Summary
In this episode, Les Hamilton shares his journey into real estate and the influence of mentors in the Navy. He explains why he chose Philadelphia as his real estate market and the importance of evaluating potential investments. Les discusses the benefits of using other people's money and the need for ethical business practices. He emphasizes the importance of mental preparation and continuous learning in the real estate industry. Les also shares his future plans, including syndication and expanding his business. In this conversation, the guest discusses various aspects of real estate investing and provides valuable insights and advice. The conversation covers topics such as contractual agreements and syndications, community outreach and networking, starting in real estate at a young age, the importance of financial literacy, advice for upcoming developers, utilizing the 203K strategy, finding strategies in a challenging market, advice for a younger self, the importance of reading and basic math skills, minimizing distractions and chasing success, and leveraging other people's money.
Takeaways
Chapters
00:00
Introduction and Background
03:00
Getting Into Real Estate and Mentors
06:44
Choosing Philadelphia as a Real Estate Market
09:37
Licensing and Certifications in Real Estate
12:05
Evaluating Potential Real Estate Investments
14:40
Using Your Own Money vs. Bank's Money
19:32
Raising Capital and Building Trust
25:32
Rehabbing Properties and Dealing with Unexpected Issues
37:51
Future Plans and Syndication
40:42
Contractual Agreements and Syndications
41:50
Community Outreach and Networking
43:34
Starting in Real Estate at a Young Age
44:20
Importance of Financial Literacy
45:25
Advice for Upcoming Developers
46:05
Utilizing the 203K Strategy
48:36
Finding Strategies in a Challenging Market
50:33
Advice for Younger Self
53:13
Importance of Reading and Basic Math Skills
54:18
Minimizing Distractions and Chasing Success
57:41
Leveraging Other People's Money
Summary
In this episode, Les Hamilton shares his journey into real estate and the influence of mentors in the Navy. He explains why he chose Philadelphia as his real estate market and the importance of evaluating potential investments. Les discusses the benefits of using other people's money and the need for ethical business practices. He emphasizes the importance of mental preparation and continuous learning in the real estate industry. Les also shares his future plans, including syndication and expanding his business. In this conversation, the guest discusses various aspects of real estate investing and provides valuable insights and advice. The conversation covers topics such as contractual agreements and syndications, community outreach and networking, starting in real estate at a young age, the importance of financial literacy, advice for upcoming developers, utilizing the 203K strategy, finding strategies in a challenging market, advice for a younger self, the importance of reading and basic math skills, minimizing distractions and chasing success, and leveraging other people's money.
Takeaways
Chapters
00:00
Introduction and Background
03:00
Getting Into Real Estate and Mentors
06:44
Choosing Philadelphia as a Real Estate Market
09:37
Licensing and Certifications in Real Estate
12:05
Evaluating Potential Real Estate Investments
14:40
Using Your Own Money vs. Bank's Money
19:32
Raising Capital and Building Trust
25:32
Rehabbing Properties and Dealing with Unexpected Issues
37:51
Future Plans and Syndication
40:42
Contractual Agreements and Syndications
41:50
Community Outreach and Networking
43:34
Starting in Real Estate at a Young Age
44:20
Importance of Financial Literacy
45:25
Advice for Upcoming Developers
46:05
Utilizing the 203K Strategy
48:36
Finding Strategies in a Challenging Market
50:33
Advice for Younger Self
53:13
Importance of Reading and Basic Math Skills
54:18
Minimizing Distractions and Chasing Success
57:41
Leveraging Other People's Money
(00:07.562)
Hey, what's going on, everyone? Welcome back to another episode of OPA to OPM. I'm your host, Day Mill, with my co-host Alex and Markelle. What's going on, guys? Yes, sir. Another great episode. Excited for this one. Another great episode. We have a very special guest today. We have a good friend, Les Hamilton, from Ham and Byas Homes, IG. How you doing, Les? I'm good, bro. Les, a highly favorite man. Thanks for having me. Thank you for coming down. We definitely appreciate your graciousness with your presence. And so let's get to know you a little bit more, man.
like where you from and how you get into real estate? So I'm originally from Philadelphia, Pennsylvania. I got into real estate because I was in Navy for 12 years. And I, you know, Thank you for your service. Thank you for your support. And I, you know, I.
had a lot of great mentors in the Navy, right? Especially guys who set themselves up for success, set their families up for success. I mean, I'm talking about the type of guys that every new duty station that they went to, they bought another property, right? They bought another property because little known fact for most military people, if you're looking, if you're watching this podcast right now, you can have multiple VA loans open at the same time, right? You can have multiple VA loans open at the same time, nine times out of 10, knowing what I know now.
He probably got a couple of VA loans, refinance out of them, probably put a little bit more money down to get rid of the PMI, the private mortgage insurance, and then he just opened up his VA exemption again, and then he just kept doing that again and again and again and again, to the point where he told me personally he makes more money off of rentals, specifically renting to military individuals who are transient, which means they moving around a lot. He was making more money doing that than actually being a senior chief in the Navy as well.
a pretty decent amount of time, you know what I'm saying? So that's kinda how I got into it. And then he put me on to BiggerPockets. So if anybody does not know about BiggerPockets, please go to biggerpockets.com. They have a smorgasbord of information. They have chats, you can find lenders there. You can do a lot of stuff with BiggerPockets, the largest real estate networking or...
(02:21.074)
information portal that you can find in America that I know to be honest, you know, you can find a lot of stuff in breaking pockets That's actually where I learned how to house hack. So Okay, and so
was the senior chief, was he like the biggest inspiration to you getting to realize? Yeah, absolutely. He really, really was. And it was because there's certain people in my career that I absolutely respected. And he was one of them. He was definitely one of them. I mean, you have the individuals who are in your work center. You have the people that you work with. You have the people that you work for. You have your media supervisors. You're a direct to somebody, right? But he was kind of like an outlier.
