highlights
“[BRRR] is not really considered failure just because you can’t pull out all the money invested in the property. People either don’t do it at all or get 100% done perfectly. It’s got to be somewhere in between.” — Young Jae Park [0:14:26]
“When I’m making these offers, I’m making these offers as if I were to take down the deals myself. If the deals make a lot of sense, I will take it down. If it’s something that maybe I’m not looking to take down myself, then I will see if anyone is interested.” — Young Jae Park [0:21:24]
“Comparison is the thief of joy. Don’t compare yourself to the other people who’ve been in the business for years, or even decades ahead of you. It’s only right that they know much more than you, and you’re just at a starting point. They should be your motivation.” — Young Jae Park [0:36:09]
“People in the industry, and if they are good people with good intentions, they are going to want to teach you, as long as you’re willing to learn and retain and study more and show progress to them, right? Everyone has gone through what you’re going through right now.” — Young Jae Park [0:36:49]
Links Mentioned in Today’s Episode
- YFP Real Estate Investing 15: Long-Distance Rental Property Investing
- MLS
- Never Split the Difference: Negotiating as if Your Life Depended on It by Chris Voss
- Connect with Young Park on Instagram: @young_j_park
- BiggerPockets Real Estate Events and Happenings
- Meetup
- National Real Estate Investors Association
- YFP Real Estate Investing
- Join the YFP Real Estate Investing Facebook Group
- Your Financial Pharmacist Disclaimer and Disclosures
Episode Transcript
[INTRODUCTION]
[00:00:07] NH: Hello, and welcome to the Your Financial Pharmacist, Real Estate Investing Podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick, and each week, my co-host, David Bright, and I explore stories from pharmacists all over the country, who are achieving their real estate goals, while maintaining a meaningful career in pharmacy. Whether you’re a first-time investor or a seasoned pro, we’re here to provide education and inspiration about the world of real estate.
Please note, this podcast is intended for educational purposes only, and should not be considered financial or investment advice.
[EPISODE]
[00:00:41] NH: Hey, David. How’s it going?
[00:00:43] DB: Hey, good. Thanks. How you doing, man?
[00:00:44] NH: I am quite well, sir. Thanks. We just got an awesome interview with Young, our first two-time guest. We brought back Young Jae Park to talk all things real estate and it was nice. Again, every time we talk to Young, I feel like I learn new stuff and I get fired up. He has a really great mentality about him.
[00:01:00] DB: Yeah, he’s great to talk with, and in this calm, but encouraging way out. Yeah, I agree with you. Feels like, now I want to go do something. He’s just a great guy.
[00:01:11] NH: Exactly. It didn’t help that the weather was gorgeous in Hawaii while we’re talking to him and we’re dealing with a cold snap here in Cleveland, Ohio.
[00:01:18] DB: Yeah, people that are only listening to this, because this is audio-only podcast, right? But yeah, we get that we get the video on our end. Yeah. This is one, if you are also sitting in a cold house somewhere in the Midwest, yeah, not a good time to be video chatting with someone in Hawaii, that’s for sure.
One of the other things that I really like that Young went into is that you just don’t need a home run in every deal. I think, that there’s just one of the things I like about talking with him, is there’s just a lot of transparent honesty in there, where he talks about the BRRRR Method, the buy, rent, rehab, refinance, repeat process. Where, in that process, you’re trying to make sure that at the end of that you’re not leaving a lot of money into that. You’re buying discounted properties, and through a cash-out refinance, by fixing the property up, you’re increasing the value substantially, so that you can do a cash-out refi and get your money back.
A lot of people put that on the pedestal, it’s like, “That’s what I want.” I love that Young talks about how, that’s great if you can get that, but you don’t need a home run in every deal. He talks about some great base hits that are just great investment options for him without maybe being the most stellar thing you’ve ever heard of, but just great encouraging stories about achievable wins.
[00:02:31] NH: Yeah. I think that’s super important, especially when trying to get started, it feels like you have to be this uber-successful person, or else you’re not doing anything right. He just shows time and time again, that’s not the case. There’s a really cool bit in there. We talk about meet-ups toward the end of this podcast. I just think it’s awesome that he’s sharing that experience with others and learning from others along the way. Just overall, a really great time to walk through and learn more about what meet-ups can do for you in terms of networking, and especially when it’s hard to get back out and seeing people in person again.
