On the show today we talk about… My First 3 Deals with Colin White!
Show Links:
– Jennifer Beadles of Addicted to ROI Meetup
– Multifamily Legacy podcast
– Certain Lending with Nghi Le
– Colin White’s LinkedIn
– Our podcast: Who’s responsible for a bad deal podcast
– Rent O Meter website
Show notes for My First 3 Deals with Colin White
The Vantastic Life is…
– is in Orcas Island WA
Joe
Where/how did you grow up Colin?
Colin
Grew up in Spokane, then went to WSU, then became employed by Deloitte and traveled all around.
I bought my first place out of college where I just wanted my family to be together, and I bought a condo in the Central District, and now I’m selling those.
They were very passive until I found the podcast Investor Chu.
I probably put in a couple of hours of work each day on the admin side and talking with agents about deals.
A lot of my investing education gets done really early in the morning or late at night.
Julie
What’s the Spokane investor scene like?
Colin
There are a couple of groups, but investing is kind of a new thing out here. But same thing, we are a decent sized town, and people are very friendly. Also, there’s plenty of meat on the bone for people to get their piece of the pie.
Spokane is 509 on the east side of the mountains here (Eastern WA state). And I focus on the Spokane area primarily.
Julie
What would you like to learn more about right now?
Colin
One of the podcasts that I’ve been listening to is the Multi Family Living Podcast out of Arizona.
We are always looking for other like minded people to get to know, and other lending sources. We go with Certain Lending first, and love working with them!
If someone is looking for a deal, reach out to me, or if you have bigger deals, reach out.
Julie
Let’s get Nghi Le in on this! We are also huge fans of Nghi and Certain Lending, and they are our lending sponsor of Seattle Investors Club and this series of the podcast (My First 3 Deals).
The most friendly and readily available guy is Nghi Le.
Nghi, how are you doing?
Nghi,
Doing great!
Colin, how many deals have you done now?
Colin
I have 3 single family homes, 2 duplexes, and co-owner of 2 apartment complexes.
Nghi
Have you ever lost money?
Colin
Yes, my first property was in Detroit and was a turn key rental that I found through a podcast that lives on the eastside. I financed it with on HELOC from my condo. It had a tenant in place, but found out that the tenant wasn’t a good tenant.
It was a bad situation and I trusted the turn key company too much.
When I switched property management companies I saw pictures of the walls being torn out and the pipping missing.
Julie
What do you think happened?
Colin
We think the turn key company found a place and flipped it over, and didn’t really look at the tenant in place. And me being a newbie, didn’t really do my due diligence.
Now going forward, turn keys aren’t something that I do anymore. I know what to look for, and I don’t have to pay a premium for the turn key.
Julie
So, you went turn key because you had a day job and were busy?
Colin
It was really getting my foot in the door, and I’d been listening to the podcast for over a year, and really wanted to get into it.
It was a put up or shut up moment.
Since then I’ve learned a lot, and I’ve bought my second and third rental properties.
Julie
Nghi, did you get started with turn key properties?
Nghi
For me it’s all about the people. My first property wasn’t that profitable either. It was only $30k.
The interesting thing is that most turn key properties will sell you on cap rate, and the reason they sell out of state is because the locals won’t buy them. They are too expensive.
Colin, have you seen the property since then?
Colin
I have seen it a few times since then. My brother is a Redwings fan, so we go out there a few times a year.
So, I still have the property. We actually had to file an insurance claim, and it’s in the final week of being cleaned up and renovated. When this tenant comes in this will be the first tenant that will actually be paying rent on the property.
We will keep this one for at least a couple years because it’s hard to find good properties out there.
I bought it for $61k, but it only appeases for $30k something. It rents for $800-1100, and it’s a community.
Julie
Why did you choose Detroit.
Colin
It’s just the area that was being pushed by the turn key company we were working with.
Julie
What’s your plan to get some of your cash out?
Colin
I’m going to buy a few other properties in the area, and then I’ll work with Nghi to get a portfolio loan on all of the properties.
Then I can take about half out of each property and put that into another rental property.
Julie
How long ago was that?
Colin
Just over a year ago.
Julie
Tell us about your number 2 deal?
Colin
It was in Indianapolis.
Jennifer Beadles does a good job of find properties that are actually a good deal.
I went over the rent potential for the property. I just want to make sure it cashflows, and will be a good long term investment.
Julie
Nghi, what’s your thought on the out of state investing?
Nghi
I try to aim for properties that need some work. I buy Ugly houses and use the BURR technique. I also always buy things that are under valued, so I can sell them.