Somebody that I would when I was younger 23 or so he was somebody that I would actually go up to and like literally Ask questions like hey, you know, what do you know about this? And it really helped that he was awesome at his job too Because a lot of the stuff that I needed to know he gave me the answers for that and then once I got those answers Then we kind of just went into What he liked to talk about which was real estate, right? You know the best way to learn somebody the best way to learn anything about anybody is to ask them about what they like To do right because they can talk to you about that all day long, right?
And that's me as well. So when you were getting into real estate, and also tell us a little bit about where you're at now. But for the most part, when you hear a lot of times people talk about real estate, they talk about somebody trashing the house, Section 8 tenants trashing the house. What if the deal goes south? What if you lose a lot of money? So with all those setbacks that you see all the time, it seems like that's all people talk about is the setbacks. What still made you want to get into real estate despite hearing all the negative stuff that's going on?
Good question. The thing that made me want to go into real estate is because I kind of look at it as a relationship, right? You know, there's a lot of relationship podcasts, dating and stuff like that. And I don't know too many people, I don't know too many people that would say, I'm going to give up on dating because I keep meeting the wrong people, right? You start doing the internal work to attract that person that you want to come into your life to be that, right? So like, I look at real estate very much in that regard, right? There's a relationship.
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that you're going to end up having to have, and you have to be a certain type of person to attract a certain type of outcome. So I would never tell people not to dive into or deal with real estate if this is a passion that you have, but don't be foolhardy in your assumptions. You still have to be a subject matter expert, not somewhat of a subject matter expert. You have to know the numbers. You have to know what you're doing. You have to be able to blueprint your tenants if you wanna do buy and hold, which is buy and keep.
have to know what your exit strategy is. You actually have to have what is a considerable exit strategy when you're buying these properties or flipping them, right, or buying them, rehabbing them, and selling them. Or if you want to utilize the birth strategy, right, which is buy, rehab, rent, refinance, and repeat, at the end of the day, you have to know where you're going to start and where you're going to end, right? So, a lot of the horror stories, and no disrespect to anybody that has a horror story, because everybody's going to have one, because this is a people business, right? It's really in the blueprinting.
that person is that you let inside your home, right? And then also making sure that you have an iron clad lease so you can take them to court if anything actually gets damaged, because we do have a court of law in this country, you know? So you have to let the people that are living in your house know that, yes, I'm a very nice person, I can be very nice, all of those things are true. But at the same time, you know, respect the things that I own, and we don't have to do all the stuff that we don't wanna do.
If that makes sense. And then where are you currently at now? What do you mean? Properties-wise. Properties-wise, so I have about six. Like I'm at six right now. I'm at three projects that are being done. Actually, sorry, five. I just sold one. So I'm at five properties right now. Three of them are getting flipped, or getting fixed right now. Shout out to my contractor, Jason Patton. He's awesome, JPS contracting, JPS general contractor, LLC. Shout out to my realtor, Sean Lirely in Philadelphia.
Couldn't do it without you, just being honest. But I'm at like five properties right now, including my childhood home. So, a childhood home, a rental property, three flips. You know, it's just, it kinda is what it is, you know? My company is called Community Financial Investments. I'm gonna...
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owner of that director, treasurer, ladybug management, logistics, family company. And then also there's a couple more companies I'm gonna be creating, also HSPJ Acquisitions, that's a company that I am the president of with my fraternity brothers, shout out Iota Phi Theta Fraternity Incorporated, ACE club if anybody's listening. Yeah, so we're just getting it rocking, just making sure that I.
have things lined up and trying to bring as many like-minded people with me that I can. That's why on my business card it says, collaboration is a superpower, because it is, and we need more of that. Amen. That's a dope line-up for that. So let me ask you why Philly? What made you wanna start your real estate investment and development journey there? Okay, good question. So I worked with an organization called Jumpstart Philly, and this was...
in my transition from being a military person to a civilian person shot the jumps are fully jumps are Germans uh... they just pop it out which is a norse sounds to make sure you check those guys out uh... and it was a development course that i went through like six weeks uh... like a hundred twenty five bucks even everything issued needed to know uh... in book form right now love to read so you know readers leaders are readers right so uh... i'd you know i'd just soaked all that up with all information i have before
(08:05.444)
Right, so anybody that wants to get into this, just understand that there's a wealth of knowledge that you already have about your area. Right, so like me being from Philadelphia, even though I didn't live there for like the past.
I don't know, 11 years or whatever. I had a base of operations. I had people that I can ask about. I had my realtor that I was reaching out to for that 11-something years. He has the knowledge that I needed. So it's a game of leverage at the end of the day. So somebody from Baltimore, they know. That's why I don't do anything in Baltimore yet. Yet, watch out for that. So anybody that's in Baltimore, they can say, OK, well, I don't want to do business in West Baltimore, or I want to do business here.
or when you actually do the numbers and you break it down and you say, oh, I got a county house and Timonium or something like that. How much money do I actually need to put down on this loan with this hard money, this private money, people that I'm working with? How much do I have to put down? And then what's the likelihood? You also have to think about utility services and stuff like that. How fast are they actually gonna get out to you to actually do the work, right? But all of this stuff is knowledge that you get from individuals that you have on your team overall. So my farm is Philly
better than I know anywhere else. And I have a base of individuals, and I have a base of operations that can feed me so much more data that's beneficial to me taking a step forward on the deal, if that makes sense. So do you need any licenses for this? So your licenses, as far as you're concerned,
No, I would say that you don't. But when it comes to your contractors, and when it comes to your realtors, like yes, you need that, right? Actually, there's one license that you need in Philadelphia. It's called a commercial activity license. But it's like 125 bucks, bro. It's not really, it's not something that you have to study for, right? Because usually when we talk about certifications, licenses, things like that, people think that you gotta sit down in class, learn about some, no, no. You're literally buying something that says, yes, I can do this particular thing.