[00:03:03] DB: No, for sure, for sure. I think that some of that in there, one of the things you weaved into that discussion of meet-ups is even how just getting started in this. There’s so many parts of the real estate investing process, it can feel really intimidating, whether it’s writing that first ever offer, or connecting with a realtor for the first time, or even trying to figure out what book am I going to read to start with, or something like that, going to a meet up for a first time can feel really intimidating. He has this great nugget at the end about being uncomfortable and how that can drive growth. Make sure you stick around for the final question that he answers, because he knocks it out of the park.
[00:03:41] NH: Absolutely. All right, we’ll take you guys to the episode. I hope you enjoy.
[INYERVIEW]
[00:03:45] NH: Hey, Young. Welcome back to the show.
[00:03:47] YJP: Hey, Nate. Thanks for having me back. How are you, David?
[00:03:50] DB: Hey, good. Thanks. How you doing, man?
[00:03:52] YJP: I’m doing well. Nice weather today. I know we were talking about that earlier. I’m sorry.
[00:03:59] NH: Yeah. Young, you’ve got high 70s in Hawaii. I think, it’s an overnight low of 26 tonight here in Cleveland, so I’m really excited about that.
[00:04:09] DB: Yeah. We’re both scraping our cars in the morning while you’re enjoying. It’s awesome. It’s awesome. It’s that time of year. Yeah.
[00:04:17] YJP: Yeah.
[00:04:18] NH: What that tells me, David is we need to start investing where we live and living somewhere else. I think that’s the better play.
[00:04:23] DB: Yes. Yes. Young has that figured out. That’s for sure.
[00:04:25] NH: Exactly.
[00:04:27] DB: Yeah. Young, tell us, you’ve been busy since we last talked. We have a lot to go over. That’s why we wanted to have you back on. Can you give everybody an update on what’s been going on?
[00:04:34] YJP: Yeah, of course. I think our last recording was July. Since then, I’ve actually purchased three properties. The first one of the three I purchased was a property with a tenant in place. I found it on the MLS. This was a cool one, because I was able to purchase it at a discount by using all cash and then I was able to increase the rent as soon as I close on the property. Then what we did was, do a quick cash-out refinance on it by using delayed financing, which appraised higher than my original purchase price. I was able to pull a good chunk of the money back out. Even though it was not a BRRRR, I was able to still purchase it at a discount and increase cash flow with very little work put into it.
Yeah, and besides that, and more recently, I’ve purchased two more properties that I also found on the MLS. The first one is a two-bedroom, two-bath with an unfinished basement. This would be a value-add play to make it a conforming three-bedroom, two-baths. It’s in a nicer location with a higher ARV. I’m actually in escrow with an end-buyer for this one, while the buyer is trying to get it financed through a bank.
The last one is, it’s a small two-bedroom, one-bath with a crawlspace. There’s no room for value yet, but it’s going to be a quick rehab, that doesn’t need much work to get it performing. Honestly, this ended up being a great opportunity for me, because I was able to work with a new general contractor on a small project like this, so that we can get a feel for each other, and then to see if we can work towards building a long-term relationship. So far, I’m really pleased with the results.
[00:06:16] NH: So many good things for us to break down in there. If I’m going to pull out one thing right off the bat, it’s that you found three deals on the MLS in a time where everybody is telling me that you have to go off market, or you can’t possibly find a deal. Talk to Young, living proof, you can absolutely still find deals on the MLS. I think that’s a really cool story.
[00:06:35] DB: Yeah, one of the things I want to pick out of there real fast, going back to that first one, you had a deal where you bought it all cash, and then you completed a delayed cash-out refinance. I love that strategy. Can you explain the difference between that delayed cash-out refinance and just a general refinance or cash-out refinance?
[00:06:55] YJP: Okay, I will try my best. I have to brush up on my memory. Delayed financing, you can actually start this process as soon as you close on the property actually. It’s in a way similar to the “regular” traditional cash-out refinance through Fannie Mae Freddie Mac. The caveat is that if you probably won’t be able to get, or there is a way to do this and we’re not going to go down that rabbit hole, but there’s a way to put in your rehab into the escrow when you purchase it. If you don’t do that, you’re not going to get the money back for the rehab that you’ve put into.
Compared to a full BRRRR, if you’re just not going to get that full appraisal and getting that full cash-out refinance back out, but the advantage is that if you’re not really putting in any work into it, or very little, like what I did, you’re able to pull out that money and make it liquid much quicker than waiting six months in a day, because you have fewer to do it with a traditional cash-out refinance.
