Resilient REI
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Dan: On Thursday, I looked up for my desk and about half the sales team was gone. And I looked over to the account executive that I was working with, like I was setting the meetings for him and his head was in his hands and he was, he was shaking a little bit and I was like, Devin, are we late for a meeting?
What’s going on? And he said, “Dan, half the team got laid off”. And I didn’t believe him. “What are you talking about?” So I was like, this is a good time for a well-timed joke. And I said, well, good. We’ve been working so hard we deserve time off.
Ryan: Welcome to the Explore Show where we dive into the worlds of entrepreneurship, real estate, and motivation. Each week, we bring you inspiring conversations with people who are exploring new frontiers and shaping the business world. Thank you for tuning in. Now, let’s get to the show. [00:01:00] Hey, welcome back to another episode of the Explore Show with Scott and Ryan.
Scott. Good to see you.
Scott: Ryan, good to see you as always. Man, you, you, you need to get rid of that beard. That thing is hideous. Oh, come on man. I think it’s time.
Dan: We’ll see. I dig it. I dig it. I know you haven’t introduced me yet, but I dig that beard.
Scott: No, you need to get rid of yours too. At least shave it down. No, I’m just kidding.
Ryan: Well, hey, we have an exciting episode on today. We got Dan from Resilient, r e i, you probably know him from Twitter and all his social medias. Dan, thanks for coming on. Why don’t you give us a little intro to who who are.
Dan: Ryan, Scott, thank you guys so much for letting me hop on, you know, just a Chicago guy out here just talking, about real estate.
I’m glad that you Kansas City boys aren’t afraid of us, even though we should have gotten your quarterback, you know.
Scott: No, dream on bud.
Dan: [00:02:00]
Scott: I don’t think Chicago will ever get to live that down, by the way.
Dan: No, we won’t. But here’s the thing though. It’s all for the best because we got Justin Fields and Justin Fields has been doing good.
Scott: Oh, yeah? He’s been doing real good…. Yeah. Let’s see.
Dan: Yeah, we got the number one overall draft pick. We were smart enough to, to trade down. We’re, gonna be alright.
Scott: We’ll see what happens.
Dan: You know, you guys asked what I’m doing. I’m a real estate nerd.
Scott: Tell me about yourself, who you are, what you do and, and what got you into the space.
Dan: Absolutely. So, I’m a little bit of a real estate nerd. I’ve been in the space for about six years, the first three years were me just grinding it out as a new college grad, just learning the ropes. Finances and living on my own and all that stuff, and studying real estate real hardcore.
And then after that three years I entered into the operational side of it where I started buying rental properties. I’ve got four properties up in Milwaukee. We’re [00:03:00] working on closing, we’re working on finishing up a house hack out in the suburbs that we’re gonna be moving into in a couple months.
And in my spare time, I run the Resilient Real Estate Investing podcast. We have Twitter. We have a whole bunch of other socials, which I’m actually taking a little bit of a strategic pause on, and maybe that’s worth discussing later in the show, but really hammering on my podcast and making sure that I can provide the best real estate content possible for everyday landlords, people who are as big of a nerd as I am when it comes to single family, short-term rental, wholesaling and, and small multifamily.
Scott: What brings the passion or their drive to want to provide all that social content.
Dan: When I was in college, I did a podcast called The Entrepreneurial Report, and please do not look it up! It is awful. It was so bad. I was in my dorm room just with a cheap condenser mic, and I say condenser for anybody who understands [00:04:00] microphones because.
It absorbed all the sounds. So like we’re talking right now with a dynamic microphone, so it is just recording what I’m saying. But I was in my college dorm room and it was recording all the echoes. It was awful audio quality.
Scott: Hey, you can only afford so much in college.
Dan: Absolutely.
I couldn’t afford rental properties, like some of the people that I have on my show now, which is just kind of mind blowing. But what I was doing is running around the city of Chicago, interviewing people who were in the startup world, anybody who called themselves a founder or a venture capitalist.
And there was a wide range on professionalism and people actually running a real startup and people then there were those running around pretending. But what I learned is that when you’ve got a platform for people to speak from, it makes ’em feel really good because they’re able to talk about how smart and how brilliant they are, even when they might not be all that smart and all that brilliant.
That was one of the lessons I had to learn with that show was I have to go through [00:05:00] and kind of call to make sure that I’m getting real people on the show. It’s kind of one of the responsibilities for having a platform. But all these really, really high level people, all of a sudden were like, yeah, I’ll take your call.
I’ll take a meeting, I’ll be on your show. And so I was like, what if I could do something similar with that and get that kind of network, but do it in real estate, which I’m really passionate about. And so I get out of it. I get a wonderful network. I get to talk to individuals such as yourself, and people who listen, are able to hopefully walk away from every single episode knowing how to buy more properties, manage ’em better, and ultimately thrive. That is our tagline.
