April 15, 2021 • 51 mins
Melissa Shea is the CEO of a Real Estate Integrated Company - Everyday RE Group, the President of the LIREIA (Long Island Real Estate Investors Association), has a NY brokers license, a licensed commercial lender for Everyday Funding, and EXIT Realty regional owner for Connecticut and Rhode Island. She has been an experienced Real Estate investor for the past 15 years and has raised over $35 million for real estate projects. She is committed to helping the homeless and is a mother of 8 children. On this week's show, Melissa shares how divorce helped her get further into real estate, her unusual launch into owning LIREIA and mentoring, her mix of flips and holds, and how opportunity is emerging in states like New York and New Jersey due to the pandemic response.
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00:00 The Data Driven Real Estate Podcast Welcomes Melissa Shea CEO of Real Estate Integrated Company and President of Long Island Real Estate Investor Associations (LIREIA)
00:45 From divorce to running a REIA, Melissa's unusual path into real estate investing
07:00 Melissa's unexpected entry into mentoring and the important of action
10:37 The mix of flipping and buy and hold properties
12:26 Where is flipping best?
14:33 The number one skill she tries to teach her agents that has been a key source of her success
17:41 How New York's tenant rules has impacted local land lords and potential opportunity in struggling landlords
34:30 What data does Melissa use in identifying buy-and-hold real estate markets?
42:02 What real estate strategies is she currently focusing on?
43:23 Reverse mortgage strategies for real estate investors.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Aaron Norris (00:07):
Welcome back to the Data Driven Real Estate
podcast, the podcast for realestate professionals dedicated
to driving business using data.
I'm Aaron Norris along with SeanO'Toole with PropertyRadar, and
this is episode 41. We are veryexcited today to have Melissa
Shea. She's the CEO of RealEstate Integrated Company
Everyday RE Group, the Presidentof the Long Island Real Estate
Investors Association. She's gota New York broker's license.
(00:27):
She's a licensed commerciallender for Everyday Funding, and
an exit realty regional ownerfor Connecticut and Rhode
Island. And since she has eightkids, I'm just excited she can
talk to us. So, Melissa welcometo the show.
Melissa Shea (00:40):
Thank you so much for having me. Yeah, it's a real
privilege to be on here. So,that's great.
Aaron Norris (00:45):
We don't talk to too many people with that many
different licenses. How did youend up in this niche?
Melissa Shea (00:50):
I'm just at a service for people, you know,
they would, I would. My firstpassion was owning a REIA,
right? A Real Estate InvestorsAssociation. I bought it about
in 2007. Great year to buy it.
Sean O'Toole (01:02):
Oh my gosh.
Melissa Shea (01:03):
A really great buy. And I just kept asking the
members, what do you need? Whatdo you need? And so, they'd
said, 'We need a hard moneylender'. And back in those days,
right, there was no hard moneylenders. They all disappear,
right? And then you got 50% LTVand stuff like that. So, I said,
(01:23):
'All right, let me start gettinginto it'. So, I started helping
them, you know, raising capitaltoo for different projects and
stuff like that, to help mymembers out, joint venture,
whatever. And then I realizedyou need a broker's license for
it. So, I got a broker's licenseto do it. And then my members
kept saying, 'Well, alright, nowthat you got us the money,
(01:44):
where's the deals, so you have abroker's license, you got a
broker's license and start afranchise.' So, then I started
doing the real estate side ofit. And we started helping our
members out that way and then Igot my NMLS to help people with
their residential mortgages.
I've since passed that onbecause let's face it, I got a
(02:05):
lot to do and that's, that's Ion't like working with the
overnment that much. So, lots ofdetail and paperwork. That is
not my forte, but I found areally good servicer for the
industry and my members and Ijust care about the members.
That's all it came from. That'show I just kept racking up those
licenses and things like that.
Sean O'Toole (02:28):
What brought you towards to buying a REIA? How'd
you, how'd you reach that? So,just for the folks listening, a
REIA is a Real Estate InvestorAssociation. So, it's a local
group of real estate investors.
Aaron Norris (02:43):
Because it's so much it's so little work and you
make so much money as running aREIA right, Melissa?
Melissa Shea (02:49):
Well, in the beginning, yeah, it's a labor of
love is, oh my gosh, I actuallyturned it into extremely
profitable business. And Ididn't, didn't intend to do
that. It was again, just to adda service because I, my first
year of real estate, I boughtsix properties. Then I bought
(03:11):
11, my second year, by the thirdyear, I realized I'm in a lot of
problems here because I didn'tknow it was around 2005, '06,
'07, I bought on appreciation,and not cash flow. And I found
myself in a big pickle. And Ididn't know how to get myself
(03:31):
out and I was only doing it bymyself. I've read rich, I've
read Carleton Sheets' book, I'mdating myself by saying that so
I cover my grades but um, yeah,and so I got myself in some big
trouble. And I was searching forsomebody to help me like a group
or something. And I did the RichDad Poor Dad. No, not Rich Dad,
(03:55):
Poor Dad. I started Googling itonline, you know, investors on
Long Island and so it brought meto a REIA. And Sean, you're not
gonna believe me. But when Iwalked in, I felt like angels
were singing like, 'Ohhh', like,there's people like you, just as
insane as you, you know, myfriends were telling me, you
(04:15):
buying another house, you know,more tenants, toilet problems,
and you got to evict and, youknow, I started losing my
friends. My family wouldn't talkto me about it. And I got so
much negativity, and then I walkinto this room of like, you
know, 50-60 people and like,they will all like, 'Go get
(04:36):
them!' you know, so positive.
And so, um, I found out it wasright around 2007 right when the
market was correcting. And thePresident said she was going to
sell it to some person that wasjust going to dissolve it for
it's own. And I thought, 'Oh,God, I can't lose my little
heaven.'
Sean O'Toole (04:55):
Yeah. So, self preservation that...
Melissa Shea (04:59):
Yeah, I just so I asked her, I said, 'Please, I
love this group so much, can youplease make sure that, you know,
I'd be interested in buying it'.
So, and she worked out a deal,and I bought it. And I've never
looked back. And you right,you're, Aaron, you're absolutely
right. I didn't know what I wasdoing. I didn't know how to run
it. I wasn't a good marketer. Idid everything wrong. And yet
(05:25):
it's my most successful businesstoday. So, who knows? You can
fail into success.
Sean O'Toole (05:33):
It sounds like a lot of your other businesses
came out of that right. So...
Melissa Shea (05:38):
Yeah.
Sean O'Toole (05:40):
...Real Estate brokerages and and other things
all grew from that fateful daywhen you walked in.
Melissa Shea (05:47):
Yeah, I wish I knew how much my life would
change. Or maybe it's better Ididn't. I became a mentor, which
I never thought I would be.
Because you have like thatimposter syndrome in the
beginning, because you like, Iwas just doing like, I'm a
hustler if you can't figure thatout already.
Sean O'Toole (06:06):
Yeah.
Melissa Shea (06:07):
I just like doing it right, and then ever. And
then I went through a horriblething called divorce. Anybody
been through that? That's fun.
So, it's like a reset in yourlife, right? Because they take
everything mean, everything'sgone. You know, once they find
out, you got assets, they justlawyers suck it all up. So, our
kids lost everything. And thebeauty of that, the absolute
(06:28):
beauty of that was I got torebuild the whole real estate
portfolio again, with so muchmore knowledge that I could do
it so much faster. And I wasactually on a radio show, like
kind of like this. And the guyasked me, if you had to start it
all over again, what would youdo? And so I started saying it.
And then he's like, 'Why don'tyou teach people?' I'm like,
(06:51):
'Oh, I don't think I have time,you know?' And do you know...
Sean O'Toole (06:57):
I can't imagine that you don't have time, you
seem to have time foreverything.
Melissa Shea (07:00):
I know, I gave up sleep, it's a great thing, you
know, so, um, but what happenedactually out of that was, you
know, how a lot of times REIAswill have these people come in
and educate the, you know, yourmembers and stuff like that. And
this guy took 10 I think it wasfive, five people he took $7500
(07:25):
deposits from and just vanishedwith the money. So, so my heart
broke for them. And I said,'Listen, I won't charge you
anything. But I'm going to haveto do it as a group. And I'm
going to have to add five morepeople in that to offset my
costs.' And that's how mymentoring program started, I
have over 140 graduates,everybody, 84% of them make
(07:48):
their money back in two years,or less, and 50 of them make it
back in less than a year, so.
Aaron Norris (07:55):
Those are really high numbers by the way, are you
behind them with a lighter, likeputting a fire under them or...
Melissa Shea (08:01):
Oh, yeah, I kick their ass.
Aaron Norris (08:04):
Seriously, a lot of people do not take action.
Melissa Shea (08:07):
Yeah.
Sean O'Toole (08:07):
I think that's the biggest problem. It's, it's, you
know, it could be, I think it'soften less the instructor and
more the people that areattracted to those programs. So,
do you weed out people when theyapply? Because the only way you
can have that level of successis by telling a whole bunch of
people, 'No' because there's abunch of people that just, will
never, they'll pay the moneywith the hope and dream, but
(08:29):
they'll never actually doanything.
Melissa Shea (08:32):
Yeah, I think that's probably the biggest
thing I don't it's not aboutvolume. For me, I'd rather take
20 small, I think we're up toour classes are up to maximum
20. Because I know I can beeffective with that. And with
that, I meet with them one onone. And if I don't feel like
they're a good fit for theprogram, you know, no harm, no
(08:54):
foul, I'll give you money backor you go on to, I'll give you
some recommendations of what youshould be doing. But I'm looking
for people who are just asmotivated as I am, you know, I'm
going places you want to comewith me, then you come but
you're not ready yet? Then, thenthere's a lot of other free
content out there.
Sean O'Toole (09:13):
Totally. Where's your REIA located?
Melissa Shea (09:17):
I'm in Long Island. So...
Sean O'Toole (09:19):
Okay.
Melissa Shea (09:20):
And now we've branched out to Connecticut and
Rhode Island.
Sean O'Toole (09:24):
And you guys meet monthly?
Melissa Shea (09:26):
Yeah, so, well, actually a lot more now. We used
to meet monthly pre-COVID.
Again, I did the same thing withthe very first COVID REIA
meeting we had virtually likethis. We had about 80 members on
there, which was great. And Isaid to them, what do you guys
want from me? What can I do?
(09:48):
What can I show leadership toyou guys during this scary time?
And they said they wanted morefree content and more support
during this time. So, we turnedit into a weekly call and we
have done doubled down witheducation. We give them six
meetings a month now, and whichis a lot.
Aaron Norris (10:11):
That's a lot of work.
Sean O'Toole (10:12):
Yeah. That's a lot of work.
Melissa Shea (10:12):
Yeah. But I can't tell you how many more deals
have come out of it, morestudents have come out of it.
Um, you know, you give, you getwhat you give, right? So, I gave
it for free for the whole year2020 I gave, every meeting was
free for all our members, andeverybody was free. And then in
2021, we started charging, andit's been extremely successful
(10:36):
and rewarding.
Aaron Norris (10:37):
What kind of deals are you doing right now? Is it,
I know you manage, you havequite a few rentals. But are you
still flipping?
Melissa Shea (10:43):
Yeah, so I'm flipping right now about 17
properties. And I have aportfolio about 100. And it
ranges every day, because I'mbuying and selling so often. But
it's a range of about 120 to 130units is where we're at right
now.
Sean O'Toole (11:01):
And how many of those are flipped versus hold
rental?
Melissa Shea (11:05):
So, 17 are flipping right now. And the rest
are all buy and hold. I reallywant to double down on buying.
Sean O'Toole (11:12):
...buy and hold.
Yeah, yeah. And that since 2007,or actually since after the
divorce, I guess when yourestarted. So, how over what
period of time did you do that?
Melissa Shea (11:26):
Well, I've done over 600 rehabs, um.
Sean O'Toole (11:29):
Wow.
Melissa Shea (11:30):
Yeah. So, my, and here's the funny story, right?