[00:07:57] DB: Yeah, and I think that’s a big key, there’s those traditional cash-out refinance. There is that six-month waiting period or you can’t do that refinance till the six month passes, but with the delayed cash-out refinance, there are some limits on how much you can pull out like you mentioned, but if you’re not putting a ton of cash into the property and you’re not looking to make an enormous cash-out, then you can still do these all-cash purchases like you did. Which helps you to be really competitive on MLS deals in this market, but then get that cash back out without having to wait that six-month waiting period. Particularly when you can get that deal because of the cash, I think that can be a great strategy with just a conventional mortgage.
[00:08:40] YJP: It is. Yeah. You’re leveraging your cash. Worked that well for me.
[00:08:45] NH: Something else that I really like there, too, is that trial of the new contractor. I was actually just speaking with a person today, a pharmacist today that’s thinking about getting into investing, and they were trying to learn more about the real estate investing space. One of their concerns was like, how do you learn this stuff? How do you learn how to budget for rehab and hire a contractor?
Anyway, basically, what it boiled down to it, my advice that I gave was, take it one step at a time, right? Don’t jump in and say, “Can you rebuild this house for me?” Start with, “Let’s do a small job, put in some flooring, put up some paint, and let’s go from there.” That’s exactly what it sounds like you’re doing, right? You’re trialing somebody new on at least somewhat smaller jobs, that you can see how that person works out and then learn how to grow from there, which is a really cool example of what that actually looks in practice.
[00:09:28] YJP: Yeah, you nailed it there, Nate. Yeah, that’s exactly what I’m doing, because I’ve been burned by another contractor who did a very heavy rehab, and it just did not turn out well. We have to separate. I don’t know if we talked about it on the previous podcast, but that’s what happened. Actually, this guy that I’m using, this contractor was a guy who stepped in to complete that property. Now I’m working with him on the smaller one. Yeah, I think he has the capacity to do bigger rehabs, but we’re just again, building that relationship right now.
[00:10:00] NH: Something else importantly, just shrug my memory on to, is that it does not have to go perfect every time, right? You guys, you had a bad situation you separated out and then figured it out since then. It doesn’t have to be perfect right upfront. I think, a lot of people get stuck on. It’s either, I can do nothing, or I have to do everything perfect. It doesn’t always have to go that way. You can learn from your mistakes. There’s grace in this process.
[00:10:23] DB: One of the things too, just from a definition standpoint, using the term general contractor. I’m imagining that means someone is supervising everything that’s going on that site, is that what you’re meaning there?
[00:10:33] YJP: Yeah. Again, I’m not too familiar with the specific definition, but general contractor, usually they are licensed by the state or the county. They have years of experience where they are able to manage the full process of rehab. They either have their knowledge of their own within their own crew to do all the work, or they can sub out to subcontractors, but still be able to manage the whole project.
[00:11:01] DB: Yeah. I think, that’s really a helpful strategy for investors that are trying to not be there all the time on site, either doing a lot of the work or supervising an enormous team. You just have one person, one general contractor, that’s a point person, for everything going on. Presumably, you pay a premium for that, because you have that one person managing your project for you. But it makes it really manageable, particularly when you’re at a distance. Can you refresh everyone for a minute, where you live versus where you invest?
[00:11:32] YJP: I live in Hawaii, on the Honolulu, Oahu. I invest in the Kansas City Market. Right now, specifically on the Missouri side. I’m investing from out of state.
[00:11:42] DB: Yeah, so with that approach, I think that general contractor model of having someone to be your boots on the ground and do all that for us huge, but even for folks that live in the same town, or could go by and do a lot of that work that as busy pharmacists, that doesn’t always fit with what we’re doing and what we’ve got going on in our pharmacy world. I think that makes a lot of sense. I really like that strategy of taking on a more manageable project, a smaller project to see if that’s a fit with a general contractor. That’s great.
[00:12:11] NH: You know, Young, one of the things that’s come up recently, at least, especially on a couple past webinars is running actual numbers and getting some practice on what those numbers can look like. Maybe you could take us through one of those deals, since they’re pretty recent, and just walk us through the actual numbers and what that looks like.
[00:12:27] YJP: Sure. I can share the one I recently purchased. I’m actually taking this one down myself. This is that smaller two-bedroom, one-bath with a crawlspace. This property was listed at $82,000. After negotiations I got it down to $72,100. It is an interesting number. Yeah, I know. There’s a whole negotiation strategy behind this, but we won’t get into this on this, unless you guys really want to go down that rabbit hole, we can do that.
[00:12:59] NH: I’m sensing, some never split the difference in there?
[00:13:02] YJP: A 100%. You got it.
[00:13:04] NH: My man. That’s my favorite book. I love that.
