On the show today we have… Jennifer Beadles – Out of State Investing Expert!
Show notes for Jennifer Beadles – Out of State Investing Expert!
The Vantastic Life is…
– is in Massacre Rocks State Park ID!
All of the ski resorts are closed and we are sad :-(.
Jennifer is in Snohomish, Julie is in Ballard, and Joe is down by the river in Idaho.
3 generation business owner. Grandfather was a small business owner during the Great Depression. They manufactured airplane parts for Boeing.
My parents wanted to run their own businesses. My dad was a wildlife nature photographer.
So from a very young age I learned about marketing, and sales, and taking in money (my favorite part).
This made me want to own my own small business.
My first job was at Alfie’s Pizza at 15 years old. I was one of my only friends that had money, and I liked that.
The money made me feel like I had power.
In high school I had 2-3 jobs and worked for my parents.
I did half senior year of high school and half college.
During that time I worked at a coffee stand in the morning and was a server at night.
It was important to me to have money and the options that it gave me.
I think that everyone should do customer service in the food industry.
My goal was to by my first house at age 21.
And my grandfather had done really good at commercial real estate.
Is that how you learned about real estate?
It’s strange that my parents didn’t want anything to do with real estate. It seems like it skips a generation.
So we bought our first house in 2007, which might not have been the best time. It was a complete gut remodel.
My ex boyfriend ended up refinancing that one to own.
After closing on that house I decided I was going to learn the real estate business.
I got hired on with a local builder and got skills like project management, working with banks, etc. They built spec homes, and small multi family.
What was the top thing you learned from that builder?
I think that it was that they were building small multi family. They were taking business profits out of the spec homes to build their small multi family. Which they called their retirement.
In real estate we don’t get a retirement plan, we have to build our own.
This stuck with me and it’s really smart.
You build an income and you take a part of that income and invest it for retirement.
I learned the financing side, the banking side, all of it.
I’m a big plan of side hustles. I think everyone needs a side hustle.
I got my real estate license in May 2009, and I wanted to be my own buyers agent. That was my only purpose.
But I had friends and family that asked me to help them buy houses. And in my first 6 months I sold 6 houses, and my eyes were opened.
Yeah, I think that everyone should get their license.
And then I ended up quitting, and we purchased a house hack duplex. My husband didn’t like it. FHA was 3% down, so we got 0 down by applying our commission.
We had the tenant on the other side pretty much paying our whole mortgage.
So I was going to give this real estate things a try.
I raised some money to do some house building.
Did you take over houses that people couldn’t finish?
The bank had taken back the first one, and we helped the builder out with a short sale.
That one I did the entire transaction as the agent, and used an LLC for the investors.
My first 5 listings were single family houses that we just built.
Some of the most talented people that we talk to are so young when they started. We are talking about people in middle school looking into real estate.
It’s amazing to see where they are today!
What year are we at?
2010, and the market shifts to a tough market.
Then I met a guy that was buying at the foreclosure auction. I had no idea about how that worked. But my eyes were opened about how it all worked.
So I started representing myself and investors at the foreclosure auction.
We had decided that for the next 5 years we were going to build our rental portfolio.
Even though the media was saying that real estate was a bad investment, but we did the opposite.
We were getting 2.65 interest rates!
When you were at the auction… what did it look like for you?
We were doing everything. Vacant land, flips, BRRR, we were looking at everything and doing everything. Sometimes with clients, and sometimes for ourselves.
We kept buying, and I learned about BRRR in late 2010.
We would get the list and drive properties all day on Thursday, and I worked with some really great guys that would come to the auction with 5 million dollars, and we would stand out in the rain bidding on properties.
Then someone said they would do a rate and term refinance and we could keep the properties. So we started doing that.
I was thinking that everyone needs to know this stuff!
So I started hosting Thursday night meetings with investors. We loved helping others build their portfolios.
Are you thinking that there’s a down turn coming here?
It’s hard to tell. We actually don’t buy any houses in WA anymore. Because we are investing for cash flow.