So, if anybody's listening andyou think oh, my God, that's too
like crazy, like, I could neverdo that. I, my first 11, I
didn't make any money on. Imade, I wrote checks at the
closing table to get rid of myfirst 11 houses. How screwed up
(11:52):
is that? Right?
Sean O'Toole (11:54):
I call it education.
Melissa Shea (11:56):
Yeah, it was...
Sean O'Toole (11:58):
It's a different way to pay for education right?
You pay a mentor, you paysomebody else or you pay out the
deal. It's...
Melissa Shea (12:03):
You're gonna pay it either way right? Yeah.
Sean O'Toole (12:05):
You're going to pay it either way.
Aaron Norris (12:06):
A personal short sale. All right!
Melissa Shea (12:08):
Yeah, exactly. Oh, yeah, you know, the rehab, I
used to get like a gut my stuff,I get, oh, this is gonna be the
one, this is the one I'm gonnamake money on. And, you know,
you still lose a little bit hereand there. But I've also made a
lot of money flipping to I mean.
Aaron Norris (12:26):
Where are you predominantly flipping? Is it in
the Long Island area?
Melissa Shea (12:30):
God? No. No, it's mostly out of state. Um, we, we
have a lot of competition herein New York, we've got a lot of
people with deep, deep pockets.
So, very competitive. We used todo quite a bit because we were
specialists in short sales. Iunfortunately had to go through
(12:51):
it with my divorce. So, I got awonderful lesson on how to do
it. And I got a wonderful lessonon the emotional part of it
because a short sale is notabout the financial matter for
them, it's about the emotionalpiece of it.
Sean O'Toole (13:07):
Yeah.
Melissa Shea (13:08):
So, if you can connect to them, in that space
of empathy and the fear, theyfeel, they have a lot more trust
and confidence. And I've takenhim to the finish line. And, and
I enjoy it, I really enjoy it.
Because watching, you ever do ashort sale and watch them at the
closing table? Like when theysign the last document and they
(13:31):
get up, you see 1000s of poundsof stress, just leave, I always
tell them, 'Tonight is going tobe the best night's sleep we've
had in years.' And so, we didget a lot of our fixed and flips
from that. But when the COVIDand moratorium hit is really, it
dried up quick, you know.
Sean O'Toole (13:53):
The empathy piece, right? Whether you're an agent
taking a listing, or you're areal estate investor buying
somebody's house or whatever,like that, that is really the,
the key to the whole thing ifyou're working directly with
the, with the owners, right?
Like, understanding thatsituation. And the rest in that
piece is so lost on everybodywho's focused on I mean, we're
(14:14):
in the list business, we selllists, right but, but
everybody's like focused on 'Oh,this list or that list,' and you
know, you can have the best theworst list in the world and
close a lot of deals. If you canconnect with owners and you can
have the best list in the worldand not close any deals if you
can't connect with owners.
Melissa Shea (14:33):
Yeah, that, and it's a hard thing to teach. It
really is ,I I have quite a bitof agents and you know, trying
to teach that compassion. Youeither have it or you don't. I
find the best ways to recruitfor that is somebody who's
actually been through a shortsale. I always tell them make
their mess, their message,message, because look, you can
(14:58):
relate to them right like youlook, you were in a financial
mess, upside down, destroyedcredit, blah, blah, blah and now
you come out, you're, you'resmarter, you're better you buy a
short sale afterwards so, youknow how to buy with equity.
You, you can make money helpingothers such a, I know it's
(15:19):
cliche-ish, but there's a realjoy in doing that there's a real
satisfaction in your work whenyou can help somebody and then
still get a good pay day out ofit so, you know.
Aaron Norris (15:31):
Well...
Melissa Shea (15:31):
That's why your lists are important, so.
Sean O'Toole (15:36):
Yeah, lists are still a necessary part. We're
here...
Melissa Shea (15:38):
Oh, God, that's where it starts right?
Aaron Norris (15:41):
I want to, before we go into the states that
you're active in, I do want totalk a little bit about Long
Island, you know, we havelisteners all over the country.
And so, some people might notappreciate your, your proximity
to New York City and what youguys are going through to
compare to what the city is, andI believe you have some
inventory in the city of NewYork, right?
Melissa Shea (15:59):
Yeah, so we have the whole Tri-State area pretty
much except for Jersey, because,you know, New Yorkers in New
Jersey...oooh taboo. Um, butyeah, so when COVID hit, right,
if people don't understand LongIsland is the island next to
Manhattan, it actually hasQueens and Brooklyn on it, but
(16:21):
we don't naturally associatethose two with Long Island. But
when COVID hit, they all came tothe island. So, our real estate
jumped up, like many cities,right, the suburbs did so much
better than the city did. And Ican't tell you the increase in
(16:44):
amount of activity just fromthat. And New York started all
with the COVID, you know, youknow, there was there was some
scary times in the beginninglike this time last year, a lot
of deaths were happening, peoplejust wanted to get out. And they
were just overpaying ridiculousamount they had cash and they
(17:04):
just kept buying. And so, ourmarket went up quite a bit. Our,
and the dynamic was ourinventory shrunk, because any of
the short sales immediately,were expunged because there was
no evictions, no foreclosuresgoing on. So, inventories shrunk
fast, it created that increasein price. And we're still kind
(17:26):
of experiencing that. Eventhough the city truly hasn't
opened up yet. You know, gymsstill can open up and
restaurants still can open upfully, you know, so they're
feeling it.
Aaron Norris (17:41):
And for, how's the tenant situation worked out? You
shared one particular story of atenant that stopped paying in
February where you offered cashor keys, can you can you walk us
through that?
Melissa Shea (17:52):
Yeah, so this is gonna sound really bizarre to a
lot of other states out there.
Especially 'cause I invest inTennessee, it's very different
there. So, I have 10, buyingholes in New York. One is
actually a shelter home thatNassau County is my tenant, and
they didn't pay for four or fivemonths, which is interesting.
Um, and that was for homelesspeople, right. So, that's crazy.
(18:15):
But the one story I was tellingyou about Aaron was they both
stopped paying in the, thehusband and wife stopped paying
in February. The mortgage on itis 30 to 60 a month is my
monthly payment. And they werepaying $3200 a month. And they
stopped paying. They are both ondisability. So, they did not
(18:41):
lose their jobs. They did notlose their benefits. And then
they decided to rent out mybasement. So, they were renting
out my second level collecting$1800 bragging to me about this,
realize that they don't have topay New York's you know, because
New York said pretty much youdon't have to pay if you're a
(19:03):
tenant. And we have been payingever since. So, that's February
of last year, so we're on our13th month of pain. April 14
will be 14. And we can evenstart the eviction till June, if
they don't extend it again. Andan average eviction in New York
(19:25):
prior to COVID was six to eightmonths. And then they did a law
change that was now making it 9to 12 because they added you had
to give 90 day notice to them tovacate, right. So, I mean, I
offered this woman up to $30,000to move. $30,000 and she
(19:47):
wouldn't take it that crazy.
Aaron Norris (19:53):
Oh, 'cause she knows that she's gonna be able
to park it there till 2022 andyou'll be out 70 grand and...
Melissa Shea (19:58):
Yeah.
Aaron Norris (19:59):
Yeah.
Sean O'Toole (19:59):
You wil, you will end up with a judgment you
know...
Melissa Shea (20:02):
Oh, yeah...
Sean O'Toole (20:03):
not sure what good that does you, but you...
Melissa Shea (20:04):
So, they just file bankruptcy and wipe that away
with a $2,000 payment, you know.
So, yeah, I think what, what ourstate did was sinful and taking
away our rights as landlords,because I have a commercial
mortgage, you know. They'relike, 'Oh, just ask for the
forbearance.' Well, forbearancedoesn't forgive the debt, first
of all. And the second part is,is that you're gonna have a lump
(20:28):
sum due when it comes up, andmaybe you can modify, but that's
not the luxury we have withcommercial mortgages, right?
Because it's not FHA-backed oranything. So, I'm paying like
7%, looking to refi, because therates are better now. But I
can't refinance, either, becauseI don't have a paying tenant,
right?
Aaron Norris (20:49):
Doesn't look good on paper, does it?
Melissa Shea (20:51):
Nope. So, I think, you know, and that's why we
invest out of state, right?
Because who wants to deal withthat? You know, and it really
ruins it for other people. I'mvery active in the, you know,
homeless, homelessness, I have anon for profit organization,
too. And it really ruins it forthem, because where are they
(21:12):
going to go? You know? And thenlet's like, take it, you know,
you guys are gonna have someserious list coming up in our
market, because you're gonnahave two things. One is, you're
going to have all theselandlords that want to sell,
right, I put that house up forsale as is with the tenant
occupied. You can't even believehow many people are making
offers on these houses likethat.
Aaron Norris (21:34):
Really? Well, they're going have to deal with
the tenant after, right? I mean,can...
Melissa Shea (21:39):
Yeah, but they're so desperate to get houses...
Sean O'Toole (21:42):
A deal, anything, right. So, and they figured
they'll make it up on the backend.
Melissa Shea (21:46):
Yeah, I'll sell it at a $60,000 discount, just get
out of the damn thing. Andthey'll pick up a deal. And
they'll deal with it. So, andthen, if it's a residential
mortgage, they're getting ratesin the threes, right? Or in the
sixes, you know, so, or fivesnow.
Sean O'Toole (22:04):
If it's a homeowner that buys it, the
eviction law is different,right? They can actually kick
the person out.
Melissa Shea (22:09):
No, not New York.
Not in New York. Is that crazy?
Aaron Norris (22:15):
Well, that's it is interesting, like why they would
take that risk. They're just sodesperate to own something?
Melissa Shea (22:19):
Yes.
Aaron Norris (22:20):
Wow.
Melissa Shea (22:21):
Yeah. Is that crazy? But um, yeah. So, that's,
that's what the next major fallis all these investors that only
single-family houses, right?
They're behind on theirmortgages, because these tenants
are not, not paying for monthsand months and months of time. I
have 10 houses, out of all 10houses in New York, only one
(22:43):
tenant is paying, one.
Aaron Norris (22:47):
Oh!
Melissa Shea (22:48):
Yeah. So, I'm floating $35,000 a month in
mortgage payments, just in NewYork.
Aaron Norris (22:53):
And these tenants do not have to prove any kind
of...?
Melissa Shea (22:59):
Nope.
Sean O'Toole (22:59):
At least in California, at least on paper,
right, they've required proofof, you know, of a loss there.
And that seems to me, like justa base case requirement like,
you know, why should somebodyget a windfall? You know, at
that, that's just, it's notfair. It's not right.
Melissa Shea (23:20):
And here's what the other problem is, there's
the let's, let's get through thewind, you know, forget the
amount of foreclosures that aregonna happen because of this
incident, where those tenantsgonna go when they eventually
get out, if you know that theyhaven't been paying during COVID
do you think any landlord isgoing to even take them? The
shelters are going to be overflooded. And because the county
(23:40):
wasn't paying us, we closed downour shelters. So, so many
shelters closed down. It's a bigmess. So, my solution is go to
Connecticut. Go to, you know,South Carolina, North Carolina,
Tennessee, anywhere else youknow.
Sean O'Toole (23:55):
The pendulums always swinging, you know, even
in places like California, andsometimes things have to get
really bad before the pendulumstarts swinging the other
direction. So, you know, maybethis is a, you know, the cure,
right, like having a get so badto one side, then things start
swinging going the otherdirections? Just, I don't know.
That's the way things go overtime.
Melissa Shea (24:17):
Yeah, there was, it was to landlord, to
tenant-friendly state. I mean,literally, a Manhattan eviction
would take you two years. No, itjust it, that's insane. That's
an average and a foreclosure.
The average time to foreclose inNew York is seven years. So,
five to seven.
Sean O'Toole (24:40):
I've got a guy who's always reaching out to me
and about, you know, he stillthinks in you know, New Jersey,
New York, that whole area thatthere are, and we don't really
know, right? We kind of believethis is true in Nevada, because
we had we, were tracking Nevadaback through the crisis and
(25:00):
Nevada changed some laws andbasically made it criminal, you
know, to foreclose, right. It'scrazy. It's a long story when
you go there, but, um, but whatwe saw happen was the
foreclosures went away.