[00:13:06] YJP: I know. Yeah, I’ve been doing that and we could talk more about that if you want too. Just to go down the numbers, this property is located very close to the Kansas City Chiefs and Royals stadiums. I actually thought about even doing a short-term rental on it. However, based on my brief research and looking up on Airbnb and VRBO, there seem to be only a handful of properties that are getting consistent bookings. I was a little bit hesitant, and the property management company that I reached out to, they didn’t respond back in a timely manner. I just decided to stick with the long-term rental, which was my original plan.
The rehab on this property will be about 17,000. The total, all-in, would be around $89,000 to $90,000. I’m estimating the ARV to be around $95,000 to a $100,000. The rent on this property would be about $850 to $950. Although, this is the holiday season and in the Midwest, it’s probably not going to get the highest rent. I’m just sticking with a lower number, but it’ll still cash-flow, right? Again, this is not a homerun type of a deal, but a base hit, which I’m 100% okay with.
One thing I want to point out about the BRRRR is that, it’s not really considered failure if you just because you can’t pull out all the money invested in the property, like you guys mentioned earlier. People either don’t do it at all or get 100% done perfectly. It’s got to be somewhere in between. There are other things that you need to consider. You’re probably getting a discount and getting a bigger cash-on-cash return on the investment if you are doing a BRRRR and still not getting a full 100% of the money back out, and you’re also rehabbing parts of, or the whole property so you know which are items you can defer the capital expenditures, or repairs further down the road, so you know which items are going to be good for a long time. Those are all the advantages of BRRRR that you don’t see on your calculator.
[00:15:14] NH: Those are great points and a great example of what that can look like. I love the idea of just, you don’t need a home run every single time, you can get that great base hit and recycle a lot of that capital for the next deal, and you’ve got a cash flowing asset that’s going to help you out for the next 30 years or longer, depending on how you want to play it. That’s awesome.
I love that. I do want to push you a little bit on the negotiation, because I think that’s cool. I think that in this market, I don’t get a lot of opportunities to negotiate anymore. It’s just a money fight. Whoever can throw the most money at the problem gets to win. But tell me a little about, how did the negotiation go on that? How did you get someone to actually be at the table with you?
[00:15:47] YJP: Yeah. Again, I’m out of state, so everything is done through my awesome realtor, by the way. First of all, I learned this strategy that we’re going to talk about from the book called Never Split the Difference by Chris Voss. Yeah, Nate’s already aware of it. I hope David is aware of that, too. Basically, he’s a former FBI terrorist negotiator. He’s just got a ton of experience, and pearls that can be applied to any type of negotiations. What I would normally do is start with a lowball offer. You can’t just throw lowball offers on all of them. Some of the way I would approach is maybe you look for those properties that’s been sitting on the market for at least three weeks or so.
They’re just slowly cutting down in the price. If they’re not getting – going under contract, that’s probably overpriced in the first place and they might start getting a little bit more antsy and more motivated to sell if they really need to sell. Going back to what I was saying earlier, I would place a “lowball offer” as an anchor. This is testing the seller’s motivation, and you’re weeding out a lot of prospects at this point. If they are willing to negotiate, that’s a win, because they’re willing to talk and we’re up for negotiations. They’ll give maybe a little bit of a price reduction, but not quite at the price point that you want. What I would do is just thank the seller for being very generous for coming down on their price.
However, we just can’t do the price that you’re asking at, so my number might be slightly higher, and go back and forth. At one point, what I would do is throw out a really, really odd number. In this case, I threw out something like $72,100. From the seller’s point of view, this sounds like your offer is really well thought out, well-calculated, even though it’s just a number. You didn’t put that much effort into it. From the seller’s point of view, they’re thinking that, “Oh, wow, he really crunched the numbers and got down to nitty-gritty numbers.” At this point, the sellers will either come down on their price, or even match the price that you offered at the end. That’s worked out for both of the two properties that I recently closed on actually.
[00:18:13] NH: Something important in there too, is that you have to have a real estate agent who’s willing to, to be okay with that strategy, right? That you have to have them be confident in going in with a lowball, and not feel like they’re going to be unwilling to deliver that for some reason, or uncomfortable delivering that. Again, just having a rockstar agent and letting those principles be applied by them, that’s huge. You’ve got a great team. That’s something that we brought up last time that I think really helps.
[00:18:37] YJP: Absolutely. You got to have your rockstar agent, like Nate and David.
[00:18:45] NH: I appreciate the shameless plug. I don’t know. That sounds like some serious negotiation.
