Episode 30 - Maximize Your Real Estate Profits by Avoiding Costly Mistakes!
In this episode. we sit down with real estate investor Ian Love to discuss the ups and downs of real estate investing, managing properties, and adapting to changing market dynamics. Ian shares his journey from his first job as a youth basketball coach to his experience managing multiple properties and scaling his real estate portfolio.
TAKEAWAY 1: The Importance of Building Trust with Your Team Trust in your real estate team is crucial for long-term success, especially in out-of-state investing.
TAKEAWAY 2: Patience and the Power of Finding the Right Deal Finding the right deal takes time; it's not always about jumping at the first opportunity.
TAKEAWAY 3: The Long-Term Value of Treating Tenants Well Treating tenants with respect and addressing their needs can lead to long-term retention and reduced turnover costs.
TRANSCRIPT
∎ Teaser / Highlighted Clip
[Ian Love] (0:00 - 0:32)
There's always like exceptions right to every rule like When when people are on they're like this could never work for me You know what that is then it's like he started with $100 in a suitcase You know came over from Vietnam was living in you know section 8 housing and like you know did living with you know host families and all that kind of stuff and it's like if you I Don't think they know a lot of the background right like they they're just kind of they're kind of thinking that he just Started with a silver spoon or something, but I Don't know.
[Stephen Husted] (0:32 - 3:35)
Yeah, they see the car and they just think okay. It's just another you know greedy Landlord investor and
∎ Podcast Intro:
Welcome to the breakthrough with Stephen Husted the show that takes you behind the scenes with successful entrepreneurs Real estate investors and other movers and shakers in the business world In each episode we'll sit down with our guests to explore their personal and professional journeys Including the challenges they faced the breakthrough moments that propelled them to success and the strategies and the tactics They used to get there get inspired by new ideas and strategies and get to know our guests on a deeper level Join us for candid conversations powerful insights and plenty of breakthrough moments Please help us grow by subscribing and sharing the podcast and welcome to the show.
∎ Guest Introduction:
Hey everyone, welcome back to another episode of the breakthrough with Stephen Husted today We've got a special guest joining us in love Ian is a real estate expert who's been flipping houses and building really cool daddies in Seattle He's got some great stories about his journey from coaching youth basketball to crunching numbers at Ernst & Young Trust me. You don't want to miss this one We're diving into some real gems today Like the secrets of maximizing margins with daddies and how Ian manages 20 units without losing his mind Plus we're going to chat about his strategy for keeping tenants happy and avoiding turnovers It's all about playing the long game folks Ian also has some thoughts on the wild world of social media and how a simple one-minute video can spark all kinds of debates You won't believe the stuff people say in the comments So if you're ready to learn laugh and maybe even rethink your real estate investment strategy stick around it's going to be a good one Let's get into it.
∎ Podcast Proper:
All right, buddy.
Thanks for jumping on appreciate it, of course Yeah, I honestly didn't want you on right away I wanted to be in contract first Yeah, I was thinking about that I might because angel is asking Are you gonna have Ian on you should have Ian on I'm like, well, I don't want to have Ian on yet We haven't got in the contract because I want to talk about that whole scenario, but I guess we can talk about Somewhat of what what's been going on.
Yeah, that'd be a good thing to chat about I'm really curious to Kind of your backstory on your first investment properties and you know just I Want to know that and I also want to understand your first few jobs you had growing up, okay There's a bit of question. I've been asking people later. Yeah, I'm just curious You know, like what where were those jobs those stepping stones that you had growing up when we start there yeah, I mean, I don't know if there are much of a stepping stones to anything, but They were jobs a lot of learning lessons.
[Ian Love] (3:35 - 4:51)
I mean if you go way back I was like a You know youth basketball coach. I was a big basketball guy growing up. So That kind of consumed a lot of my you know my time in terms of playing in high school played varsity So that kind of, you know took up a lot of my time kept me out of trouble all that stuff You know growing up and then my first real job though, other than like camp counselor type of thing was at Target So I worked at Target for you know a summer and then I also worked at Macy's For a summer.
So those were like my two first You know, I guess full-time jobs summer jobs and Then you know first, you know come out of the college. My first job was actually public accounting. So I was in Big four I worked at Ernst & Young which is like public accounting firm For those of you listening that are familiar with accounting and tax.
Hopefully not too many of you But yeah, so I did that for for a number of years and You know, that's kind of how I started my career so yeah Target and Macy's weren't really a stepping stone into a public accounting but They were the first job.
[Stephen Husted] (4:51 - 5:27)
Yeah, the first ones for sure the so, you know accounting and QuickBooks and all that stuff. I always Talk about this on the podcast that you know, the the one subject I stay clear from I make it very clear to all my Business partners to like hey, I will do X Y & Z. These are the things I'm not doing at all.
Yeah, and it's this Not doing it. Yeah, I'll analyze deals, but I'm not doing accounting. This is not my thing So you're I'm sure run your own Accounting for your properties in your business.
[Ian Love] (5:27 - 5:56)
Yeah, I would yeah I mean I did for a long time. So now I actually outsource I use the company here in no cool Kirkland it's a little bit on the pricey end, but like you said, you know, you've got a eventually move on from doing everything yourself, even if You know that thing might be something that you could you know, you could technically be doing Right ultimately, it's just not not worth it anymore to be doing my own taxes
[Stephen Husted] (5:58 - 6:15)
Are you do you feel like you catch more? You're more proficient at catching things that are maybe Need some questioning or any kind of issues within For sure prepping for your taxes. You can't yeah that you're like, hey things that I probably would not catch You're probably catching that.
[Ian Love] (6:15 - 7:18)
Yeah, I mean You know early on it's like anything, right? You're I Would equate it kind of like property management, right? I still managed I started out managing a lot of my own properties I still do and then You know if you don't want to be the one managing your own properties you can hire a property manager But then you still have to manage the property manager, right?
You're not just you're not just handing over your taxes and they just magically appear and then you don't have to do anything You know You shouldn't it's not like you don't have to review them or at least spot check to make sure that things are going, right? You want to at least be that second set of eyes? So that's really helped me I've definitely You know spotted things, you know cost segregation stuff like that that are planning opportunities even where I've had prior tax Prepares not even identify those or you know, not really see that.