Scott: I think that’s awesome. Your Twitter, you’re really providing some, some great content there. So not only your podcast, but I know you’re across all platforms, but we were talking about this before we started, you’re gonna back off and you mentioned it briefly, but you’re gonna kind of step away from the other platforms for now and really focus in on Twitter.
[00:06:00] Why, why Twitter?
Dan: I love Twitter for a number of reasons. It’s really easy to execute against. So I started out with Twitter and when I started Resilient to R E I 18 months ago, I started with Twitter because it’s super easy. You have a thought, you type it out, and then you push it out there to the world.
When you get into some of these other platforms like Instagram and TikTok and YouTube, there’s just so much development that goes into it. You know, building, coming out with an idea for a video, and then building the video and then editing the video, and then posting the video and doing all this, all this stuff, and you’re doing all this work.
It’s just I wasn’t getting traction like on Twitter. It wasn’t easy. Right? You have a thought, you put it out there in the world, people engage with it. My whole deal, my whole brand is not for me to be a guru and not for me to be like this real estate genius. I mean, again, I’ve done it for six years and really only operating [00:07:00] it within the last three years. So I don’t want to kind of hold that mantle. I want to have a position where other people come on and they talk about what they’re doing in their business lessons that they’ve learned. Situations that didn’t go right and kind of what we can all learn together and you really can’t have that dialogue on other social media platforms.
You know, with Twitter and Instagram and TikTok, it’s all about me, me, me. Nobody really goes through and has deep discussions in the comments like they do on Twitter.
Scott: Yeah, you can learn so much on Twitter, almost too much. Sometimes you gotta really nail down what you’re looking and trying to do, but absolutely, it is impressive and all the open information and the available information that everybody is so willing to share and help with has been mind blowing.
Dan: What I like to say is there’s that old adage that you’re the average of the five people that you spend time with, and I think that so much of what we’re doing is virtual, and so much of our, our headspace is virtual, [00:08:00] is like where we spend our time on social media, YouTube, podcasts, and all that stuff. So, I also say that you’re the average of the five content streams that you consume, right?
So if you’re only consuming just funny TikTok videos, It’s like what Earl Nightingale said, if you’re only thinking about nothing, you become nothing. So that’s why I think that’s really important with your social media is to kind of police it and try and find, these are the lanes that I wanna succeed in, so let me find the influencers.
Let me find the content providers within those lanes on those social media platforms, because we’re all gonna be on social media, right? We’re all gonna have an Instagram probably. We’re all gonna have a TikTok, we’re all gonna have a Twitter, um, or at least one of them. It might as well help keep us focused on our goal.
Scott: Yes, you get too spread thin. And I know other people might not agree, but I completely agree with you. I would rather go really hard on one, maybe two platforms and just crush it, versus trying to put it across all different platforms. [00:09:00] Unless you have a whole team, we don’t have enough head space for that, let alone time, everything else that we’ve gotta do.
Ryan: What I like about Twitter is you can compile lists and they’re very good. Their algorithm doesn’t try to send you down other rabbit holes, whereas on other platforms, I feel like you can follow a bunch of real estate guys or whatever you’re into and you see some of that, but they’re always trying to send you down some other path and you get trapped in it.
So on Twitter, you can very easily narrow it down. I wanna talk about this subject with this kind of person, and it’s gonna feed it to you.
Dan: So, the whole discussion element of it is really, really helpful, especially for newer investors. The whole segment, the whole subset of Twitter, we call it Retwit Real Estate Twitter, and they’re just some great content providers.
If you really follow one person, you can figure [00:10:00] out like who is all in this community. So like myself, “Adulting is easy”, “The frugal gay”, “The FI Couple”. If you follow one of these persons and you see who they’re interacting with, you can quickly build out this whole community that you can follow.
And if you have a question, right, like you can just shoot them a dm, you could shoot them a comment. If they’re not going to answer it, other people within that community will answer it.
So, anything that goes wrong in my business, I feel I’m so blessed because I’ve got 8,000 people who follow me and I’ve got other people I could reach out to and say, “Hey, how would you approach this situation with this tenant?”.
Or “How would you approach this situation with the contractor?”, and you’ll get four or five different thoughtful answers. I mean, it’s invaluable.
Scott: They’re really thoughtful. It’s not people you know. You’re always going to have the people out harassing or be there to try to ruin your day for no reason.
But for the most part, you’re gonna get [00:11:00] down to the dirt answers, where these people are gonna go through so much detail. You’re gonna know everything about what you just asked, and probably learn a lot more. It is impressive the amount that people are willing to give there.
Which I’m the same way. I always try to provide anything. People ask me, I’m gonna tell you as much as I know. I’m looking at some of these responses we get on Twitter and man, these people are way more in depth than I am, and I thought I was good at giving information. It’s like, wow!
Ryan: Let me ask, what is your Twitter strategy? Scott is always dogging me because my Twitter game is weak. What is your Twitter strategy? Do you want to send out this many tweets a day, or are you just naturally trying to get on there?