But if you can find deals in your own back yard, then you should.
We are going to go deep dive on that!
How does that morph to Agents Invest?
I love helping people build portfolios, but I was getting a little down. My expertises is looking at the numbers. So we brought on agents that could help with different personalities.
We had been so successful with buying properties in WA, and then 2016 rolled around and we hadn’t really bought any properties.
We had to figure everything out. How to find properties, how to put a team together, and everything else!
Let’s go deep into that. You have turned into the go to person for out of state investing!
You have become the authority.
What is your process and how did you start?
Yeah, yeah. I was like, where do I start? I only want to invest in cities… that are growing, that did ok in the last recession. Then I needed to find a good team.
And I put together a team in Indianapolis.
So how did you build that team?
I started calling brokers and property management companies and asking who where their best people. Finally I found a few good agents and bought a property.
Then my investors were saying that they wanted to do this too.
So I was wondering if we really needed to start in Indianapolis, and thought maybe Spokane… and when I looked into Spokane I thought that it had everything to take off.
And I asked if some investors would consider it, and working with the team I found.
The agents and investors were both doing great, so I decided to do a pivot.
How does that work for you on the flow?
We put agents through a series of tests and analyze their deals for a long while to know that they know what they are doing. At first I was looking at all of the deals.
Then I brought on someone to help me vet the agents and check the deals that they have. We also talk to clients that they’ve worked with.
There’s nothing worse than giving a bad referral.
I remember that we used to let investors submit wholesales to our SIC community. But one time, someone who went through the vetting submitted a bad deal. And someone else bought it because of it coming through our channel.
I still to this day feel guilty about it.
This can ramp up quickly.
We used to make an individual connection between agents and investors, but the agents didn’t have time for that because it got so busy.
Then we shifted to agents sending the deals, we looked at them, and we put them on a deals list.
We put some provisioned in there for our investors as well.
We do currently still analyze every deal. I do this.
Let’s talk about that.
I run it all through my buy and hold deal analysis calculator. We only do buy and hold, not flip at all.
I look for at least 8% cash on cash or higher. Sometimes we can go higher on a really hot market. Like Austin, for example.
What do you see them agreeing to on cash on cash?
I would say 6%.
And I run everything at a 10% vacancy. So my 6% might be another investors 8%.
10 for economics and physical vacancy, and 10 for cap X, and 10 for property management… And that’s how I’m getting to the cash flow number.
Saying that out loud makes you think it would be hard to find deals.
We find deals like this all the time! In fact my inbox is full.
Back to investors buying deals because of who you are…
We require investors to vet the properties themselves. We won’t show them our numbers. They have to do it themselves.
That’s how we got into Agent Invest. We are really helping out. But it was only helping out the experienced investors.
Do you have a questionnaire that you can give investors?
Yeah, we have a survey, and I’d be happy to share. At the end it says that based on your answers… you should invest like this!
We’d love to have that. Is there a link?
How would you do with 5-10 units?
Yes to link.
We do more analysis, but it’s a similar process. And actually depends on the buyer. Some don’t want to do a full rehab on all of the units.
I don’t want to anticipate what every investor wants to do on a deal.
We also do online classes and meetups.
So you are still vetting the deals these days? And if it passes the sniff test you post it…
Yes. We ask our agents to assign a renovation budget. So sometimes I will run the deal in different ways. It’s a quick pass to see if we should send it out.
We run a stabilized refinancing on BRRR properties.
Let’s jump into what’s going on today.
You might have received an email from Jennifer a few days ago if you’re on her emails list. She sent out a very helpful guideline of what we should be thinking about.
How are you feeling right now?
I am highly optimistic in the long term. Short term we are going to face some challenges. A new economy. The education system is getting completely disrupted, and we might have negative interest rates. More US made manufactured products.
People have been asking if they should be putting a pause on things right now? We are going to keep buying multi family real estate.
We had a check in with people to make sure people are doing well and feeling ok.
And how from a few weeks ago have you personally changed?