So now it's really important for me to have kind of like a Tax planning team in addition to just somebody preparing your taxes.
[Stephen Husted] (7:18 - 8:06)
So yeah, they need to be separate Yeah, so that you have an implemented plan for the year like hey, you know You're gonna be doing X Y & Z in your business and then this can do this or maybe you add this in there and then The other guy the other person just takes care of Yeah, preparing them and yeah. Yeah Definitely not my favorite It's definitely not my favorite but you'll start, you know I think the funny part about it is it might not be your favorite, you know thing to do in your business But then when you start getting hit with huge tax bills, it becomes something that you focus on a lot Right, like really quick you start going. Oh, oh, I made all this money.
Oh my god, they took half of it You know, so you start to really try to figure out how to play the game better. So to speak
[Ian Love] (8:06 - 8:45)
Yeah, I mean if you're saving 20 or 30 percent on taxes every year that 20 30 percent You know, you're automatically 20 to 30 percent ahead of everybody that you're competing with You know that doesn't have those types of tax benefits or that tax planning strategy in place so, you know you might You know just even if you don't make anything on that you just put in the bank it, you know 5% or whatever You're you know 30 percent 35 percent ahead of everybody else just by doing that So that supercharges your investments because then you can take that put it into more property more investments You know that kind of starts that flywheel so it's a compound
[Stephen Husted] (8:46 - 9:24)
Don't you find it funny on on social media when you make these type of videos how fast somebody will blow you up on Discredit what you're trying to tell them but you know, it's like look it's a one-minute video if you're taking a one-minute video that serious especially because that one-minute video is could can go in so many different directions pertaining on the The person that's taking on that video, you know, I mean, it's it's funny They'll just roast you in the comments over something that you know Maybe it may maybe it's true. Maybe it's not.
Yeah
[Ian Love] (9:24 - 10:29)
Yeah, I mean Context is very important, right and you can't always get the full context in a one-minute video or maybe you know there's people that will You know talk bad about like the real estate, you know real estate professional designation or like I can't do that when I'm a full-time employee or you know You're not going to be able to offset your earned income from your job because this and that and finding all these excuses for why? They can't do it. But like just having the knowledge that that opportunities out there For me triggers.
How can I make that work for myself, right? Whereas a lot of right more like that will never work for me I'm just gonna go talk shit on the internet and say like that because that doesn't work for me You know, it can't work for you, too So like it's just kind of how you how you take in information, right? Like you can either be optimistic about it Then like go figure out how it's gonna work for you and how you can apply that to your own life Even if it's not now, even if it's five or ten years from now, you can start like laying the groundwork Or you can just put your head in the sand and act like everything that everybody says is a lie and you know, it's impossible
[Stephen Husted] (10:31 - 12:36)
Yeah Yeah, and I think these I think these little one-minute videos are there there's like teaser videos in a lot of ways They're basically just giving you a thought that then you just jump online do some research Contact some people and figure out does it work for me, right? It's not an end-all be-all and I think that's a big problem You can't pack it all in there on a one-minute video So it's really it leaves it really open for people to kind of discredit what you're trying to say even if you're really put I have to hold back sometimes like lately, you know, because I I think because you and I connect well, we talked We're newer on social media like watching videos, right? So we comment so then Instagram gives us more of each other Yeah, I don't know if that works for me I know I see a lot of your stuff where people who I followed two years ago.
That might be in Investors, I barely see their stuff I actually have to go to their profile to actually see what's updating, you know what they're doing interesting, which is pretty interesting But I know right now it's you Vena and thatch. Yeah, and the comment sections are just hilarious And you know at some point I look You know, especially with like that I go I kind of trip out when people are just, you know going crazy in the comment section like Will you step back and and take in what this guy is actually doing? He is giving you blueprints and you're just want to discredit it knock it down Talk all the shit you want to do Where you could be learning something.
I mean, it's it's funny and it's funny It's just like it's free information, right? And is there a business model behind what he's doing? Yes, does he show?
His cars and the cars that he rightfully deserves he earned them He's worked his ass off. You know, I mean, it's like it's just kind of I don't know It's kind of like I hold back like sometimes I want to jump. Yeah Just like I got better things to do.
[Ian Love] (12:36 - 13:11)
Yeah, I can't do it. Yeah, I mean There's always like exceptions right to every rule like When when people are on they're like this could never work for me You know what that is then and it's like he started with $100 in a suitcase you know came over from Vietnam was living in, you know, section 8 housing and like you know did living with you know host families and all that kind of stuff and it's like if you I Don't think they know a lot of the background, right?
Like they they're just they're kind of thinking that he just started with a silver spoon or something, but I Don't know.
[Stephen Husted] (13:11 - 15:04)
Yeah, they see the car and they just think okay. It's just another you know, greedy landlord investor and you know, he's flaunting his stuff, but they get I think people are quick to kind of shoot off comments without really Understanding backstories and how much work goes into getting where you where you want to be That's a lot of things about him just in investors in general People look up to some of them like I'll never get there But they have to understand that they've also put decades in to get there like sit back give yourself a little graze Start, you know get going on that process Whatever that is, you know because there's so many different debates to online You know, I was noticing something about Vanna was talking about she only wants to invest in in in Washington in more appreciating, you know, and that caused that triggered all the all the Midwest cash flow Investors to kind of you know, clap back a little bit. Yeah, and it's like it's not a one-size-fits-all Right, you know, I mean if you can only afford to jump into a Midwest market or whatever market So be it.
It's not it's just about getting going. Yeah, because once you get going you start to really You start to see The inner workings behind being in an investor and you start to learn all those little skills like oh Hey, you know and it could be the most simple thing about money About money, you know, like oh I can get money from a hard money lender To to rehab this so I only really need to get a pocket 20 grand. I thought I needed 120 grand to get going You know, I mean and they you figure that out as time goes on when you start to jump into it could be off that Really crappy small little investment property and you know instead you're holding back because you're you know, pulling information from 20 other people that you know can't have different opinions because everybody's on different journeys for sure
[Ian Love] (15:04 - 15:09)
You can never you never compare your level, you know one to somebody else's level 100, right?
