EP 149: Real Estate Millionaire Secrets From Tommy Harr

Home inspector turned millionaire real estate investor, Tommy Harr shares his journey from wholesaling to rehabbing properties and managing large-scale projects. He highlights his business strategies, including maintaining a lean budget, employing overseas virtual assistants, and utilizing private money for financing.

Tommy's detailed approach to managing multiple rehabs simultaneously and his emphasis on building a systematic, scalable business provide invaluable insights for both novice and experienced investors. Don't miss this episode to learn how Tommy's methods could transform your real estate game!

Key takeaways to listen to:

• Discovering the secrets to managing multiple rehabs simultaneously.
• Streamlining your real estate operations with a lean budget.
• Utilizing private money to fund real estate deals efficiently.
• Implementing a systematic approach to wholesaling and rehabbing properties.
• Learning the importance of having specialized trades for rehabs.

About Tommy Harr

Tommy Harr is a home inspector turned real estate investor born and raised in Pickerington, Ohio. By the time he was 27, he was financially free and a millionaire through real estate investing, starting with $0 in his bank account! All because he learned a blue collar skill and took action to invest in real estate.

He’s been in real estate for 7 years, has inspected 5k+ houses, renovated over 200 houses, has wholesaled 200+ deals, has a 70-unit rental portfolio worth $15 million, and 25 STRs managed in house. He owns National Property Inspections, Legacy Home Group LLC, and Legacy Home Investments LLC. He was featured twice on Business Insider in 2022 and has coached over 275 people nationwide on how to invest in real estate.

His family is why he does this business, to retire his parents, and take care of his future family/kids through real estate investing. His mom retired from her teaching job of 30 years in 2022 to run his Airbnb company, sell all of his flips, and design all of his renovations, and is his biggest accomplishment to date!

He has 11 team members locally in Columbus, 4 more overseas, and loves creating a workplace where people can grow in all areas of their lives. It is his passion and goal to teach the “real side of real estate” which shows the blue-collar, hard-working, and tangible steps and items one needs to do to succeed in real estate investing!

Resources Mentioned:

• RealSide of Real Estate - https://tom-harr.mykajabi.com/

Connect with Tommy Harr:

• LinkedIn - https://www.linkedin.com/in/thomasharr1/
• Facebook  - https://www.facebook.com/tom.harr/
• Instagram -

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Transcript

[00:00:00] Randal McLeaird: I literally was looking at a 25, 000 square foot church just the other day. Damn that big. It was huge, man. But like I wanted it for, I wanted to turn it into a pickleball place. Cause now you're 

[00:00:13] Tommy Harr: talking my language, 

[00:00:14] Randal McLeaird: dude, it was bad ass. That's insane. Yeah, it just, it like, I went and toured it in the setup.

[00:00:20] Randal McLeaird: It was just funky. And then it really would have only gotten one court. And I was like, nah, but it was 500, 000 bucks and huge. But if I could have gotten two or three courts, I probably would have easily done it. Yeah, that sounds amazing. But yeah, I'm looking for quirky, like weird things like that.

[00:00:35] Randal McLeaird: There was another deal on like the east side, San Antonio. And it was very similar setup to what you took down two lots side by side, historic district. So like very cool upstairs, old, like very old retail shop that I was going to convert into our offices. But dude, yeah, it was like, I've watched some of your videos.

[00:00:52] Randal McLeaird: You look like you do full blown let's do everything. Everything. Yeah. Unfortunately. Yeah. [00:01:00] 

[00:01:00] Intro: If you're a real estate agent earning 200, 000 a year and you want to grow your passive income, this show is for you. Learn secrets other agents use and hear from experts in our field who will guide you on your journey to investing in assets like apartment communities.

[00:01:16] Intro: So you can take your commissions and turn them into cashflow. Here's your host, Randall, let's dive in. 

[00:01:23] Randal McLeaird: Hey, welcome back. It's awesome to have you again today. I have an awesome guest. His name is Tommy Haar. We're going to talk about rehabs pretty heavily today and wholesaling, that sort of thing. How he gets business, we talked some details because I'm currently doing a bunch of rehabs as well.

[00:01:36] Randal McLeaird: So I was curious how he structured his business and his company. And so we dive in some of the details on that. If you're interested in how to structure some of the things on the rehab side of the business, definitely has a bunch of tactics on that front because he's doing a great job. They're up to, I think he says at any given time, they have 15 rehab projects going on at a time.

[00:01:54] Randal McLeaird: Along with seven to 15 wholesales that they're working on. So they're a high volume business [00:02:00] and it's really impressive what they are working on. So I know you're going to get a lot of the show. Now, if you could, wherever you listen to this, if you're getting some value out of the show, please go on rate and review, leave a one word comment or some more words.

[00:02:11] Randal McLeaird: If you like to, we always think that appreciate that. We'll read the reviews and definitely appreciate any feedback that you guys have. So without further ado, let's jump on and let's chat with Tommy. Here we go. Thanks for jumping on man. It's good to have you on the show today. I'm really excited for this conversation because we are one in the same, but not right.

[00:02:26] Randal McLeaird: Obviously you got your thing going on, but when I read your story and I know what you're working on, I'm like, okay, you're doing very similar stuff. So we have a lot to talk about again. Thanks for jumping on the show. First thing, let's jump in and talk about what's your main focus. Is it the rehab?

[00:02:38] Randal McLeaird: Is the wholesale and the rentals? What is the top of the top? 

[00:02:42] Tommy Harr: Everything has always been wholesaling. So our business started six years ago, five, six years ago, wholesaling. And that's been our backbone. So deal finding, but the end goal was to hold properties. And I think the intermediary there is building a construction company and construction business to where you can exit a different way.

[00:02:59] Tommy Harr: [00:03:00] So if you flip it, that's just one exit, but you have to build that system to do the burr method. So the flipping is just to build the capital and to keep mouse fed and keep the business open. But the long term is to cherry pick the best deals and keep them doing the burn method. And we manage them in house as well, but everything starts with the deal, the wholesale side.