But if you’re buying in cashflow markets, they don’t usually appreciate that much. But the good thing is that they don’t depreciate that much either.
I do look for properties that don’t have tenants, but I just bought one that has tenants and we’ll turn those over when the leases expire.
Julie
What do you do with tenants?
Colin
We ask for the rent roll and any work items that have happened in the last year. What’s the area like… are we going to have break ins, etc.
If we can’t get info about rents being paid on time, we might go to another property.
Julie
Do you get property inspections?
Colin
Absolutely! And figure out of there’s going to be any costs or things that we need to improve.
For the tenants, we look at the tax returns to see what their wages look like.
Nghi
We usually buy without tenants to do value add, and prefer that.
Julie
What do you use to know what your rents should be?
Colin
I ask agents and property managers in 3 different areas to make sure that I’m hitting the mark that we need. And we use Rent O Meter
Julie
Do you have any thing bad that’s happened in the Indianapolis area?
Colin
Not really.
Julie
Is there a reason that you’re going out of state vs. buying in Spokane?
Colin
When I got into real estate I was still living in the Seattle area, so I didn’t have many connections in Spokane around real estate.
And my first networking came from cities outside of my home town.
Julie
Where were you networking?
Colin
I just started asking around in my general life and on a podcast that I was listening to. And I found some realtors, and other people to talk too.
BiggerPockets.com is something that I just joined in the last few months.
Julie
The key to smoother process always comes back to relationships. You can get referrals of other relationships, and these can be of so much value!
We get so caught up in all of the real estate meetups these days, but we forget to talk with our neighbors.
Real estate becomes an addictive lifestyle.
Do you guys know of any turn key services that you’d recommend?
Colin
Not that I can personally recommend.
Nghi
The best turn key service that I know of is Jennifer Beadles network.
The question that people always ask is should I go with a local lender or one that’s close to the properties?
And it’s a difficult question.
I’ve done a lot of calling around and talking with lenders. It’s hard to find a lender that will lend everywhere with the same programs.
I have a lender that I take everywhere with me, and I ask them if they will go with me to a new market.
Julie
What was your next deal after Indianapolis?
Colin
I wanted to learn about bigger deals, so I went with three syndication companies. I did this so I could diversify and learn about how each of them works.
After that I came back to Spokane because I was able to create the relationships that I didn’t have before.
Julie
What did you see as the difference between the syndicators?
Colin
One was the due diligence, the other was that I learned that certain syndication groups will allow you to actually bring in a deal and operate it, and get your name into the ring of making the decisions.
So you can grow and get more experience.
Some people want to be totally hands off, but I want to learn, and it depends on what stage of life you’re in.
Julie
It is absolutely to each their own. It’s whatever you want to do for yourself.
The only hand slap is to make sure you have your goals.
Is there anything on your next deal that you would do differently?
Colin
I think we got it down to a science now. I’m not going to say that we are perfect, but I can’t really think of anything right now.
Something that we haven’t talked about is that we are starting to get into rehabbing. We have a good group together to find these older properties in the area.
Julie
How are you finding these deals?
Colin
We use a lot of different inputs, and create really good relationships.
Julie
We’ll have to get you back on for round 2 to see how you like the flips after doing the rentals.
I’ll be curious to hear what you like better, and what you learn.
Colin
I’d be honored to come back and tell you how we did on the other side of real estate.
Julie
I’m curious to see what you do to use financing to move forward. Nghi, do you have any tips?
Nghi
Colin is a sharp guy, but if you’re ever in unknown territory… use your lenders when you’re in new markets. Ask them what they think of the places that you’re looking.
Especially if you’re doing the BURR technique and have to do renovations you want someone watching your back. This is also why I finance as much as I can to have the lender as a partner on my back. And you want to lean on that.
Julie
Are you able to get loans out of state on the smaller loan amounts?
Nghi
If you’re going under $100k it’s cutting into how much you can borrow, and under $50k I haven’t heard of anything.
It might not be worth it to get a loan at the smaller price points.
Julie
Good stuff! Are you suggesting that if the appraisal comes back and the lender doesn’t like it, you don’t do it?
Nghi
Yep, and if the appraisal looks good we move forward, and if it’s not, we move away.
I usually have these under contract before the appraisal.
Julie
I love it! Major nuggets!!
We would love to connect with you more, and maybe have you out to our small mastermind groups out here in South Seattle/Burien area.
Colin
Keep learning and asking questions!
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