[Stephen Husted] (15:11 - 17:01)
No, no, you got to take their you got to take some of their there You got to take their like pull extract that information. They're giving to you and just kind of like hold it back For that next time Totally I mean hey you Back to that. Let's go to that limiting beliefs Yeah, you you you kind of checked me when we were together in in Seattle We were you know cruising around and you know, I was talking to you about what's going on in in, California Like hey, I'm gonna start here, but California, you know, it's gonna start I keep comparing the two We're definitely not there but it was like well, we're not gonna be able to pull this off like this you're like, dude There goes your limiting believe yeah, and then you showed me that one property that was in between two houses that had the driveway And I went oh, oh, yeah that that can be done Yeah, that can be done. And now it's not even a now we're we're looking at stuff and trying to figure this out We're just not getting a very clear picture From the city like what we can really do and what we can't do You know, like they're almost trying to take away some of the things like SB 9. Oh really about yeah They're kind of backtracking a little bit Yeah a little bit.
Yeah, you know so matter of time though, I think Yeah, I agree. I think the problem is one thing is I don't want to get stuck Building, you know taking on the house and playing that scenario where it's like, okay We're gonna break even on the main house, but we're gonna make all this money off the ADU Yeah, and then that doesn't happen because then that date that ADU is really not worth that much You know, I mean, it's not a it's not a beneficial scenario. Maybe you can rent it out.
But So, yeah, we'll see. We'll see how that all that plays out
[Ian Love] (17:01 - 17:09)
you know playing in the Seattle playground for a little while longer and Wait for the the right time over there
[Stephen Husted] (17:09 - 18:02)
Yeah, I agree and I think that's it kind of worked out for a reason this way to you know, go up there and do speaking of that so We what what's been like a couple months we've been searching for a couple months probably Not a lot of inventory a lot of competition a Lot of different variables It's not as straightforward as like buying a single-family home and just fixing up the house and flipping it or holding it There's a lot of other little factors that go behind Your quote-unquote first deal We've been looking we wrote one offer thought I was gonna be your neighbor yeah that didn't happen Somebody came in Obviously a little bit higher. I wonder I wonder if they you think they paid cash, too I think so.
[Ian Love] (18:02 - 21:06)
I think they were a two-week close and a little bit higher offer Right off their their initial offer and with that escalation clause Yeah, so we'll find out soon what that actually closes for but but yeah, I mean You know, like you said, it's a little bit different in the flip market You do have to exercise a little bit more patience. You've got higher margins in these deals you know what what Steven and I are talking about right now is the There's a there's a law in Seattle that allows you to actually build three homes on one single-family lot and Sell them all separately. So it's called the ADU DADU law so additional dwelling unit and a detached additional dwelling unit So in Seattle, you can have a single-family home an ADU and a DADU all on one single-family lot sell them separately and Because you're able to do that you're actually able to extract a ton of margin on these on these deals so One thing to remember and that I had tried to remind Steven and clients that I work with is You know, it might take us a couple months to find a deal But you really don't need a lot of them to make a huge impact to your portfolio and to your earned income You know if you're gonna flip them or sell them because the margins on these things You know, you can build the ADU or DADU for around 350 to 400,000 and in Seattle right now They're selling from anywhere from 700 to 900,000 depending on the specific location So, you know you're talking about 300 to 500 thousand dollars of equity Obviously pre-tax for everybody's looking but gross But gross margin on these deals Which you know you do one of those a quarter You know, that's close to you know 1.2 to 2 million on just four deals so it's like a You know, it's a whole nother level in terms of you know What you would normally expect from like a flip where it's maybe 50 to 100 grand margin This is like five five flips or ten flips in one deal.
So You know, it goes back to the mindset thing too, right because if it can take you three months to find a deal You start getting a little anxious. You want to just pull the trigger on something You want to go buy something? But you got to remember like it's more important to find the right deal something that you know is going to be a clean You know clean process great margin easy, you know, you'll have flexibility on the back end To either sell it or if you want to keep you know ADU or the DADU or you know You could you can you have the option on the back end to keep or sell both of them so I have a lot of clients that are actually just selling off the front house and keeping the back as a rental because they also rent for thirty five hundred to four thousand dollars a month the ADU's do so so yeah, just a You know, I'm not for Steven to just be patient We're gonna find you the right deal and you're gonna make a lot of money.
So don't worry.
[Stephen Husted] (21:07 - 22:20)
I Had that conversation with Ann Curry, you know when I was talking to her about the Tacoma market, you know I was like, hey, you know, this is kind of how I operate I can move quick or I can sit back I'm not gonna just buy to buy I think now where we are with rates and just where the market is it's a little different than it was like 2019 where you could kind of take a little bit more risk on and You could even be in a project for longer and be okay because the rates were low, you know I mean, there's just so many different ways that you could screw up and be okay, and I don't feel like that's the scenario So being patient is a good thing, you know And then we've looked at a lot of deals and I and it's funny the one that I really liked, you know I knew that street because you drove me on the street.
So I had a good understanding of the property itself I knew that alleyway because I was on that alleyway And so I was like, okay I'm comfortable here and I know that you know it because you basically live on the same street and can look at it So it all made sense. It all made sense And we were aggressive too. We went quick like we didn't mess around went over the weekend.
I think we wrote the offer Yeah, but then they knew it too they're like, okay Yeah, we can let's let's get some people in the doors.
[Ian Love] (22:20 - 23:17)
So somebody's gonna somebody's gonna step up a little bit more Yeah, I mean one thing will you know, we can do on the next one is tighten up that expiration date, right? Like Generally, you know, I can you I've had it happen both ways. We're a same-day expiration Kind of rubs the sellers the wrong way or they're like, you know, if you're in a multiple offer situation They don't like the one that puts the pressure on them to sign that day They might take the other option instead because it's just kind of the approach you take they're being a little bit more aggressive But I've also had to happen in this case It could have been a benefit to have that same day expiration because by having a next day expiration They were able to you know Have that extra day to let more offers come in or hit the phones and see what else they can bring to the table so you know It's just a Strategy that we can kind of evaluate next time too and see if it makes sense to to do that.
[Stephen Husted] (23:17 - 23:40)
Yeah And that escalation clause was yeah Another scenario, which I didn't wasn't really bothered by that part I just wish that did you think that the the listener just didn't want to the complexity of a counter and trying to figure out Like the whole escalation. He just didn't want to deal with it. It was almost like hey, I got this in front of me They're gonna pay more no matter what by five ten get five to ten thousand dollars.