Dan: So I started [00:12:00] out on Twitter 18 months ago, and it was just me tweeting stuff out, throwing stuff out there, throwing stuff out against the wall. And then what I started to do with the podcast is that I started trying to put everything everywhere, right? Twitter, Instagram, TikTok, like I was saying earlier.
And in order to do that with one person, right? Not having a team behind me, it meant everything had to be cookie cutter, everything had to be scheduled out, all planned out, all this stuff. Then I tried to be really fancy with it. So I used this platform called zlappo, Z L A P P O, where if I got 20 likes on this, it would automatically put my link tree and said, “Hey,, if you like this tweet, go find all my other stuff here.”
And what I found over the last couple months is I wasn’t really growing and it felt more like a job. It’s like, man, I got into Twitter and I love Twitter. Like what, what’s going on here? So, screw [00:13:00] it. Not doing zlappo anymore. Everything is gonna be organic.
And I think that the Twitter algorithm really likes that. But when it comes to my strategy for posting stuff, It’s all about trying to get people to interact. It’s all about asking a question or putting a thesis out there and seeing what other people have to say. Sometimes people shoot me dms and saying, “Hey, you know, I’ve got 20 followers and you’ve got whatever it is, 8,000 followers.I’m having this problem. Could you ask this question?”. I’ll push it out. I will, I’ll make it anonymous, if people want. It’s all about getting people to think about it and then to put their own 2 cents into it. The algorithm really likes it because it gets engagement and other people really like it because they’re able to kind of see what other people are doing in their business and what tips other people can provide.
So I want to build the platform, right? My whole deal is to build a platform. People come on, they debate each other, they bring in their ideas. They [00:14:00] talk about what’s going on in their business and their investing career. It’s not all about me. I think that what’s different about Twitter compared to Instagram and TikTok, where it’s all influencer based, right?
And you’re waiting for them to talk about that course that they built or take a thousand dollar half hour coaching call with them. It rubs me the wrong way.
Scott: I couldn’t agree more. And Ryan’s not even cookie cutter. He’s below a cookie cutter on Twitter, it’s really bad.
Dan: That’s what I’m saying. Cookie cutter it’s like once you see the pattern, you see the pattern everywhere and all you can see is the pattern. You don’t actually select the individual details.
Scott: He’s not very good with patterns. He failed that in high school, or elementary school, I guess.
Let’s talk more about your investing strategy. So you’ve got several in Milwaukee. Are these all single family? Do you [00:15:00] do some multifamily? What’s your strategy? How do you go about it? What got you into this?
Dan: So it’s a long story. So how would you like me to approach it? How do I get into it? Or what’s my current strategy?
Scott: Let’s start with how did you get into real estate and, and what piqued your interest in it?
Dan: Sure. So let me back up to the podcast I did in college, I was able to get some sponsorship revenue from people who wanted just to be in the startup world. It is funny enough, those sponsors, their whole deal was, we’ll pay you a couple hundred bucks a month, but we’re looking to get this person, or we want to have conversations with this type of entrepreneur. So you’re networking all over the place and when you find this type of individual, do an introduction for us.
And it was a great way to make some beer money. It wasn’t enough, and I didn’t really see a pathway to be able to scale it and grow it. If I went back to what I know now, then I’d be like, dude, this is what you gotta do! Like, you could really blow this out. [00:16:00] but when I was there I was like, okay, I’m making a couple hundred bucks a month.
I was graduating at the end of next semester. How do I play this out? So what I did is I used it as a great networking tool to get the best job possible after I graduated. I would have these interviews with really successful companies. I’d ask, “Hey, are you hiring?”. Could you connect me with somebody?
So I was connected to all these people, all these really cool startups here in Chicago. And one of them that I was connected to led me to another guy who led me to the head HR person for this medical startup called Outcome Health. Outcome Health was the leading unquestionable, the top real estate startup dog in Chicago.
They had raised 500 million the summer that I joined. Sounds like a lot. I mean, doesn’t sound like a lot compared to like Silicon Valley. It’s a lot of money. It’s the second most amount of money ever [00:17:00] raised in Chicago’s startup history. If you’re wondering what number one was, it was Groupon who raised like 950 million.
I got interviews. rolling with them. I got hired as a business development rep which was like a salesperson.
My whole job was to call medical offices and try and go from Susan, who is like the crusty lady who’s at the front desk, to get to Dr. So-and-so, Dr. Smith or Dr. Doe. That was really, really, really hard because oftentimes these receptionists and people working at these hospitals, their main job is to hang up on all salespeople.
This is a little bit of an aside, but there are so many salespeople [00:18:00] calling medical facilities, selling anything from Viagra to M R I machines that it’s a nonstop flow. I had to find a way to break through. But I was doing really well.
