February 18, 2021 • 58 mins
Ward Hanigan is a full-time foreclosure specialist and real estate investor based in San Diego County with over 40 years of real estate experience. He's trained some of the most successful and experienced real estate investors and trustee sale buyers. At 80 years old, he's still chasing deals and loves what he calls Ding-Bat Rentals. He's a perfect example of backing into a unique niche that no one else wants, and finds unique ways to attract tenants with an average lease-up of 25 years! He's also recently discovered accessory dwelling units and he's got new ideas he's exploring.
Get your questions answered on the upcoming show by posting your questions in our community: https://bit.ly/ddre-34
00:00 The Data Driven Real Estate Podcast Welcomes Ward Hanigan, Founder of Foreclosureforum.com
00:04 From A&W Franchisee to stocks to foreclosure investing, Ward shares his unusual journey into real estate investing
14:37 Why Ward got into foreclosure investing
18:25 Ding-Bat rentals and senior housing
23:44 What is a wrap-around deed of trust or all-inclusive deed of trust?
26:44 Why one-bedroom homes for seniors work best
30:07 Properties selling cheap because nobody wants them
35:16 Using other peoples' land to build ADUs for rentals
36:15 Building accessory dwelling units for seniors
42:56 Unique ways of connecting with section 8 seniors for future housing vacancies
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Aaron Norris (00:04):
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 34, featuringWard Hanigan. Ward has one of
the most interesting real estatebackgrounds I've ever heard. He
started as an orphan eventuallygot into becoming an A&W
franchisee holder in Mexico,then to stocks, commercial real
estate, law, and then intodingbat rentals, you're gonna be
(00:27):
very interested to hear hisjourney into real estate and
later on the show, how hefinally focused on a very
specific niche that nobody elseseems to want. And he's got
marketing lists that nobody elsehas, because of the way that he
approaches his dingbat rentals.
And now Accessory DwellingUnits, you won't want to miss
the show. Well, Ward, I reallyappreciate you joining us today.
(00:48):
And my first question is, whatkeeps you excited about
investing in real estate?
Ward Hanigan (00:53):
All the girls.
Yes, yes.
Sean O'Toole (00:59):
You're in a different real estate business
than I am.
Ward Hanigan (01:04):
No, it's just, it's just a quest. You know, you
find out something that you likethat. And you've mastered it,
once you've mastered it, itcomes from a pain in the butt to
a passion. And if you live longenough, I prophesize. That's
what's going to happen topeople. And so right now, it's
just a passion. And I keepscore, you know, with proving
(01:29):
over and over again to myself,that what I'm doing is valuable,
because I'm getting a lot ofmoney. As long as I can teach
somebody teaching element is, isvery important to me. And I've
never been that sort of thing.
Sean O'Toole (01:44):
When I first came across you almost 20 years ago
in 2002, when I was firststarting in the foreclosure biz.
Ward Hanigan (01:51):
Right.
Sean O'Toole (01:51):
And I never took one of your classes because I
had a very experienced mentorthat had done hundreds and
hundreds of foreclosures. Butyou know, I always wanted to
come to him with smartquestions. So, I spent a lot of
time on your siteForeclosureForum.com, to at
least try to find the answerfirst. You know, I think that's,
anybody who wants a mentor outthere. Like, try to find the
(02:13):
answer on your own. First,you'll ingratiate yourself a lot
more. And but yeah, your site, Ithink was 2002 was around and
was had a lot of goodinformation.
Ward Hanigan (02:24):
Yeah, we endeavor to use it primarily for the
betterment of the people thatcame. And so, I absolutely
insisted, we're not going tohave any ads, I could care less
if we made buku money with adsand all that crap, and selling
people's emails, and I'm notinterested in it okay, because I
(02:44):
make enough money, my, my, youknow, major foreclosure
activity. And also, I love thefreedom. If I'm not dead, I'm
not going to step on somebody'stoes, you know, because they're
an advertiser. And, and I thinkthey, what they're advertising
is overpriced, or some otherdamn thing.
Aaron Norris (03:02):
Now, your background is an economist and
law. Did you practice either ofthose professionally?
Ward Hanigan (03:08):
No.
Aaron Norris (03:11):
Why is that?
That's a lot of schooling.
Ward Hanigan (03:13):
It was because of money. And yeah, I was
fascinated when I was in juniorcollege, and also in when I went
to the University in culturalanthropology. I just loved it.
I'm much more interested and insociety and stuff like that. So,
(03:36):
but I got into, I was recruitedon campus by IBM. And so, I
became, I was more interested insales rather than technical end
of it. So, I went into officeequipment sales instead of
computers. But I liked the, Iliked the stuff you go out and
meet people and talk to themand, and convince them to make
(04:02):
things better for themselves bybuying your service or either
that or buying your products.
They didn't have a businessmajor. So, the next best thing
was economics.
Aaron Norris (04:12):
So then, how did you fall into real estate?
Ward Hanigan (04:13):
I fell into real estate because IBM I loved it.
The first year was all very new.
Uh, second year, in fact, I didtoo well, I in one year, sort of
unheard of. But when normallyyou don't get to the IBM 100%
Club, to sales, for sales, whereyou take a fantastic trip
(04:34):
anywhere in the United Statesand sometimes foreign countries
as a reward for being top inyour division, your district as
far as sales are concerned. Anduh...