(10:07.712)
here because the city wants to collect their money too from what you're from what you're doing right so yeah the only license that you actually need is commercial activity license and then you have to be if you want to be a GC on your own project general contractor which i do not suggest you do for at least the first three projects because you're going to be responsible for the tetris that is your project right you got your water you got your plumbing got your framing got your insulation got your flooring got your finishes you got your HVAC or if you do your floor heating like
manage or monitor, like, okay, just get somebody that loves to do that first, and then they'll help you or guide you along and just build a great rapport with them. So commercial activity license for Philly, GC license if you wanna do your own thing. However, I don't suggest that you do that for your first two to three projects. You are gonna be so overwhelmed.
And it doesn't actually make sense not to be a follower in that case. In that instance, right? You want to work with the people who actually know what they're doing. Like, why would you not? Why would you just go to an NBA game talking about I can make a three? Like, I'm sure you can. But can you do it as consistently as Steph Curry does it? No, you probably can. Right. So like staying your lane until you can create a lane, if that makes sense. So for the Duffie, you say you chose for the Duffie, because that's homeless. But was there anything besides that?
like where you from and what you know. Is there anything else that specific that you would say, hey, this is a really attractive market right now?
Yeah, absolutely. I think that Philadelphia, not I think, I know, I just read an article, and it's like the top three, top five places to visit in the country. So Philadelphia is very attractive in that way. But the places that I'm going to buy my properties, I'm more so on the starter home side. So when you're looking at interest rates, interest rates being bananas, five, 6%, 7%, which is, to be honest, it's kind of normal. We've been getting away with low interest rates for a long time.
(12:05.864)
Like before COVID, I think it was around four or five percent, but now we're kind of making up for that. So when you're looking at the people who are going to be able to buy your house, you're looking at under $250,000 after repair value for sale, right? And then you also need to have wiggle room in that. So like if you're selling property, the buyer might want you to do
seller concessions, right? They might want you to be able to buy down their rate. Well guess, whose money are you gonna use to buy down a rate? You're gonna use the potential money you were gonna make. What does that mean, buy down the rate? Buying down a rate means that the...
the buyer has a higher interest rate and you can basically buy points for them. So that means that the points would be, I don't know, two or $3,000. But if you're trying to buy two points, that's six grand. So now it's like, all right, cool, well, you can do that, or you can raise the price and then have that kind of filter in that. So now they have a lower interest rate coming in to actually owning the property. That's a common thing to do. I didn't do that on my last house that I sold because the last house that I sold was pretty much a steal
The I had to lower the sale because the comps change comps are comparables in a particular area when somebody sells a property That's what you're going off of you're going off of the comps, right? So it's like oh four properties or three properties sold in the last six months at 300,000 Well, guess what? That's where your comps kind of sit at so if somebody can agree to buy your house for let's say 315 Then they'll buy your house for 315 and the bank is gonna pay 315 as long as the house appraises for that amount or more
Because it's not just I want to buy a house. That's not what this is. It's science. And then it's also you have to meet certain income criteria, and the bank has to trust that you're going to be able to pay that off. And then also, a larger down payment can sometimes guarantee you being able to buy the property itself. So when you're looking at these deals and trying to figure out who's the buyer, obviously you've got to start somewhere. When you're starting to look at the house and you see like,
(14:11.442)
I don't know if you go in the MLS or wherever you find your deals at. What are some of the potential things that you're looking at to say, all right, this is this is my buy box. Yeah. Awesome. Buy a box. I like that. Great term. So to me, it's gotten a little easier. It's gotten a lot easier because of my realtor and how experienced he is. OK, I basically say, hey, Sean, I need to find properties of myself for 225000, but they need to cost a certain amount.
Because little known fact, you don't lose at the end of the deal. You lose at the beginning of the deal. You don't lose at the end. The end is going to come, right? You're going to.
be kicking and screaming to the end of this deal, right? You're gonna be kicking and screaming. But the fixed cost that you have inside of that deal is how much you actually bought it for, right? So if you buy a deal, if you buy a house for too much and the house needs so much more work than actually intended because you were going off of what you thought it needed and you didn't go talk to a general contractor that is in the field every day talking to people, buying materials, building these relationships, being able to save you a decent amount of money
materials because material costs can be insane. So material costs can be insane. Labor costs can be another burden. When you wrap those things up and you have a GCA that you actually trust, you end up saving money, like saving a pretty decent amount of money. So when you that buy box that we're talking about, you need to find if the deal actually makes sense in the beginning. And that's where you say, okay, well, I have a hard money lender,
(15:53.28)
That sells for $225,000. Well, if you did that and the property needs $70,000 worth of work, where are we sitting at? 135 over 225. I usually tell people worst case scenario is take 10% off the top for broker, roaster fees, which are really 6%. But then you have all these miscellaneous fees, city fees, county fees. I need to keep this money fees, withholding fees, right? So that kind of stuff works out to be about 10%.
If it's not 10%, good for you. You just save money. But when you're looking at the financial aspect, it always needs to be worst case scenario. It always needs to be. Because if you're operating at the best case scenario, you might end up having to bring money to the table just to sell your house, and you don't ever wanna be in that particular situation. You don't ever wanna be in that situation. Even if they're gonna write you a check for $6,000, thank you. I don't have this house anymore. I got six grand. You might be a little bit upset that you didn't make 20, but okay.
You know, it's a refining process that you have to go through. That you have to make sure that you do well. And then once you have enough under your belt, then there's really nothing else to say, just keep going. So, what criteria do you consider before evaluating a potential real estate investment? So, good question. So, what I usually look for is, are the housing in that area selling?
are they selling at all? There's a lot of different criteria. I'm not gonna go through every single one of them, but just going through the ones that I deem to be the most important are houses in that area selling. Because if you had a sale a year ago, your comps are not working. Because it has to be.1 to.25, I would say, to be safe. In Philadelphia and Baltimore, it's different. Even, like I told you, I'm not doing anything in Baltimore yet. But in Philadelphia, let's say.1 to.25, three months.