[00:18:49] YJP: You really do, because it’s, we’re more needy than some other folks, possibly because we are investors. If the realtors are able to work with us, they’re – literally, my realtor got three properties closed within the last three, four months with me. That’s a huge benefit for them, huge benefit for me. As long as they’re willing to work with us, you know, then we can just reap the benefits.
[00:19:15] NH: I need some more clients like you.
[00:19:18] DB: I think that shows that value of a team. We talk all the time about team and health care, just like team in real estate out. In this case, having that great realtor, plus a buyer that has developed that mindset, developed his negotiation skills, developed all that, done all that prep work, that team of that great realtor, and a well-prepared buyer can help to get good deals. In this case, it sounds like you were very successful with those three closed deals. You talked about those two that you’re keeping, the cash-out refinance, the smaller rehab, but then you also talked about this value-add and an end buyer for that one. That’s a little bit of a different strategy there. Can you walk us through that one and what did you do with this extra deal that you might not have had capacity for otherwise, but you were just extra successful with getting deals under contract?
[00:20:05] YJP: Yeah. I understand that people can, in a way be a little bit shocked. I was like that myself. I was pretty shocked when I found out that both of my offers were accepted, I think on the same day, or maybe a day apart from each other. When I got the deals, I knew I wanted to offload one of the properties, okay? With both properties, I did get the inspections done. I got the bids for both properties. Based on these numbers, of course, we’re trying to get more price reduction after we go into contract, which is very important. From this point on, I knew I wanted to offer the one of the properties and there are several investors here in Hawaii, who are looking to invest in a cash flow market and they are looking for deals to come their way.
What I’ve been doing is to just try to find these properties and get them at a steep discount, and then find end buyers who may be interested. I’m not really making much money doing this, but this sharpens my skills of analyzing and putting in offers and negotiating. I’m also able to provide value to the people who are looking, but they may not have the time, or the effort to find their own deals.
Another point I want to make is, when I’m making these offers, I’m making these offers as if I were to take down the deals myself. If the deals make a lot of sense, I will take it down. If it’s something that maybe I’m not looking to take down myself, then I will see if anyone is interested. There are usually buyers who are interested. It’s worked out so far.
[00:21:48] DB: Yeah, that sounds like, I think that fear a lot of people have when they’ve been told that they should be making a lot of offers, right? The only way that you’re going to get a house is if you make a lot of offers. Then there are these situations you can run into where you’re saying, either on the same day or a couple days apart, two offers get accepted out of nowhere. I don’t know if you are offering many times and just continually striking out and then suddenly, two appeared out of nowhere. That’s almost a good problem to have. I think, a lot of people are just fearful of that in general. What are some other things that can help to bring down that fear at the offer stage, particularly if someone may not have other contacts to pass off a deal to, or something like that?
[00:22:29] YJP: That’s a good question. You got to, I guess, pick and choose if you’re not able to take both deals down yourself, if you don’t have the network that you may be able to share the deals with, that just has to come down to, is it worth pursuing one or both properties, or neither properties? That comes down to you. What is your criteria and are you willing to take them on?
[00:22:58] NH: You actually had a deal recently like that, where you decided to walk, right? I saw that. I think, I saw a post on Facebook on that, where you actually were buying into this, you had accepted, or had an accepted offer. We started the due diligence process, but then walked away. That can be tough, to be able to go in and say, “Never mind. This isn’t a good fit for me.” Can you tell us, at least a little bit about that, or how you manage that to make sure that it’s obviously didn’t hinder you, but how do you do that? How do you pull that off?
[00:23:21] YJP: Yeah. I think, some of that has to do with just doing your homework and doing the due diligence, like you talked about. That specific example, it was a deal that seemed way too good to be true, and it was. So my realtor –
[00:23:37] NH: Funny how those work out.
[00:23:40] YJP: My realtor brought me the deal, telling me the seller was willing to give over 30% discount from the listing price. I had to do absolutely nothing to get the price down that much. The property had a section 8 tenant in place. At least from the photos, it looked to be in a very solid condition. Long story short, basically, we found out there was an HOA with rental restrictions, where the owner has to live in the property for the first two years before it can be turned into a rental property. That was an easy no.
I’m pretty sure, the previous buyer, if I remember it correctly, looking on Zillow the date it was sold. I think, it was within the past year. They found out the hard way and just trying to sell it at a discount and just get rid of it. Going back to what we did with it, we actually saw that there was an HOA fee associated with the property and you can easily look this up on Zillow, or Trulia. You can see if there’s an HOA fee or not. Once we saw that, my awesome realtor added a line under the additional terms and conditions, saying that the seller must provide the HOA rental rules within three days of executing the contract. Eventually, that really protected and allowed us to back out of the contract without losing our end, because the seller’s agent actually did not provide the HOA restrictions or rules within the three days.