[Ian Love] (23:41 - 24:50)
Yeah, let's just get them up probably Yeah, I mean what I think happened and what you know, they had an escalation. They told us they had an escalator so for us You know when we have a net offer or a straight-up offer it a certain price If you know the other person has an escalator But there's no other offer then you're kind of if you go up then you're basically just escalating the other person But you're not really, you know, you're basically putting yourself into a bidding war, but you're also helping the seller get a higher price whereas By not playing ball with them I think what happened was the seller the agent had to go to the other seller or the other buyer and say yeah You know, can you just offer your max, you know on that escalation? So like if they went up to like 800 on an escalator, they probably were just like hey, we've got this other offer But if you go up to your max on the escalator We'll just take yours because they already kind of showed their cards of like how high they would go Right.
So I think since we didn't play ball and like help them escalate Their next phone call was like, hey, we've got this other offer You know, you're willing to go this high if you do that. Well, we'll go with your offer.
[Stephen Husted] (24:51 - 24:59)
So What would it have been if that was you and you were buying it? What would have been your max offer on that property? Wait, what did we write up?
[Ian Love] (24:59 - 25:04)
We were at seven. I think probably 725 would have been my max on that one Okay.
[Stephen Husted] (25:05 - 25:24)
All right, and everybody's different to just depending on how much it costs them to Like we don't even know what they were gonna do on it. I mean, yeah, they could have been building a daddo They could have just Yeah, an investor making a make ready, you know rental, you know, yeah, and that one You know, if it was a 5,000 square foot lot a little bit bigger.
[Ian Love] (25:25 - 26:23)
I probably would have been more Aggressive in terms of like pushing you in terms of like hey, you've got a you know go for this For people listening in Seattle, you need a 3200 square foot lot or bigger to build an ADU in the back This lot was about 3,800 square feet So it had enough room But you would have taken up the entire kind of what's called floor area ratio or the entire Lot would have been kind of filled with structure So you you do lose a little bit of Value on the back end when you don't have a backyard or any sort of outdoor space like that obviously, we're talking about 300 to 500,000 our margins on these deals, so You're still you know, you're still making a nice return But it's probably gonna be more on the lower end of that range than the higher end if you don't have You know the yard the outdoor space that kind of adds to the single-family feel of the
[Stephen Husted] (26:25 - 26:33)
How big a lot was is yours it's about 5,000 About 5,000. Okay.
How long ago? Did you buy yours?
[Ian Love] (26:33 - 26:52)
We bought ours in 2022? Yeah, so we bought it at ours as a two-bedroom one bath had an unfinished basement so we we can we finished out the basement made it a four bed two bath and Then in the backyard we built a DAD use a detached ADU the next year
[Stephen Husted] (26:52 - 26:59)
How much money in all in on on that project yeah, so as we bought it for 700
[Ian Love] (26:59 - 27:31)
We put a hundred and fifty thousand into the front house to finish that basement It appraised at 1.1 million so we were able to Essentially go to the bank and get a HELOC for the home equity line of credit for that $250,000 of equity that we were able to create and then The ADU costs three hundred and fifty thousand Probably closer to four hundred thousand after like the landscaping and all the exterior work that was done dirt work And then in that appraised recently at eight hundred thousand
[Stephen Husted] (27:32 - 27:45)
So yeah, yeah place is awesome That was a great one looks good, too Yes, well appointed.
Yeah, does it have a little bit of a backyard for both it does the dad who does right?
[Ian Love] (27:45 - 28:08)
yeah, the dad who has like a Probably a couple hundred square feet basically it's got a patio of pavers, and then it has the artificial turf If they have a dog or whatever and it's all fenced in and then we have a front yard So like in the back, it's more of theirs and then we have a private front yard with grass and patio and all that stuff Is that garage yours in the back? Yeah. Yeah.
[Stephen Husted] (28:08 - 28:15)
Yeah, okay, and I forgot Does it does the dad you have a garage or no garage or does it know there's no daddy on the garage?
[Ian Love] (28:15 - 29:37)
It's got two tandem parking spots so like the the dad who has the two spots basically tandem right next to it and then next to that is Kind of keeps the access to the existing garage for the single family Okay, and are you renting now the daddy? Yeah. Yeah, so it's kind of a cool story When we were in the middle of building it You know, we were a little nervous because you've got this big Structure going up in your neighborhood.
You're worried about the neighbors thinking, you know, it's You know this monstrosity, you know, all these people have lived here for 50 years. It's a pretty nice area But one of the neighbors that we were actually worried about his girlfriend or partner Left a note on our car one day during construction and she said hey, I really like what you're doing there If you don't have a renter already call me I'd be interested in renting it so We called her back and she was you know, she was interested. She just retired from Microsoft About you know a couple months earlier and So we agreed, you know $3,500 no pets She travels half the time no kids so a single renter So it worked out really well just without even having to market it Wow That's fantastic.
[Stephen Husted] (29:37 - 30:06)
And that whole alleyway looks That was something I was noticing When I got there and then we kind of toured around but then after that I was going through some alleyways It's like now these alleyways are transforming into like little neighborhoods, you know, like it's almost looking it looks better Yeah You know, I mean, yeah do do neighbors think that way or you get like 80% like it and there's obviously 20 that just think that it's a Bad thing all said and done.
[Ian Love] (30:06 - 32:32)
Yeah, it's funny like I was 80 20 is probably a good ratio you know, you've got people that are like, you know times are changing you have to change to and just get used to it and it's good for affordability and The designs on these things actually I think helps a lot too because they used to be like when this these laws came out in like 2021 and they were originally like you know, they tell you what you can build but then it's like Without like really having an opportunity to design and you know practice the aesthetic or whatever Originally these things were popping up and they were like boxes, right? They're just like oh you can put a thousand square foot house in your backyard and then architects were like, okay let's just put a box back there and Call it a day But now we're like three four years in where they've got like the farmhouse cottages and all these different like really nice design features That make them look a lot nicer.