Melissa Shea (25:13):
Right.
Sean O'Toole (25:14):
But I don't think it was because people started
making their payments. I thinkthe banks just said, 'Forget it,
we'll let them not make theirpayments. And we'll just sit on
these properties until they, youknow, whatever.' So, you know,
It wouldn't surprise me at alltoday, if there are 10s of 1000s
of owners in Nevada, thathaven't made a payment since
(25:36):
2007. And banks have just said,'We'll wait till they die or
sell or move or whatever,'right. And because it's not
worth foreclosing, and theprices have gone up, and so
that, you know, the assets stillthere, we're continuing to
accrue the interest and stuff,we'll get paid someday, but
(25:58):
we're not going to worry aboutit for now. And...
Melissa Shea (26:00):
But I gotta be careful about that, because they
could do a quiet title actionand clear their debt out. And
that's it.
Sean O'Toole (26:06):
Maybe, yeah, maybe. So, you know, it's, it's
interesting, you know, and soanyways, he feels the same
things happening in, in NewYork, New Jersey, etc. and that
there are 10s of 1000s of peoplethat haven't made a payment
since 2007. And no foreclosures.
Because we didn't really see thevolume of foreclosures there
that we saw in other places.
Melissa Shea (26:28):
In Nevada?
Sean O'Toole (26:30):
No, no, I'm saying even in New York, New Jersey,
Nevada. Certainly.
Melissa Shea (26:34):
Yeah. You know why a lot of that was? So, because,
we're such a reputable state.
There was a, the largestattorney was fraudulently
foreclosing on people, StephenBounds office. So, they had to
reverse all the foreclosures.
Everyone of those foreclose, youknew what a mess that was? And
(26:57):
they put a moratorium for 18months on foreclosures. So, what
happened was they just settledout. And that's why our short
sale business did so good.
Because we were just settlingout with the bank. The banks
were hungry to just settle atthat point, because they knew
they couldn't foreclose. And..
Sean O'Toole (27:12):
Yeah.
Aaron Norris (27:13):
Do you have...
Melissa Shea (27:14):
That's really where our strength comes in. Is
that that short sale market,which will come back eventually.
Aaron Norris (27:20):
Do you see a lot of members sort of preparing for
the opportunity that you'retalking about maybe picking up
some properties forover-leveraged investors not
prepared to do what you'redoing?
Melissa Shea (27:30):
Yeah. The investors, you know, you don't
even have to wait for theforeclosure part. They're just
so desperate to get it likeinvestors are a little bit
different than homeowners,because they don't have the
memories of you know, bringingJohnny home from the hospital
and watching them grow up in thehouse. You know, it's, it's a
different emotional attachment,right? It's like...
Sean O'Toole (27:48):
And they don't have legal protections.
Melissa Shea (27:50):
Yeah, they don't have the legal protections.
Sean O'Toole (27:53):
Not being foreclosed or evicted.
Melissa Shea (27:55):
Yeah. And well, actually foreclosure, they still
can't foreclose on them either.
But it's going to destroy theirfinancial life, right? Because
the financial hit to them is, istoo much. And so, if they can
get out of that, they'll take,they'll take a hit and move on.
You know, it's unfortunate,because it's out of our control
(28:16):
right. And, and I think that'sthe part that, you know, losing
our constitutional right toexecute, you know, you don't pay
you have the right to evict andI don't mean, like, you know,
throw them out heartlessly. Butlike you said, there's a lot of
good reasonable states thatsaid, 'You know what, you have
to prove that you actually gotimpacted by COVID before we have
before we can go up though'there is a three month grace
(28:39):
period, four month grace periodsome.
Sean O'Toole (28:43):
Trillions and trillions and trillions of
dollars of support, right, somuch in the name of homeowners
so much went to a nothomeowners, but to renters and
the rest, right. And so, there'sbeen a lot of support for these
folks. And, you know, so to thedegree that we were gonna put
trillions of dollars of supportout there to have it go to
making sure their housingpayments, so it supports the
(29:04):
entire chain and doesn't justpick and choose. And, you know,
I keep hearing stories of likefolks that are, you know, not
paying their rent, but investingin GameStop, that, that
shouldn't happen.
Melissa Shea (29:16):
Well, that was a stupid thing that they did a lot
of legislation didn't think thisone through.
Aaron Norris (29:21):
No.
Melissa Shea (29:21):
They wrote the checks to the tenants, they
should have been writing it tothe homeowner or to the
landlord. And so, the tenantsgot the checks and they still
weren't paying the rent, likeyou said, they went...
Sean O'Toole (29:32):
Write the check to the tenant and let them make the
decision, but then don't protectthem from eviction if they use
it, you know, on a new bigscreen TV.
Melissa Shea (29:39):
That's true, too.
That's true, too.
Aaron Norris (29:42):
Are there... I've seen different states doing
different things. In Californiathere's some nonprofits getting
CARES Act money to backfillspecifically working with
landlords or is any moneyavailable in the New York market
for landlords making up pastrents as grants?
Melissa Shea (29:57):
We've been, we've been trying to actively come
together as a community, it's alittle divided right now. But
it's, it's taken such a hit thatwe have to get united on it. But
no, there's no resources for,they view the landlord is the
big, ugly, rich people. Andmeanwhile, it's your mom and
dad, your neighbor next door.
It's not, it's notconglomerates, it's not. Hedge
(30:18):
Funds are smart. They're buyingin, in places where there's low
taxes, right? They're not buyingin their own backyard right? And
here's the funny part is most ofthem investors that buy these
rental houses live in New York,you know what I mean? So, that's
the ironic part, you're actuallyhurting that whole economy of
(30:39):
scales, like you said, Sean,like, if they had just paid it
to the landlord, it would havekept the whole economy going,
you know.
Sean O'Toole (30:50):
This thing something happened to small
businesses, right. So, you know,like, in a lot of cases, small
businesses, right, you gavepeople this extra unemployment
benefit, which I think wasawesome. And you know, there's a
lot of good things about that.
But then, I know lots of smallbusiness owners who are trying
to survive and keep theirbusiness open. And they're
asking those employees to comeback, and they're saying, I'm
(31:10):
making too much money onunemployment. I don't want to go
back to work ,right?
Melissa Shea (31:16):
Right.
Sean O'Toole (31:16):
And , and so now, wait a second, wait, you know,
so, yes, this helps in a way.
But there were jobs availableover here that people weren't
willing to take? And, you know,so it's, we're not very good as
a country at, at stimulus. Andit's one of the reasons right,
we have it. We put all thismoney out there. And ideally,
(31:38):
right your reflating, theeconomy, right? COVID is
incredibly deflationaryreflating the economy, and
getting it back on track. Butbecause we're not good about how
we do that the money pops up allthese unexpected places. And,
you know, you've got a run onexotic cars, and you've got to
run on GameStop. And you've gotBitcoin going through the roof.
(32:01):
And like, the money pops out inthese places where it shouldn't,
and yet small businesses andlandlords aren't helped at all,
and they're getting justabsolutely hammered. And, and,
you know, the rich get richer,because both parties think that
the $250,000 a year smallbusiness owner or, you know,
(32:24):
small landlord that owns fiveproperties is rich person, and
not, not the guys who areactually profiteering off of all
of this?
Melissa Shea (32:35):
Yeah.
Sean O'Toole (32:35):
Anyways, I'll get off myself....
Melissa Shea (32:39):
Yeah, but you know, what's interesting about
that, is that, you know, thankGod, we're in real estate, you
know what I mean? And that'sprobably the message. And that's
probably why, you know, my big,my big mission, if you want to
put it on life is to empower andeducate people for financial
independence through realestate. So, it doesn't work in
New York so great. So, what, youknow, take your lookings, but
(32:59):
don't give up, right, that's my600 rehabs, I would not have my
600 if I gave up after myfourth, writing my check, you
know, and there's real estateavailable everywhere else, I'm
still making a lot of money.
Thank God, because that'soffsetting My New York mess.
But...
Sean O'Toole (33:15):
And my guess is, is if you ,if you survive
through this thing in New York,you still do really well in New
York, like everybody wants to bedown in California. But, you
know, the investors I know, inCalifornia, all kind of crushed
the investors I know, everywhereelse, right, in terms of
absolute income and rest. And,you know, you're making 50
(33:36):
$100,000 a deal versus two andten, like, so.
Melissa Shea (33:40):
That's true.
Sean O'Toole (33:41):
I don't know. But it does. It can be very
frustrating at times.
Melissa Shea (33:46):
Yeah. And if you do it, right, like, ironically,
Florida is the one I made thelargest spread on, but they're,
you know, our average flip isbetween 40 and $60,000 still,
you know, it's it's got a goodchunk to it. I mean, there's, no
I'm not gonna lie. There's timeswhen we meet it's really, really
good money. And then there'stimes where you just get beaten
(34:07):
down by the town or something.
I'm writing a check for $20,000to get out of the deal. And, you
know, but it's just a big boygame, and you got to get into
it. And you got to survive, youknow, and I'm a woman and I do
it anyway.
Aaron Norris (34:21):
You're in New York woman you are a watch out.
Melissa Shea (34:23):
Yeah. Yeah, I'm going to...that's where you
really got to watch.
Aaron Norris (34:29):
Let's talk about the data, you talk about
different states, what data didyou use to, was it strictly
landlord friendly or how did youselect your states?
Melissa Shea (34:37):
So, I evolved over the years as I grew my knowledge
base, right. So, my firstmistake was, I bought in
Florida, similar to a market wehave now right? I bought new
construction back then it wasvery popular, right? So, D.R.
Horton would buy a house, youknow, build a house, a
community, whatever. I was likegambling on us. He was
(35:00):
addictive, right? So, I put down$10,000. And then I wholesale
that contract off in two monthsfor another $10,000. And it was
cool to me, right? So, and itwas, I, can you know, it's like
going to a casino, right. So thefirst time I did it with 10
grand, I was like, oh, wow, Igot 10 grand back. So, I did it
with three houses. And I think Imade like 15 grand between 10
(35:23):
and 15 on each house. So, whatdid I do? I go in with 11. Yeah,
11, right. 11 and, um, yeah,that's right. My magic number,
right. That's the one I shouldnever gamble on. And I got stuck
holding the bag. And I couldn'twholesale them. So, to not lose
(35:47):
my down payments. I closed onall 11. How stupid was that? So
ow I have 11 negativelycash-flowing properties
because I didn't think, loo, see, and feel. Right? I
idn't, I didn't do the data righ. I didn't see that yeah, 100
people a day and moving inBut just you know, 1200 are
(36:08):
ying. You know what I mean? Likthat, you got to look at those
umbers. You know what I mean? Yu got to look at who is actual
y buying those houses. It was ony investor to investor was hot p
tato. Right? And then so, thatas my evolving in data there is
hat I had to look for jobs, marets where there was stable in
ome. And that's when I learned lke, okay, cash flow is the game.
(36:32):
So, I got myself out of that mss by doing a strategic
deal where I was able to buy siapartment buildings simultane
usly. That was a little stpid, too. But I went for cash
low, right? And cash flow dide well, I did well. The divor
e didn't do me so well, butthat the cash flow did well. And
(36:52):
then when that all got taken awa, I had to go through my divorc
. And I lost my house. And I wen, Oh my God, if I'm going thr
ugh this, there's got to be othr people that going through t
is. And so, then we started ding the Lis Pendens list. And
so, we would buy in strategicmarkets. And we did research,
New Jersey can set, um, Suffok County where I actually
(37:14):
ived was the top 10 in the natioof foreclosures. So I thought,
ow, this is, of Lis Pendens swe...
Sean O'Toole (37:25):
Filling.
Foreclosure filings, but theyweren't getting completed.