ago, six months ago, right? You don't want to go more than six months, because you're trying to find where the trends are, right? So like, if somebody is buying houses in 19121, right? That can be the Temple University area. They could be buying them to rent them out to college students. Who knows, right? They might not even be selling them. There's a lot of stuff that goes on in the back, and a lot of that stuff is recorded in accounting court records, deeds, stuff like that, you know,
(18:19.232)
and stuff like that. But you have to look at what the hotspots are. And I usually stay away from the places that are super oversaturated, because if they're oversaturated, then that means that individuals who are looking to sell that property are going to increase the amount that they're selling that property for. And you're like, nah. A couple months ago, I couldn't. A couple months ago, I could have got this house for $60,000. Why are you trying to sell it for $100,000? But guess what? You're not going to win.
because there are individuals out there who do the same thing that you do and better, and they will buy the house for $100 grand, and they'll figure out how to skimp on material cost to be able to make the deal actually work for them. So you're going to lose left and right. You know, you're just going to lose. I feel like you got a question. Yeah. OK. Yeah, yeah, yeah. No, no, no. Good. So yeah, as far as investing into properties,
What has been some of your strong suits? Or as far as using, is it better to use your money or the bank's money? Because I know you started with the VA loan. So what's some tips or tricks that you might?
Give one up. So I started with the just because I'm a veteran. I started with the VA loan. It was the easiest thing in the world, man. It was like 1900 bucks to move into a two hundred and thirty one thousand dollar house. Like, how could you not do that? Right. And like in the 1900 bucks was the home inspection and a couple other things. Right. Home inspection, like 700 bucks, 900 bucks, whatever. Sewer scope. You know, you have to check the vents and make sure the HVAC and all the other stuff is good. Structural integrity. You know, you have to do that.
that might run you 900 and then it's just other little stuff that you have to pay or whatever. So it really cost me less than 2000 to buy both of the house that I had in the same area. Like I had a house I can walk to, you know, like one down here, one down here and I was house hacking in both. So I never actually paid a mortgage if that makes sense. I never, you know, because from the time that I moved into the property, I was 1900 in, the VA covered my entire down payment.
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And because they cover my entire down payment, I listed the property for rent like the same month. So I had somebody moving in February. I was living in the basement. They were living upstairs, living room, dining room, kitchen, three bedrooms, bathroom for like...
I don't know, like 1700, 1800 bucks. My mortgage was like 15 at the time. It was like 15. So not only am I, I'm not making anything, but I'm not actually spending anything, right? Because our cost of living, our living expenses and our budget works out to be like 70% of all the money that we make. I just got rid of a $1500 expense, and I'm living for free.
Right, like that's what house hacking does and that's what I got from BiggerPockets. So I could, you know, dig it into those forums, dig it into those forums, we're amazing. Oh, it's a bigger.
Yeah, shut up the bigger pockets for real. Shut up. Shut up the bigger pockets and shout out to the people who actually are in the forums because those individuals are really out there like letting us know like, hey, this is what you have to deal with. This is the stuff that you, you know, this is the stuff that you have to look out for if you're not really a seasoned investor. And that's also where the lease comes in, making sure that people are not trashing your place. And then you have to be stuck with it because you didn't say that they were going to have to pay for something
mess something up. So can you run your question back one more time so I can answer it? It was more so like so I was just more so asking is it more important to use the bank's money or your money but you kind of answered it. It's always to be honest it's always I'll answer it directly directly. It's always important to use somebody else's money but here's the thing.
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just because of somebody else's don't act like it's not yours. Right? That's where a lot of individuals that I see that may be on some of these forums, I can't necessarily say bigger pockets or anybody else. But if you're not acting ethically with the money, don't ever expect to get it back. Don't ever expect to get it back. So it's like,
I'm borrowing money from individuals to leverage that to get more money, to do deals. But I don't ever act like this is not my money. It's mine.
at the end of the day, because I'm responsible for it. But at the same time, with the individuals that I work with, they trust that I'm not going to go out to Puerto Vallarta or something like that and just be turning up with a break. They know. I do lender newsletters. I call it status. I do status newsletters for anybody that's a lender partner with me off of MOU. And we have a good time with it. So it's just being able to be ethical in business
an avenue or create a system where people can trust you with their hard-earned cash because you got to think about you got to Put it in you got to put yourself in their shoes. Somebody gives you forty thousand dollars. You get somebody forty thousand dollars How much you gonna sweat you're gonna sweat a little bit no matter how much you trust me you're gonna sweat But if that person doesn't keep reassuring you
that hey, this is safe, everything is good, this is contractual, because to be honest, one of the biggest issues that I see with people who look like us is that we might loan somebody a couple thousand dollars and we don't have a contract. Why?
(23:54.054)
Why don't we have our role in faith based system? Faith based system? Cut it out. Cut it out. Apple don't even have a faith based system when they're trying to update your cell phone. So why are we having a faith based system with cash? Like let's put it could be on a napkin. I wouldn't suggest it, but it could be. It could be on anything that says, hey, person A owns person, owes person B this amount of money because of this particular thing. And this is the interest rate that we're going off of. Get it signed. Get a notary if you really want to go that far.
anything that I have has an electronic signature, so anytime somebody fills out an application, it gives me feedback to say, oh, this person signed this at this time, and this is the timestamp, it has a timestamp, and it gives me the IP address. So if you needed to take that to court on me, okay? It sees it, it's right there, right? So it's about responsibility and accountability and being ethical across the board.
have that and you don't actually have a business like a business anybody can trust if that makes sense.