[00:03:18] Tommy Harr: So they all morph into each other. 

[00:03:19] Randal McLeaird: Yeah. Yeah. Okay. Very similar setup. I started with the rehab. Like I was like, it's so hard to find a deal. Once you find it, I want to actually take that deal and run with it. And then we morphed later into the wholesale side. So you're coming at it like. I know finding the deal is the hardest thing.

[00:03:33] Randal McLeaird: Once you have it, you have multiple exits. And if you're the one that's buying it, controlling the deal, then you're in it as deep as possible. Then you have all those exits. Okay, love it. Deal flow wise, what are you guys taking down now compared to maybe two years ago when it was just red hot and things were going on?

[00:03:46] Tommy Harr: We're buying anything in the first time home buyer range, mostly cosmetic to medium rehab. I'm in Columbus, Ohio. So we have houses that are a hundred plus years old, veering away from those. Like I was telling you earlier before we were chatting losing a hundred or not a [00:04:00] hundred grand. That was my first flip losing 20 grand on a flip.

[00:04:02] Tommy Harr: Tomorrow, and it's a 100 year old house. We took, 10 months too long. Permits were a pain. So just so many variables. Markets changed like 2 or 3 times during that time period. So something that we can get in and out of within a couple of months and has that multiple exits. So in Columbus, that's the.

[00:04:18] Tommy Harr: Under a hundred to 200, maybe two 50. Love that price point. We can whole tail those as well. Yeah. So there's just so many options with those. 

[00:04:25] Randal McLeaird: Yeah. Yeah. Did I hear you say under 100? There are, yeah. Like full retail sales under a hundred, rehabbed? Or is that five Not rehabbed? Really 

[00:04:35] Tommy Harr: used to be. So for example, in a couple days we're buying two, so tomorrow I'm buying one for 85, we're gonna put 50 into it.

[00:04:40] Tommy Harr: It'll be worth two 20. Yeah. Really the same deal for the other one. We're buying it for 85, putting 60 into, it'll be worth two 20 as well. Yeah. So we can. Keep it, flip it, whatever. 

[00:04:49] Randal McLeaird: Yeah. All right. That's like very similar to the price points. Like I'm looking to be 140 into these deals and we're owner financing them around the 215 mark.

[00:04:57] Randal McLeaird: And so trying to keep that, get a down payment, get our [00:05:00] bases down in the deal. But we have the same type of, right? Like in that price point, San Antonio market is very similar to what it sounds like you're targeting. All right, let's talk about then those long, large deals, 100 year old houses. I have done a few of them and I understand some of the challenges, but for anyone not in the rehab game what are some of the challenges you find when you're rehabbing a hundred year old house?

[00:05:22] Tommy Harr: The first thing is going to be, just not know what you don't know in rehabbing. If you don't, especially with the areas of houses, so a hundred years old, you have Nava tube, you're going to slate roofs. You're going to have maybe asbestos insulation. You're going to have termite damage.

[00:05:33] Tommy Harr: You're going to have things that you open up these walls in specific areas. Most of the a hundred year old house areas in Columbus. In order to get top ARV, they have to be gutted. So you take these down to the studs, redo everything other than the shell. And so you just get into these clay pipes and just things that are so old, you need to replace them.

[00:05:52] Tommy Harr: And then on top of that, like the house I'm losing money on tomorrow, we waited six months for permits. So towards the [00:06:00] tail end of COVID, the city stopped going into the office as much, making the excuses. And there was like 10 revisions they needed. So having somebody on your team, or it's a who not how thing, make sure you're Getting with a contractor or designer architect that knows people in the city and they can pull strings and get your permits pulled really fast.

[00:06:20] Randal McLeaird: Yeah, that is key. And alright, so you had the permitting issue, but again, when you're rehabbing one of those houses, you mentioned it and it's like you went through two or three market cycles. It's wild because they just take so long to do, not just on the permitting side, but if you're doing every single thing on them.

[00:06:35] Randal McLeaird: And I'd found that to be the case. We did 200 year old houses, like when I was doing full rehabs and that sort of thing, and both of them took forever, a lot longer. Historic district is or are yours in historic districts. 

[00:06:47] Tommy Harr: I'm selling one next week in a historic and that one, that's a whole nother story.

[00:06:51] Tommy Harr: And 

[00:06:51] Randal McLeaird: yeah it's brutal, man. Okay. That's on the older homes. I guess I'm curious just in general. So you have a deal that [00:07:00] comes in like one part of the conversation we could have is. Tactics, like, how are you guys finding deals, right? Everybody always wants to know what are you doing?

[00:07:07] Randal McLeaird: What's your best lead source that you're bringing in? So I don't know if you're an open book on that front or not. 

[00:07:12] Tommy Harr: Open book 

[00:07:12] Randal McLeaird: about everything, yeah. Yeah, so right now, finding a deal, every market's gonna be different, what is it that you guys are doing that you're seeing the best results in?

[00:07:19] Tommy Harr: Yep. So I'm going to split this into two. So our wholesaling side of like truly finding deals every single day, direct to seller marketing, we've texted in cold called for the last five years. So we have overseas cold callers. We have five of them. They call around the clock. They're just getting hand raises.

[00:07:34] Tommy Harr: So they're calling, Hey, is this so and because we look at it as a funnel. You're pulling lists online. You're skip tracing those lists. And then you're just mass marketing out to them to figure out if you have one, the right data, the right person. And if they want to, Even consider selling to me. That's what is a lead.

[00:07:50] Tommy Harr: So that lead then goes into our acquisitions teams. We have two sales team members on the acquisition side and one Dispo. So those guys are touching warm leads and [00:08:00] just following off the people every single day. That's what they do for a living. So texting and cold calling and then texting has gone through some legalities last six, eight, 12 months.

[00:08:09] Tommy Harr: But it seems like we found a kind of neutral area at this point. Okay. But that's what been our deal flow. I think we, it's probably 12 to 15 contracts or so a month right now on the wholesale side. And we're wholesaling most of our wholesale deals because we're trying to generate more cash on that end, but we still need to feed our flipping business, which is 10 to 15 projects at a time as well.