Melissa Shea (37:28):
No. And that actually that dynamic worked
really well for us because thebank was willing to work with us
because they knew they couldn'tget to the finish line. We could
talk to the homeowners in a waythat said, 'Hey, don't look at
this and milking your life. Lookat it as a launch to start your
life.' Because the real truth ofthe matter is nobody wants to
(37:49):
stay in their home not payingrent. I mean, it sounds great
and sexy and fun and ormortgage. But mentally, it does
something to them. They don'tthrive, because they're always
afraid of like who's gonna pullmy credit, or it's just as a
negative way of living, when youcan free them out of that
bondage is when you can helpthem overcome their fear right?
(38:13):
When you can tell them 'Listen,there is a better way. Let me
show you how.' And they listen.
I have people who come back tome two, three years later, and
they're like, Oh, my whole lifeis all better. They move out of
state they do this they move inwith family, they buy another
short sale. Life can begin whenthey stop.
Sean O'Toole (38:34):
Because their credit situation none of that
starts improving until afterthey get the deal done and move
on.
Melissa Shea (38:39):
Yeah. And that's so that data was so important
because we had callers callingconstantly, you know, once they
were at auction dates, or whenthey went list pendants and
developing those relationships.
And now, so then we moved intoother states, we moved into
Connecticut, Rhode Island, downsouth so our data led to where
good jobs right so I have a bigportfolio in Tennessee in
(39:01):
Memphis. I love Memphis. Nikebuilt their plant there, Bear
built there. Same thing withPittsburgh did a lot of research
and data on that what's, where'sjobs? Right. So, here's a hint
for all you listeners, you wantto find where the good deals
are. Don't go for the home rungo for the steady eddie cas
flow, where there's good solijobs, where there's goo
(39:24):
employment, you know, and ihelps when you guys can provid
good data like that where, wherabsentee landlords, you know
that's a really good thingWe're going after that i
Connecticut, you know, absentelandlords
Sean O'Toole (39:41):
Especially if you have a holding power and you can
bail out the folks like, youknow, New York and get our
absentee landlord list in NewYork right now. If you've got
holding power, it's good time toget some discounts.
Melissa Shea (39:52):
Yep, that's and that's the truth right? So, you
got hedge funds that are lookingfor those kind of deals because
New York inherently doesn't loseits value, really, it doesn't.
That bad. I mean, we can cry andcomplain all we want right now.
But it's like California, right?
California holds its value justdoes, you know, because it's
California to New York. But Ifind that for the average
(40:15):
investor, especially whenthey're starting, you don't need
to hit the heavy hitter areas gowith the bread and butter bar
the non-sexy areas, right, Alaama was great for me. I made so
uch money in Alabama. It was eas. And it was 5, $10000 here and
there, 20,000 here. But it waseasy you know.
Sean O'Toole (40:35):
What about like in New York, New Jersey, right? So
in California, there's, they'reonly miles apart. But there's a
big difference between trying toinvest in Newport Beach, and
Riverside, right. Like those,those are completely different
markets. And what, an hour driveAaron? You've been down there.
Aaron Norris (40:51):
Without traffic.
Sean O'Toole (40:53):
Without traffic one hour.
Melissa Shea (40:55):
Without traffic, one hour.
Sean O'Toole (40:56):
Do you get... do you see some of that where there
are those markets where that,you know, closer to you that are
growing and thriving, and youknow, still going to be more
expensive than Memphis but doyou look at that? And do you
look for those kind of moremicro opportunities within your
market?
Melissa Shea (41:13):
Yeah, so for Long Island, the bread and butter
sweet spot, like the entry levelis between 350 and 550? I don't
even think there's a house for350 on in Long Island anymore.
Aaron Norris (41:25):
I was going to say, 'Where?'
Melissa Shea (41:26):
Yeah, that was like in the hood, right? The
hood has changed, right. Andthat's probably why we go out of
market, our taxes are really ourbiggest drain on us. You know, a
simple little house, like myhouse property taxes are close
to 16 grand, and I don't have abig, big yard or a lot of thing,
you know, for 16 grand. I mean,that's crazy money. Our second
(41:49):
house in Maryland, and that'snot too far from DC. The taxes
are $6,000, $10,000 less, youknow, it's crazy difference. So,
you get so much more value outof state and um...
Aaron Norris (42:02):
So, what strategies are you liking? You
mentioned absentee? Is there aspecific data set that you're
tackling when you're going intothese markets?
Melissa Shea (42:10):
So um, I like fatigued and absentee landlord.
So, like, people in California,just because they have money
will invest in turn-keyproperties in other states. Like
how I said that right.
Aaron Norris (42:26):
So you look for a mailing address from California,
got it.
Melissa Shea (42:30):
Or New York or Canada, you know.
Sean O'Toole (42:33):
Out of state absentee owner list is one of
our more popular for sure right.
Aaron Norris (42:37):
Yep.
Sean O'Toole (42:37):
Yeah.
Melissa Shea (42:38):
Because they think it's like that, what is that
George Foreman Grill, like, setit and forget it, that's what
they think it is. And that's thedanger, you should be a note
holder, not a property owner,right. And that's the
difference, right? If they canunderstand that. So they don't
understand when the tenant callsand they have a problem, or
(42:59):
there's an issue with theirtenant or something like that,
so...
Sean O'Toole (43:05):
Older absentee owner, too, is another really
popular list. So, as you know,folks start hitting 70, 75, 80,
right, they're kind of done withbeing a landlord. And, you know,
they probably need or want thecash for other things and stuff,
you know, so that postretirement, absentee landlords
another good one.
Melissa Shea (43:24):
Well, you know, what's also good about that,
because they want to do theireither 1031 exchanges, and
they'll do it to like a DST, youknow, so. So then, at least it's
just kind of more stagnant.
they've exhausted their taxbenefits. You know, another good
market list I'd be interestedin, is I was pretty passionate
about this is the senior market,because in our particular area,
(43:44):
reverse mortgages are going toreally hit hard in New York, New
Jersey, and California, wherethere's high property taxes,
because for anybody who doesn'tknow what a reverse mortgage is,
that's on the call, is thatbasically, they don't have to
make a mortgage payment, butthey have to still stay current
(44:05):
on their property taxes andtheir, their insurance, but they
essentially are using the equityin their house to live off of
whether it's in monthly paymentsor a lump sum. Now, a lot of
mortgage pay, companies back inthe day, were incentivized to
get the lump sum money. And so,a lot of these seniors had never
(44:28):
seen this kind of cash in theirlife, right? So, they kind of
feel like they won the lottery,right? So, they get their house,
it's worth $600,000, right? Theyget a reverse mortgage, they get
a lump sum of $300,000 theydon't have to make a mortgage
payment on it, and then they canlive in it till they die. That
sounds great. So, now they spendall their money on you know, all
(44:51):
their grandkids paying for theirweddings and fixing up you know,
buying cars.
Sean O'Toole (44:57):
Cadillac.
Melissa Shea (44:58):
And they get Cadillac, you know, splurging,
and they don't save for theirtaxes and their insurance, and
they don't save for or do therepairs to their house, because
for the next 20 years, they'regoing to live there. They think
that they're not going to have arepair, you know, a roofs not
gonna go or a heater elementsgonna go. And so six, eight
(45:21):
years later, they can't paytheir property taxes, the roof
is leaking. And it's so sadbecause they probably lived
there 20, 30 years, and now theyhave to find out that they're
gonna get kicked out of theirhouse because they can't afford
their mortgage sucks. It's, it'sheartbreaking, honestly, it's
heartbreaking. And so, we do alot of short sales right before
(45:42):
COVID we were getting about 30%of our short sales were all
reverse mortgages, it was sosad. It's so sad. And I would be
interested in the data just tosee how many people have reverse
mortgages in our market areas.
Because the reality is. Oh, andthen the beauty of it is, let's
(46:03):
say they did say for that rainyday, right Nassau County
increased their taxes, somethinglike 17% their property taxes
and like a two, three yearperiod of time, if you're on a
fixed income, boom, you justlost your home, you just lost
your home.
Sean O'Toole (46:19):
Yeah.
Melissa Shea (46:20):
So, that's ...
Sean O'Toole (46:21):
People are really against Prop 13 in California,
but it's it is, you know, youknow, let property taxes not
increased more than cost ofliving index, you know, because
why should government growfaster than cost of living? And,
you know, that just that onedrives me insane. And one of the
things I do like aboutCalifornia. But yeah, I know
(46:43):
that the reverse mortgage listis another popular one and a
fairly unique one that we havethat a lot of people don't. So,
yeah.
Aaron Norris (46:52):
We're thinking about that. So, you could
because we have the demographicsof the owner as well, would you
be interested in, in the age ofthe owner combined with how long
they had the the loan in play?
So, the reverse mortgage, howmany years? Would you want to
see it season?
Melissa Shea (47:07):
Yeah, and the reason why is because they don't
really feel it in the first fiveyears, right right. It's
anything after that five iswhere they really start feeling
it. And that's because they,they don't really plan out that
far. And then the age. Yeah...
Aaron Norris (47:22):
A new list idea.
Melissa Shea (47:24):
I know, I'm gonna give you more.
Aaron Norris (47:27):
I'm on it. I wrote it down.
Melissa Shea (47:28):
Have me back for another show, I have more ideas.
But um, yeah, I really do thinkthat, that's, look, I've come to
this philosophy in life thatwhen you serve others, you, when
you solve other people'sproblems, you solve your own
problems, right. So...
Sean O'Toole (47:46):
Yeah.
Melissa Shea (47:46):
It is a heartbreaking problem. And I'd
love to solve it for someseniors because, and they're so
embarrassed to tell their familymembers what happens, you know,
and then they're out on thestreet, and they don't even know
why, you know, so, I startedthis thing called the Golden
Girls. So, we would get a few ofthese single women, you know,
their husband passed away,they're in the house, they don't
(48:09):
know how to do the defer.
They're in the reverse orembarrassed. So, we would get,
the only way they could livetogether was if I put a couple
of them together. So, we hadlike, three women move into a
house for women. So, I called itThe Golden Girls because,
program because that was theonly way they could afford to
live here and still see theirgrandkids. Otherwise, it was
move out of state, you know,so...
Aaron Norris (48:30):
I love that.
Melissa Shea (48:31):
Yeah.
Sean O'Toole (48:31):
That's cool. Yeah.
Aaron Norris (48:33):
We have to end.
Melissa Shea (48:34):
Yes.
Aaron Norris (48:35):
If they wanted to get in touch with you. What's
the best way to reach out?
Melissa Shea (48:38):
Probably go on Long Island REIA.
L-I-R-E-I-A.com. Um, definitelyemail me, Melissa@longislandreia
or info@longislandreia. Um, wehave every second, I'm sorry,
every fourth Wednesday of themonth, I do a free give-back
webinar. So, you can sign up forfree and it's intro to real
(48:59):
estate investing, ask where,whatever questions, you can pick
my brain for that whole time andwhatever you want to learn or
it's all free. It's really...
Aaron Norris (49:07):
Is it on Zoom?
Melissa Shea (49:08):
It's on Zoom. Yep.
Aaron Norris (49:09):
Very good. Okay.
Melissa Shea (49:10):
Everyone in the nation could go we have people
from California to Florida toCanada, to join us and even the
UK, so...
Sean O'Toole (49:18):
It's crazy, you have seen this with the better
REIAs. And sounds like yours isone of those where we zoom now
they've suddenly have this muchbroader, you know, audience than
the local folks that woulddrive, you know, maybe an hour
to come to a meeting. It will befun to have the in person
meetings though, too, because,you know, going to the REIAs and
(49:39):
throughout California, like youmeet a lot of people and you
make a lot of friends and youknow, a lot of familiar faces,
and I do miss that. So, it'll benice to start again. So, will
you do a mix? Will you continuedoing this and go back to doing
the live...
Melissa Shea (49:55):
Yeah, we could. We do semi live so we'll have a
live audience and um, zoom atthe same time, so I can hold up
to 25 legally here, whateverwith the COVID restrictions. And
yeah, so we do that on oursecond Wednesday, our general
meeting. We have that here sothat there's a little networking
still, but yeah, I can't wait tothe day. Sean, I really look
(50:20):
forward to that.
Sean O'Toole (50:21):
We're close, we're making a lot of progress. I feel
good about it.
Aaron Norris (50:24):
All right.