So when you are using other people's money, you get on contract, and you're going through these deals, for our audience, can you walk us through one of your deals that you've gone through where maybe it's something that's current or something that you've gone through where it's like, hey, this is my steps from A to Z kind of thing? Easy thing. So good question. So I went about raising. I had like $30,000 myself. So the best thing when you're somebody in my position raising capital, because that's kind of what I do at this point, raise capital, analyze deals, the best thing that you can do
is you can have a little bit of skin in the game for yourself, right? And you say, hey, this is what I'm doing, this is what I'm targeting. I think I spoke to like 105 people when I first started off. Three people said yes. That should give you an understanding of what this actually is, right? So three people said yes, three people trusted me enough, and I thank them every single month with the status newsletter, like, hey, thank you so much for allowing me to have my dreams come true, because that's kind of what it,
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That's exactly what it is. So I went about raising money, created contracts, wrote them myself, had a lawyer look at them. They said they were pretty decent. I'm a project manager, so I have my PMP. I'm a certified project manager, project management professional. So I can talk that talk. Quality of analysis, quantitative analysis, like we can go through it. Cost basis, we can go through it. So I talked to him and I said, hey, this is what I'm doing. These are the type of projects that I'm targeting. And we did a memorandum of understanding
of what their percentage would be out of the deal that we actually do, and we also have multiple deals. And I also got really good at learning about what the SEC wants, right? The Securities Exchange Commission. If you don't know what the Security and Exchange Commission is, it's really the police for money, if that makes sense, right? Not in the sense of like...
trying to figure out if it's real or fake, right? We're talking about investments, if somebody wants to do it, because I don't have investors, I have lender partners. Everybody's lending me money. So I basically make everybody that I work with the bank. Like you are the bank. I owe you an interest rate for borrowing your money and we can set up how I'm gonna pay you back, but the SEC wants to see ownership, right? They wanna see that your name is a part of something or you have a contract or X, Y, and Z. They also wanna make sure that you're a savvy lender, right?
as somebody, a sophisticated lender, savvy, sophisticated, they want to understand that you understand what money is, what interest rates are, what APR is, right, annual percentage rates. They want to help, they want you to understand what APR is, annual percentage yields. You need to know certain things. So even on my platform, I created a test.
You know, so I test people, it's open. You can go on my link tree right now. Go to financial.guru.ham. On Instagram, that's financial.guru.ham. On Instagram, you can tap into my link tree and take my quiz.
(27:54.11)
If you're a lender, potentially, I'll holla back at you. If you're not, then you know, you kind of just did that for fun, you kind of just did that for fun. But at least it exposes people to things that our school districts don't really teach us, right? So, so I, so on to that, when I got three individuals by talking to like over 100, that's 3%. So if anybody wants to get into raising capital, or you know, raising funds for real estate, like just understand.
That's really good numbers. 3% of people actually believe that you're going to do what you need to do. And I believe that the contractual basis that I have set up was kind of like the...
the, you know, like it was like the nail in the coffin for people because they know that they have a document that's sent directly to them that I actually owe them money. So they can take that to court. I don't shy around that, man. In business, like you can't just, you can't be afraid to say the things that people don't wanna talk about. Like, yeah, take me to court, that's fine. Like, I have it set up to where if you do feel like you're being...
used or whatever, you got a contract. Like, I'll be there, because that's the legality of the situation. So after I raised the money, I talked to my realtor, Sean, and then we went to start looking for deals, multiple deals that we could do in the city of Philadelphia. And that's where the real work actually happens, because I'm not just going on, he's not just going on MLS, the multiple listen service.
He's not just going to MLS and talking or finding locations and emailing to me, right? He's just like, hey bro, these are all of the places that you said you wanted to look at, let's go check them out.
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Man dozens of places we were in we were in Philly for a couple days like just walking around Hey, let's go to this location. Let's go to that location. Let's go to this location Let's go to that location four or five locations and hey, let's go get something to eat. Are we done? All right, cool. Now we got to go to two more locations, right? And you know, we of course we've known each other for over a decade but we still end up building rapport even in that moment and with me with my with my virgin eyes
certain things I was like ah
That's gonna cost money, don't wanna do it. These rooms are too small, can we throw another bedroom on this floor, right? Or can we throw another bathroom on this floor, make it a three and two upstairs, powder room on the first floor, can it be open concept, do we have to finish the basement? Like these are all the questions that I was asking myself as I was going through all of these properties. So then when we locked in ones that were a really good price, had a really good ARV after a pair of value, once we locked that in,
And
for anybody who understands when you get something under contract, you actually sign inspection contingencies as well. So like if there's anything wrong with the structural integrity of the property, you can void your contract out right now. You can do that. Like you can do that. Yep, you can get your earnest money deposit back. But we don't really want to do that. Because the price was already good. So what you do is you negotiate the price even further down. You negotiate the
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Every issue can be fixed and that's where my GC comes in. That's where Jason comes in. I don't put an offer on anything unless he goes to see it.
He has to go and see it because he's the one that's going to do the work. So so why would I why would I go out? Why would I take him out of the he's a he's a very integral part of my team. Why would I take him out of the process and buying something where he's going to be like, hey, bro, this place got termites, crazy amount of term and also inspections to like I said before, I get my guy Donald out there from Eleanor Home inspection. Shout out to Donald Nagel. I get Donald out there and he's looking at everything. He says, hey, well, you got to you got to look at this. Oh, you got to look at that. Oh, you got to look at that. And all that to me.
is dollars. But at the end of the day, because I already know the after repair value, I already know how much I can sell it for at the moment. And I already know how much I can buy it for. And then we look at how much it costs to actually renovate it to specifications. And then we're, you know, we're good to go in that sense. So it's a science. It's a science behind it. On the last part, you said kind of leads me to my next question.
Do you have, like, during the process of rehabbing the property, have you ever had, like, any unforeseen things that come up? How did you correct those issues? So, because I am fairly young in the game, I did a couple properties with another organization that will not be named, and then I'm starting my three right now at the same time. I haven't really ran into too many issues with that because the first properties I was buying were gutted-out properties, right?
I can actually tell you, don't do full flips first. The first two flips I'm doing are full gut rehabs, right? And the reason why I went that route was because, the reason why I went that route was because I could see everything already. You know, like when you're buying properties and you're fixing these properties up and you might say, oh, it's gonna cost 67, 70,000. That's with what the property is going to need at that moment.
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Once you start busting those walls out and gutting it to the studs and knocking walls down, you're like, oh, I got to move that stack, which is the stuff coming from right here to right here, might have to move that stack over. Or I didn't know that the, what is that called, the joists? I know the joists was rotten. How could I tell that?
if I couldn't see them, you know what I'm saying? So there's stuff that might, and that's why you also have contingencies. Industry standard is 10%. I'd go with the industry standard, but also go with the industry standard if you're using a licensed and insured and hopefully bonded GC. 10% for what? 10% for contingency. So if you have a $60,000 rehab budget, you should have $6,000 additional to that on the side for any incident.