So I think that goes a long way in helping, you know people You know look at it favorably because it looks a lot nicer But you know what your comment reminded me of is you know how there's like the next-door website and like Facebook and like there's always like somebody in the neighborhood that's like I don't know what they do all day just kind of sit on there and Complain about everything that's going on for stuff to get mad about yeah, and Yeah, so some lady the other day was like Took a picture of like an ADU development and she's like look at this Can someone tell me what's wrong with this picture, you know?
And then like you've got most of the comments like I don't see anything. It's a new house You know, you should have seen what was there before it was like a hundred-year-old house That was like a crack house, you know, and now it's like a new it's gonna be a new construction nice home for your area It's probably raising the value and like other people are like, I'm still I'm still not sure what's wrong with this picture, you know But she's like the people are just going back and forth, right?
you've just got one side that never wants any change and I'd rather have the crack house there as long as you know, these horrible new developers or Builders aren't involved and then you've got people that are they see opportunity or they see you know that bad house being removed and all those people that came with it being removed and safer neighborhood, but Can't can't win them all right
[Stephen Husted] (32:32 - 36:24)
You you can't I know and it is it it's it's one of those things too. That is We just go through it on a daily weekly basis, you know, it is that way was seeing something on Facebook about a Like a seven like they're developing seven townhouses off this street in Willow Glen and Everybody's like, oh, it's gonna it's gonna change the neighborhood. It's changing everything It's like wait a minute right across the street is a mid-rise apartment complex You know then a couple houses then a you know a commercial building that's a business like a dentist office and then another apartment complex and They're building it on a place that had a old beat-up liquor store What do you mean yeah, they're building townhouses seven of them not a hundred and the debate and you know, and then the debate turns into Well, we need more affordable housing well, is it really gonna change affordable is it gonna make it affordable? Yeah that part I can see where that argument sits. Yeah.
No, it's just it's providing more housing. Let's just start there The the affordable housing scenario is another big topic in San Jose They're they're building a bunch of mid-rises on the street on Bascom, which is a kind of a busier thoroughfare It it it separates Willow Glen with Campbell and the neighborhoods So you basically and it's a way to get to you know Freeway and you know restaurants things like that and it has restaurants and old business, you know buildings and now they're building a lot of you Know affordable housing there, but then the neighborhoods that are right behind it Those people are getting upset, you know Oh, it's gonna bring more traffic or now it's gonna be more cars, even though they're building, you know underground parking structures Mm-hmm, and that they're affordable housing for people that make under a hundred thirty thousand.
It's like It's yeah hundred and thirty thousand. Do you want your teacher to live somewhere in your school district? And it's it's just this weird, you know, and they're not built it's a new construction, you know, it's a mid-rise Just it's a new building.
Yeah, and people freak out They just freak out and it's not even really that close to them, but they just don't want it Yeah, they don't want it here. They don't want it there. They want it somewhere where they don't see it Yeah, where it's out of sight out of mind.
Don't do it in my backyard. Don't even do it close I don't want to see the construction Sound like it's like a homeless shelter or something. But yeah Well, yeah Even that scenario, you know, they'll complain about that part, too But the only other alternative is you'll just get tense What do you want?
You know, they tried to solve that scenario. They there's a street in San Jose kind of by downtown West Santa Clara that they took an old hotel Yeah, and turned it into you know housing, you know for people that are homeless and yeah I Don't know if it's helped they do have a lot of problems in that general neighborhood just people stealing doing you know it I don't know. It is what it is.
They try but it's not easy It's not an easy thing. It's not an easy thing so when I was out in Seattle, I had met with you and then somebody else and They were driving me around telling me about how the more, you know, like, oh we got a lot I have a lot of issues with tents and stuff. I'm like you guys don't have anything going on here Was that pretty bad during Coven has that?
Been resolved and were they able to get people into housing?
[Ian Love] (36:24 - 38:18)
Um, I don't know I mean, it's definitely has been bad during Coven. I think that Escalated pretty significantly over that period I Didn't see an article in the Seattle Times. It said like there's more Unhoused or under housed people in King County, which is like the broader Seattle area than ever before.
I think it's like I Don't want to say it's either 16 or 60,000 I forget which one but it's a huge number They have been doing similar things like with the hotel conversions for affordable housing They have like these mini house villages where they kind of have that's cool tiny house villages or whatever But it's just a it's a tough problem with you know, the intersection of drugs affordability Mental health mental health so like it's not a one one-size-fits-all solution.
No But it's tough. I mean, especially in cities, you know, like Seattle like San Jose Where you know the home price I think you were saying the home price in San Jose now is like around 2 million for like an average home Yeah, so it's like what do you expect to happen to the you know? What's what used to be the middle-class family, right?
But you know was just living in the neighborhood Yeah It's you know, I mean you can always tell people can move further and further out but You know, that's kind of what we're seeing the same effect in Seattle Especially when things happen so quickly, right? This has all been maybe San Jose's probably since the 90s maybe longer 80s but Seattle is more like early 2000s with the Amazon effect, so When you've got really that's when it started.
[Stephen Husted] (38:18 - 38:20)
Yeah early early to tell okay
[Ian Love] (38:20 - 39:05)
yeah, I mean even with you know, we've always had the Boeing's and the Starbucks and the the Microsoft's but That was kind of large like it wasn't anything close to the number of employees and the number of people that have come with with Amazon and Like what they've done to the the housing prices and things of that nature I Would say, you know Microsoft was more like Redmond Bellevue like the east side So right now it wasn't necessarily as impacted by that.
They've always been a little bit higher price point Probably more comparable to San Jose over there Mm-hmm, but yeah, I would say, you know, the last 20 years has been you know, we've seen Easily dealt like two doubles, right?
[Stephen Husted] (39:05 - 41:18)
So like You know house that was 500,000 in 2004 would be 2 million now Yeah, but it's still to to me, you know like your neighborhood I can compare your neighborhood to a neighborhood in Cambrian and it's like half the price Like seriously, you know when I see this some of these I'm like, oh my gosh look at this neighbor This name is so so cute. And I don't know I I have to say, you know, I I love that area. Yeah The weather was better in Seattle in Washington.
I would have I would move in a heartbeat. I really like it there You can't I like I like everything about it was that came at a good time Weather wise Yes. Well the first Yeah, you're right.