Sean O'Toole (04:47):
And you've nailed it.
Ward Hanigan (04:49):
And I did it in spades. And it was funny because
it, embarrassed. There's onlytwo guys out of Riverside
district that went to the 100%Club and, and I went, and I just
pissed all the other salesmenoff. I won the 100% Club. And
(05:10):
when I came when we started thenext year, they they increase
the quota, I could care lessfine. You want me to climb
another mountain? That's okaywith me I get it that didn't
bother me for what reallybothered me and I hadn't thought
about before, was it cut myterritory. And that's the way I
felt. I felt like this is myterritory, I had this very, very
(05:34):
strong ownership feeling aboutmy territory. And I'm the one
that fertilized it. And I'm theone that organized, I'm the one
that you know, got people justprimed to buy with the next
budget just on and on, and Ijust could not get over it. I
just could not get over it. Andso, finally in discussed it, I
(05:56):
find I just quit, shockedeverybody. And the manager
really wanted to find out why Iquit because he didn't want to
be criticized that I think bysupervisors, here's his hot
shot, and he quits. And so, whatthe hell did you do to them. And
so, anyways, I left IBM for thatreason. And I, in him, it was a
(06:20):
A&W Root Beer stand. And in asummer, Hemet is hotter than
hell. And so, I would go inthere on the day, the day that I
usually went to him it whateverit was a Wednesday or Thursday
or something, and drink a, anA&W Root Beer. And when I think
about it now, I could have oneright now. But anyhow. There's
(06:43):
only one person in there besidesme and as the guy that owns the
joint. And so, I said, 'Wow,how'd you get this place?' And
I'm making small talk, you know,and, and this is cool. And he
had the district manager for A&WRoot Beer right there where
there's his register, he says,'Here is this guy's card. He's
the area manager. And if youwant to talk about a franchise',
(07:07):
and wow, I thought I think ofhis card. And that night I saw I
looked at the card. I thoughtA&W. I know enough people, you
know, it was raised some money,and buy an A&W franchise, and I
wanted to put it into onebecause I noticed that when I
went down to marry a Mexicangirl, and she has a zillion
(07:30):
relatives in Mexico, and nowthat she's up United States they
want to come up at Christmastime. They want to come up on
New Year's Day like, I they likecome up on Valentine's Day or
something. I'm always going downto the airport in Tijuana to
pick up some friends orrelatives. And, and while I'm
waiting for the plane to come,I'm still standing around and
(07:53):
waiting downtown, Revolucin,and there's a ruler's drugstore
there and they got a lunchcounter. And no matter when you
go in the lunch counter, isjammed with tourists. And as a
lion going out the front door.
They would buy Woolworthshamburgers and stuff like that,
because it just didn't knowabout how they could trust
(08:15):
eating Mexican food. And I gowow, I can take advantage of
that. The A&W thing clicked inmy mind. I thought wow, A&W
everybody knows A&W, that's howI started and I bought the A&W
Root Beer franchise for BajaCalifornia Norte, and so what I
did is I raised $90,000 withsome, some people that knew me.
Sean O'Toole (08:39):
What year was this, Ward?
Ward Hanigan (08:42):
That was a 65-ish.
Sean O'Toole (08:44):
So, there's a lot of money it's not $90,000 today.
Ward Hanigan (08:47):
No. Yeah. And I didn't have any money to put in.
So, I said I work for nothingfor free, no salary. I just get
my portion of the of the profit.
I thought it would be profit alot faster. You know, I put a I
was completely wrong as to whomy customer was absolutely 180
degrees upside down on that one.
(09:11):
I thought it was going to beAmerican toursist going down
Revolucin to the racetrack. Andso, I spent all this money and
we actually built on leased landwhich is crazy. The world's
largest A&W Root Beer stand atthe time. See, I got out of A&W
and, and that's a story initself as you can imagine. And
(09:32):
then so, I stayed in San Diego,I fell in love with San Diego. I
had an economics background. So,I decided to become, go to
Shearson, Hammill & Co. in LaJolla and try being a
stockbroker. And again, I tookoff like crazy even though I had
an empty book of, what we callbook of customers. But I quickly
(09:56):
found out that it's really ashady business. And so, I saw
there was a, an ad to paper.
Countrywide, Countrywidefunding. So, Countrywide was a
brand new outfit in 1969, in LosAngeles, and a year after that,
they decided to open up anoffice in San Diego, the first
(10:18):
expansion. And so, Mozilointerviewed me. Okay.
Sean O'Toole (10:24):
Personally? Wow.
Ward Hanigan (10:26):
Yeah. And gave me the job. There's two people
hired in San Diego. Again...
Sean O'Toole (10:32):
How big, how big was Countrywide? I mean, this
is, where it's just for theviewers, we're talking about
Countrywide financial, which waskind of the epicenter of the
foreclosure crisis. Mozilo was,you know...
Ward Hanigan (10:42):
Mozilo was it was a conniver, right?
Sean O'Toole (10:46):
Yeah. It was one of the biggest names in the
whole foreclosure thing. Andwe're talking a huge company
that was still sold to Bank ofAmerica. And how big were they
when you interviewed?