[00:08:28] Tommy Harr: So we used to buy a lot of our direct to seller stuff. But now we just cherry pick them. So now we hired what we're calling our JV department. So for business to business relationships, so really building a system off of networking, seeing all the deals offering on MLS. There are deals on the MLS for anybody that's on here listening to this.

[00:08:46] Tommy Harr: And the main thing about that business is the squeaky wheel gets the grease. So if you're the person that's touching base with these wholesalers every day, every week, seeing what they got, they're going to remember you and they're going to send you what they have. And then [00:09:00] helping educate them on what deals look like, you're going to start getting deals out of nowhere.

[00:09:04] Randal McLeaird: Yeah, I couldn't agree more with that. Your spend right now on the marketing front, how are you guys looking on the calling, the skipping, the lists, like those are all things you're buying and paying for? 

[00:09:16] Tommy Harr: Yep. On a month to month basis, our overhead without commissions, this is including VA, CRM, skip tracing, list pulling, is 10, 000.

[00:09:24] Randal McLeaird: Ooh, 

[00:09:24] Tommy Harr: man. That is crazy low. We're the leanest company I know. I know a lot of people around the country, and every time I say that, they're like, that's insane. Yeah. So we use a lot of REI SIFT, if you've heard of that. Tyler Austin's program. Write that down. REI SIFT is a great way to not double skip trace things.

[00:09:40] Tommy Harr: So a lot of people, what they do is they need more marketing. They go buy a list and then they skip trace it immediately and start blasting. REI SIFT is a data management software that's going to house everything, stack your data. It's a full CRM too, but we just use it for data. And then it's going to have you target market and not re skip trace things.

[00:09:56] Tommy Harr: So you tag the list coming in and then you can. [00:10:00] And you just know what your marketing is and who you're marketing to. It's really complex at the end of the day, but that's the easiest way I can explain what it is. 

[00:10:08] Randal McLeaird: No, I've seen similar things, but it wasn't called that when we were digging into this because we were spending.

[00:10:14] Randal McLeaird: 50, 000 a month easy on direct mail. And that was the biggest driver of business. We tried a few other things. We never did the actual cold calling outbound, but a number of guys in some masterminds I was in, they were doing that and it was like becoming a bigger and bigger thing in 18, 19. Yep. So how are you guys getting around the, what was it like AP2 compliance now that's come out that everybody has to go through for the text messaging? 

[00:10:35] Tommy Harr: So we just worked through it with the companies and to be honest, like I have a business partner that kind of handles that, that entire, like that side.

[00:10:41] Tommy Harr: And then we've taught one of our virtual assistants, all of the texting, all of the REI SIFTA I just talked about, all of the compliance. And she just deals with that stuff now too. 

[00:10:49] Randal McLeaird: Okay. Yeah. Solid. So for that 10 K spend, is that nationwide or is this just in your market? Just Columbus, Ohio. So 

[00:10:56] Tommy Harr: Columbus, Ohio and bordering 

[00:10:58] Randal McLeaird: counties, like 45 minutes [00:11:00] out.

[00:11:00] Randal McLeaird: So what's the demographic what are the trends on population? Are you guys booming right now? Or what's 

[00:11:06] Tommy Harr: happening? 

[00:11:06] Randal McLeaird: Yeah. Columbus 

[00:11:07] Tommy Harr: has been a top five market in the last five years, every single year. And you never know what to trust, right? And these, but Forbes just says the fastest growing city in the United States.

[00:11:15] Tommy Harr: We've got Intel coming in Google. There's a lot of data centers. It's not expensive. So Intel is building a multi billion dollar chip plant right now. And the average salary for the people coming in thousands of people is a hundred grand plus and in Columbus, that's phenomenal. If you're making a hundred grand you're living a good wage.

[00:11:33] Randal McLeaird: Yeah. Yeah. Awesome. Yeah. Cause again, that spent on that deal flow, that's you're talking, 15 deals. A month and the 15 projects is that outside of that number? 

[00:11:45] Tommy Harr: Yeah. So we're buying 30. Contracts wise, sorry to cut you off to contracts wise. Obviously I have fallouts and obviously some linger into the others like probates and those things.

[00:11:53] Tommy Harr: Some wait a little longer. So we're closing seven to 10 on the wholesale side a month and then another five [00:12:00] to 10 on the purchase and sell side. 

[00:12:02] Randal McLeaird: Yeah. Awesome, man. So let me get back into the wholesale then, because I shifted again from, I want to blast out all this marketing. I want to do all of this and I'm in a wholesale to, I'm just going to select the wholesalers, like for the business that we are doing, where we're raising capital and buying, 25 houses a year and putting them in a fund.

[00:12:19] Randal McLeaird: Yep. I don't want to spin up an entire acquisitions team, dispo team, all of that. And so I've transitioned into just talking to wholesalers. What are you guys seeing on your deals when you're wholesaling right now in this type of market for this type of marketing? Are you guys still getting, a contract for 10 option fee and, you got 90 days to close on it?

[00:12:39] Randal McLeaird: Or is it like sellers want their cash now, I'm going to close on it quickly. I give you 30 days. What does a typical contract look like for you guys? 

[00:12:46] Tommy Harr: Our typical contract is 30 day due diligence. And once we get our inspection, It's usually, if it's a good deal, sold within 7 to 10 days. So closed, our cash conversion cycle once it's in contract is maybe like 21 days.

[00:12:59] Tommy Harr: But we're trying to [00:13:00] churn and burn them as fast as we can. 

[00:13:01] Randal McLeaird: Yeah, got it. So the market in San Antonio for wholesalers turned into 85 percent ARV sale price. It was insane. Okay, I'm not buying anything from anybody. They're selling it based on you're betting on the come. The value of the house is going to go up while you're rehabbing it type thing, right?