Eventually, we did find out what we talked about earlier, there was an actual restriction from the HOA, so it wasn’t going to be a good deal for me. Because we had that, I guess, in a way, disclaimer saying, you have to provide this, or else we can back out. We were able to back out without having any of our money put into it.
[00:25:48] DB: Yeah. I think another one that can be like that too, is not just those HOA rules, but can I see a copy of the lease? Is the tenant paying? I think, particularly right now in COVID times, there’s concern that tenants may be there and not paying. At least in my market, I’ve seen where that’s another reason why an owner may be willing to sell a property really cheap, because they have a tenant in there, they can’t get the tenant out, the tenant is not paying. It can be a problem there. Whereas, without some of those things in the contract, without working with a great agent that knows to ask for those things, yeah, there’s some unfortunate surprises that can pop out of that inspection period. Yeah, definitely, definitely need to have those pieces in there.
[00:26:27] YJP: Yeah, and I think you guys hit all three things. I actually mentioned this on one of my Instagram posts. The three big things for due diligence, you got to do the physical inspections. You just check the status of the roof foundation, HVAC, plumbing, etc. You want to get legal issues, or check on that, check for HOA rules, liens on the property, title, search, etc. Lastly, financial due diligence; if there’s a tenant in place, you want to check their lease, rent rules, repairs. I would even go as far as speaking with a tenant, which I did on the first property that I shared. That gave me the goal to pursue with the property and close on it.
[00:27:09] DB: Yeah, that speaking with a tenant is a great tip that I’ve heard before, too. One of the things that I’ve found just in walking properties is even asking that tenant, “What are some things that the landlord has fixed lately, or that the landlord still needs to fix?” That tenant will sometimes give you a long list of deferred maintenance items and make your inspection period really, really simple. Anything else you’ve learned from a tenant, or how you’ve worked through those conversations?
[00:27:34] YJP: Yeah. I got this tip from my mentor, [inaudible 00:27:37], because that’s what they do. This was really a fruitful conversation, because I got to speak directly with the tenant and just asking them, coming from the position of you wanting to help them, you want to provide a good place for them to live in. It’s their home. I asked, were there any things that kept getting – like you mentioned, “Are there things that keep coming back for repairs? Are there things that you want me to repair?”
Just having those discussions upfront really, I think, puts us at a good start from the get go. This also, in a way puts them – brings up to a good conversation, where it leads to bringing up the rent, because they were paying way below under market rent. Me just by providing these things that they want or need, we’re able to just carry that conversation over with the property manager. I don’t personally do it, but the property manager is able to have that conversation.
[00:28:42] DB: Absolutely. I think those tips are great things and we all just pick up along the way in different places. One of the ways that I’ve had a chance to learn a few of those things is even from just local real estate meet-ups. I know one of the things you’ve been doing lately is getting much more into the networking side of things and even starting your own meet-up. Can you back us up for a minute and talk about what is a real estate meet-up and why might an investor want to attend a meet-up?
[00:29:09] YJP: Yeah. Basically, a meet-up is people gathering together and share information, right? That’s what that is. There are different meet-ups of course, but if we’re talking about real estate investing meet-up specifically, there are different types of meet-ups where it could be very broad in general, which is the approach that I take for the in-person meet-up. There are people with just various levels of experience, whether you have tons of experience, you’re just getting started, you have 5 to 10 properties, or whatever it might be, we’re just trying to get people together, so that we can learn together and share contacts and see what value each person can bring to the other person, and just be able to work together.
[00:29:58] NH: You actually started your meet-up, right? It’s the one that you have locally. There wasn’t one before that and you’re like, “Look, I can do this.” What prompted you to go that route? I think that’s awesome.
[00:30:06] YJP: I wouldn’t say that there weren’t any other meet-ups. There are. Yes, I did start one recently, actually a couple months ago as an in-person meet-up. My good friend, Brandon and I, we’ve been hosting a monthly Zoom meet-up called The West Side Real Estate Meet Up. We host that monthly basis and this has been going on for the past year, almost two years, pretty much since COVID started. At one point, we’re just getting very, very comfortable doing online meet-ups and not meeting people in person, or not as much. That prompted us to, “Hey, let’s actually start meeting people in person again.”