Melissa Shea (50:24):
Thank you so much for asking me to be on your
show. It's fun.
Aaron Norris (50:27):
Thanks for being here.
Melissa Shea (50:28):
Very cool.
So long, everybody. Thank you.
Aaron Norris (50:35):
Thank you for listening to the Data Driven
Real Estate Podcast, you canfind show notes and links to
some of the resources mentionedin the show at
datadrivenrealestate.com. Clickthat join the community, and
you'll be forwarded to thePropertyRadar community where
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upcoming guests and askquestions there. We'd love to
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(50:55):
Please don't forget to like,favorite, subscribe and share on
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helps us out a great deal.
Thanks for listening, and we'llsee you next week.
Welcome back to the Data Driven Real Estate
podcast, the podcast for realestate professionals dedicated
to driving business using data.
I'm Aaron Norris along with SeanO'Toole with PropertyRadar, and
this is episode 41. We are veryexcited today to have Melissa
Shea. She's the CEO of RealEstate Integrated Company
Everyday RE Group, the Presidentof the Long Island Real Estate
Investors Association. She's gota New York broker's license.
(00:27):
She's a licensed commerciallender for Everyday Funding, and
an exit realty regional ownerfor Connecticut and Rhode
Island. And since she has eightkids, I'm just excited she can
talk to us. So, Melissa welcometo the show.
Melissa Shea (00:40):
Thank you so much for having me. Yeah, it's a real
privilege to be on here. So,that's great.
Aaron Norris (00:45):
We don't talk to too many people with that many
different licenses. How did youend up in this niche?
Melissa Shea (00:50):
I'm just at a service for people, you know,
they would, I would. My firstpassion was owning a REIA,
right? A Real Estate InvestorsAssociation. I bought it about
in 2007. Great year to buy it.
Sean O'Toole (01:02):
Oh my gosh.
Melissa Shea (01:03):
A really great buy. And I just kept asking the
members, what do you need? Whatdo you need? And so, they'd
said, 'We need a hard moneylender'. And back in those days,
right, there was no hard moneylenders. They all disappear,
right? And then you got 50% LTVand stuff like that. So, I said,
(01:23):
'All right, let me start gettinginto it'. So, I started helping
them, you know, raising capitaltoo for different projects and
stuff like that, to help mymembers out, joint venture,
whatever. And then I realizedyou need a broker's license for
it. So, I got a broker's licenseto do it. And then my members
kept saying, 'Well, alright, nowthat you got us the money,
(01:44):
where's the deals, so you have abroker's license, you got a
broker's license and start afranchise.' So, then I started
doing the real estate side ofit. And we started helping our
members out that way and then Igot my NMLS to help people with
their residential mortgages.
I've since passed that onbecause let's face it, I got a
(02:05):
lot to do and that's, that's Ion't like working with the
overnment that much. So, lots ofdetail and paperwork. That is
not my forte, but I found areally good servicer for the
industry and my members and Ijust care about the members.
That's all it came from. That'show I just kept racking up those
licenses and things like that.
Sean O'Toole (02:28):
What brought you towards to buying a REIA? How'd
you, how'd you reach that? So,just for the folks listening, a
REIA is a Real Estate InvestorAssociation. So, it's a local
group of real estate investors.
Aaron Norris (02:43):
Because it's so much it's so little work and you
make so much money as running aREIA right, Melissa?
Melissa Shea (02:49):
Well, in the beginning, yeah, it's a labor of
love is, oh my gosh, I actuallyturned it into extremely
profitable business. And Ididn't, didn't intend to do
that. It was again, just to adda service because I, my first
year of real estate, I boughtsix properties. Then I bought
(03:11):
11, my second year, by the thirdyear, I realized I'm in a lot of
problems here because I didn'tknow it was around 2005, '06,
'07, I bought on appreciation,and not cash flow. And I found
myself in a big pickle. And Ididn't know how to get myself
(03:31):
out and I was only doing it bymyself. I've read rich, I've
read Carleton Sheets' book, I'mdating myself by saying that so
I cover my grades but um, yeah,and so I got myself in some big
trouble. And I was searching forsomebody to help me like a group
or something. And I did the RichDad Poor Dad. No, not Rich Dad,
(03:55):
Poor Dad. I started Googling itonline, you know, investors on
Long Island and so it brought meto a REIA. And Sean, you're not
gonna believe me. But when Iwalked in, I felt like angels
were singing like, 'Ohhh', like,there's people like you, just as
insane as you, you know, myfriends were telling me, you
(04:15):
buying another house, you know,more tenants, toilet problems,
and you got to evict and, youknow, I started losing my
friends. My family wouldn't talkto me about it. And I got so
much negativity, and then I walkinto this room of like, you
know, 50-60 people and like,they will all like, 'Go get
(04:36):
them!' you know, so positive.
And so, um, I found out it wasright around 2007 right when the
market was correcting. And thePresident said she was going to
sell it to some person that wasjust going to dissolve it for
it's own. And I thought, 'Oh,God, I can't lose my little
heaven.'
Sean O'Toole (04:55):
Yeah. So, self preservation that...
Melissa Shea (04:59):
Yeah, I just so I asked her, I said, 'Please, I
love this group so much, can youplease make sure that, you know,
I'd be interested in buying it'.
So, and she worked out a deal,and I bought it. And I've never
looked back. And you right,you're, Aaron, you're absolutely
right. I didn't know what I wasdoing. I didn't know how to run
it. I wasn't a good marketer. Idid everything wrong. And yet
(05:25):
it's my most successful businesstoday. So, who knows? You can
fail into success.
Sean O'Toole (05:33):
It sounds like a lot of your other businesses
came out of that right. So...
Melissa Shea (05:38):
Yeah.
Sean O'Toole (05:40):
...Real Estate brokerages and and other things
all grew from that fateful daywhen you walked in.
Melissa Shea (05:47):
Yeah, I wish I knew how much my life would
change. Or maybe it's better Ididn't. I became a mentor, which
I never thought I would be.
Because you have like thatimposter syndrome in the
beginning, because you like, Iwas just doing like, I'm a
hustler if you can't figure thatout already.
Sean O'Toole (06:06):
Yeah.
Melissa Shea (06:07):
I just like doing it right, and then ever. And
then I went through a horriblething called divorce. Anybody
been through that? That's fun.
So, it's like a reset in yourlife, right? Because they take
everything mean, everything'sgone. You know, once they find
out, you got assets, they justlawyers suck it all up. So, our
kids lost everything. And thebeauty of that, the absolute
(06:28):
beauty of that was I got torebuild the whole real estate
portfolio again, with so muchmore knowledge that I could do
it so much faster. And I wasactually on a radio show, like
kind of like this. And the guyasked me, if you had to start it
all over again, what would youdo? And so I started saying it.
And then he's like, 'Why don'tyou teach people?' I'm like,
(06:51):
'Oh, I don't think I have time,you know?' And do you know...
Sean O'Toole (06:57):
I can't imagine that you don't have time, you
seem to have time foreverything.
Melissa Shea (07:00):
I know, I gave up sleep, it's a great thing, you
know, so, um, but what happenedactually out of that was, you
know, how a lot of times REIAswill have these people come in
and educate the, you know, yourmembers and stuff like that. And
this guy took 10 I think it wasfive, five people he took $7500
(07:25):
deposits from and just vanishedwith the money. So, so my heart
broke for them. And I said,'Listen, I won't charge you
anything. But I'm going to haveto do it as a group. And I'm
going to have to add five morepeople in that to offset my
costs.' And that's how mymentoring program started, I
have over 140 graduates,everybody, 84% of them make
(07:48):
their money back in two years,or less, and 50 of them make it
back in less than a year, so.
Aaron Norris (07:55):
Those are really high numbers by the way, are you
behind them with a lighter, likeputting a fire under them or...
Melissa Shea (08:01):
Oh, yeah, I kick their ass.
Aaron Norris (08:04):
Seriously, a lot of people do not take action.
Melissa Shea (08:07):
Yeah.
Sean O'Toole (08:07):
I think that's the biggest problem. It's, it's, you
know, it could be, I think it'soften less the instructor and
more the people that areattracted to those programs. So,
do you weed out people when theyapply? Because the only way you
can have that level of successis by telling a whole bunch of
people, 'No' because there's abunch of people that just, will
never, they'll pay the moneywith the hope and dream, but
(08:29):
they'll never actually doanything.
Melissa Shea (08:32):
Yeah, I think that's probably the biggest
thing I don't it's not aboutvolume. For me, I'd rather take
20 small, I think we're up toour classes are up to maximum
20. Because I know I can beeffective with that. And with
that, I meet with them one onone. And if I don't feel like
they're a good fit for theprogram, you know, no harm, no
(08:54):
foul, I'll give you money backor you go on to, I'll give you
some recommendations of what youshould be doing. But I'm looking
for people who are just asmotivated as I am, you know, I'm
going places you want to comewith me, then you come but
you're not ready yet? Then, thenthere's a lot of other free
content out there.
Sean O'Toole (09:13):
Totally. Where's your REIA located?
Melissa Shea (09:17):
I'm in Long Island. So...
Sean O'Toole (09:19):
Okay.
Melissa Shea (09:20):
And now we've branched out to Connecticut and
Rhode Island.
Sean O'Toole (09:24):
And you guys meet monthly?
Melissa Shea (09:26):
Yeah, so, well, actually a lot more now. We used
to meet monthly pre-COVID.
Again, I did the same thing withthe very first COVID REIA
meeting we had virtually likethis. We had about 80 members on
there, which was great. And Isaid to them, what do you guys
want from me? What can I do?
(09:48):
What can I show leadership toyou guys during this scary time?
And they said they wanted morefree content and more support
during this time. So, we turnedit into a weekly call and we
have done doubled down witheducation. We give them six
meetings a month now, and whichis a lot.
Aaron Norris (10:11):
That's a lot of work.
Sean O'Toole (10:12):
Yeah. That's a lot of work.
Melissa Shea (10:12):
Yeah. But I can't tell you how many more deals
have come out of it, morestudents have come out of it.
Um, you know, you give, you getwhat you give, right? So, I gave
it for free for the whole year2020 I gave, every meeting was
free for all our members, andeverybody was free. And then in
2021, we started charging, andit's been extremely successful
(10:36):
and rewarding.
Aaron Norris (10:37):
What kind of deals are you doing right now? Is it,
I know you manage, you havequite a few rentals. But are you
still flipping?
Melissa Shea (10:43):
Yeah, so I'm flipping right now about 17
properties. And I have aportfolio about 100. And it
ranges every day, because I'mbuying and selling so often. But
it's a range of about 120 to 130units is where we're at right
now.
Sean O'Toole (11:01):
And how many of those are flipped versus hold
rental?
Melissa Shea (11:05):
So, 17 are flipping right now. And the rest
are all buy and hold. I reallywant to double down on buying.
Sean O'Toole (11:12):
...buy and hold.
Yeah, yeah. And that since 2007,or actually since after the
divorce, I guess when yourestarted. So, how over what
period of time did you do that?
Melissa Shea (11:26):
Well, I've done over 600 rehabs, um.
Sean O'Toole (11:29):
Wow.
Melissa Shea (11:30):
Yeah. So, my, and here's the funny story, right?
So, if anybody's listening andyou think oh, my God, that's too
like crazy, like, I could neverdo that. I, my first 11, I
didn't make any money on. Imade, I wrote checks at the
closing table to get rid of myfirst 11 houses. How screwed up
(11:52):
is that? Right?
Sean O'Toole (11:54):
I call it education.
Melissa Shea (11:56):
Yeah, it was...
Sean O'Toole (11:58):
It's a different way to pay for education right?
You pay a mentor, you paysomebody else or you pay out the
deal. It's...
Melissa Shea (12:03):
You're gonna pay it either way right? Yeah.
Sean O'Toole (12:05):
You're going to pay it either way.
Aaron Norris (12:06):
A personal short sale. All right!
Melissa Shea (12:08):
Yeah, exactly. Oh, yeah, you know, the rehab, I
used to get like a gut my stuff,I get, oh, this is gonna be the
one, this is the one I'm gonnamake money on. And, you know,
you still lose a little bit hereand there. But I've also made a
lot of money flipping to I mean.