My deal criteria hasn’t changed since 2009. In the short term we aren’t taking on high vacancy properties with a lot of work. But we will go back to this after a short pause.
I have some good news for you! Jennifer is going to check in with us every few months as we go through this together. Hopefully that sounds good. It brings me comfort!
Have you had any reaction from the agents yet that they aren’t able to find people to sell?
So, we are based on Seattle WA and I think that things are different here than maybe in the NW. 3-4 of our investors got into multi family properties in the last week.
There have been a few concerns or cautions on the investor side.
We haven’t seen a flood of properties hit the market and I’m not sure that we will see that.
So, not a whole lot of difference with out of state.
How are you going to adjust your rents with job loss? Are you modeling this out.
It’s going to depend on the property. The A class is going to be hit the hardest. Most of our properties are on the affordable times.
At one point 25% of our tenants where on unemployment and they were all able to pay.
I think that April is going to be the hardest. I would look at the unemployment rates your areas.
What if someone applies for rent at one of your properties that is on unemployment?
Yes, all the time. I would say take them. Put them on a 6 month lease. You want tenants that are paying.
I was thinking about that. If I was a tenant I would be feeling insecure with a 6 month lease. If I was the tenant.
I’m just thinking out loud.
I think that we all need to be proactive right now.
Yeah, if you guys have any ideas… that’s how we do it in commercial.
Maybe there’s a way to do that…
It’s so early that we are into this. I have a landlord that just offered a discount on April’s rent if they could show a hardship.
If you need to lower the monthly payment that people can afford because they can’t afford it…. don’t touch your base rent. Touch your other income first. Lenders will look at the base rent. Stop the utility bill backs before you touch the base rents.
I think we are going to see historically low interest rates, and we want to be able to take advantage of that.
Why not recast your leases right now. Go to your tenants and give them security where you recast them for another 12 month right now…
What about not being able to evict right now?
I would say that most landlords won’t be evicting at this point anyway. I’m not in agreement with that announcement.
I have a unit available right now if you are looking in downtown Ballard. Hit me up if you’re interested via email.
This that you can’t evict if they can’t pay is weird right now.
It sends the wrong message. The next time this happens… are we going to play this all over again?
Fill vacancies as soon as possible. Even if you have to take less rent or creative measurement tool.
Renewing any month to months
Getting HELOCs to boost cash reserves. Do you think people should pull the cash out on that?
Yeah, I did draw mine out on Monday.
What are you paying right now.
4.5 or 5% and I expect that to go down.
So you’ve drawn yours out. And other investors are doing that as well.
Draw as much out as you can handle.
Rate are bouncing around…
I sent this out a week ago, and I think that in 2-3 weeks we will see them back in the 4’s or 3’s.
Let’s educate people. The loans are based on the 10 year treasury. Like a stock that bounces all over, and when lenders go to lock they grab that rate that it’s at. It’s by the moment. And then each lender adds their spread on top. And that’s based on the lenders current pipeline. Which could be due to the lender being busy.
So the spread goes up and down based on how busy they are.
This means that you want to get in line for the window of opportunity.
That was probably the best explanation that I’ve heard! Bravo!
Then the lenders will sell their loans on the back end. Then a couple of weeks ago there were so many loans on the backend that they couldn’t sell the loans for as much.
Keith Pitch with Loan Depot has taught us on that.
Is there one last tip that you wanted to mention… you said it might be hard to get contractors.
Yeah, it’s hard to find them now, so it’s going to be hard.
How can people stay in touch with you? And keep plugged in.
If you don’t do this you are nuts!
Thank you so much!
We put out a bunch of free content! I’ve canceled all of my vacation plans, and we are talking about what to put out there for what’s to come. And to take advantage of opportunities.
I think it would be cool to publish successful closings right now.
Absolutely! 100% agree!
How about your master class?
We are hosting 2 master class sessions next week.
Tuesday and Thursday. Then the free master class on Wednesday.
You can find those on AddictedToROI.com and Facebook group.
We are capped on these! So sign up early!