Ward Hanigan (10:56):
Oh, it was just one dickie office, you know, I
mean, he would use othercompanies forms and copy of
them, and just put Countrywide'sname on it. And that was the
form that we would use, youknow, to, to interview people
for mortgages and stuff likethat. I remember one time it had
a question on it. And it sayssomething like, 'Are you
(11:20):
interested in, I'm going toshorter, like mortgage term
insurance?' you know, this whatit was really about. But anyhow,
and nobody knew anything aboutit. My office, and I called up
LA, and nobody knew anythingabout it up in LA, when did this
Countrywide form and you don'tknow what it is, you know. So,
they give me a clue about itoriginally was somebody else's
(11:40):
form. Anyways, they gave a spiffif you checked, yes. And because
there was a premium that wascharged, you know, as they added
it to every monthly payment, ormortgage term insurance, we did
the interview with husband andwife in their home while I was
qualifying, take the applicationfor a loan and I'd say okay,
(12:01):
Tom, when you die, not if, butwhen you die. Do you want June
here to be saddled with thecontinuing payments on his
mortgage? Or would you like tohave the house fully paid off at
the time you die? And he can sayhe couldn't say in front of his
wife. Now, they're strugglingwith a mortgage. And so, it was
(12:25):
100%? Yes, yes. Yes. And so, itgot to Angelo's attention. That
the CA who in San Diego, WardHannigan is, as was used up all
the S&H Green Stamps. And so, hecalls me up. The Saturday was
our sales meeting, down here,was is up in LA. And he wanted
(12:50):
me to come up Saturday and ittells the salesforce up and says
what was my approach by gettingpeople to agree to pay a little
extra and, and I tried to tellAngelo over the phone. I said
look, it's, it doesn't comingout of my territory on Saturday
to go up there. It doesn't itisn't that. It's so simple. Let
(13:10):
me tell you how I do it rightover the phone. And so, I mean,
you could do it. It's just, it'snot that I'm, he was into it. He
said, 'Hey, I told you I wantyou up here. I want you at our
sales meeting. It starts at09:30 on Saturday, and he end
his conversation bam! So, I wentup there and I purposely I
walked in said either the guysthat had about six or eight or
(13:32):
10 salespeople or something likethat, 'Mr. Jones, all right,
when you die, do you want Neelyover here to be saddled with the
mortgage, having to deal withmortgage payments when now
you're gone and had incomesgone? Or just for the price of,
and IBM taught me to sell thedifference, and so I suggested
for the price of a pack ofcigarettes, all right, once a
(13:54):
week, okay, she could do, wouldbe completely paid off if
something tragic happened toyou, pal. Okay, that's it. See
you guys later. That was anywaysso...
Sean O'Toole (14:09):
Ward you have led such a full life. And let's pull
forward to Ding-Bat rental and,and also what you're doing today
because you know, you are afterall these years you're still
after it, still making ithappen, still closing deals. I
understand you got some stuffgoing with ADUs. And let's,
(14:30):
let's pull forward to today andgive folks some.
Ward Hanigan (14:35):
Okay.
Sean O'Toole (14:35):
Some stuff they can use in the market right now.
Ward Hanigan (14:37):
You know, here's one man song and maybe they can
sing it too. I'm convinced thatwe now have progressed medically
in both devices and medicinesand stuff like that. treatments
that the average person if theydon't play the no-no games, you
know, no booze, no drugs. No, Idon't alcohol, all this
(15:03):
nonsense, and you're not a realDaredevil, you probably can have
the expectancy of livingapproximately to 100. And so,
the problem is that you're goingto be replaced, I guarantee it,
you're going to be replaced atabout 50 to 60 years of age, no
matter how good you're at, orwhat you're doing. And so now,
(15:25):
the problem is that since youdidn't think it was important
enough to create something whileyou had an active income, so,
that it would give you a passiveincome in the second half of
your life, the second half ofyour life is gonna be a long
period of time, that's going tobe 40 to 50 years. And so, you
got to start taking somethingthat you make out of the first
(15:47):
half of your life, all right,and given an opportunity to come
to fruition at the beginning ofyour second half, so, that it's
going to carry you through. Andso, that turned out to, for me,
that turned out to invest insomething that I don't have to
babysit, invest in somethingthat I don't have to keep
(16:08):
staying. So, it doesn't requiremy active presence. And so,
that's why I say it's a passiveincome type thing that occurred
to me when I was 40, 45. I wasmaking so much money in
foreclosures that I didn't thinkthat I need, didn't need to, to,
to do anything else. But thatbecause I never made 40, 50, 60,
(16:29):
$80,000 in a crack and I just'whoo!' you know.
Sean O'Toole (16:35):
What year was that we were going so crazy with
foreclosures?
Ward Hanigan (16:39):
I got started in foreclosures in '82. Okay, I
work for Countrywide for abouttwo or three years. Then I
decided, you know, I can sellrings around these guys, mostly
guys are selling real estate.
And those days were retired, theguys really didn't intend to
really understand anything aboutmortgages and mortgage rates.