Six months in I was at a press conference and it was the two founders of the company standing next to Ram Emanuel, then mayor of Chicago, and we were in this beautiful lobby and they were doing the ribbon cutting of them locking up like a 10 floor lease of this giant skyscraper.
They’re gonna have their name, it’s gonna be Outcome Health Tower. It was like, oh my God, this is so cool. I have, you know, attached my wagon to a rocket ship. This is great. I’m gonna be making $300,000, $400,000 a year as a sales guy. If I want, I could be the sales director of outcome health, in Illinois or whatever [00:19:00] the case might be.
This is what they were throwing around. We’re gonna grow, we’re gonna expand, and everyone will be getting stock options. You’re all gonna be rich, like all those early Uber and Facebook employees. So that was on a Wednesday. On Thursday, I looked up and about half the sales team was gone!
And I looked over to the account executive that I was working with that I was setting the meetings for him and his head was in his hands and he was shaking a little bit and I said to him, “Devin, are we late for a meeting? What’s going on?” And he said, “no, Dan, half the team got laid off.”
I didn’t believe him. “What are you talking about?” So I was like, this is a good time for a well-timed joke. And I said, well, good. We’ve been working so hard we deserve time off.
What ended up happening was, we got pulled into a conference room with our sales manager who was 30 at the time, and myself with the remaining of the sales team. The sales manager said, there’s gonna be some fake news gonna be coming out in the Wall Street Journal. Don’t talk to any reporters. A guy you know, who’s probably 28 right, raised his hand and says, “what does a reporter look like?” Does he have like the hat, like with the little thing on the side that says press on the side of it? Is that like an old school camera with a little notepad and she’s replies, “I don’t know what to tell you.”
So that started about a two month death spiral for the company. I’m able to talk about it now because the executives were found guilty and were sentenced and were sentenced to prison. What ended up happening is it was kinda like Theranos [00:21:00] just with accounting.
They were moving money around. They were raising money fraudulently, they were pulling money out. They were giving a separate book to the accountants, not necessarily a Ponzi scheme. It’s kind of sad because the technology was really cool. It was like this touchscreen and these TVs that really helped you visualize very complex medical situations.
You would do a whole 3D rotation of your chest if you had cancer, and it could walk through the different stages of lung cancer. That experience taught me that there’s no cavalry, right? I gotta be in charge of my own destiny here. That’s what led me down the road of really researching passive income.
We all know that passive income is kind of a myth. It led me to real estate, and that was day one, hour zero on that three year journey of me learning how [00:22:00] do I become a good sales individual? How do I save money? How do I understand this weird world of real estate? How do I build out a team? It took me three years to get to the point where I could buy that first rental property. In year one, I was able to buy three properties. Year two, I felt like a total bomb because I was only able to buy one. And then this year I bought a duplex that is an incredible asset. I’ll probably hold on forever and that’s gonna allow me to house hack and cut my living expenses down dramatically.
That’s in the western suburbs of Chicago. So that’s the story of how I got into this weird and wild roller coaster.
Scott:Let’s step back real quick, you said passive income is not really passive. Could you explain to everybody what you mean by that? I would agree with you, just to throw it out there.
Dan: So passive income is this whole idea. [00:23:00] If you spend any time on Instagram or TikTok, you’ll find people who are talking about how easy it is to make money. You just have to do this one thing, and you have to buy my course and do this and that, and you’ll be making money and you’ll be living on a beach and you won’t have to do any work!
So it’s a whole idea that you’re going to make money without doing work. It’s not real. That’s not exactly honest.
Scott: It’s exaggerated.
Dan: I mean, you could do dividends, right? You could. There are ways that you can make money without having to work, but in order to be able to make that meaningful, you have to have hundreds of thousands, if not millions of dollars in a dividend account because you’re only getting like a couple cents per share or whatever the case might be.
So you have to do a ton of work. You have to sweat and just hunker down to be able to buy, to be able to build that portfolio. Then at that point you have to also manage it, [00:24:00] right? Right? Is this a company? Like Comcast with the Comcast dividend? Is that the right choice for right now?Or should I move stuff around? So that’s my stance on that. Just go out there and make money. Go out there and be smart with your money. Make sound investments. Make sure you’re not losing money and just continually study, study, study.
Scott: I think in the real estate world it’s been TikTok and influencers have put this exaggeration on investing overall, but really in real estate and how easy and how simple it is to just make all this money. I guess in the last couple years almost everybody seems to have been doing it but it is not as easy as it sounds and it is not passive.
That’s about the last thing real estate is to be honest, real estate is very cash heavy in the beginning, [00:25:00] especially, unless you’re starting out with a ton of cash, you’re typically buying lower grade properties, B or C class properties. So then what do you have to do for the B or C class property? Well, you have to fix it up.
There’s ways of doing that with as little cash as possible, but it still takes money. Then what happens? Well, typically if you have these lower class properties, you’re going to get tenants that might not take as good care. Not always, but it’s sometimes. That could be in any class property, I guess.