Aaron Norris (12:26):
Where are you predominantly flipping? Is it in
the Long Island area?
Melissa Shea (12:30):
God? No. No, it's mostly out of state. Um, we, we
have a lot of competition herein New York, we've got a lot of
people with deep, deep pockets.
So, very competitive. We used todo quite a bit because we were
specialists in short sales. Iunfortunately had to go through
(12:51):
it with my divorce. So, I got awonderful lesson on how to do
it. And I got a wonderful lessonon the emotional part of it
because a short sale is notabout the financial matter for
them, it's about the emotionalpiece of it.
Sean O'Toole (13:07):
Yeah.
Melissa Shea (13:08):
So, if you can connect to them, in that space
of empathy and the fear, theyfeel, they have a lot more trust
and confidence. And I've takenhim to the finish line. And, and
I enjoy it, I really enjoy it.
Because watching, you ever do ashort sale and watch them at the
closing table? Like when theysign the last document and they
(13:31):
get up, you see 1000s of poundsof stress, just leave, I always
tell them, 'Tonight is going tobe the best night's sleep we've
had in years.' And so, we didget a lot of our fixed and flips
from that. But when the COVIDand moratorium hit is really, it
dried up quick, you know.
Sean O'Toole (13:53):
The empathy piece, right? Whether you're an agent
taking a listing, or you're areal estate investor buying
somebody's house or whatever,like that, that is really the,
the key to the whole thing ifyou're working directly with
the, with the owners, right?
Like, understanding thatsituation. And the rest in that
piece is so lost on everybodywho's focused on I mean, we're
(14:14):
in the list business, we selllists, right but, but
everybody's like focused on 'Oh,this list or that list,' and you
know, you can have the best theworst list in the world and
close a lot of deals. If you canconnect with owners and you can
have the best list in the worldand not close any deals if you
can't connect with owners.
Melissa Shea (14:33):
Yeah, that, and it's a hard thing to teach. It
really is ,I I have quite a bitof agents and you know, trying
to teach that compassion. Youeither have it or you don't. I
find the best ways to recruitfor that is somebody who's
actually been through a shortsale. I always tell them make
their mess, their message,message, because look, you can
(14:58):
relate to them right like youlook, you were in a financial
mess, upside down, destroyedcredit, blah, blah, blah and now
you come out, you're, you'resmarter, you're better you buy a
short sale afterwards so, youknow how to buy with equity.
You, you can make money helpingothers such a, I know it's
(15:19):
cliche-ish, but there's a realjoy in doing that there's a real
satisfaction in your work whenyou can help somebody and then
still get a good pay day out ofit so, you know.
Aaron Norris (15:31):
Well...
Melissa Shea (15:31):
That's why your lists are important, so.
Sean O'Toole (15:36):
Yeah, lists are still a necessary part. We're
here...
Melissa Shea (15:38):
Oh, God, that's where it starts right?
Aaron Norris (15:41):
I want to, before we go into the states that
you're active in, I do want totalk a little bit about Long
Island, you know, we havelisteners all over the country.
And so, some people might notappreciate your, your proximity
to New York City and what youguys are going through to
compare to what the city is, andI believe you have some
inventory in the city of NewYork, right?
Melissa Shea (15:59):
Yeah, so we have the whole Tri-State area pretty
much except for Jersey, because,you know, New Yorkers in New
Jersey...oooh taboo. Um, butyeah, so when COVID hit, right,
if people don't understand LongIsland is the island next to
Manhattan, it actually hasQueens and Brooklyn on it, but
(16:21):
we don't naturally associatethose two with Long Island. But
when COVID hit, they all came tothe island. So, our real estate
jumped up, like many cities,right, the suburbs did so much
better than the city did. And Ican't tell you the increase in
(16:44):
amount of activity just fromthat. And New York started all
with the COVID, you know, youknow, there was there was some
scary times in the beginninglike this time last year, a lot
of deaths were happening, peoplejust wanted to get out. And they
were just overpaying ridiculousamount they had cash and they
(17:04):
just kept buying. And so, ourmarket went up quite a bit. Our,
and the dynamic was ourinventory shrunk, because any of
the short sales immediately,were expunged because there was
no evictions, no foreclosuresgoing on. So, inventories shrunk
fast, it created that increasein price. And we're still kind
(17:26):
of experiencing that. Eventhough the city truly hasn't
opened up yet. You know, gymsstill can open up and
restaurants still can open upfully, you know, so they're
feeling it.
Aaron Norris (17:41):
And for, how's the tenant situation worked out? You
shared one particular story of atenant that stopped paying in
February where you offered cashor keys, can you can you walk us
through that?
Melissa Shea (17:52):
Yeah, so this is gonna sound really bizarre to a
lot of other states out there.
Especially 'cause I invest inTennessee, it's very different
there. So, I have 10, buyingholes in New York. One is
actually a shelter home thatNassau County is my tenant, and
they didn't pay for four or fivemonths, which is interesting.
Um, and that was for homelesspeople, right. So, that's crazy.
(18:15):
But the one story I was tellingyou about Aaron was they both
stopped paying in the, thehusband and wife stopped paying
in February. The mortgage on itis 30 to 60 a month is my
monthly payment. And they werepaying $3200 a month. And they
stopped paying. They are both ondisability. So, they did not
(18:41):
lose their jobs. They did notlose their benefits. And then
they decided to rent out mybasement. So, they were renting
out my second level collecting$1800 bragging to me about this,
realize that they don't have topay New York's you know, because
New York said pretty much youdon't have to pay if you're a
(19:03):
tenant. And we have been payingever since. So, that's February
of last year, so we're on our13th month of pain. April 14
will be 14. And we can evenstart the eviction till June, if
they don't extend it again. Andan average eviction in New York
(19:25):
prior to COVID was six to eightmonths. And then they did a law
change that was now making it 9to 12 because they added you had
to give 90 day notice to them tovacate, right. So, I mean, I
offered this woman up to $30,000to move. $30,000 and she
(19:47):
wouldn't take it that crazy.
Aaron Norris (19:53):
Oh, 'cause she knows that she's gonna be able
to park it there till 2022 andyou'll be out 70 grand and...
Melissa Shea (19:58):
Yeah.
Aaron Norris (19:59):
Yeah.
Sean O'Toole (19:59):
You wil, you will end up with a judgment you
know...
Melissa Shea (20:02):
Oh, yeah...
Sean O'Toole (20:03):
not sure what good that does you, but you...
Melissa Shea (20:04):
So, they just file bankruptcy and wipe that away
with a $2,000 payment, you know.
So, yeah, I think what, what ourstate did was sinful and taking
away our rights as landlords,because I have a commercial
mortgage, you know. They'relike, 'Oh, just ask for the
forbearance.' Well, forbearancedoesn't forgive the debt, first
of all. And the second part is,is that you're gonna have a lump
(20:28):
sum due when it comes up, andmaybe you can modify, but that's
not the luxury we have withcommercial mortgages, right?
Because it's not FHA-backed oranything. So, I'm paying like
7%, looking to refi, because therates are better now. But I
can't refinance, either, becauseI don't have a paying tenant,
right?
Aaron Norris (20:49):
Doesn't look good on paper, does it?
Melissa Shea (20:51):
Nope. So, I think, you know, and that's why we
invest out of state, right?
Because who wants to deal withthat? You know, and it really
ruins it for other people. I'mvery active in the, you know,
homeless, homelessness, I have anon for profit organization,
too. And it really ruins it forthem, because where are they
(21:12):
going to go? You know? And thenlet's like, take it, you know,
you guys are gonna have someserious list coming up in our
market, because you're gonnahave two things. One is, you're
going to have all theselandlords that want to sell,
right, I put that house up forsale as is with the tenant
occupied. You can't even believehow many people are making
offers on these houses likethat.
Aaron Norris (21:34):
Really? Well, they're going have to deal with
the tenant after, right? I mean,can...
Melissa Shea (21:39):
Yeah, but they're so desperate to get houses...
Sean O'Toole (21:42):
A deal, anything, right. So, and they figured
they'll make it up on the backend.
Melissa Shea (21:46):
Yeah, I'll sell it at a $60,000 discount, just get
out of the damn thing. Andthey'll pick up a deal. And
they'll deal with it. So, andthen, if it's a residential
mortgage, they're getting ratesin the threes, right? Or in the
sixes, you know, so, or fivesnow.
Sean O'Toole (22:04):
If it's a homeowner that buys it, the
eviction law is different,right? They can actually kick
the person out.
Melissa Shea (22:09):
No, not New York.
Not in New York. Is that crazy?
Aaron Norris (22:15):
Well, that's it is interesting, like why they would
take that risk. They're just sodesperate to own something?
Melissa Shea (22:19):
Yes.
Aaron Norris (22:20):
Wow.
Melissa Shea (22:21):
Yeah. Is that crazy? But um, yeah. So, that's,
that's what the next major fallis all these investors that only
single-family houses, right?
They're behind on theirmortgages, because these tenants
are not, not paying for monthsand months and months of time. I
have 10 houses, out of all 10houses in New York, only one
(22:43):
tenant is paying, one.
Aaron Norris (22:47):
Oh!
Melissa Shea (22:48):
Yeah. So, I'm floating $35,000 a month in
mortgage payments, just in NewYork.
Aaron Norris (22:53):
And these tenants do not have to prove any kind
of...?
Melissa Shea (22:59):
Nope.
Sean O'Toole (22:59):
At least in California, at least on paper,
right, they've required proofof, you know, of a loss there.
And that seems to me, like justa base case requirement like,
you know, why should somebodyget a windfall? You know, at
that, that's just, it's notfair. It's not right.
Melissa Shea (23:20):
And here's what the other problem is, there's
the let's, let's get through thewind, you know, forget the
amount of foreclosures that aregonna happen because of this
incident, where those tenantsgonna go when they eventually
get out, if you know that theyhaven't been paying during COVID
do you think any landlord isgoing to even take them? The
shelters are going to be overflooded. And because the county
(23:40):
wasn't paying us, we closed downour shelters. So, so many
shelters closed down. It's a bigmess. So, my solution is go to
Connecticut. Go to, you know,South Carolina, North Carolina,
Tennessee, anywhere else youknow.
Sean O'Toole (23:55):
The pendulums always swinging, you know, even
in places like California, andsometimes things have to get
really bad before the pendulumstarts swinging the other
direction. So, you know, maybethis is a, you know, the cure,
right, like having a get so badto one side, then things start
swinging going the otherdirections? Just, I don't know.
That's the way things go overtime.
Melissa Shea (24:17):
Yeah, there was, it was to landlord, to
tenant-friendly state. I mean,literally, a Manhattan eviction
would take you two years. No, itjust it, that's insane. That's
an average and a foreclosure.
The average time to foreclose inNew York is seven years. So,
five to seven.
Sean O'Toole (24:40):
I've got a guy who's always reaching out to me
and about, you know, he stillthinks in you know, New Jersey,
New York, that whole area thatthere are, and we don't really
know, right? We kind of believethis is true in Nevada, because
we had we, were tracking Nevadaback through the crisis and
(25:00):
Nevada changed some laws andbasically made it criminal, you
know, to foreclose, right. It'scrazy. It's a long story when
you go there, but, um, but whatwe saw happen was the
foreclosures went away.
Melissa Shea (25:13):
Right.
Sean O'Toole (25:14):
But I don't think it was because people started
making their payments. I thinkthe banks just said, 'Forget it,
we'll let them not make theirpayments. And we'll just sit on
these properties until they, youknow, whatever.' So, you know,
It wouldn't surprise me at alltoday, if there are 10s of 1000s
of owners in Nevada, thathaven't made a payment since
(25:36):
2007. And banks have just said,'We'll wait till they die or
sell or move or whatever,'right. And because it's not
worth foreclosing, and theprices have gone up, and so
that, you know, the assets stillthere, we're continuing to
accrue the interest and stuff,we'll get paid someday, but
(25:58):
we're not going to worry aboutit for now. And...