(16:59):
And let's say they sold or they,they, they sold the house. And
now they got to find a lendertrying to pass the lousy the
salespeople so that they wouldsteer the buyer to this mortgage
rep or that mortgage rep orsomething else. And I remember
Weyerhaeuser was, had suchcrappy rates, because
(17:20):
Countrywide was trying to veryquickly get market share.
They're the new boy on theblock, and they want to elbow
their way into the trough. Andso, they have really low, low,
much lower interest rates. So, Iremember one day just couldn't
believe it. This guy TOs hismortgage to like Weyerhaeuser. I
(17:41):
knew Weyerhaeuser's fees andeverything else. and they just
stuck compared to Countrywide, Isaid, 'why did you do that to
your clients?' And he picks up apack of Wrigley's gum. And all
that he's got, a thing that,that they gave him. That's what
he got for steering the goddamndeal to, I couldn't believe it.
(18:05):
It just oh, you did not onlyscrew your, the, the listing
that you got your, your owner,all right for a pack of gum. I
walked out of the damn officeand said, Hey, I can do this
standing on one leg.
Sean O'Toole (18:25):
Yeah, the mortgage sides are much harder and a lot
of ways on all that stuff youhave to do. So, you have this
great combo. You got sales fromIBM, right? You got
entrepreneurship from a A&W.
Now, you've got, you know, goodreal estate knowledge from
Countrywide and doing a bunch ofmortgages. So, you put all that
together, you're in the realestate business, you're doing a
lot of foreclosures. Jump todingbats.
Ward Hanigan (18:48):
Okay, so let's jump to being dingbats. So, what
are the things you do when youstart acquiring property when
you're selling it is you mightdo a 1031 exchange. And so, I
did a couple of those. And onetime, this guy he wanted us to
take from his side, not only hisapartment house, but this
(19:10):
stinking little one bedroom, onebath, old piece of junk, you
know, and he dug his heels andhe said, 'No, I don't want this
and I, but I and I got it and Isell, I'll agree to your trade
with your property and myapartment house and stuff like
that. But you got to take thisthing too. Basically, I took
(19:31):
that as part of my share of thedeal. So, I took this trade and
then about a year later, twoyears later, I completely forgot
about it. And I TO'd it to EricI said 'Hey do something with
this, you know, sell it tosomething.' And I don't know why
but about a year, or it's twoyears later I asked and said
Eric, what do we, did we eversell that one bedroom, one bath
(19:53):
piece of crap that we had totake? And he said no, no, no, we
didn't sell Dad. We still haveit. And I go 'What? We still got
it?' Yeah, we can't sell it.
Nobody wants to buy it's tooold. and blah, blah, blah. Who's
gonna brag about buying a onebedroom? A 60 year old one
bedroom, one bath house? I said'damn, still got it?' Yeah. So,
'well, how many times you haveto rent it out to somebody?' 'No
(20:15):
'cause the lady that lived therewhen we bought it is still
there.' I'm gonna go 'Wow, thatwas not my experience'. When I'm
selling when I was in the, I gotinto the apartment business, by
the way. Okay, as an agent, sobecame an agent. And when I left
the...
Aaron Norris (20:36):
Countrywide, yeah.
Ward Hanigan (20:37):
Yeah. Countrywide.
And so, I worked for 10 yearsthen buying and selling
apartment houses as an agent.
And so, I had gone to lawschool. But I, nobody wanted to
hire me because I went to a noname school. So, I wasn't going
to go into practice myself,because I knew that I didn't
(20:58):
really know I only knew half oflaw. And that is the book part.
I didn't have the experience ofknowing that way around a court
how to frame an argument infront of a jury, you know, all
that kind of stuff.
Sean O'Toole (21:11):
More of doing apartments and practicing law?
Ward Hanigan (21:13):
Oh, yeah. So, I said I'd do it someday, when I,
you know, get older, sellingreal estate, lots of times, you
have to be creative in financingto put the deal together. And
so, I learned from a guy inPhoenix showed me how to do
wrap-around deeds of trust. Ididn't even know what the hell
(21:35):
he's talking about, and they areall inclusive. And so, I
mastered that. And then I foundthat it doesn't pay to be the
only person in your whole area,that knows because no one else
wants to, we're gonna deal withyou, 'cause they don't
understand it. And so, how canthey tell their seller, let's
cooperate with this, and wecarry back and all inclusive
(21:58):
deed of trust, and blah, blah,blah. So, I had to start a class
under the, the ages of the titlecompany. So, I was told,
convinced the title companythat, hey, let me teach this
class, in your boardroom onweekends. And I have an attorney
buddy, I met in my law school,he was a, he was a real estate
attorney. But he got his licensein the Navy, he would come to me
(22:21):
and breaks in the Senate andasked me what was the crux of
this case that we're talkingabout? What was the element?
That's in it. And so, after awhile, we came pals. And so, I
tell them, I said, Hey, I needto, I need to, to convince the
title company. Let me teach aclass. It's actually I want to
tell them, you're teaching aclass, I'll show you what, what
(22:43):
you need, and what equipment youneed and stuff like that.
Taught...puts class on it saysit was the attorneys class. And
that's how I started with my, Ifound out that it takes two to
tango, you just cannot be theonly genius in town, you got to
be able to do business withpeople and you got to if they're
(23:04):
not there, you got to trainsomebody so that you can you
know, dance. I considered...