The reality is any time a tenant turns over, you’re going to have some cost and you’re going to have management costs, you’re going to have things that are broken. I’ve bought houses and on the day we buy them, the AC units seem to go out. It just is, what it is. That stuff happens, but it’s not passive.
When you’re making maybe a hundred hundred dollars a month, in “passive cashflow”, “passive income”, one thing goes wrong and there goes all your cash flow for the next two years.
Dan: The other side of that is [00:26:00] to get passive income so that you can go lay and hang out on a beach. How good of a landlord are you gonna be?
I think that’s what a lot of people miss. They talk about the spreadsheet, they talk about the cash flow, but nobody really talks about the responsibility that it is to own real estate. You are responsible for the four walls, the floor, and the roof. A place that a family might be raising kids in.
People come home from a tough day at work. It needs to be comfortable. I mean, it doesn’t need to be custom cabinets and designer everything. Right? But it needs to be comfortable. It needs to be safe. I just cringe when I hear people talk about how easy it is and it’s just like, well, what type of landlord are you?
Right? Like, are you really taking good care of your properties if all you’re doing is just trying to buy enough passive income so you can go hang out on the beach?
Ryan: Like you said earlier, typically the ones that talk about how easy it is and how passive it is, are these people trying to sell a course or trying [00:27:00] to sell a coaching program or a session they want, they’re trying to lure people.
It’s easy, I’ve got 300 houses and I take six month vacations every year and blah, blah, blah. But in reality, that’s just not the case.
Dan: Absolutely. Things just happen. Things break, it’s been very good to me, and real estate is a very forgiving asset class, but I’m very skeptical of anybody who says that, you know, why do you buy real estate? Why are you choosing this path? And they say, oh, I wanna retire and hang out on a beach when I’m 30. That’s not the mentality that is conducive to being successful because it’s really, really hard.
Scott: It is. The only way to do it like that is if you just have a ton of capital that you ran into somehow, or maybe earned really young.
Even then, it’s still very hard. I don’t care how much money you have, it’s still [00:28:00] not extremely passive no matter what. Even if you’re just an LP and different opportunities, right? So you’re a liquidity partner. Even then, you’ve gotta review stuff. You’ve gotta look at spreadsheets all the time.
You’re trying to understand, really. You should be doing a ton of research on these projects and interviews with the GPs, everything else. So it’s really not passive in any way.
Dan: Absolutely. I like that you brought up LPs. I mean, how many LPs are just gonna get absolutely crushed? Right?
How many deals have been done that made no sense in an environment above 4% interest rates? I think that I posted something. You start to see it come out and this guy, he has had to foreclose on like four buildings, 3000 units, and he was big on YouTube and got into syndication because it was a thing to do.
People who didn’t know any better. I feel so bad. I feel so bad for all these people who thought, real estate, it’s so [00:29:00] easy. I’ll be an LP. I don’t even have to do anything. Right? Passive income, passive income. Then all of a sudden they’re like, wait, like commercial debt is 3 to 5 years, that’s not 30 year debt? That’s like 2, 3, 5 years done.
Scott: We can get on that tangent all day, the reality is, real estate is not passive. Let’s talk about this house hack. House hack has been a term that has become very popular the last couple of years.
It seems like everybody’s trying to do that now. Explain what house hacking is and give us a background and rundown of your exact project. So you bought a duplex. Tell us a little bit about the numbers and what you’re doing to it and what it’s gonna turn out to be for you.
Ryan: How did you find it as well?
Dan: Oh, that’s easy. I didn’t find it. My wife found it!
Scott: Nice, got yourself a good one.
Dan: So start out with what a house hack is. House [00:30:00] hacking is where you buy a property and you’re somehow able to offset the cost associated to yourself, so that way you’re able to live in your biggest expense, which is typically housing. It is less, it could be zero. And in some very rare cases you could actually be negative, which means that you’re getting cash flow. Very, very rare, even though people like to talk about how easy it is. So an example would be you buy a duplex. You live on one side, you rent the other side out.
If you buy a really junked up duplex, you might be able to bring your housing costs to zero, so you’re technically living for free. There’s a number of ways you can do it. You could do a duplex, triplex, you could do apartments if you’ve got the money.
You could even do co-living. That’s what I actually was originally looking to do, way back when. After the days of Outcome Health. When I first [00:31:00] started researching real estate, I was gonna buy a two bedroom, two bath, condo here in the city and then get a roommate. Thankfully I did not qualify.
Long, long, long story, long story on that. The property we found is in one of these, just gem of a neighborhood, in the state of Illinois. It’s a top 10 school district. One of the safest. Single family houses there pretty much start at $600,000. At $600,000 you’re gonna have to do some work to it. It’s probably going to be fairly dated.