[00:13:14] Randal McLeaird: That was the argument. They're selling it. So again, that's why I didn't buy anything from anybody. So right now, when you guys are marketing them, what are you guys seeing is the percent ARV that investors are looking to buy. 

[00:13:24] Tommy Harr: I think most people are sitting at that 70 to 75 percent ARV minus rehab.

[00:13:28] Tommy Harr: I think that's pretty common. That's pretty standard. And it changed a little bit, obviously the same way with you, with the hedge funds and everything, everybody was buying it way higher prices. And now I think it's everybody's come back to reality and it's been nice to see. So what, it's April, almost May.

[00:13:43] Tommy Harr: Back in up till November, it got really tight. Not a lot of people buying. And we saw some floodgates open around December and into the new year. Now people are buying like crazy again, which is really good to see. 

[00:13:52] Randal McLeaird: Yeah. Yeah. That's the same sentiment down here. Okay. So you guys have those deals now talk to me about building your team.

[00:13:59] Randal McLeaird: Were you still [00:14:00] doing home inspections when you started building the team out? 

[00:14:02] Tommy Harr: Yes. 

[00:14:02] Randal McLeaird: Okay. So how did you start building the team and where did you get this model from? Because it's a model that like, I don't know if Did a mastermind, if you did something else, or if you just built this out of, Your head, tell me, I 

[00:14:16] Tommy Harr: mastermind around the country and I model a lot of the things that we've done around people that I highly respect.

[00:14:20] Tommy Harr: Somebody down in Texas, Donovan rough, and I'm sure you've bought from him definitely model a lot off of them. And then a couple of guys that I know, so I was inspecting full time up till. Three years, four years ago, and I just can't do it all yourself, and my business partner had been in car sales for 10 years.

[00:14:37] Tommy Harr: He owned car lots by the time he was 22, 23, and then was a sales manager for a big car dealership. And he was like, dude, I don't want to be on the phones forever. I just don't want to, but I know you need to do the acquisitions. So we just started to replace ourselves and build a real business. So the first thing we did was hire an acquisition.

[00:14:54] Tommy Harr: And then we were starting to run some rehabs and I hired a project manager. And then, oh, even before [00:15:00] that, I was self managing all of our properties, or mine at least, because I owned some, he owned some, so a virtual assistant on that end to free up some of our time, and then VAs on the data side for the wholesaling, and then hired a project manager, and then just started to build a team from there.

[00:15:16] Randal McLeaird: Okay. Awesome. And before we move on, I want to, you were able to retire your mom is what it looked like. So that's pretty awesome, man. Yeah. I was putting an 

[00:15:24] Tommy Harr: asterisk next to it. Cause like she still works. She was a teacher for 30 years, but hated waking up in the morning. She's a ninth grade algebra teacher.

[00:15:32] Tommy Harr: Just shit head kids, yeah. And over time. That's a long story, but she finally quit two and a half, three years ago to sell our deals full time. So flipping more, she was my agent told her to get her agent license six, seven years ago when I was getting started, had done very little business. And now she's making a couple hundred grand selling our deals.

[00:15:51] Tommy Harr: So she works less, creates her own schedule, all that stuff. So that's also, I always put that in asterisk. 

[00:15:57] Randal McLeaird: Yeah, but retired from the job she [00:16:00] was doing in order to work with you. Yeah. That's amazing to be able to do that. So how was it just working with your mom? 

[00:16:06] Tommy Harr: We're both very headstrong.

[00:16:09] Tommy Harr: We're very opinionated and we bought heads a little bit while, so the way it works with her is not on cosmetic rehabs, but the bigger ones where we're changing floor plans and we're adding different kitchen designs. She comes in and helps on the front end. That's amazing. And then she comes and sells it on the back end and we manage the system, the rehab, all that stuff.

[00:16:26] Randal McLeaird: Yeah. 

[00:16:26] Tommy Harr: And a lot of times we have different budgets in mind and there's different, it's just, it's all love at the end of the day, but there's a lot of back and forth and aggression sometimes. 

[00:16:37] Randal McLeaird: I work with my wife and my brother was working with us for a while too. And yes, I get working with family, but it's also great.

[00:16:42] Randal McLeaird: It's fantastic. You can't talk to anyone like you can your mom, 

[00:16:45] Tommy Harr: there's always a trust factor to, on the back end, it's does she always have our best interests in mind? Yes. It's your mother. Obviously. So that is always good. Peace of mind to know that every deal is being handled the way it should.

[00:16:57] Tommy Harr: And there's no doubt that everybody's [00:17:00] working towards the common goal. 

[00:17:01] Randal McLeaird: Yeah. Okay, man. Let's talk about some rehabs then. I'm curious. Now you built out your team, right? And we had a very similar setup, a couple of guys, Dispo, transaction coordinator, all that sort of thing. And then when we were doing the same thing, cherry picking the deals for us to rehab, we got super busy and it's impossible to run 15 rehabs and projects by yourself.

[00:17:21] Randal McLeaird: It's not impossible, but it's going to be challenging. So compare. How you used to do it to how it works now. And then let's dive into kind of now what it looks like. 

[00:17:31] Tommy Harr: So before, it was just like anybody else doing a little bit of work yourself and like just winging it and choosing finishes as you go.

[00:17:38] Tommy Harr: Now it's very plain and simple. We have a material list that we use for every rehab and it's split into two. We have a builder grade and a higher end. We're not doing luxury houses. So we have the same paint, the same floors, the same trim, the same doors. Everything is the same. And that allows us to have predictability and our contractors also know the expectations of what they're using and what they're [00:18:00] going to be doing.

[00:18:00] Tommy Harr: So we have a material list. And then obviously, before we start, we have a regular scope of work and we have a contractor view scope of work, which breaks it down by sides of the house. Front, left, right back. Each room mechanicals really in detail. Everybody's on the same page and then, once we start, we're really off to the races.