Sean O'Toole (23:10):
That started your career in real estate education,
then because you've had a longcareer now doing that and
teaching people the business.
That was the first one.
Ward Hanigan (23:18):
Yeah, probably right. And I started fast
started buying commissions ofpromoters, salespeople that, you
know, we're living on a dime.
And, and so we would besplitting commissions, because
we tell somebody, 'Hey, let's doa wrap-around deed of trust. So,
we don't have to pay off thatmortgage'. And we're going to do
it in such a way that will neverbe discovered that you're
getting around to doing on saleclause, I had to explain all
(23:40):
that kind of stuff.
Sean O'Toole (23:44):
I'd like to explain for our viewers really
quickly, a wrap-around deed oftrust. So, if I as the owner, I
have a good mortgage at a goodrate. You want to buy the house
from me, right. But maybe youcan't qualify or you can't get
as good a rate, what we do is weput a wrap around my existing
mortgage that says you're goingto make payments, basically, to
(24:06):
me, and I'm going to makepayments on that mortgage, and
you get to now live in thehouse. So, you're going to
become the new owner. You'regoing to give me a mortgage, but
I'm going to keep my mortgageand so it wraps around. And
that's that's the all inclusive,it includes the underlying
mortgage or wrap-aroundmortgage.
Ward Hanigan (24:24):
And then you get sophisticated and you make sure
it's collected by a neutralthird party and no collection
service. Here in San Diego. It'scalled Toro, something Toro Note
Collections. So, it wouldn'tcome undone. Because sometimes
the guy that you sold tooriginally he now turns around
and sells it somebody else andhe doesn't explain it quite good
enough and starts to come apart.
Anyways, one of these my, myinclusive mortgages it was sold
(24:49):
the property department housewas sold more than once or twice
after I sold it. And so, all ofa sudden now they guy that the
original owner who he wrappedhis mortgage, he calls me up and
says 'Ward, he said, youconvinced me to carry back this
all inclusive deed of trust. Andnow there's no payments on it.
(25:11):
What the hell am I supposed todo?' And I said, 'Well, you
start a foreclosure'. And hesaid, 'Well, how do I do that?'
We started getting into thedetails, you know, that
motivated me. I'm going lawschool at the time, that
motivated me to go to lawlibrary, and got every book
written on for closures. InCalifornia, foreclosures, not
(25:33):
interested in other states,California foreclosures, I
started buying wrap-aroundmortgages because nobody wanted
to buy a wrap-around. Alright,people in town like to buy a
mortgage for some income, andit's an add on and they want an
ordinary mortgage Ain't nothingnew. And so I knew that I could
drive a better bargain bywilling to buy if I'm the only
(25:56):
willing buyer. All right, Idon't have to be as much as if
everybody knew what that was.
And so I have mortgages comingout my ears. But I didn't like
about mortgages, and I stilldon't to this day, is that that
the person in control is thepayer, because if the interest
(26:17):
is, is up here, and he can finda new loan down here, all right,
then he's logically going towant to refi. And so, I get paid
off earlier than expected. Ifound out later, there's a lot
of wisdom in not trying to getthe greatest part of a deal, you
got to have leave something infor the other side, or they have
(26:39):
no incentive to stay in thedeal. And that took learning.
Sean O'Toole (26:43):
On that apartment deal. You ended up with the ding
bat, right. There's the onebedroom, one bath, tenant had
stayed in there for a while.
Ward Hanigan (26:52):
Right.
Sean O'Toole (26:53):
And which was a surprise to you. Because in
apartments, you saw a lot ofturnover, you see no surprises
person stayed in.
Ward Hanigan (27:00):
You get a lot of turnover, because I had
actually, I really hadexperience with one bedrooms, I
had a guy convinced the guy tobuy a six-unit apartment
building, and he were all onebedroom, one bath. It's like a
friggin motel. Because, youknow, people are just coming and
landing and finding, gettingtheir whereabouts at the town
(27:25):
and, and this and that. And, aswith anyone make any commitment
until they found the best placeto buy a house, and they
understood the town and wherethe values were, you know, all
that kind of stuff. So, theystayed here. And they would
leave. And so, I had 100%turnover, and I was a great
manager. So, my bias was I don'twant one bedroom, one bath. I
(27:47):
mean, you couldn't find a guythat was more polarized and
saying, one bedroom, one bath,stick it . In spite of that, I
so curious, because myexperience with the apartment
houses, they didn't just leavetheir lousy tennis and I hear
this little lady, she's doingnothing terrible to the
property, she keeps it clean andneat. She pays promptly on time.
(28:11):
She's very sweet. And on and on.
And I can add the differencebetween this and this. And it
just got me very curious. Andso, I found out that she's on
this thing called Section 8, andfound that she's really not
paying us to read Section 8 ispaying us directly to our
checking account, she pays atiny part 10 to 20% of the rent
out of her own pocket. And thegovernment, the federal
(28:36):
government through Section 8pays their difference. And wow.