My wife was just scrolling through Redfin one day, and she was like, “Hey, did you see that there’s a duplex?” I was like, there’s no duplexes in that town. And she’s like, “there’s a duplex”. She sent me the link and it was like $730,000.
I’m looking at it and I’m like, is there a way that we could make the numbers [00:32:00] work on this? Then I said, I’m gonna call the agent. And she’s like, “what are you talking about”? I’m gonna call the agent. I’m gonna call up the agent on this property.
So I called the agent and I said, “I’d like to take a look at this property”. You know, by the way, I’m not represented. I own property in Milwaukee. I don’t have a good agent here in this city. I shouldn’t say a good agent. “I’m not represented by anybody”.
We ended up working with him, his team. They got both sides of the commission, which I’m sure that they were pretty happy about. It started a very long closing process. I think that we got an offer accepted in January and we closed on May 1st. Then we’ll ultimately move into the property sometime in September.
It is a really unique duplex. It’s two units side by side, so it’s not up down. Nobody’s living above or below anybody. We share just one wall [00:33:00] and the back unit is the former owner’s unit and it’s kind of crazy. It’s 2,900 square feet, four bed, two bath. It opens up to an enclosed backyard that’s got a recessed pool, I think that is the name. So it’s kind of above ground, but mostly below ground pool. You follow it out, and it goes directly into a two-car garage. The front unit is a three bed, two bath, and hasn’t been updated since the nineties. It has had plenty of animals living in it from previous tenants.
It smells like…. you know, it smells like money. That unit has a one car garage in the back. There’s no private space for that front unit. So what we’re going to do is we’re gonna rent out the back unit, rehab the hell out of [00:34:00] that front unit and then live in the front unit.
Eventually, one day, we’ll switch and go and live in the back unit and rent the front unit out.
Scott: Very nice. So what did you end up getting it for?
Dan: We ended up getting it for $730,000. What took so long, is that the only person who could buy this property was someone who was going to live in it.
It did not make sense numbers wise as a pure investment because that front unit was tenant occupied. It was way, way, way, below market rent. Their lease was up on June 1st. They (owner) basically listed it shortly after they (tenant) had signed the renewed lease.
From an investor perspective, it’s like, I’m gonna buy this huge property. It’s not really gonna cash flow. Then I’m gonna have to do all this work on the front [00:35:00] unit, and I’m going to inherit a tenant. They started out super high. I think they started out like $850,000 or so, and then they started dropping it down.
Scott: It’s a terrible strategy for anybody listening. Starting high almost always kills you.
Dan: Well, shoot for the moon, right? We have had a couple crazy years in real estate.
Scott: I guess, but I could tell you from experience, the transactions we do. People that start high almost always bring in less money.
Almost always, I don’t actually recall a single time that if they started high, we would have sold it for more. People start questioning, “Why is that property sitting?”, “Why are they dropping the price?”, “What’s wrong with it?”
When really there’s nothing wrong. It’s just we started too high, but now people have fear.
Dan: Well, as an investor, I always like seeing stuff that’s been on the market for a little [00:36:00] bit too long.
Scott: Exactly right.
Dan: That’s probably great advice because when we saw it, it was on the market for like 60 days.
We’re like, nothing’s sitting in this town for 60 days. Nothing has been sitting in this town for two weeks. What’s the problem here? And so we originally thought it was the pool. We thought that the pool was scaring away investors. Then we bought it, kind of in spite of it. We were like, there’s a pretty good chance that we’re just going to rip out that pool. But then we’re like, we kind of want to have a pool. when we make the shift over. Then after we bought it, everybody was asking about the pool, right? Perspective tenants were like, this is the place that has the pool, right? I’m like, oh yeah, yeah, this is the place that’s got the pool.
Let’s go show you this amazing private backyard. So that pool actually helped us rent it. Fairly quickly. You know, it’s a little bit too early to say, but we think that we’ve got a really good family that’s gonna be moving into that side.
Scott: Good. That’s awesome, man.
Well, congrats. So how much work can your company to put into it?
Dan: [00:37:00] How much work or how much into it?
Scott: Roughly numbers wise, what’s it gonna look like on cost to get it renovated and ready?
Dan: So the front unit…The back unit was an owner’s unit that needed plumbing work, which was a couple grand. Which is just fun to see the price of copper.
So we put a couple grand in there because it was galvanized pipes. The front unit is going to need a considerable amount of work. We’ve gotten some quotes from general contractors in the $40 to $50 thousand range. New flooring, new kitchen, new bathroom upstairs, ventilation work. A lot of it I’m going to try and do myself. That’s kinda where I’m at now.
I think that I’ll just act as the GC. We’re gonna work with individual contractors on plumbing and flooring and some carpentry work. Then I will try and do as [00:38:00] much of it as I can. It’s going to be less than what we originally were quote. So it’s probably gonna be somewhere in the $30K range.
You know, remodels never go on time and on budget. So ask me in a couple months.