Melissa Shea (26:00):
But I gotta be careful about that, because they
could do a quiet title actionand clear their debt out. And
that's it.
Sean O'Toole (26:06):
Maybe, yeah, maybe. So, you know, it's, it's
interesting, you know, and soanyways, he feels the same
things happening in, in NewYork, New Jersey, etc. and that
there are 10s of 1000s of peoplethat haven't made a payment
since 2007. And no foreclosures.
Because we didn't really see thevolume of foreclosures there
that we saw in other places.
Melissa Shea (26:28):
In Nevada?
Sean O'Toole (26:30):
No, no, I'm saying even in New York, New Jersey,
Nevada. Certainly.
Melissa Shea (26:34):
Yeah. You know why a lot of that was? So, because,
we're such a reputable state.
There was a, the largestattorney was fraudulently
foreclosing on people, StephenBounds office. So, they had to
reverse all the foreclosures.
Everyone of those foreclose, youknew what a mess that was? And
(26:57):
they put a moratorium for 18months on foreclosures. So, what
happened was they just settledout. And that's why our short
sale business did so good.
Because we were just settlingout with the bank. The banks
were hungry to just settle atthat point, because they knew
they couldn't foreclose. And..
Sean O'Toole (27:12):
Yeah.
Aaron Norris (27:13):
Do you have...
Melissa Shea (27:14):
That's really where our strength comes in. Is
that that short sale market,which will come back eventually.
Aaron Norris (27:20):
Do you see a lot of members sort of preparing for
the opportunity that you'retalking about maybe picking up
some properties forover-leveraged investors not
prepared to do what you'redoing?
Melissa Shea (27:30):
Yeah. The investors, you know, you don't
even have to wait for theforeclosure part. They're just
so desperate to get it likeinvestors are a little bit
different than homeowners,because they don't have the
memories of you know, bringingJohnny home from the hospital
and watching them grow up in thehouse. You know, it's, it's a
different emotional attachment,right? It's like...
Sean O'Toole (27:48):
And they don't have legal protections.
Melissa Shea (27:50):
Yeah, they don't have the legal protections.
Sean O'Toole (27:53):
Not being foreclosed or evicted.
Melissa Shea (27:55):
Yeah. And well, actually foreclosure, they still
can't foreclose on them either.
But it's going to destroy theirfinancial life, right? Because
the financial hit to them is, istoo much. And so, if they can
get out of that, they'll take,they'll take a hit and move on.
You know, it's unfortunate,because it's out of our control
(28:16):
right. And, and I think that'sthe part that, you know, losing
our constitutional right toexecute, you know, you don't pay
you have the right to evict andI don't mean, like, you know,
throw them out heartlessly. Butlike you said, there's a lot of
good reasonable states thatsaid, 'You know what, you have
to prove that you actually gotimpacted by COVID before we have
before we can go up though'there is a three month grace
(28:39):
period, four month grace periodsome.
Sean O'Toole (28:43):
Trillions and trillions and trillions of
dollars of support, right, somuch in the name of homeowners
so much went to a nothomeowners, but to renters and
the rest, right. And so, there'sbeen a lot of support for these
folks. And, you know, so to thedegree that we were gonna put
trillions of dollars of supportout there to have it go to
making sure their housingpayments, so it supports the
(29:04):
entire chain and doesn't justpick and choose. And, you know,
I keep hearing stories of likefolks that are, you know, not
paying their rent, but investingin GameStop, that, that
shouldn't happen.
Melissa Shea (29:16):
Well, that was a stupid thing that they did a lot
of legislation didn't think thisone through.
Aaron Norris (29:21):
No.
Melissa Shea (29:21):
They wrote the checks to the tenants, they
should have been writing it tothe homeowner or to the
landlord. And so, the tenantsgot the checks and they still
weren't paying the rent, likeyou said, they went...
Sean O'Toole (29:32):
Write the check to the tenant and let them make the
decision, but then don't protectthem from eviction if they use
it, you know, on a new bigscreen TV.
Melissa Shea (29:39):
That's true, too.
That's true, too.
Aaron Norris (29:42):
Are there... I've seen different states doing
different things. In Californiathere's some nonprofits getting
CARES Act money to backfillspecifically working with
landlords or is any moneyavailable in the New York market
for landlords making up pastrents as grants?
Melissa Shea (29:57):
We've been, we've been trying to actively come
together as a community, it's alittle divided right now. But
it's, it's taken such a hit thatwe have to get united on it. But
no, there's no resources for,they view the landlord is the
big, ugly, rich people. Andmeanwhile, it's your mom and
dad, your neighbor next door.
It's not, it's notconglomerates, it's not. Hedge
(30:18):
Funds are smart. They're buyingin, in places where there's low
taxes, right? They're not buyingin their own backyard right? And
here's the funny part is most ofthem investors that buy these
rental houses live in New York,you know what I mean? So, that's
the ironic part, you're actuallyhurting that whole economy of
(30:39):
scales, like you said, Sean,like, if they had just paid it
to the landlord, it would havekept the whole economy going,
you know.
Sean O'Toole (30:50):
This thing something happened to small
businesses, right. So, you know,like, in a lot of cases, small
businesses, right, you gavepeople this extra unemployment
benefit, which I think wasawesome. And you know, there's a
lot of good things about that.
But then, I know lots of smallbusiness owners who are trying
to survive and keep theirbusiness open. And they're
asking those employees to comeback, and they're saying, I'm
(31:10):
making too much money onunemployment. I don't want to go
back to work ,right?
Melissa Shea (31:16):
Right.
Sean O'Toole (31:16):
And , and so now, wait a second, wait, you know,
so, yes, this helps in a way.
But there were jobs availableover here that people weren't
willing to take? And, you know,so it's, we're not very good as
a country at, at stimulus. Andit's one of the reasons right,
we have it. We put all thismoney out there. And ideally,
(31:38):
right your reflating, theeconomy, right? COVID is
incredibly deflationaryreflating the economy, and
getting it back on track. Butbecause we're not good about how
we do that the money pops up allthese unexpected places. And,
you know, you've got a run onexotic cars, and you've got to
run on GameStop. And you've gotBitcoin going through the roof.
(32:01):
And like, the money pops out inthese places where it shouldn't,
and yet small businesses andlandlords aren't helped at all,
and they're getting justabsolutely hammered. And, and,
you know, the rich get richer,because both parties think that
the $250,000 a year smallbusiness owner or, you know,
(32:24):
small landlord that owns fiveproperties is rich person, and
not, not the guys who areactually profiteering off of all
of this?
Melissa Shea (32:35):
Yeah.
Sean O'Toole (32:35):
Anyways, I'll get off myself....
Melissa Shea (32:39):
Yeah, but you know, what's interesting about
that, is that, you know, thankGod, we're in real estate, you
know what I mean? And that'sprobably the message. And that's
probably why, you know, my big,my big mission, if you want to
put it on life is to empower andeducate people for financial
independence through realestate. So, it doesn't work in
New York so great. So, what, youknow, take your lookings, but
(32:59):
don't give up, right, that's my600 rehabs, I would not have my
600 if I gave up after myfourth, writing my check, you
know, and there's real estateavailable everywhere else, I'm
still making a lot of money.
Thank God, because that'soffsetting My New York mess.
But...
Sean O'Toole (33:15):
And my guess is, is if you ,if you survive
through this thing in New York,you still do really well in New
York, like everybody wants to bedown in California. But, you
know, the investors I know, inCalifornia, all kind of crushed
the investors I know, everywhereelse, right, in terms of
absolute income and rest. And,you know, you're making 50
(33:36):
$100,000 a deal versus two andten, like, so.
Melissa Shea (33:40):
That's true.
Sean O'Toole (33:41):
I don't know. But it does. It can be very
frustrating at times.
Melissa Shea (33:46):
Yeah. And if you do it, right, like, ironically,
Florida is the one I made thelargest spread on, but they're,
you know, our average flip isbetween 40 and $60,000 still,
you know, it's it's got a goodchunk to it. I mean, there's, no
I'm not gonna lie. There's timeswhen we meet it's really, really
good money. And then there'stimes where you just get beaten
(34:07):
down by the town or something.
I'm writing a check for $20,000to get out of the deal. And, you
know, but it's just a big boygame, and you got to get into
it. And you got to survive, youknow, and I'm a woman and I do
it anyway.
Aaron Norris (34:21):
You're in New York woman you are a watch out.
Melissa Shea (34:23):
Yeah. Yeah, I'm going to...that's where you
really got to watch.
Aaron Norris (34:29):
Let's talk about the data, you talk about
different states, what data didyou use to, was it strictly
landlord friendly or how did youselect your states?
Melissa Shea (34:37):
So, I evolved over the years as I grew my knowledge
base, right. So, my firstmistake was, I bought in
Florida, similar to a market wehave now right? I bought new
construction back then it wasvery popular, right? So, D.R.
Horton would buy a house, youknow, build a house, a
community, whatever. I was likegambling on us. He was
(35:00):
addictive, right? So, I put down$10,000. And then I wholesale
that contract off in two monthsfor another $10,000. And it was
cool to me, right? So, and itwas, I, can you know, it's like
going to a casino, right. So thefirst time I did it with 10
grand, I was like, oh, wow, Igot 10 grand back. So, I did it
with three houses. And I think Imade like 15 grand between 10
(35:23):
and 15 on each house. So, whatdid I do? I go in with 11. Yeah,
11, right. 11 and, um, yeah,that's right. My magic number,
right. That's the one I shouldnever gamble on. And I got stuck
holding the bag. And I couldn'twholesale them. So, to not lose
(35:47):
my down payments. I closed onall 11. How stupid was that? So
ow I have 11 negativelycash-flowing properties
because I didn't think, loo, see, and feel. Right? I
idn't, I didn't do the data righ. I didn't see that yeah, 100
people a day and moving inBut just you know, 1200 are
(36:08):
ying. You know what I mean? Likthat, you got to look at those
umbers. You know what I mean? Yu got to look at who is actual
y buying those houses. It was ony investor to investor was hot p
tato. Right? And then so, thatas my evolving in data there is
hat I had to look for jobs, marets where there was stable in
ome. And that's when I learned lke, okay, cash flow is the game.
(36:32):
So, I got myself out of that mss by doing a strategic
deal where I was able to buy siapartment buildings simultane
usly. That was a little stpid, too. But I went for cash
low, right? And cash flow dide well, I did well. The divor
e didn't do me so well, butthat the cash flow did well. And
(36:52):
then when that all got taken awa, I had to go through my divorc
. And I lost my house. And I wen, Oh my God, if I'm going thr
ugh this, there's got to be othr people that going through t
is. And so, then we started ding the Lis Pendens list. And
so, we would buy in strategicmarkets. And we did research,
New Jersey can set, um, Suffok County where I actually
(37:14):
ived was the top 10 in the natioof foreclosures. So I thought,
ow, this is, of Lis Pendens swe...
Sean O'Toole (37:25):
Filling.
Foreclosure filings, but theyweren't getting completed.
Melissa Shea (37:28):
No. And that actually that dynamic worked
really well for us because thebank was willing to work with us
because they knew they couldn'tget to the finish line. We could
talk to the homeowners in a waythat said, 'Hey, don't look at
this and milking your life. Lookat it as a launch to start your
life.' Because the real truth ofthe matter is nobody wants to
(37:49):
stay in their home not payingrent. I mean, it sounds great
and sexy and fun and ormortgage. But mentally, it does
something to them. They don'tthrive, because they're always
afraid of like who's gonna pullmy credit, or it's just as a
negative way of living, when youcan free them out of that
bondage is when you can helpthem overcome their fear right?
(38:13):
When you can tell them 'Listen,there is a better way. Let me
show you how.' And they listen.
I have people who come back tome two, three years later, and
they're like, Oh, my whole lifeis all better. They move out of
state they do this they move inwith family, they buy another
short sale. Life can begin whenthey stop.
Sean O'Toole (38:34):
Because their credit situation none of that
starts improving until afterthey get the deal done and move
on.