[00:18:17] Tommy Harr: We have a warehouse now that we house all the materials. Lowe's does a warehousing program, so they stock everything for us. We take it, we drop it on site, and the guys are off to the races. And our philosophy on rehabbing, I've found this is the best way that I've found to do it. Is if we're doing a full gut rehab, all you specialized trades, subcontractors up to drywall.

[00:18:39] Tommy Harr: So I'll have my own framer. I'll have my plumber, my own electrician, my own HVAC person, my own window person siding, because you get your costs down that way as if you were using GC, it'd go up. And then I have four or five crews that work only for me. And they have, so it's one guy and two or three family members or four people.

[00:18:55] Tommy Harr: And they come and do setting the cabinets, tile, flooring, [00:19:00] trim. And they're just doing that. 

[00:19:04] Randal McLeaird: Okay, so the project manager is really in charge. You're giving them one, two, three main street. This is your baby. You see it all the way through to the end. Here's a list of approved electricians, plumbers, blah, blah, blah.

[00:19:15] Randal McLeaird: We have three of them. That's basically how you have it set up. What are you using for scopes of work then? Cuz You're walking through a house and you're like, all right, the front scope of work, what kind of tech I want to know some tools and tips and what are you doing on the tech side on like checklist and all that stuff?

[00:19:28] Randal McLeaird: You've touched on that, but 

[00:19:29] Tommy Harr: so on the tech side, it's not anything like super robust. I've not found anything like scope wise. That's all that amazing. We use a custom Google sheet that we use, obviously. But what we do is we use virtual assistance for that. So we have 1 project management, virtual assistant, and he has the template and we have it with us when we're out on site.

[00:19:46] Tommy Harr: Then we voice message on WhatsApp to the virtual assistant while we're there and we go line by line with them. By the time we get back to the office. The scope of work is completely done and ready to get bidded out by the contractor. So that [00:20:00] eliminates two, three hours of figuring out, remembering things when you're on site.

[00:20:04] Tommy Harr: So that gets done. And also at the same time, since the material is systemized, we know exactly the VA can know exactly what to order and that gets put in our Amazon part. And also we know what's warehoused from our Lowe's account as well. So we're able to grab everything quickly. And then when we're ready to put it on site, we do.

[00:20:23] Randal McLeaird: All right. So Lowe's warehousing, tell me about that. Because I just got a bunch of stuff for a few jobs and they keep calling me every day. They're like, Hey, got to pick this up. So what's the warehousing side. 

[00:20:32] Tommy Harr: Yeah. So we just bought a warehouse. We're still somewhat infancy, but I have a mentor or a friend that did it really successfully.

[00:20:40] Tommy Harr: So what they'll do is they'll come weekly, bi weekly, monthly. And whatever you're using. So we use the same tubs. We use the same faucets. We use the same door handles. We use the same insulation. They will come stock it for you if you have an LAR. So lowest account receivable. Okay. They'll stock it for you.

[00:20:55] Tommy Harr: So they'll bring truckloads of it. And then in the next two weeks, they'll come and [00:21:00] inventory it. So they'll come and see what you've used and then they charge you for what you've used. That's awesome. So we now have it on site, ready to go for all of our places. And then the only things that we have to go get are Amazon things.

[00:21:13] Tommy Harr: So we use Amazon light fixtures, certain things they can't price match, but they came way down on their prices on a lot of things. And it's now all centralized. 

[00:21:23] Randal McLeaird: Yeah, that's awesome. All right. So how big is the warehouse that you need in order to maintain all of this? 

[00:21:28] Tommy Harr: The one we have is about 2000 square foot.

[00:21:30] Tommy Harr: So nothing insane. We're still toying with how many of each thing we need. So it's still a work in progress. Yeah, we probably started it three months ago, but it seems like it's going to be a really good thing. 

[00:21:40] Randal McLeaird: Did they come and help you do the finish out for that? 

[00:21:43] Tommy Harr: Yeah. So they know what they're doing.

[00:21:44] Tommy Harr: If you get a really good Lowe's pro, they'll help you. They came to our office, sat down with four or five reps. They had their paint guy. They had all these people and we just talk about what we're using. So the only thing they couldn't match was like our LVP we get from floor and decor. If you have that, I don't know if you have that in Texas, but their [00:22:00] prices were just way better.

[00:22:01] Tommy Harr: And there's we can't really touch these. So everything else was pretty comparable. 

[00:22:04] Randal McLeaird: I saw a a tile that you used on a shower. It was on your. It may have been a couple of years ago though, but it was on your ex page. I literally just put the same tile. It's like kind of wavy, but it's the, about this size.

[00:22:16] Randal McLeaird: Where are you getting that? Is that a floor and decor 

[00:22:18] Tommy Harr: deal? I have to think which one that is. It's probably floor and decor though. 

[00:22:21] Randal McLeaird: Yeah. Okay. Cause my buddy's got a flooring company here and he sold it to me. Jason, I'm going to get a discount on that next time, buddy. All right, man. Okay. Go back just again, just out of curiosity, and this is really in the weeds.

[00:22:33] Randal McLeaird: So anyone listening to this, I'm digging deep because this is what we do on the rehab front. And we are stepping ours up. Like we're trying to acquire more deals. You've got a virtual assistant who is looking at a Google sheet while you're walking the property and you say, Hey I'm at the front.

[00:22:48] Randal McLeaird: And then are you talking to them or are you voice chatting them to where it's all voice 

[00:22:53] Tommy Harr: chatting? We're just sitting there go line by line and they can re listen to it. So just like you would on an app so they have [00:23:00] WhatsApp, he's in Nigeria. His name's Andy. Say, Hey gutters, we need new seamless gutters on the front of the house.

[00:23:05] Tommy Harr: One down spout. Make sure it kicks out six feet. Next thing it's written down. And then also we use slack for communications in our business. So whenever we buy anything on the fly, we send it into slack. It's under project tracking and he's going in and we have, we built out our own project trackers.

[00:23:21] Tommy Harr: So we break them out from receipts to invoices and he has the lowest accounts receivable as long as we use the right email, right? And he'll break down every single receipt. Total. And then everything that was purchased. So then we'll know what we're buying, what we're not using. So we're trying to just gather as much data as we can and be predictable about some of the decisions we're making.