But the first the first two days were really cold I'm like, oh like cold like I could fill in my bones like I'm like, oh, this is yeah, this is cold Oh, this is yeah and then those sunny days came and I got to just see you know, because I drove around and saw these neighborhoods and How close it is to get the mountains and just everything. I was like man. This place is amazing and Aesthetically, it's pleasing too.
I don't know. I like the style of homes like you had said about the 80 years Yes, they're packing things in. I mean some I'd just be driving and see Look like a 3,000 square foot lot and there's like six townhomes like straight up going.
Oh Wow, how did they do that? You know, I'm taking a you know video from the back Like how did they even get their car and I'd see it but it all blends in really good with The old homes, yeah, I think it blends in good with these neighborhoods, I don't know it just makes it makes sense Yeah, and I still try to envision That in let's say San Jose or some of the surrounding areas I See it working in some areas and then not in others You know, it's just different layouts and one we don't have a lot of alleyways. That's a big part of it right there Some in downtown but there really isn't any yeah, so that changes it up, but Yeah, I like I like Seattle.
[Ian Love] (41:18 - 42:04)
Yeah, I think one of those like B's and C neighborhoods, right? like even in Seattle, there's gonna be the a neighborhoods where You know, you're gonna have where everybody on the blocks like an attorney or like, you know Everybody on the block has a state or trust that they're gonna fight back and never allow like a 80 you on their street But like the vast majority of like B C neighborhoods Even if they don't have a alley or a corner lot Which is ideal for 80 or dad you so that the houses can kind of face different directions But You know, those are really where I would see the opportunity.
So in your neighborhood, those are the if you even have those, right? You got something in a neighborhoods like probably 5 million the B neighborhoods 2 million. It's like
[Stephen Husted] (42:05 - 43:26)
Yeah, well I had to do a CMA for my my mom's house and There so she's got a Neighborhood and you know, it's called Vista Park and then right across the street called Branham there's another development and there's another one and and hers was always been the nicest one like we'd say the a and then you got the B and the C and Now people are coming in to those areas and you know flipping houses and fixing them up, but they're going for like two million dollars These houses were like five hundred thousand, you know back in like 2015 like it's crazy and I and I even catch my rate because I wasn't you know, I hadn't shown any properties over there and years and When I started seeing look comparables, I like I knew some of these streets some of my friends growing up lived over there I'm like, oh my god this house sold for two million Like I'm freaking out going. Oh my god. This is crazy.
Yeah, you know, it's just nuts Schools aren't good either like schools aren't good. You're going there for schools is that's not gonna be the case You're going to private or maybe you don't even care about that. Yeah, but but yeah It's it's pretty interesting that and that just kind of shows you supply and demand and not building enough housing where we end up
[Ian Love] (43:26 - 43:55)
Yeah, there's a whole argument about that around here too with Really people moving into like nicer areas with decent schools not that great of schools but a lot of people are doing private private school, which is like reducing some of the investment into the public schools and kind of You know continues to that trend of public education kind of getting worse and worse because people are just not making the investment in Supporting them so
[Stephen Husted] (43:56 - 44:32)
I'm seeing that firsthand in my my parents neighborhood You know the schools were decent, you know back in the 80s and then they kind of fell off and then you could just tell You know people are moving on my parents court Yeah, all their kids go to a you know, a private school one way or another like there I'd rather spend this money on the house Maybe they're priced out of the areas that have the good schools and that's another factor and they're just weighing out It's just um, you know a money thing like I could buy a house for this and then schools this I'm saving whatever $40,000 a year and whatever they're doing. So it's kind of always a interesting kind of play.
[Ian Love] (44:33 - 44:33)
Yeah.
[Stephen Husted] (44:33 - 44:55)
Yeah. Oh So what about because you have yeah, you're gonna have a you're gonna have to be thinking about this soon I didn't know this about other schools good over by your house Yes, so the elementary school is really good Is it it's weird because they're all the same school district the elementary school is really good in terms of ratings I'm not a parent.
[Ian Love] (44:55 - 45:20)
Yeah, I'm just going off what I'm reading is Expecting a baby girl in August. So we're like, you know trying to get educated here Yeah, the elementary school looks pretty good and then the middle school for some reasons like got bad ratings And then the high school got like, you know, pretty good ratings from a public school perspective So, I don't know what they're doing in the middle school or how that like how that works out, but yeah, yeah, they're pretty good
[Stephen Husted] (45:21 - 46:04)
Yeah, yeah, that's kind of common actually, you know, well, that's what I see Yes, you know you get maybe you get you know, the elementary is amazing The middle school is okay, and then the high school is a little bit better interesting, you know, or it's just yeah That's a common. I think the the school districts or neighbors You're moving into that have you know, good schools across the border usually really pricey You know because you can keep your kid in in a school from you know elementary all the high school that's a big deal, especially when they're the middle the The elementary school the middle school in the high school general areas same areas so to speak definitely that the pricing is much higher, but Yeah, you're gonna learn that one quick.
[Ian Love] (46:04 - 46:30)
Yeah Yeah, when's your daughter? When it was 31st Cool so how you how you doing with that? Yeah, we just we went car shopping and picked up a new baby car SUV Gotta start putting together the crib and baby room this weekend Wow getting going.
[Stephen Husted] (46:30 - 46:31)
It's cool.
[Ian Love] (46:31 - 46:42)
Yeah, so that'll be fun. We got to find you a deal before that though before we get You know on house arrest You totally you're gonna be that's okay.
[Stephen Husted] (46:42 - 47:04)
You'll you'll schedule just adapt. Yeah You'll be nesting for a little bit. That's for sure Yeah, that's that's pretty that's pretty common Speaking of deals, you know, is it free the investors you deal with?
How long does it typically take give or give or take for an investor to get into their first deal out there? Does it really depend on what they're trying to do?
[Ian Love] (47:05 - 48:47)
Yeah, I mean, I would say a couple months and I think the reason for that is I would say it also depends on the investor, but if you're somebody that Let's say you bought a single-family home You want to get into an investment property? You know to kind of high net worth individuals like that's kind of the standard what I work with a lot Those people usually we need to see a couple of these properties and then they need to realize like how quickly they go right because sometimes You don't want to you can't really explain to people the situation until you've taken them through a couple of the scenarios Put in a couple offers. They kind of see how you know, what types of offers are being accepted The types of contingencies that are being waived You know and it really how aggressive you need to be to get a deal like this in the first place In the Seattle market, which is I'm sure it's similar to to where you're at but Kind of it probably takes a couple months to first of all, you know Go through all the paperwork go through the evaluation get people kind of educated on this is what we're looking for And this is why this is what the process is gonna look like for the next 12 to 18 months from fixing up the front house building the ADU So I kind of do a lot of the A to Z walk through get them comfortable And then when we get out there in the market, it usually takes a couple offers to kind of go through And then I would say within the first two or three They'll usually get one within that time frame.