And so, it's very hard to findlandlords that agree to Section
8 situation. And so she justabsolutely was petrified that I
was going to sell the property,and she'd have to move, or I was
so she never wanted to doanything lawn noise-wise. Taking
(29:00):
care of the property just on andon and on. And wow. So, I
started...
Sean O'Toole (29:13):
Super reliable tenants gonna stay there
forever. Completely differentsituation
Ward Hanigan (29:17):
Now. Yeah, I didn't realize it's gonna be
forever. I tried. You know, infact, actually, I said, Oh,
well, if that works, maybe I doa duplex and so duplex didn't
work. I couldn't figure out whyfor a while. Now, I don't. And
anything else that has to bemust absolutely have to be a
single standalone, one bedroom,one bath, one story house, okay,
(29:41):
otherwise, you're going tojeopardize the amount of time
they stay. Right now, they'restaying 24 to 26 years...
Sean O'Toole (29:51):
That's how long tenants are staying tenants of
your properties?
Ward Hanigan (29:55):
And so can you imagine a cash flow coming in at
you know 180, 200, 240 monthswithout interruption, not one
interruption. All right...
Sean O'Toole (30:07):
These properties are the, are selling cheap
because nobody wants them.
Ward Hanigan (30:10):
Nobody wants them, but I love it. I love what
Sean O'Toole (30:11):
So, you've got all these one bedrooms, and some of
nobody wants. Man! and you'retalking to the right guy, and I
them have enough land, I guess,to add ADUs. So, now you're
adding one bedroom ADUs. Andthat's not upsetting the
just had this big smirk on myface, you know, all the time.
applecart because it's no commonwall.
And right now as a consequence,I have 20 I have an almost all
of them have been there 20, 25years. And but the ding bat, th
brand new and the ADU they builon the back of the house. T
(30:33):
ey're already own boys. She hd Jim the why because she's y
ung, she's 51 years old, okay, ian odd quirk or missing c
g or something that doesn't alow her to hold a regular job. B
t other than that, she can lve a large takes care of her p
operty, she could cook she ets she does as she drives car, b
ah, blah, blah. So, anyways, se pays me $1383 a month, okay? F
(30:59):
r the that's the payment sandard. That Section 8 goes to o
a one bedroom, if it's a two bdrooms it's more, if it's t
ree bedroom and they go up to sx bedrooms. So, it says zero b
droom, if it's a loft or a sudio there you go from zero to a
out six months times five. And bt I'm, now, very, if I got a d
(31:20):
al, I would, I would, I would, Iwould 'Oh, okay, sure I buy t
o bedroom, and there I'll buy atwo-bedroom house. And so, t
ey only stayed about half the tme. And so, most people would g
ve their eyeballs for somebody tat would stay, you know, 15 y
ars. Wow, Jesus, I could add 3or 25, please, sell it. And s
(31:42):
, I got around to purging my cllection and selling out e
ery, anything that did not mtch the profile. I mean, I e
en have duplexes with one bdroom in the front and one b
droom in the back. Absolutely. Idoesn't work. That's good. T
ey said about turnover by once eery 12 years have a common, w
(32:04):
at's the real problem is a cmmon wall. Okay, people s
elled especially elderly teasure more than anybody. All r
ght, peace and quiet. And so, iyou have a common wall with a n
Ward Hanigan (32:14):
And most of the time, I wish that was it. But
ighbor, ah, as far as they're cncerned, it's driving them n
most of the time, they're not onover a large enough lot to allow
ts, or they might have an agel. All right, but then that a
a building another ADU. Okay. Itjust happened to be that
gel moves out, and all of a sdden, now comes a turd. As as t
particular neighborhood calledShelltown and San Diego that was
e guy on the other side that Woa, oh, man, you know, and t
designed from the get-go 1940. Iwas born in 1940. So, 80 years
en she wants to move. So, I gt two vacancies. He's moving b
(32:36):
cause he's an idiot. And she mves because she is all riled u
ago, then zoned so that you puta house in the front facing the
that the guy is his, he has te audacity to he'd be playing h
street and a house in the backfacing an alleyway.
s TV after nine o'clock at nght. You know`, stuff like t
at. And house also, sound tavels though them like, you k
ow, a tissue box.
Sean O'Toole (33:03):
Wow.
Ward Hanigan (33:03):
And so, now that 80 years, it's style. Little by
(33:37):
little, it's been completelybuilt out. Okay. And so, but
there's enough leftover that ifI live long enough, what I'm
going to do is go through thoseneighborhoods, here's my new
plan is to, is to go to a guywho never took advantage of
building anything on the backend of the property. And I say
'Listen, I want to do a deal,which is not going to cost you a
(33:59):
penny out of your pocket. Notnow. Not ever. Okay, I'm going
to build a house that you'regoing to see because I have the
availability to show it to youand the inside the tenant is
happy to get 25 to 50 bucks forme to open it up and let us walk
inside that you're going toadmit that it's a really very,
(34:20):
very, very nice ADU'. Okay, it'sonly 492 square feet. I had a
specially designed by anarchitect who took my son's
ideas and my ideas, put themtogether and we got the ideal,
the most fantastic ideal unitfor a citizen, or it's got 36
(34:45):
inch wide doors everywhere. It'sgot not one stair, and the whole
place is super insulated. So,they're not wasting their
energy. You know, it getsoverheated or too cold and all
this kind of stuff. I mean Ieven put in or some huge tenant
to plug in your electric car.