You gotta have a contingency. You have to, you absolutely have to. So, but yeah, I have not had any issues. I don't even wanna say yet. I think yet is a very powerful word, but not in this instance, right? Cause I don't really wanna have issues like that. But you know, some things will come up because once you bust those walls down, you...
you're going to run into all different types of stuff. How do you plan for something like that? Because in real estate, like you said, that 10% contingency, but obviously there's going to be things that are going to surprise you more than you're expecting. So how do you mentally prepare for that? Because like you said, for all you know, you bust a wall down and all of a sudden the foundation is terrible or this has to get, this whole thing, the phagia has to get replaced. So how do you mentally prepare for something like that? Expect the unexpected.
I have to say, expect the unexpected. Understand that your estimates are base estimates. They're not the actual estimate, right? So that's why I tell people don't.
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Do your own work for the first three deals. Don't do it. Get the GC to do it. Because plus, if you're feeding this guy checks, or guy, girl, 2024, if you're feeding this person checks, 10,000, 15,000, they understand what they can do with. They understand that there's additional costs that they may have to incur. They want your business. You're building that rapport. So you will save a ton of money by just being able to utilize a professional.
Like, just utilize a professional. It's not gonna hurt. It'll cost you a little bit more money right now, but imagine how much time and stress is going to save you. People don't equate money with time and stress, and that's the only way I equate money, is with time and stress. When it comes to real estate, you know what I'm saying? Leverage, you know, just understanding that there's a certain way that you need to operate when it comes to that. And mentally preparing, just a question about mental preparation, read, read a lot of self-improvement books.
Read a lot of stuff like the last self the last actually I'm reading the 12 week year right now Um, shout out to the 12 year. It's a really good book I'm like 35 minutes done if you if you can't find yourself sitting down to read a book get audible There is no excuse. There's no excuse like just get audible. Um, because it's awesome. I drive For hours at a time sometimes and I burn books. I just burn them. I'm waiting for the credit because i'm cheap, but I
But at the same time, I just absorb a lot of stuff because this can be very stressful. But if you don't know how to manage the stress, if you don't know how to utilize the tools in your toolbox.
If you don't know how to utilize those, then you're going to end up falling by the wayside and getting stressed out and ending up blowing up your deal on some self-sabotage type stuff accidentally. Another book, The Mountain is You by Brianna Weiss, that's dope too. That was the last book that I finished before I did the 12 week year. To piggyback off that, what you just said, because we've had this conversation before. I've had that issue before. Like.
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a new investor going with a new contractor, trying to save a little bit of money and end up blowing up my whole deal. So I end up losing a whole lot more money. So I definitely agree with that.
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Yeah, so what's your future plans? You got any long-term goals in real estate development? And then how do you see your business evolving in the upcoming years? Good question. My long-term goals, I would really say that they're short-term goals, because I'm kind of looking at a timeline, one to three years. I'm definitely working myself into
syndication. So PPM 506, private procurement memorandum, stuff like that, being able to get on the SEC's radar. What is syndication for our audience? So syndication is where you're gathering other people's money to be able to do it at a level where you don't have to worry about how many people are in the actual deal. Right? So it's kind of like, if you go more than two people on one particular deal, now that's an investment. I'm not investment licensed.
You can have as many contracts as you want. The SEC is coming after you. If you're creating what is considered to be securities, right? Because that's another thing, right? You're in an industry where you're taking other people's money, whether they're loans or whether it's money. You don't use the word investments. You're not investment licensed. You're not securities licensed. So don't even do that, right? Like you have to understand what it means. The way around that is to actually create a company.
Right, because remember I said before, SEC is about ownership, right? So like let's say us guys right here, we all had 20 grand and we're like, you know what? We wanna start a company. Let's call it Black Wealth Consortium or something like that, right? You can start it. It starts off with 80 grand minus whatever it costs to do it. I have private lenders, I have hard money lenders. I have people that would lend us the money. They would have to do soft credit pools and everybody's, do soft credit checks on everybody's credit or whatever, but nine times out of 10,
if you come up with a down payment, they're gonna give you the deal. They want the money, they want the money, but they also wanna be a lien holder on the actual project itself. So no matter what, once it gets finished, it's paid. And you're basically managing your own project. So a syndication is where you bring everybody's money together and it's more so an investment. You don't have to be an investment license. Because you actually have an investment firm. So a so-so. So-so, so-so. What's that? Y'all remember that? Right, well, I think it's the.
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for like a lot of...
Asian community does it and Caribbean so everyone puts money into a pack. Hmm each year or whatever it goes It goes to one person to start a business Yeah That's basically what it is, but I'm talking about what we have on paper so it's registered You know I'm saying is registered with the state like that's awesome. Yeah, but there's a lot of trust in that There's a lot of trust to hand somebody a few thousand dollars and say alright cool boom cuz at the end of the day That's kind of like a birthday club
be honest, you know, a lot of jobs have a birthday club that they do and you put $100 in per month and then on your birthday, you get 2400 bucks, you doubled, you doubled your money. It's great. It's great investment made 100%. You know, but with that, like there has to be something that is completely and utterly transparent to do that because
what if somebody's turn comes around and they don't get paid? You know what I mean? But that's awesome if we can do it. My biggest thing is let it be contractual.
Let it be contractual, 100%. Let a lawyer look at it. Make sure it's ironclad. Make sure that the person that you're giving his money, so you're not giving it to a person, you're writing a check to a business. That's the difference. I can give it to my uncle such and such, but if he doesn't do what was intended to do, then I don't have that money anymore. It's gone, completely gone. You don't wanna be on the other end of that. So.