[00:23:41] Randal McLeaird: Yeah, for sure. Man, that's awesome. I love like a process map that's done. They can geek out on those things. I'll share all 

[00:23:47] Tommy Harr: those project trackers and everything with you. When we get off here too. If you want to be, 

[00:23:51] Randal McLeaird: yeah, for sure. Did you ever have GCs or did you always just run it? Okay. So what are some of the benefits of having it all in house compared to [00:24:00] having a GC?

[00:24:00] Randal McLeaird: Other than just the price gets cheaper. 

[00:24:02] Tommy Harr: Being able to control the controllables, so you never know when they're taking some of the material to the next job and I like to just be in charge. I want to get the American express points for buying them online. I want to be able to just because there's so little that you can control fully.

[00:24:16] Tommy Harr: And I feel like that is something you can truly control. So materials is a big one and it's not that hard at the end of the day. It's just more time consuming and more people. Yeah. Yeah. Yeah. And it's all about setting the right expectation with everybody. So every contract I know that works for us, they know exactly how I like things.

[00:24:33] Tommy Harr: Like it doesn't matter what material we use, whether it's our builder grade or high end, the paint lines need to be the same. The Schluter's need to be installed the same. There needs to be paper on the floors, no matter if it's carpet or if it's engineered hardwood. Like it's just certain things that need to happen.

[00:24:48] Randal McLeaird: Yeah, do it the right way. Do it your way. That's awesome. So then let's talk about financing. Like how are you acquiring these deals? I know that you have set up, you have some short term rentals. [00:25:00] Is that correct? Yeah. All right. So you got some short term rentals. You have all these rehabs that you're doing at the same time.

[00:25:04] Randal McLeaird: So how are you structuring these deals? Are you doing BRRR? Yeah. I'm going to give you like 10 questions at once to answer. I like it. Don't worry about it. Sorry, man. I'm just kidding. No, I like it. Yeah. Let's talk about financing. Really? Like how are you structuring these deals? Using hard money, using cash.

[00:25:18] Randal McLeaird: What are you doing? We're using private 

[00:25:20] Tommy Harr: money, so 99 percent of the time we're using private money. So over the last couple years, just really, people love the fact that I was a home inspector before. So they know that we know what we're looking at. Track record kind of speaks for itself.

[00:25:31] Tommy Harr: We've done over probably 250, now probably 300 rehabs and we've never not paid a lender back. So we're raising typically purchase and rehab. And we're paying it off on a refi or we're selling it. So on the refi, we were using community banks for a while. It just depends on like the environment we're in, so a lot of the stuff we're doing now is DSCR. So DSCR on the individual property now, I'm not bundling a lot of stuff. Just for the next couple of years until things cool down and people stop freaking out. I'll probably [00:26:00] take a lot of those and bundle them into 2025 year am community bank loan.

[00:26:03] Tommy Harr: But for now I'm using these higher interest only sometimes loans and just just stabilizing the asset and making sure that we can do something with in the future with the equity. 

[00:26:13] Randal McLeaird: What are you seeing on those DSCR right now? 

[00:26:15] Tommy Harr: 8, 9, 10. It just depends, the leverage. So right now, we're closing one tomorrow at 7.

[00:26:20] Tommy Harr: 9%. 

[00:26:21] Randal McLeaird: Nice. 

[00:26:21] Tommy Harr: And that's a rate and term. So they leveraged up to 78 percent on a rate and term on that. So they'll leverage up to 80. I figured out a long time ago, these banks don't like to cash out ever. So pulling enough money to, even if you're trying to steal your equity up front, say, if I spend 70 on a rehab and I'm all in 70 with my private money lender and it's worth a hundred, They do not want to cash you out that 80%, so 80 minus 70, that 10.

[00:26:47] Tommy Harr: So I'll just raise another 10 or so and then take my cash out up front and then refinance it on the back end. 

[00:26:54] Randal McLeaird: Yeah. So from the private lender, they'll give you 80%. 

[00:26:57] Tommy Harr: So the private lender money lender will give me a [00:27:00] hundred percent person rehab. And then the backend bank, if instead of a 75 percent LTV loan, so 75 grand loan, you can get an 80, if I owe 80 to my private lender, if that makes sense.

[00:27:10] Randal McLeaird: Yeah. You just have to have that relationship with the private lender up front so that they will go up to whatever that number is. Yep. Okay. Are you having any issues or you just have you can tap in as much money as you need? 

[00:27:22] Tommy Harr: Recently, I've been, anytime, if you follow me on Instagram anytime I'm actively saying I need money, there's times where I'm tapped out.

[00:27:28] Tommy Harr: We probably have, man, five, six, maybe seven million on the streets right now, private money, between 30 ish private money loans. It's just a lot of higher dollar projects that are about to close on the back end right now. And we just purchased, we just bought an eight unit for 600 grand cash. We just bought a nine unit for 450 grand cash.

[00:27:45] Tommy Harr: Got a bunch of 400 projects. So just really trying to get those to pay off to start buying these 150, 000 deals again, because I want to just spread 

[00:27:53] Randal McLeaird: it out. So what happens with the private lender when you are on this project, you're talking about, you're going to lose 20 [00:28:00] grand. So you personally, but not the project, correct?

[00:28:02] Randal McLeaird: The lenders being made whole or what's the story there? 

[00:28:05] Tommy Harr: My lender is making 50 grand tomorrow and I'm making, and I'm bringing 20 grand to close the deal. And I told him that I was like, Hey, I know. And we're a little bit late on this loan. And I was very upfront with it. And I was like, Hey, here's, what's going on.

[00:28:16] Tommy Harr: I can pay you off if you want. I get all my lenders, they're a 30 day guarantee. They get their money back. And I'm like, Hey, I texted him yesterday. Cause he's being a dick to me. I'll be like, Hey, by the way, I'm losing 20 grand on this and you're making 40. So I just wanna let you know, abandon my word.