So, I got that electric outletto handle that charge and
electric cars. So, 90% of mytenants don't have enough money
(35:08):
to have a car. Yeah. And...
Sean O'Toole (35:14):
We're running out of time.
Ward Hanigan (35:16):
Oh.
Sean O'Toole (35:16):
So, you've got this amazing ADU. And you're
partnering now with folks thatown these special lots in
Shelltown and putting the ADU inthe back and...
Ward Hanigan (35:30):
I use all my own money, because I got tons of it.
So, I'm using money, and I buildeverything, so not a penny out
of the pocket. And then for thenext 25 years, I manage it.
Okay, if anything goes wrong, Ipay for it. Never a penny out of
his pocket, but I get all therent for it. Okay.
Sean O'Toole (35:48):
What if they decide they want to sell what
happens, then?
Ward Hanigan (35:52):
I've made all my money back, plus another several
$100,000. And I can better...
Sean O'Toole (35:59):
Keep going.
Unfortunately, I have a hardstop right now. So, I'm going to
go and say goodbye Ward. Awesometo have you on and learn so much
from you over the years. Andthank you for all that you've
given to so many in the realestate business. And I'll let
you guys continue.
Aaron Norris (36:15):
I want to back up for a second and explain how
brilliant it is what you justdid. So, it's a list that nobody
else is going to have. So, youwere talking about a very
specific neighborhood where itwas designed with an alley,
where it's almost like you cancome in and build this ADU and
put a wall down the center ofthe lot. And for all intents and
purposes, it's two separateunits, completely two detached
separate units, right?
Ward Hanigan (36:36):
Right. And one piece of ground.
Aaron Norris (36:38):
And the design wise, that's perfect. And you
already know the ADU's thatwork. Is there a garage on
these? Or is it just...
Ward Hanigan (36:45):
You know, most of the, most Section 8 don't have
enough money to afford a car.
And so, it's not a negative ifyou have no parking. All right,
you're gonna be walkingeverywhere. The breeze, I had
some space on the back, allright, to put a driveway. And I
elongated it so that you canhave tandem park. So, you put
two spaces, and you approach ofcourse from the alley. And, but
(37:08):
and it just a fluke, this galthat I put in, she needed to off
street parking places becauseher daughter who's ready to
leave probably is already goneon because she's she only had
another year in school. Andshe's going to move to somewhere
(37:29):
in LA. But she got extra moneyfrom the state because she had a
daughter. Okay, that saysthey're gonna pay more for
dependent. And, but so most oftime if I can do it while I'm
building the house. Yeah, whynot put the parking driveway? I
(37:50):
didn't, I don't have there'snothing over there. It's just a
it's just a driveway in theback. And so, then I noticed
well, okay, so here's a, there'san alleyway and an alley. The
difference between an alleywayand an alley is an alley is
wider. And an alley allows someparking in the back and has
(38:14):
lighting. Okay, this is analleyway. So, it's not wide
enough to allow parking. And ithas no lighting of thinking
about yourself as a 60 to 65year old gal is she going to
want to walk at night, cominghome. I mean, after she's goes
to the supermarket that's threeblocks away and carry groceries
(38:35):
in a dark alley. And there's nolights and on. So, I said no,
that's going to maybe agitate orbother her enough to where she
might want to move faster than25 years. So , what I did was I,
I, I put a sidewalk on theinside of my property line going
(38:58):
from my unit all the way up theproperty line on the east side
to the sidewalk in the front andputting a down there and put the
mailbox there. Okay. And then Iin this in this gate that I
built halfway through the gatethat split the lot. I put a
gate, excuse me a fence. And so,that and that's operated to
(39:23):
where the people in the frontcan't come in her yard and she
can't go in their yard. Shebecause the fence is kind of
like a quarter. And it givessome security and privacy to
both people. So, yeah, that'show it worked.
Aaron Norris (39:45):
So, she can decide whether to park in the front or
the back then as well.
Ward Hanigan (39:48):
Yeah, but the problems's the front, the street
is when you have, you have asingle lot but you have two
houses on almost every singlelot. You've doubled the
population and neighborhood andnow there's almost always two
families or more living in eachhouse. And so, the little
parking is premium thing. Infact, they got a thing going on
(40:09):
in my mind that if she evermoves, I get a gal that doesn't
have a car, I'm thinking, I'lltell you what, sweetheart, why
don't I rent out the parkingspace to someone in the
neighborhood, right now splitthe rent with your 50/50.
Aaron Norris (40:26):
There you go.
There you go. Now, when you'reapproaching people that you
don't own the property, whathappens if they decide to sell?
Ward Hanigan (40:35):
I put on a property, she can't lease the
land, because if you lease morethan three years, and I want to
go 25 years, then the assessorconsiders it the equivalent of a
sale and wants to reassess theproperty. So, I know he's not
going to want to do something,which causes a reassessment of
his property, increasing histaxes, and he not getting some
(40:57):
money for that.
Aaron Norris (40:58):
Okay.