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Now that we have the idea of like you doing the syndications, you have future doers come in and you're basically pulling money together for people to invest or have a solid return on investment. Yeah. What are some of the things that you like community wise, you want to start doing like outreach stuff or just ways of just kind of like connecting with the, your community to say, Hey, these are the things that I'm interested in. These are things that I'm trying to do. And these are the initiatives that I'm trying to take towards those goals. Yeah.
So I just talked about, I go to networking events all the time, pass my card out, got a digital card with Link. And I organically create this environment that I'm working on.
You know what I mean? So, and I also just, I talk to people for, I have a mentorship program as well, it's like 897 or something like that, but I'll give you so much game. It's just certain things that you're not gonna be able to get from me unless you pay. You know what I mean? But like, I'll still give you so much game to get you started if you wanna reach out to me. That's cool. Fina on Instagram. You can reach out to me on that. But like.
Just organically networking and figuring out how we can collaborate in a way that makes sense. Because money ruins relationships. Money is scary to most people, because we're not taught that in like when we're growing up. We're just not. So if we can get over that fear of working in a legitimate way, because we don't have that fear with banks, we don't. The banks have FDIC.
$250,000 of money is protected if the bank falters, right? What do you think a contract does? A contract may not immediately get your money back, but a contract says who's responsible for taking said money. And then you don't have to pay the lawyer fees because the guilty party does. So at the end of the day, it's like, these are the things that we have to have in place. And we also have to have individuals that we can trust, right? Everybody doesn't know me.
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But the people that do know me, they know me, right? They know I'm not gonna go to Cabo San Lucas and turn up. They know I'm not gonna do that because I treat what you give me as if it was mine. And I'm not, I'm not, I'm not that type.
I got a question, quick question. So how young are you, and at what age did you get in real estate? I'm just thinking for an audience like this, might really inspire somebody, because they might think their time is running out. Yeah. I'm 35. I've been.
And I've been in and around real estate since like 2019. But I've been around and learning and digging into money since like 2016. So that financial literacy aspect is of the utmost importance, which it just is. If you don't know how to manage your own money, excuse me. If you don't know how to manage your own money,
How can you expect to manage $100,000 of somebody else's money? If you're making $50,000 a year.
and you can't manage that, not in the sense of you're living above your means or anything like that, but you don't have a common sense of it, right? Okay, well, I need to put money into retirement. I need to put money into savings. I can only spend this. If you don't have discipline, you're not gonna have discipline with 100,000. You're not gonna have discipline with a million. These are the things you have to understand. These are the things you have to take care of first before you put yourself in a position that I put myself in, if that makes sense. Oh, no.
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35% So do you have any advice for any up and coming developers, someone who's trying to get in the game besides managing your money or being disciplined with it? Where would you go to if I wanted to buy a property this year? What steps would I need to take to buy it? I usually talk to people about a strategy that I give to young folks that are actually looking at buying properties right now. Number one, I always say read.
Leaders are readers and readers are leaders. That's just what it is. And I'm not talking about books that are not gonna add to your personal growth. I literally mean read books about.
Conquering self-sabotage, read self-improvement books, read birth strategy books, read capital investment books, read all of those things, because I look at books in Audible and stuff like that, like having conversations with individuals that I haven't met yet, right? Or being in rooms where they're talking about things I don't know about, right? So like you can teleport yourself there, soak up all that information, and just apply it to real life, because as we know, your world, your external world starts with your internal world. Like you gotta change this first
can change anything outside, right? Like you gotta, you gotta do that first. That's number one. But just to drop something, and one of my other realtors, Karen Goodwin, shout out to Karen Goodwin.
She just actually sold my Maryland house in spectacular fashion. So shout out to Karen, really good friend of mine as well. 203K strategy, right? A 203K strategy is a construction loan that you get for buying what they consider to be the worst house on the best block, right? So even going through the deal, kind of reversing back to the deal, utilizing the 203K strategy is like flipping, but you just have to hold it for longer because now you're gonna deal with long-term capital gains taxes, right?
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on whatever state however everything works out. I know it used to be like 365 in a day, but as I just sold my last property, I think it was two years. So I think they're trying to change how fast people are actually saying it might be based on state to state. I don't know, I can't really get that to you. Like definitely consult your local roads or trusted realtor on that. But.
a two or three K strategy basically dictates that you can buy a property for below market value, potentially significantly below market value. And then you got a two or three K contractor, they fix up the house to the specifications, do not use all the money that they give you for the contractor. Like do not do that because every dollar you spend is a dollar equity you just lost. Right? So you're not you're not going to spend an entire amount of money to fix this
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talk to somebody who has really good design concepts, right? You can work with a designer if you want to, you definitely should work with an architect, engineer, if there's any issues with the house or whatever. Like I said before, you don't buy things that have structural issues, right? If you run into structural issues because it wasn't found, okay, now you gotta fix it. That could be a dent into your budget. But at the same time, if you didn't know, you didn't know, there's really nothing you could do about it. But when you buy a property, let's say you buy a property for like $70,000, right? These are just numbers I'm giving you
not accurate, I'm not talking about a particular zip code or whatever. So let's say you buy a property for 70,000 and you put $70,000 worth of work into it. Now you're at 140. Well, what can a house sell when you when you when it's all said and done? 250. Okay. Now you're at once $110,000 worth of equity, you can live in that property for a year. And then you can sell it when you're done. If there's any tax implications, you got to eat that. But who just gets a check for $110,000 minus fees? Like who just does that?
That's actually a cheat code for people of my generation who are looking to buy property because you're not like quit looking for the $400,000 houses, they're not available. Like you don't like 2023 was the first year where the amount that it cost to qualify for a home was above what the average two family household made.
You know what I'm saying? First time in the history of ever that happened. So now what do we do? Do we stick to the retail market or do we try to find different strategies that we can utilize to be able to get that same thing done? That's what entrepreneurship is. So individuals who wanna buy these properties, they should look at properties that need a little bit of work, because the bank will give you the money. And then all that matters is your realtor being able to negotiate with their realtor, if they don't have the same realtor, likely they don't, but being able to negotiate with that realtor so they can say,
hey, this person got approved for this amount of money, do you wanna take this deal?