Scott: That makes sense. You think you’ll be under $800K?
Dan: Yeah. I would say well under.
Scott: What does something like that lease for up there? Obviously you have some unique things with the pool and everything else, but roughly.
Dan: That was a real trick. I think that was the other reason why it sat is because there’s not a lot of duplexes in this town. When you look, when you do like the rentometer on duplexes, there’s just nothing. So you expand out the circle and you go into different towns that are, are nice but not that nice.
There’s just no comps. There’s no comps for it, especially with a private backyard and a private pool. So we were being [00:39:00] told that we’ll be able to rent it for five grand a month. We heard ranges anywhere between $3,000 and $5,000 a month. We’re like, the numbers work.
They don’t really work at three grand, but we think we could probably get 3,300 for it. We listed it at $4,000 and we took it off the market after four days. We were blown away by the number of people who came through and were highly qualified. I mean, we had senior VPs, we had lawyers taking a look at this property.
Scott: That’s really exciting. So what’s your goal like? You want to be a real estate investor. Do you look at, in the future, do you think you’ll try to raise money? Syndicate, or do you think you’ll stick with the small multi-family residential? What’s that look like?
Dan: [00:40:00] I’m gonna stay with the single family, small multifamily. I love those asset classes. I mean, the properties I have up in Milwaukee have just been treating me very, very well.
I don’t think I’ll syndicate. I don’t think I’ll go that route. Time will tell. Maybe I will. Maybe I’ll raise some private money. The reason why I like it is just because of the debt structure, right? I like 15 to 30 year fixed debt. That’s what scares me about commercial is not being able to have debt fixed long term.
So that’s why I think that’s kinda the lane that I like. For now, that’s what I’m going to stay in. I think I’m gonna keep buying properties in Milwaukee. I might expand my footprint, down here in Illinois, even though it is a little bit more of an expensive market. That’s where I see the future for me.
Scott: Do you think you’ll [00:41:00] eventually be full-time in real estate?
Dan: Absolutely. Absolutely.
Scott: Real estate investing, I should say. I apologize. Just on the investing side.
Dan: I think that, people talk about passive income and how you spend no time. I mean, with real estate, the idea is that I’ll build a portfolio and it’s not gonna be a 40 hour a week thing.
So I will do resilient, REI, the podcast and the Twitter full-time. I’ve got some really cool ideas of what that could look like down the line. So that’s what I’m, what I’m building towards. I think that it goes back to that initial conversation that we were having, that if you go into this, this whole personal finance, retire early world and your whole goal is to move and just hang out at a beach all day and drink mai tai’s, you’re gonna fail.
The people who, in my experience, who are able to hit that goal and be able to be a full-time investor, they’re doing other stuff. You know, they’ve got a [00:42:00] podcast, they’re building their own company or they’re syndicating, they’re busying themselves doing stuff. They’re not just, you know, f-ing off to a beach for nine months out of a year.
Scott: Let me tell you, I’ve been a full-time investor for seven years now, plus in the real estate sales, plus multiple other industries, building businesses, and none of it’s passive. I haven’t taken a penny out of it. I mean, it’s continually having to throw money at stuff. So there’s nothing passive, you know?
Now more power to people that can. Come and crush it right away. If you’re comfortable with it, that it can take off and you sit on a beach. That’s awesome. Most of the time people, those people that are wired that way aren’t probably gonna be able to sit on a beach for very long.
That’s my experience and what I see with a lot of the people. They might try that but people who are preaching that more than likely are [00:43:00] not telling the full truth. Because if they were really that good and that baller at what they do and crush it so fast, they’re not gonna be sitting on a beach doing nothing.
Ryan: I feel like a lot of people who say that, they’re working a job they don’t like, every day they hate going to work. So their idea is, I’m gonna do this, so that I don’t have to work anymore and just go sit on that beach. It’s just not realistic.
Dan: When I was doing the three year of graduate level study for real estate. The jobs that I had, I did not like. I mean, when you’re in a sales role at a bad company and you’re just cold calling and trying to get your 1 call closings. That’s a brutal, brutal way to make money.
I found that I’ve got a job that I’m at now that is wonderful. I love the company that I’m working for, and I’m doing very well [00:44:00] at it. I just find myself, building this for my own financial stability. I’m not trying to run away from that thing that I hate, that job that I hate.
I’ve kind of realized it recently when I was in those jobs and I really hated it. It was like, “The pressure’s on, I gotta do real estate, I gotta buy these properties”. I have to get out of this situation. Whereas now it’s just a little bit different set of motivation.
Scott: I love that. I think it’s so accurate and so true as well. Do you plan on managing all of your properties then? Or what’s the plan there?
Dan: No, I am hooked on the teet of property management. Good property managers are worth their weight in gold.
Scott: He said, “I am hooked on the teet”. I like that!
Dan: There are plenty of bad [00:45:00] property managers out there, and don’t think that they’re all created equal.