I know some other states in the mainland, they were doing that way ahead of time. Hawaii has pretty strict rules, so we have to take it slowly and we have limitations on how many people can gather, things like that. It was just nice being outside and get to talk about real estate, eat some snacks, and just share and just – you shake their hands, have a fist bump or whatever you want to do. It was just nice doing that.
[00:31:15] DB: I know one thing, particularly for some of these live meet-ups and we think about the typical pharmacist personality type, there’s a lot of pharmacists who are a little more introverted, I mean, the thought of a meet-up may not be the most exciting thing out there. Do you have any tips for pharmacists that may not feel super experienced, may not feel like they have a lot to share, but they’re thinking about going to one of these? How do you come out of your shell a little bit and make that a good experience?
[00:31:39] YJP: Trust me, I’m a 100% introverted. I struggle with this all the time. You’re not alone pharmacists. After meet-ups or social gatherings, I’m just knocked out cold. Just for tips, if you’re a pharmacist and brand new, and you want to start attending these meet-ups and you’re not comfortable, what I would suggest is maybe start with doing some basic research about real estate. Grab a book, watch some videos, whatever it might be, so that when you’re actually attending a meet-up, you can somewhat follow what the other person is talking about. That’s just to get started. You don’t have to know everything, but at least know some terms, some vocabulary, because that will take you a long way.
Another thing might be, maybe go with a friend, or your significant other who’s interested in real estate. That way, you at least have someone to fall back to. You might feel much less awkward, at least in the beginning. Lastly, let people know that this is your very first meet-up, and just be ready to learn. I promise you, people actually get excited to see someone who’s coming up to a meet-up for the first time, because they’ve all gone through it at one point. They had to have gone through it to actually be there. They know what it feels like to be at a meet-up for the first time.
Those with good intention, and most people are, they’ll root for you and may even give you valuable information, or even offer their time. I would suggest that you bring pen and paper and take notes and learn. If you hear a topic or vocabulary that you’re not familiar with, write them down and look it up when you go home, so that next time you hear it again, you’re able to follow along and have – just join that conversation. Those might be some of the tips that I would give for maybe newbies, or people who haven’t gone to meet-ups yet.
[00:33:38] NH: I love that. I think that’s great. A good use of their time, instead of just showing up and not knowing what to do. I think that’s smart. I know this comes up a lot when I hear people talk about meet-ups and going. Do you have any stories of when it’s making one of those connections has helped you find a deal, or help somebody else find a deal, anything like that?
[00:33:57] YJP: Yeah, absolutely. Actually, the deal that I have it on their escrow right now was actually done, because I was at a meet-up, at a physical meet-up. Yeah. There was a buyer who was interested in purchasing their properties, but she was actually not able to get the financing, or she didn’t have the cash to purchase it outright. She needed to get it financed. Of course, my mentor CJ was there and he was able to actually bring us together solve our problems. I had a deal that I wanted to offload.
There was a buyer who wanted a property but needed to get financing. We worked it out together, like a creative deal where I’m almost acting as a seller financing deal. While the end-buyer is trying to get it financed through a bank, I’m just charging a small holding fee in a way. Yeah, we’re just able to work that out. She’s currently going through the bank, trying to get a rehab loan, which is a very cool product. If she gets everything approved, then she may have very little money out of pocket to purchase and rehab the whole property.
[00:35:14] NH: Yeah, it’s just a great way to show some of the connections and how that can lead to advantages for someone else, advantages for yourself. It’s a win-win. I like that a lot.
[00:35:22] DB: Yeah, I know, I’ve seen a lot of those, same win-win things happen when you get people in a room that are high energy like that and that are all after similar goals. I know, I’ve met wholesalers and lenders and contractors in meet-ups like this. Even more than, and I guess, in addition to some of those contacts, there’s just this momentum in this energy in the room, where I know what you mean as a fellow introvert about leaving and feeling exhausted, but also, somehow leaving and feeling like, “Okay, I can see what the next step is. I could see where this could go.” Can you talk about how sometimes being around veterans in a room like that, veterans of real estate can help propel you to next steps?
[00:36:04] YJP: Sure. I think there’s a saying something like, comparison is the thief of joy, right? Don’t compare yourself to the other people who’ve been in the business for years, or even decades ahead of you. It’s only right that they know much more than you, and you’re just at a starting point. They should be your motivation. It’s just not fair to yourself, trying to compare yourself with others and other veterans like that. Instead, just, again, be who you are. Don’t try to act like someone you’re not. Don’t try to act like you’re a know-it-all. If you don’t have the knowledge, just let them know and be ready to learn and show enthusiasm.