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And now you're just kind of building a house the way that you want to build it. I think you touched on another point that I'm actually a question off script and then, Demi, I'll let you have the last word. But I think you touched on a big point that is not talked about or is kind of gloss over where people say, oh, you just need 5%, 3% down and this and then just like, oh, you got $100,000 in equity. But they're not showing you the fact that you still have fees, you still have attorney fees, you still have realtor fees,
have all the miscellaneous fees and stuff like that. You're paying everybody before you give them. Right. It's like people are counting that $100,000 in profit. And it's like, oh, yeah, I'm about to make $100,000. And then by the time they realize it, it's $85,000. Yeah. So going, understanding what you know now, you said 34, 35? 35, yeah. 35. I'll be 36 this year. OK. I wish to rise. So you'll be 36. Let's go with that. 36.
Half your age, because most of our listeners are going to be between the age of 18 and 24, sometimes up to 32, right? As less as a 36 year old, what would you tell your 18 year old self? Oh, what would I tell him? What would I tell him? Oh, my God. Low script. This guy cut the camera. Cut the camera. I'll turn the iPad off. That could end it right there. Low. What would I tell my 18 year old self?
I would tell my 18 year olds, because I was somewhat of a wild boy.
Read more. Take your time way more seriously. You're 18 right now. Next year, you're going to be 19. The year after that, you're going to be 20. These years are going to fly by. They're going to fly by. And being able to absorb.
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positivity and also understanding that sometimes the people that are around you right now are not for you. They're for the moment, right? They may not be for you, but they're for the moment. Like take that seriously. Read more, understand how precious your actual time is and create a network that will eventually be your network, right? So like, you know, for example, my
HSPJ Acquisitions is the company that I created with my three line brothers, my three line brothers. And I'm talking to me. I'm.
I'm telling you, like, we're dynamite. Like, entrepreneur, military, veteran, whatever. So you're entrepreneur, global business banker, CPA, comptroller, like, these guys are awesome. You know, these guys are awesome. These guys are awesome. Like, to say the absolute least, these guys are awesome. Right, so when you are spending your life and spending your time building something for other people, do not forget all the things that you have gained from the experiences that you have. Just figure out how you could be able to monetize that
with family, right? So to the 18 year olds, I'm telling you, read more. You still have fun, read more. Understand that everybody's not for you and take your time very seriously. And don't include yourself in things because you think that they're supposed to be for you. They're probably not.
You know, like you have, sometimes you can second guess yourself and it can come out fairly well. You don't have to overthink, right? You don't have to overthink about it, but at the same time understand what's for you and what's not for you. You know, be a little intrapersonal in that way. And then for anybody who's trying to get into real estate, just read.
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Just read, and get good with basic math and interest rates and percentages, or know somebody who is good with it, that you trust and that you respect, because bad information will make you buy a bad deal, thinking that is good. Remember, I told you, the deal is not bad at the end. It's bad in the beginning. So just focus on better beginnings. I would definitely add as well.
to go off what you just said. Don't be chasing a.
Women up and down the streets. That's the conversation for a different day. Probably this podcast, but definitely for a different day. Definitely. But I'm just saying, you lose a lot of money at all. Chasing distractions in general is big. It don't necessarily have to be women. It could be whoever. Or it could be whatever. Just chasing distractions, because there's a lot of white noise. There's a lot of white noise. How many television shows? How many apps do we have?
at some point cable was mad expensive and now you got a thousand apps now the apps on that firestick are expensive because you subscribe to all these other things like
I remember Eric Thomas, the hip hop preacher, he said, how are you broke with a favorite TV show? I don't get it. And I said, oh, that is a gym. I got a favorite TV show. At the same time, I'm working to get to where I wanna be. It's like we have to understand how we can manage these distractions. Distractions can be good because they can take you away from being an over thinker. Because I'm not gonna say that everybody suffers from the same thing, nor am I gonna say that everybody needs to do the same thing.
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but at the same time, we have to understand that if you choose this route, if you choose the route of success, then you have to say, or your own personal success, whatever success looks like to you, if you're doing that, then you need to minimize any and all distractions that you have, because they're time consuming. I just listened to, in the 12-week year, the guy was saying that in an entrepreneur's day, 30% of their day is...
engulfed with distractions from their team.
Any supervisor, any manager, you have to understand what block timing is. You have to understand what being intentional is. These are all the things that you have to understand how to do, you know? So you have to become a subject matter expert. That's first. Don't just think you're going to come in here and win like you can. That's not going to happen like you are going to fail forward. But when you become a subject matter expert, when you arm yourself with the things that you need, when you can properly utilize the tools
by doing it yourself but following other people who are doing it and using their experience as a cheat code, you're going to win way more often than you're going to lose. 100%. I definitely just took away my being intentional to time and sacrifices. Yes. Delay gratification. Yes. That S on Superman's chest should have been for sacrifices. Because if you want to be great, if you want to be great, just understand that, you know, if you want the life that you know you deserve to have.
There's going to be things that you're going to need to do. The definition of insanity is doing the same thing over and over again and expecting different results. Well, it's insane for you to do the same thing over and over again and expect to get something different. That's just what that is.
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Another dope episode Okay, yeah, I came out swinging bro, I didn't come here to play I came here to teach Nah, but definitely a lot of gems as Markel said and oh that was dope Any guys have any closing remarks? I appreciate you. I appreciate y'all for having me. Thank you so much
Yeah, no, one of the bigger takeaways is, like you were saying, just like, learn to leverage other people's money because once you start learning how to leverage, you know, a lender's money or a family member's money or somebody, you could use someone's 401k or Roth IRA or something like that to get into a deal, a VA loan. Yeah. Like, my father has a VA loan, right? And, but I didn't know that you could have multiple VA loans on there. Sure can. Right, and so with that, you're learning that you can use other people's money. Absolutely.
other people's audience. Thank you all for tuning in. Absolutely. I hit the wrong button, bro. Absolutely. Hey, I knew he was saying that up.