[00:28:30] Tommy Harr: I do what I say. Thank you for your patience. 

[00:28:32] Randal McLeaird: Yeah. Good way to 

[00:28:33] Tommy Harr: handle it, man. It's that's the only way to handle it. There's so many people that run from it. It's just you guys know what you're getting into when you're doing this business. It's not a secret. Like you can lose money.

[00:28:43] Tommy Harr: Just be smart. 

[00:28:44] Randal McLeaird: All right. Let's talk then about these multifamily deals you got, man. So you just bought. A six and an eight? A nine and an eight. Nine and an eight, okay. So are those going to be recap projects? What's the story? 

[00:28:56] Tommy Harr: Yeah, so the nine, this is a, I think a pretty good deal. We bought it [00:29:00] from a lady who's going under and I ended up just talking to the private money lender.

[00:29:04] Tommy Harr: It has been on the market for a little while and the private money lender just lost 250 grand selling it to me at 401, 000. So he was like, I want out, I'm done. She did a new roof, new windows for did some framing. I have to redo pretty much everything. So it's an 8, 300 square foot, nine unit property, mostly one ones.

[00:29:21] Tommy Harr: We're turning most of them all into two ones. We're going to spend 450 grand on rehab. So we're going to be all in a 50 plus another a hundred of holding. I would say should be worth 1. 2, 1. 3. When it's done, gross rents are probably going to be. 10, five to 11, 000 and hopefully our debt that we're going to get on it will be maybe eight grand PITI and we manage in house.

[00:29:42] Tommy Harr: So not a home run by any means, but it'll be a good long term hold. 

[00:29:46] Randal McLeaird: So your value on that deal, you've got. Rents are what? 10, 11, 10, 5. All right. Ten five. And what is that? 10, 10, 12. 126 minus what? What do [00:30:00] you think your expenses are gonna be? 50%? Yeah. I rented a 40 to 50% expense ratio. 45%. 69. And so your caps up there, what are you trading that thing at?

[00:30:09] Randal McLeaird: I get different answers, but seven, seven or eight. Yeah. Yeah. That's awesome. It's one of those. So you're going to hold onto that deal. 

[00:30:17] Tommy Harr: Would love to. It's just a old, beautiful building. It's not in the best area, but it's not bad by any means. So it's also a test to have okay, I stand there and I'm doing all these rehabs like, all right, let's do it.

[00:30:29] Tommy Harr: I'm going to pay an architect 20 grand for the plans. This is a, it's a bigger boy deal. 

[00:30:33] Randal McLeaird: Yeah. 

[00:30:33] Tommy Harr: Nice. 

[00:30:34] Randal McLeaird: It's always interesting, like coming from the world of just winging it on the fly, like I'm going to rehab this house. I see it. A wall needs to go there. You don't have actual plans for it, but you just tell your guy, put a wall there to moving into talking to architects and like getting the plans thrown up and having the as built compared to what it's going to look like at the end.

[00:30:52] Randal McLeaird: It does bring a lot of clarity to every trade and what they need to be doing, like where your can lights are going, where this is happening, everything on there. So [00:31:00] I'll be curious to see how that project goes for you, man. So that's the nine. What about the eight? 

[00:31:04] Tommy Harr: Eight is eight, one bed, one baths in a really established downtown area.

[00:31:09] Tommy Harr: Now they listed it for 600. We ended up low balling like 480 and right away they emailed or texted back. And they're like, do you want to see the inspection report? Cause it fell out of contract a few times. And I was like, Oh, this, these people want to play ball. And ended up meeting at five 29. All of them are occupied.

[00:31:27] Tommy Harr: Two of them are rehabbed. So the eight, I was going to get, just get them out right away, rehab them all. And ARV is probably 900 or so rehab. It's really not that big of a rehab. We got to put split systems in each unit and then just cosmetically update it. But we found out like a couple of days before closing that they lied about the lease terms.

[00:31:47] Tommy Harr: But the leases on the ones that we need to put, let's call it 15 grand of each unit to turn them are about 800. So 800 and so the rents are, we would only get 900 to 950 after spending [00:32:00] the 10 grand, 15 grand of rehab and it's like a government agency that's paying it. So I'm like, all right, let's keep it.

[00:32:05] Tommy Harr: Let's delayed finance this thing. It's probably worth. 800 or so, maybe 750 right now. I'm going to delayed finance it, probably get an 80 percent LTV loan. And if I have to bring a bunch of cash to close it, that's called a hundred grand, I'll just keep one of those private money lenders on there. Cause a lot of them lend out of IRAs.

[00:32:20] Tommy Harr: So I'll just keep that on there. And as they start to move out, I'll turn the units in a year, maybe two years. I'll go and take it to a community bank when now the property's seasoned, it's showing good rents. We have tax returns on this thing and really get good debt on the property. 

[00:32:34] Randal McLeaird: Yeah, nice. Yeah, that's a good strategy.

[00:32:37] Randal McLeaird: But yeah, so the calculation that you did, if anybody's listening right, and you wanna know the calculations, 15 grand gets you $150 per month is essentially the calculation that you were doing. Yeah. And so whatever that is, say, call it a hundred, that's $1,200 on a year divided by 15,000 spend, 8%, 10%, something like that.

[00:32:54] Randal McLeaird: I would think, ROI. So yeah, if you're targeting and you're trying to get higher than that, you can do it over time, [00:33:00] essentially is what you're working on. It's awesome, man. So again, that was a listed property. 

[00:33:04] Tommy Harr: Yep. Both of them actually. 

[00:33:06] Randal McLeaird: Yeah. Really interesting. So one was with the private lender already and you took them out.

[00:33:11] Randal McLeaird: So that was helpful and easy, basically a short sale that didn't have to go through a bank short sale process. Yeah, 

[00:33:17] Tommy Harr: it was a regular sale. We went through title. I paid my staff and he paid. There was also a second. He was the second and the first was a hard money company. The hard money company still needed paid off.