So I would say a couple months from beginning to end. It's about common Yeah That makes sense.
[Stephen Husted] (48:47 - 51:07)
Well, you're there we can tell it we we get to we were there Yeah, we're there and but let's get them the full disclosure to everyone out there I did make a a pretty big mistake and I Think it's kind of a funny mistake that I made Ian actually brought me a deal off market That made complete sense in all aspects It was a corner corner lot easy no-brainer could build the daddo front house need work And in an up-and-coming neighborhood another really big investor thatch was you know buying over there too so that gives it a little bit more of a stamp of approval and I had it right in front of me. All I had to do is say yes, I want to buy it and I Had just met Ian and so I'm playing this game of like is this the right deal for the first one?
Is he just passing this to me? What's wrong with it? I went through all these things that I think any investor Maybe even a newer investor, even if I the fact that I'm seasoned at Buying investment properties.
I'm still a second-guess myself. So then I let it slide and then I went back to it because We were did I show up? Did I go to Seattle?
I think I went to Seattle and I think I realized okay No, actually I do like this. So I came back to Ian it was like Alright, I want to buy it and at that point Ian Understanding an opportunity he decides to buy it and He got it and he's gonna be developing it out and doing his thing And so that was a big learning lesson like it, you know Sometimes you have to just you have to trust the process you really have to have trust in Your team out of state as well your agent your contractor your lender your handyman all the people on your team They are gonna make or break you I always say this and it wasn't You know anything against Ian I just didn't know Ian yet but then I got out to him and I hung out with him for a day drove around and I get a little bit more of an understanding of you know, what we're gonna do moving forward and then that the trust gets built and it just you know is one of those things and Then it made sense because it was a good deal because you wouldn't have bought it if it was a good deal.
[Ian Love] (51:07 - 51:17)
Yeah Yeah, you'll feel a little bit better going forward if I send you something and I'll tell you usually, you know Straight up like this is one I would buy Yeah, unfortunately.
[Stephen Husted] (51:17 - 52:04)
Well, we had that conversation. I did tell you that too. I said don't you know, you find something that makes sense don't beat around the bush you say yes go for this one now and Because that's probably what I would do with you If you're if you were looking you or that anybody was looking in San Jose and we're looking at deal I would say yes or no, right or here's gonna be the issues here.
Here's here's how I can go But then again on the flip side You've also mentioned that you're getting a little jaded by these deals as well about How much money could be in one of them? We did walk that one property and was it in Ballard that neighborhood Ballard? Okay, so your client bought it.
That was a real true fixer-upper full gut.
[Ian Love] (52:04 - 52:14)
They paid seven Yeah, it was seven hundred with the $8,000 seller credit so about six ninety two Okay So that was a full guy.
[Stephen Husted] (52:14 - 53:28)
They were digging out the basement It had a huge it had a big backyard. Well had a bigger backyard It had room for the front house to have its own backyard and the dad do play to have its own backyard It was on an alley It they had to dig out the basement. So they were doing a ton of work So ton of work a lot of risk, but a lot of reward once it's all said and done.
However the neighborhood Was a no-brainer. Yeah, you had you know, two-story farmhouses right across the street four houses down You know just a lot of development. You can just visually see it when you drove down the street like okay You find a fixer on this street.
You're gonna you're gonna knock it out of the park on top of it So they bought it for seven How much were they doing 300 for the full rehab of the main house in the basement was that Yeah, okay, so now they're at a million Plus they got soft cost carrying costs all that good stuff, right? And they're gonna be in that what doing that project in the front for Last I heard by the end of June so But when did they say it's it was?
[Ian Love] (53:29 - 53:59)
Probably a six to eight month project and the largely a lot of permits and things of that nature This was a nineteen hundred and eighteen house. So like hundred-year-old house needed, you know earthquake retrofit or seismic retrofit You know all sorts of new electric plumbing basically everything that you can imagine with the city also wanting it all brought up to code so that added some delays, of course, but You know, they're gonna be all in about a million on it.
[Stephen Husted] (53:59 - 54:59)
It'll be worth 1.4 range on the front house alone Okay, this is where let's let's stop right here This is a big deal. This this deal is like the the the home run hit right here So all in for a million probably a little bit more than that because carrying caution all that so But yeah, so let's say one one so they're making three off the main house They can then do a refinance Take that equity or do an equity line of credit and then throw it right out the daddo. The daddo will take Another year to build six months for permits right and then another six to build so that they're in for a year But essentially that piece of land is free, you know, they it's it's a free piece of land They're just got to build it out But now that two to a thousand square foot daddo is worth nine, right Nine.
[Ian Love] (54:59 - 55:11)
Yeah. Yeah in that in that same location like four doors down Builder did a very similar project But he actually tore down the front house and he built a single family in a D.
[Stephen Husted] (55:11 - 55:32)
Yeah and the dad you Same size lot and everything and they sold they sold the daddy for nine hundred and twenty thousand Okay Did you just say they made I don't know if it was that one, but somebody Really didn't approach it correctly on that street as well. I guess and still did good. I don't remember that conversation
[Ian Love] (55:32 - 56:28)
Yeah, I mean anytime you're able to keep the front house Usually you're gonna have lower risk and higher margin if you can just fix up that front house and then build a to you Because you can spend you know two years getting permits on The front house and the ADU and then like with the holding costs and the cost of construction and then how much those sell for You're really not making too much more margin Then you would have if you just fixed up the front house and either, you know kept it or sold it Just the way the numbers work out your your big money is usually going to be on the the daddy So, you know the more you can kind of do that faster with less carrying costs and then less time spent And less money wrapped into the front project You know the quicker you kind of get to the good stuff, which is the daddy
[Stephen Husted] (56:30 - 56:38)
Did they I got a question were they? Did they pull permits on the dad you as concurrently with the main house?