Scott: Oh. The majority are bad, if I’m going to be honest.
Dan: I have found the property manager that I have up in Milwaukee is outstanding. She is, she’s the best.
She manages all the rehabs. She’s my agent up there, decades worth of experience in the market. I sent her a listing and she has either managed it herself or she has been in that property. She knows this little niche area of Milwaukee, like the back of her hand. To have a property manager who also oversees your rehabs, walk a property and say, okay, this is what it would look like to rent it. This is a tenant pool. This is how much it would cost to renovate. And oh, by the way, here’s what we can do to get this deal and then go back to our office and write an offer. I mean, unless I had a real estate license, I don’t know how I could beat [00:46:00] that deal?
Scott: Just that service and the knowledge she has is worth every penny that she makes. I mean, the reality is, people want to talk about real estate agents, commissions, blah, blah, blah. The good ones are worth every penny that they make. I will promise you that. They work way harder than what everybody seems to think.
Now, yes, the 80/20 rule applies, in my opinion, and it is 80% of the work gets done by 20% of the agents. That 20% of top agents is worth way more than the bottom 80% that are in the business. You’re going to have to find them.
Dan: Absolutely. You know, there’s so many people who complain about the management fees, which, you know, could be anywhere between 8% and 12% of gross rent.
They’re like, oh, I should do that myself. No, no, I’m more than happy to pay that. I’m more than happy to pay for this individual, this qualified individual to take care of these properties. [00:47:00]
Scott: I always laugh when people tell me or are complaining about management fees. You know, we sell a lot of real estate in Kansas City and I work with, and have in the past especially, worked with tons of investors.
We get phone calls all the time from these investors. They thought they were going to save a couple of bucks managing these properties themselves. “Hey, so, this broke…”. So I had a perfect example, over this winter one of my past clients, they were managing it themselves. They had a pipe break, it flooded their crawl space.
They had to get a plumber out there to drain the crawl space. When you do that, you have issues with structural work too, because if you drain it too fast, the walls can collapse, right? Because of all the pressure. So they had to get it drained out. They had to pump it and then they had to fix the pipe.
What we decided to do is bring it up into the garage. Long story short, they had a guy come out, he charged them, I think, $1,800 [00:48:00] just to pump it. My guy would’ve charged him $400 to pump it. All right? So that’s what, a $1,400 difference? That would’ve paid for an entire year or more of management on the house, and they would’ve never had to deal with any of the Saturday calls that they get, any of the Friday night calls that they’ve been getting.
I mean, it happens consistently.
Dan: That is such a great example
Scott: We save people so much on maintenance, because we know the right people that are gonna do fair quality work for a fair price.
Dan: I’m in a situation now where I’m looking at contractors for this remodel and I’m like, This is really hard. Who should I be working with?
Is this number fair? If you’re looking at a property manager, one of the questions that you should ask in every interview is, how many subcontractors do you have? Try and drill down how many plumbers they know. How many carpenters? When you work with a property manager, you get plugged into their network. That’s the same thing with real estate. [00:49:00]
Scott: We had a guy on the podcast, one of our first podcasts, good buddy of mine here in Kansas City. He said their name is Con-tractor, for a reason! A lot of them are a big emphasis on the con.
I mean, he’s right and that’s sad because there are a lot of great ones out there. Again, I say it’s the 80/20 rule, you know? 20% of ’em crush it, but there are a lot more out there that are going to just charge whatever they can just because people will pay it or because they just don’t care.
Then they’ll take your money and run or not do things right. Like it’s a tough industry, so one or two bad contractors. Emphasis on the con. You can really lose all cash flow for many, many years.
Dan: Absolutely. You know, that’s the importance of getting plugged into the right network.
Ryan: And it will discourage you from keeping going. You know, if it hits you hard enough in the pocket, you’re not gonna wanna get back on the horse.
Scott: [00:50:00] No, you can’t. A lot of the times, like some people I’ve seen get crushed. You know what, they’re paying these contractors to come out there and do some of the work for ’em. It’s just absolutely asinine. They do it because they know no better.
Ryan: Right, well Dan, we appreciate you coming on. Is there anything else? We definitely we want to know, where people can find you? Your Twitter and socials.
Dan: Sure. So you can find me on Twitter Resilient. R E I
Scott: I highly recommend following him guys, he’s got great content
Dan: Well thank you for buttering my bread and then my podcast is Resilient Real Estate Investing, which you can find anywhere that podcasts are sold even though it’s free.
Scott: I’ll be there someday. I’m waiting on my invite, guys.
Dan: We’ll figure it out. We’ll connect offline here.
Scott: Yep. Sounds good Dan. We really [00:51:00] appreciate it. Ryan, you wanna close it out?
Ryan: Yep, we’ll link all of Dan’s and Resilient REI’’s information and in the description below. Dan, thank you so much again for coming on and thanks for everybody listening to the Xplor Show.
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