Melissa Shea (38:39):
Yeah. And that's so that data was so important
because we had callers callingconstantly, you know, once they
were at auction dates, or whenthey went list pendants and
developing those relationships.
And now, so then we moved intoother states, we moved into
Connecticut, Rhode Island, downsouth so our data led to where
good jobs right so I have a bigportfolio in Tennessee in
(39:01):
Memphis. I love Memphis. Nikebuilt their plant there, Bear
built there. Same thing withPittsburgh did a lot of research
and data on that what's, where'sjobs? Right. So, here's a hint
for all you listeners, you wantto find where the good deals
are. Don't go for the home rungo for the steady eddie cas
flow, where there's good solijobs, where there's goo
(39:24):
employment, you know, and ihelps when you guys can provid
good data like that where, wherabsentee landlords, you know
that's a really good thingWe're going after that i
Connecticut, you know, absentelandlords
Sean O'Toole (39:41):
Especially if you have a holding power and you can
bail out the folks like, youknow, New York and get our
absentee landlord list in NewYork right now. If you've got
holding power, it's good time toget some discounts.
Melissa Shea (39:52):
Yep, that's and that's the truth right? So, you
got hedge funds that are lookingfor those kind of deals because
New York inherently doesn't loseits value, really, it doesn't.
That bad. I mean, we can cry andcomplain all we want right now.
But it's like California, right?
California holds its value justdoes, you know, because it's
California to New York. But Ifind that for the average
(40:15):
investor, especially whenthey're starting, you don't need
to hit the heavy hitter areas gowith the bread and butter bar
the non-sexy areas, right, Alaama was great for me. I made so
uch money in Alabama. It was eas. And it was 5, $10000 here and
there, 20,000 here. But it waseasy you know.
Sean O'Toole (40:35):
What about like in New York, New Jersey, right? So
in California, there's, they'reonly miles apart. But there's a
big difference between trying toinvest in Newport Beach, and
Riverside, right. Like those,those are completely different
markets. And what, an hour driveAaron? You've been down there.
Aaron Norris (40:51):
Without traffic.
Sean O'Toole (40:53):
Without traffic one hour.
Melissa Shea (40:55):
Without traffic, one hour.
Sean O'Toole (40:56):
Do you get... do you see some of that where there
are those markets where that,you know, closer to you that are
growing and thriving, and youknow, still going to be more
expensive than Memphis but doyou look at that? And do you
look for those kind of moremicro opportunities within your
market?
Melissa Shea (41:13):
Yeah, so for Long Island, the bread and butter
sweet spot, like the entry levelis between 350 and 550? I don't
even think there's a house for350 on in Long Island anymore.
Aaron Norris (41:25):
I was going to say, 'Where?'
Melissa Shea (41:26):
Yeah, that was like in the hood, right? The
hood has changed, right. Andthat's probably why we go out of
market, our taxes are really ourbiggest drain on us. You know, a
simple little house, like myhouse property taxes are close
to 16 grand, and I don't have abig, big yard or a lot of thing,
you know, for 16 grand. I mean,that's crazy money. Our second
(41:49):
house in Maryland, and that'snot too far from DC. The taxes
are $6,000, $10,000 less, youknow, it's crazy difference. So,
you get so much more value outof state and um...
Aaron Norris (42:02):
So, what strategies are you liking? You
mentioned absentee? Is there aspecific data set that you're
tackling when you're going intothese markets?
Melissa Shea (42:10):
So um, I like fatigued and absentee landlord.
So, like, people in California,just because they have money
will invest in turn-keyproperties in other states. Like
how I said that right.
Aaron Norris (42:26):
So you look for a mailing address from California,
got it.
Melissa Shea (42:30):
Or New York or Canada, you know.
Sean O'Toole (42:33):
Out of state absentee owner list is one of
our more popular for sure right.
Aaron Norris (42:37):
Yep.
Sean O'Toole (42:37):
Yeah.
Melissa Shea (42:38):
Because they think it's like that, what is that
George Foreman Grill, like, setit and forget it, that's what
they think it is. And that's thedanger, you should be a note
holder, not a property owner,right. And that's the
difference, right? If they canunderstand that. So they don't
understand when the tenant callsand they have a problem, or
(42:59):
there's an issue with theirtenant or something like that,
so...
Sean O'Toole (43:05):
Older absentee owner, too, is another really
popular list. So, as you know,folks start hitting 70, 75, 80,
right, they're kind of done withbeing a landlord. And, you know,
they probably need or want thecash for other things and stuff,
you know, so that postretirement, absentee landlords
another good one.
Melissa Shea (43:24):
Well, you know, what's also good about that,
because they want to do theireither 1031 exchanges, and
they'll do it to like a DST, youknow, so. So then, at least it's
just kind of more stagnant.
they've exhausted their taxbenefits. You know, another good
market list I'd be interestedin, is I was pretty passionate
about this is the senior market,because in our particular area,
(43:44):
reverse mortgages are going toreally hit hard in New York, New
Jersey, and California, wherethere's high property taxes,
because for anybody who doesn'tknow what a reverse mortgage is,
that's on the call, is thatbasically, they don't have to
make a mortgage payment, butthey have to still stay current
(44:05):
on their property taxes andtheir, their insurance, but they
essentially are using the equityin their house to live off of
whether it's in monthly paymentsor a lump sum. Now, a lot of
mortgage pay, companies back inthe day, were incentivized to
get the lump sum money. And so,a lot of these seniors had never
(44:28):
seen this kind of cash in theirlife, right? So, they kind of
feel like they won the lottery,right? So, they get their house,
it's worth $600,000, right? Theyget a reverse mortgage, they get
a lump sum of $300,000 theydon't have to make a mortgage
payment on it, and then they canlive in it till they die. That
sounds great. So, now they spendall their money on you know, all
(44:51):
their grandkids paying for theirweddings and fixing up you know,
buying cars.
Sean O'Toole (44:57):
Cadillac.
Melissa Shea (44:58):
And they get Cadillac, you know, splurging,
and they don't save for theirtaxes and their insurance, and
they don't save for or do therepairs to their house, because
for the next 20 years, they'regoing to live there. They think
that they're not going to have arepair, you know, a roofs not
gonna go or a heater elementsgonna go. And so six, eight
(45:21):
years later, they can't paytheir property taxes, the roof
is leaking. And it's so sadbecause they probably lived
there 20, 30 years, and now theyhave to find out that they're
gonna get kicked out of theirhouse because they can't afford
their mortgage sucks. It's, it'sheartbreaking, honestly, it's
heartbreaking. And so, we do alot of short sales right before
(45:42):
COVID we were getting about 30%of our short sales were all
reverse mortgages, it was sosad. It's so sad. And I would be
interested in the data just tosee how many people have reverse
mortgages in our market areas.
Because the reality is. Oh, andthen the beauty of it is, let's
(46:03):
say they did say for that rainyday, right Nassau County
increased their taxes, somethinglike 17% their property taxes
and like a two, three yearperiod of time, if you're on a
fixed income, boom, you justlost your home, you just lost
your home.
Sean O'Toole (46:19):
Yeah.
Melissa Shea (46:20):
So, that's ...
Sean O'Toole (46:21):
People are really against Prop 13 in California,
but it's it is, you know, youknow, let property taxes not
increased more than cost ofliving index, you know, because
why should government growfaster than cost of living? And,
you know, that just that onedrives me insane. And one of the
things I do like aboutCalifornia. But yeah, I know
(46:43):
that the reverse mortgage listis another popular one and a
fairly unique one that we havethat a lot of people don't. So,
yeah.
Aaron Norris (46:52):
We're thinking about that. So, you could
because we have the demographicsof the owner as well, would you
be interested in, in the age ofthe owner combined with how long
they had the the loan in play?
So, the reverse mortgage, howmany years? Would you want to
see it season?
Melissa Shea (47:07):
Yeah, and the reason why is because they don't
really feel it in the first fiveyears, right right. It's
anything after that five iswhere they really start feeling
it. And that's because they,they don't really plan out that
far. And then the age. Yeah...
Aaron Norris (47:22):
A new list idea.
Melissa Shea (47:24):
I know, I'm gonna give you more.
Aaron Norris (47:27):
I'm on it. I wrote it down.
Melissa Shea (47:28):
Have me back for another show, I have more ideas.
But um, yeah, I really do thinkthat, that's, look, I've come to
this philosophy in life thatwhen you serve others, you, when
you solve other people'sproblems, you solve your own
problems, right. So...
Sean O'Toole (47:46):
Yeah.
Melissa Shea (47:46):
It is a heartbreaking problem. And I'd
love to solve it for someseniors because, and they're so
embarrassed to tell their familymembers what happens, you know,
and then they're out on thestreet, and they don't even know
why, you know, so, I startedthis thing called the Golden
Girls. So, we would get a few ofthese single women, you know,
their husband passed away,they're in the house, they don't
(48:09):
know how to do the defer.
They're in the reverse orembarrassed. So, we would get,
the only way they could livetogether was if I put a couple
of them together. So, we hadlike, three women move into a
house for women. So, I called itThe Golden Girls because,
program because that was theonly way they could afford to
live here and still see theirgrandkids. Otherwise, it was
move out of state, you know,so...
Aaron Norris (48:30):
I love that.
Melissa Shea (48:31):
Yeah.
Sean O'Toole (48:31):
That's cool. Yeah.
Aaron Norris (48:33):
We have to end.
Melissa Shea (48:34):
Yes.
Aaron Norris (48:35):
If they wanted to get in touch with you. What's
the best way to reach out?
Melissa Shea (48:38):
Probably go on Long Island REIA.
L-I-R-E-I-A.com. Um, definitelyemail me, Melissa@longislandreia
or info@longislandreia. Um, wehave every second, I'm sorry,
every fourth Wednesday of themonth, I do a free give-back
webinar. So, you can sign up forfree and it's intro to real
(48:59):
estate investing, ask where,whatever questions, you can pick
my brain for that whole time andwhatever you want to learn or
it's all free. It's really...
Aaron Norris (49:07):
Is it on Zoom?
Melissa Shea (49:08):
It's on Zoom. Yep.
Aaron Norris (49:09):
Very good. Okay.
Melissa Shea (49:10):
Everyone in the nation could go we have people
from California to Florida toCanada, to join us and even the
UK, so...
Sean O'Toole (49:18):
It's crazy, you have seen this with the better
REIAs. And sounds like yours isone of those where we zoom now
they've suddenly have this muchbroader, you know, audience than
the local folks that woulddrive, you know, maybe an hour
to come to a meeting. It will befun to have the in person
meetings though, too, because,you know, going to the REIAs and
(49:39):
throughout California, like youmeet a lot of people and you
make a lot of friends and youknow, a lot of familiar faces,
and I do miss that. So, it'll benice to start again. So, will
you do a mix? Will you continuedoing this and go back to doing
the live...
Melissa Shea (49:55):
Yeah, we could. We do semi live so we'll have a
live audience and um, zoom atthe same time, so I can hold up
to 25 legally here, whateverwith the COVID restrictions. And
yeah, so we do that on oursecond Wednesday, our general
meeting. We have that here sothat there's a little networking
still, but yeah, I can't wait tothe day. Sean, I really look
(50:20):
forward to that.
Sean O'Toole (50:21):
We're close, we're making a lot of progress. I feel
good about it.
Aaron Norris (50:24):
All right.
Melissa Shea (50:24):
Thank you so much for asking me to be on your
show. It's fun.
Aaron Norris (50:27):
Thanks for being here.
Melissa Shea (50:28):
Very cool.
So long, everybody. Thank you.
Aaron Norris (50:35):
Thank you for listening to the Data Driven
Real Estate Podcast, you canfind show notes and links to
some of the resources mentionedin the show at
datadrivenrealestate.com. Clickthat join the community, and
you'll be forwarded to thePropertyRadar community where
you can ask questions about thecurrent show and even see
upcoming guests and askquestions there. We'd love to
engage with you in thecommunity. So check it out.
(50:55):
Please don't forget to like,favorite, subscribe and share on
your favorite platform whereyou're listening to the show. It
helps us out a great deal.
Thanks for listening, and we'llsee you next week.
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