[Ian Love] (56:39 - 56:50)
Yeah, so they're working on that. They should have those Soon as well. So as soon as they're done with the front they're gonna shift gears and move towards the back Yeah, that one's that one was great.
[Stephen Husted] (56:51 - 57:13)
Now that one you can just tell visually to when you get there when you go to the property like how much it makes sense just for the privacy of Both houses and I think even the main house Has his own back it just there's so much privacy that I think the value of the front house is is going to be intact As well even more so than some of these plays. That's true. Does that make sense?
[Ian Love] (57:13 - 58:03)
Yeah, definitely I mean, that's one thing you see a lot in the comments of like there's no way that you can split these two lots and then You know have them be worth the same amount because you're losing the backyard and that there is a element of that Definitely, it's generally like a 10% haircut on the value of the front house because you're Kind of cannibalizing the backyard, right? So you're gonna lose a little bit of that space but Like in mine, it was appraised at 1.1 million with the full lot and then 1.05 once I did the daddy in the back So it was really only like 50 grand that they assigned the value towards the backyard So it really wasn't a significant or a material amount That I think would surprise a lot of people And you spent how much on the daddo?
[Stephen Husted] (58:04 - 58:31)
350 to 75 Okay, and then what do you think that's worth my place yeah So, yeah back to those jaded numbers Yeah, there's some definitely good home runs So besides Being super busy and investing like what do you like to do for hobbies? What do you do?
[Ian Love] (58:31 - 59:22)
Yeah, I mean right now I'm training for a half marathon. So been doing a lot of running. See you out there running as well Yeah, always been pretty active, you know basketball Workout every morning Monday through Friday.
So just you know weights Cardio, you know just kind of trying to stay active that way a lot of walks or hikes But You know in reality like I love real estate so much that like that takes up a ton of my time When I'm not working my nine-to-five, I'm I'm usually looking at houses evaluating properties working with clients and just you know spending time I have my own properties that I manage and then You know just always trying to find more find more deals basically
[Stephen Husted] (59:23 - 59:40)
So it's an addiction Yeah, definitely what what have you What have you learned about owning your own investment properties and manage them What are the big things you've learned?
[Ian Love] (59:41 - 1:03:38)
I Mean, I actually I tell people stories about like, you know My tenants and all the things that I you know have to go through with you know, managing your own properties so right now I manage eight properties myself, which is about 20 units and then We have a nine unit that we Basically anything over five units we outsource like a manager Just from my experience like a wonderful unit property It's you know, you automate the billing or the the rent collection through property management software You can do work orders and all that online So the maintenance and things of that nature just don't really take as much time it's not really worth You know it goes back to the story or what we were talking about earlier is like if you get a property manager You still have to manage the property manager, right?
It's not just gonna yes 100% so You know from the from my perspective the wonderful unit properties I think it's it's great, especially as you're starting out to just manage those yourself and learn how to be a landlord Kind of manage those relationships But I would say, you know, the biggest thing I've learned is just if you take care of your tenants They don't want to move unless there's something that they you know, they really need to for a job or a family situation But in general the vast majority of people hate moving. So as long as you're taking care of them You're not nickel-and-diming them every single time the lease is up like trying to max out as much as you can get from them You know, I've found that playing the long game is taking care of people and Keeping rents a little bit below market Responding to maintenance requests, you know within 24 hours, whatever you can do You know and just kind of you know having that respect for people take giving them a clean place to live Over time I think that has really allowed me to scale my portfolio Much faster because I don't really have very many turnovers that take up a lot of time I'm able to kind of You know automate a lot of those systems and yeah I've just had a lot of really good tenants that have stayed with me now a lot many of them over 10 years and Yeah, I think that's the main thing it's just good, you know taking care of people Treating people with respect and not trying to nickel-and-dime people. I did a post the other day. It was like You know how they do like You know on these like a million dollar fourplex was the example and like a lot of people would say hey I'm gonna raise rent on these four people by $50 a month I know it's like ridiculous like You know if you think about it long term if that makes you have one turnover that could cost you five or ten grand Renovating that unit having the vacancies Marketing it getting it rented and you're all doing that for 50 bucks when that's you know $50 a month will be 400 per the whole building So that's you know $4,800 more a year But if you had one turnover that that offsets your entire You know five grand that you increase the rent on So like you just have to weigh that pros and cons of like you're the time that you have Invested, you know are the time, you know, peace of mind the time you have available to deal with it And then also the appreciation factor because you know in Seattle last year for instance, you know We had 12% appreciation. So that's 120,000 on that same building when I just left rents the same Instead of you know, I didn't have any turnover. So you just kind of gotta play the long game I think and You know evaluate, you know, whether it makes sense sometimes you're way way under market and you got to think about that too, but Ultimately, I think just playing the long game taking care of people and taking care of your properties.
It's gonna be a much bigger Much better strategy than trying to raise the rent every year just because you can
[Stephen Husted] (1:03:39 - 1:04:00)
Absolutely, and you in it in it almost Puts you in a position to potentially lose a really good tenant and then getting a really bad one, too It can backfire you on you in different ways Which is you know, sometimes you take that risk on and it just doesn't pan out next you know, you're like now You're losing money. Yeah on it.
So yeah, it's
[Ian Love] (1:04:00 - 1:04:14)
on the higher end range to like When you really try to like get top dollar for a unit You're much more likely to have that person say for like a year or two Then like if you have like a little bit more affordable price point where people say three to five years or longer
[Stephen Husted] (1:04:16 - 1:04:24)
Yeah, they know they got a good deal and they're like and they're and it's almost like they're working with you and vice versa And it's like, okay, we got a win-win here.
[Ian Love] (1:04:24 - 1:05:00)
Let's keep it going this way Yeah, well, I appreciate you jumping on today maybe we can do a We'll do a second one once we get Yeah, yeah, that'd be great where can I'm working the audience find you I'm on Instagram Facebook Ian love my handles Ian loves real estate So, yeah, if I'm down there happy to answer any questions, you know providing free game every day, so Awesome.
[Stephen Husted] (1:05:00 - 1:05:38)
All right. Well, thanks for joining today, buddy. I appreciate it and I'll be talking later on today All right, thanks a lot
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