People in the industry, and if they are good people with good intentions, they are going to want to teach you, as long as you’re willing to learn and retain and study more and show progress to them, right? Everyone has gone through what you’re going through right now, or what you’re going to go through by showing up at these meet-ups. Yeah, they’ll really appreciate when you’re just coming out, coming prepared, and just them seeing your progress. It’s like, you being a student, or a resident on the rotation. If you show your preceptor that you’re progressing along, and learning and becoming better. They’re more likely to be receptive and teach you the ways, or whatever it might be, or get you connected with the right people.
[00:37:37] NH: I love that. If I’m an investor, and I want to be investor and I want to find a local meet-up, what’s a good way to track one down?
[00:37:44] YJP: I think the easiest way to search is, just look up the upcoming meet-ups on Bigger Pockets, that’s one way. You can also check the app, or a website called meetup.com. There, you can always find a bunch of real estate meet-ups that’s both in-person and Zoom, actually. I think lastly, you can still look up in – check out your local real estate investment association meet-ups. You can easily find these online. I believe it’s a national organization and they have their local chapters. Maybe Nate and David, you guys might know more about that.
[00:38:20] NH: Yeah, it depends on your location, but you’re right, there are a lot of real estate investor associations out there that have local chapters and national level support. All are great tips.
[00:38:27] DB: Very cool. I know one of the things that has been just a running theme across this episode is so many ways for folks to get started. I know we have a lot of listeners that are in that, thinking about getting started, I’d like to get started. I’m looking for that first property. How do I go from none to one? I know we’ve done final infusion questions with you before, and so we don’t want to end with the final infusion questions, but well, do you have any parting words to share that, how would you help encourage someone to go from none to one, to get off the bench and get into the game?
[00:39:01] YJP: Oh, man. I was not ready for this question. I would say, start by just taking one step at a time. It’s literally, you’re taking one step towards going to a meet-up. That could be it. We just want you to go put yourself in a state where you’re going to be uncomfortable, because I 100% believe that growth only comes from being uncomfortable. Right now, if you’re just looking at yourself, you might be super comfortable of where you’re at. We’re pharmacists, we make good money. We can make living and just live a comfortable life.
Maybe look further in the future, maybe you have some goals that you wanted to do, like maybe your passion project, just spending more time with your family, loved ones. Help your parents financially, which is what I want to do, or whatever that goal would be. If you really wanted to do that, do you think you can be able to do that by just working your W2, 9 to 5 for the next 30, 40 years? I don’t know. I mean, that’s maybe a question that you may have to answer. Might be a little bit too deep. Honestly, if you know what your goals are, then you want to put yourself in that position where you’re just uncomfortable. That’s okay, because I know I’m going to grow, and I know, I’m going to be a better person.
[00:40:29] NH: I love that. I think that’s awesome. Young, again, reasons why we had you back on the show as our first repeat guest right there, just awesome answers and awesome advice for our pharmacist community out there, that’s thinking about getting started in real estate investing. Again, just really appreciate you sharing your time with everybody. It’s always a really wealth of knowledge. Appreciate it.
[00:40:48] YJP: Hey, thank you so much for having me back again. It’s always fun talking story with you guys. We’ll meet soon.
[00:40:54] NH: Yeah, absolutely. David and I are going to come out to Hawaii, especially this time of year.
[00:40:58] YJP: I’ll try to go there in the spring or fall.
[00:41:00] DB: Sounds great. Well, hey. Thanks so much. Yeah. That’s bad. Don’t come to Cleveland or Michigan, until it’s sunny and warm out.
[00:41:07] YJP: Sounds good.
[00:41:07] DB: Thanks again, Young.
[00:41:08] YJP: Thank you guys.
[OUTRO]
[00:41:10] ANNOUNCER: Thanks for listening to the YFP Real Estate Investing Podcast. If you liked what you heard on today’s show, please leave us a review and subscribe to the show so you never miss an episode. If you have a question, know someone that would make a good guest or want to connect with Nate or David, head on over to wfprealestate.com and join the growing YFP Real Estate Investing Facebook group.
As we conclude this week’s episode of the YFP Real Estate Investing Podcast, an important reminder that the content in this podcast is provided to you for your informational purposes only and is not intended to provide and should not be relied on for investment or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.
Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on this podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist, unless otherwise noted, and constitute judgments as of the date published. Such information may contain forward-looking statements which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.
Thank you for your support of the YFP Real Estate Investing Podcast. Have a great rest of your week.
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