[00:33:27] Randal McLeaird: The hard money company got made whole, but the private lender was out. Okay. Yeah. Again, it's easier than dealing with a Bank of America or a, Wells Fargo doing a short sale because essentially that's what that was. Somebody got shorted on that deal. Pretty much. Yeah. So any other cool projects that you've got coming up, anything you're working on, any big news, things that are coming down the pipe.

[00:33:49] Randal McLeaird: Nothing 

[00:33:49] Tommy Harr: like that. We have a big office space in contract, but I'm not sure it's going to pencil out. It's like a 30 unit office building office. Isn't very sexy, especially right now. We have it in contract for 1. 8 and the [00:34:00] rents are like 24, 000 a month already. So there's some value add, but it's been chopped up and.

[00:34:05] Tommy Harr: The utilities don't really make any sense and the HVAC. So we're still working through that. I don't have enough like really to speak on 

[00:34:10] Randal McLeaird: it. Okay. All right. Hang on. You're going from rehabbing, wholesaling, and now you're transitioning. So the company has to be sustaining itself at this point, right? You guys have had the systems in place.

[00:34:21] Randal McLeaird: You got all the things. And so now you're looking out and up for any interesting deal or something specific? Because office is a left hand turn. That one. Just dropped into our lap. 

[00:34:33] Tommy Harr: It just completely dropped into our lap. So no, we're We are not looking for this stuff. Like most of this stuff we're not looking for, right?

[00:34:40] Tommy Harr: So like an eight unit nine unit to me, like it's still in our wheelhouse. It's, they need rehab. It's not much different. We already have another eight unit. We have a couple of small commercials, but like this one was just in regular wholesale marketing and they were just like, yeah, we have this.

[00:34:53] Tommy Harr: And we're opportunists. We're like, okay, let's talk about it. But no, we do that is not [00:35:00] something I'm like an idiot right now would be like, I'm looking for massive office space. It sounds like a great opportunity. 

[00:35:06] Randal McLeaird: That's an interesting deal. So again, how did you go about actually pricing it out, getting the price?

[00:35:12] Randal McLeaird: And then are you trying to wholesale it? You're trying to keep it what are your thoughts around that? 

[00:35:15] Tommy Harr: Yeah. We right away just asked some people were like, okay, this is clearly not in a real wheelhouse, but it's value the same as a big multifamily, right? What's the income?

[00:35:23] Tommy Harr: What's cap rate? What are some of the expenses? Once we dug in more and my business partner has been running a lot of this stuff too. We walked it this last weekend. We're looking at what's the deferred maintenance? What are some of the repairs that are needed today? What are the leases? A lot of these people have been on leases for 15 years.

[00:35:38] Tommy Harr: Like very established tenants. They've been there for a long time. So just really trying to figure out like, what's the expense multiplier? What's like the income approach? What is this thing may be worth when it's done? What's it worth right now? So we're still working through that. I think we get different answers from different people, but one guy was saying it could be ARV of 3 million.

[00:35:57] Tommy Harr: Some people say it's worth like 2. 3 as it sits. And they [00:36:00] wanted. Yeah. 1. 8 ish. And we were like, yeah, that sounds reasonable. Let's put it in contract and let's do a bunch of due diligence. And in worst case scenario, it's still a newer thing to us. Let's learn a lot. Let's get some education on this thing and figure it out.

[00:36:12] Randal McLeaird: So have you talked to, I will credit my brother with some of the stuff that he's done, cause he's doing storage and doing all kinds of stuff, but he's wholesaled, he wholesaled a bunch of these things and he just made a ton of calls to. Potential buyers, right? And so have you already done that or is that something you guys are working on?

[00:36:27] Randal McLeaird: Not yet. You might be shocked man. You find just some random company looking for something And so I don't know if you're gonna wholesale it and if it is 2. 3, man You could just pop it real fast and be done and move on So it might be something to think about finding somebody who's you know in that market looking to buy stuff like that 

[00:36:43] Tommy Harr: No doubt, 

[00:36:44] Randal McLeaird: but that's cool.

[00:36:45] Randal McLeaird: Hey man, it was good catching up, like good chat and seeing what you're working on. Ton of tips in here, man. Ton of things. If you're looking to rehab, looking to do something really appreciate it. And you are putting out content of your own, correct? So we've got, 

[00:36:56] Tommy Harr: yeah. 

[00:36:56] Randal McLeaird: Yeah. Let me see the shirt.

[00:36:57] Randal McLeaird: What do you got real side of real [00:37:00] estate? Yeah. Check it out. We'll put a link in the show notes for that as well. A bunch of tips on real estate real stories. I'm going to talk about a couple of things that happened as you heard it today, he's losing 20 grand on a deal and he's not afraid to talk about it.

[00:37:10] Randal McLeaird: So I really appreciate the fresh approach and discussing the ups and the downs. Like you said earlier, when we were offline, I think it was, it's just like anyone not talking about some of the hardships. It's probably not a real person. It's it's an AI bot or a yo boy or something. 

[00:37:24] Tommy Harr: Careful who you listen to is all, there's a lot of people that talk about what they did 10 years ago and maybe they did do well 10 years ago, but now they're not really active in the business.

[00:37:33] Tommy Harr: Like I said, if somebody tells you they've done over a hundred deals, never lost, hit that unfollow button because that person is a liar. One of the two. 

[00:37:39] Randal McLeaird: Yeah. Right on. Again, man, I appreciate it. If you're looking for property or if you have something to sell up in the Columbus, Ohio area, man, definitely reach out to Tommy.

[00:37:49] Randal McLeaird: Again, appreciate you jumping on, sharing your knowledge. Absolutely. Thanks, dude. Catch you guys on the next episode. Did you know that 80 percent of the agents we speak with got into real estate in order to gain passive income so they could [00:38:00] obtain financial freedom and become work optional? If you want to stay up to date, the best way is to make sure you're subscribed.

[00:38:06] Randal McLeaird: So if you haven't done that, go ahead and do it now. We'll catch you on the next episode.