Ward Hanigan (40:58):
So, I figured out, okay, there are forgiveness
loans out there, for cities forwhatever reason, they might get
cops to move into toughneighborhoods, and this and
that, they'll provide a juniornote, and which is usually the
down payment. And if he staysthere, 10 years or five years,
or whatever the time period is,they'll forgive the note, you
(41:19):
won't have to pay it. So, it'sa, it's not an installment note,
it's a straight note, nopayments until the end. And so,
that induces that, that a doctoror that whatever, to stay in
that neighborhood, and, andnormalize the neighborhood,
(41:39):
right. With cops, stuff likethat. So I've got that I've got
a forgiveness note. So, if he,if for some reason, whatever,
who cares, they want to sell theproperty in a snap, and they
want to pay off my loan, but myloan is going to be for the
exact amount that it costs me tobuild it.
Aaron Norris (41:58):
Okay.
Ward Hanigan (41:59):
And then it's going to have an interest rate,
that's going to be modest. Okay.
And but it's not going to bedoing payable. Uh, if I am
allowed to stay there in placefor 25 years, I'm collecting the
rent.
Aaron Norris (42:15):
That is very interesting. Now, I, you and I
briefly talked about this,there's two different ways to
approach this stick build wall,for the stick build structure of
the 452, 492 square feet, theremight be a reassessment by the
county, a little bit of propertytaxes, so, the owner might have
to pay property tax unless it'sa structure like a tiny home,
(42:37):
so.
Ward Hanigan (42:38):
Yeah, the tiny homes are too impermanent for me
and I think would be tooimpermanent for my tenant. If
you want to get rich in life,and I really believe in, is find
out what your customer wants.
And then what?
Aaron Norris (42:55):
Deliver it.
Ward Hanigan (42:56):
Yeah, give it to him. Okay. And so, yeah, I
didn't know who my customer was.
See, because I thought a tenant,was a tenant, was a tenant that
I never distinguished between,you know, senior, as a tenant,
as someone on Section 8 as atenant, or you know, that kind
of thing. And all of a sudden, Ihad to sit down and figure out
who am I really want as acustomer. So, I say, you know,
(43:18):
birds of a feather do what flocktogether. So, where does seniors
go where to older people go, oh,senior rec center. Wow. So,
you're not going to find any 18to 49 year old, going to a
senior rec center and learninghow to play bocce ball or
(43:39):
something. So, good idea. Andthen I learned that they have
senior nutrition centers, ah,that is a gym. So, I don't have
to advertise anywhere I do oncein a while and Section 8
nationwide website's calledgosection8.com you go there and
drill down to the state you'reinterested to the county, the
(44:04):
city, the blah, blah, blah. Andyou'll find a bulletin board set
aside for that local area forlandlords and tenants to
announce themselves, okay. Andbut I would the way I like is
with the way I I think Iinvented and that is these
nutrition centers. There's manynutrition centers in a
(44:27):
metropolis as our branchlibraries is enabled. So San
Diego is an example we have ateam, a senior nutrition
centers, and we have 15 branchlibraries in San Diego. Wow.
Okay. So, if you ever wonderwhere that's going to be where
(44:50):
it is in your neighborhood, justfind out where the branch lib
ary is and you find you're proably going to be A Nutrition Cen
er in that little, in that comunity, that neighborhood. And
so, they usually start at 11 o'cock in the morning. And they go
o about 1230. Right at noon, thedon't give breakfast and mos
(45:13):
of them don't give suppers. I'vheard some of them do. But any
ays, most of us just ate lunh, a nice, nutritious lunch. Tha
's kind of like I call it orpanage food because I grew up in
n orphanage where you have caseroles and you have, you kno
, a biscuit. Right? You have ovecooked lima beans, like so. Oka
(45:37):
. So, but it's real cheap. Ifou're senior, of course, bei
g government, they can't not letyou be a customer. And you mig
t have a guest, but somebody isounger than 62, then they pay
double. So, it's like $6, or maye $7, rather than a three for
(46:02):
the senior.
Aaron Norris (46:05):
So, do you go as sponsor? How do you, How are you
connecting there?
Ward Hanigan (46:09):
Well, what I do is I go on Lombardi time. So, if
this thing starts at 11 o'clock,I'm there at 10:45, 15 minutes
early to make sure I'm at thehead of the queue, or the line
that is starting to start rightabout on 11. And I want to be at
the head of the line, becauseI'm going to have about 20 or
30, flyers, a picture of myvacancy, and some of the
(46:33):
pertinent stuff about it anddirection how to get there. And
a offered that, hey, if you wantus to pick you up and take and
show it to you and take you backhome fine. Because some of them
are so poor, they can't, theydon't want to spend money to or
Uber or a cab. And so I'm there.
So, when someone comes up behindme, it's just very sociable and
(46:55):
logical, I would turn around andsay, 'Oh, hi, my name is Ward,
what's yours?' And you sayAaron, and I go, you look a
little bit too prosperous, to beenrolled in Section 8, but I bet
you you get a lot of friends andaccomplices, not accomplices,
but acquaintances, and maybeeven relatives that are on
(47:18):
Section 8. And not as lucky asyou. But what I want to do is
give you a flyer and in casesome of those people all of a
sudden need to find anotherplace to land because of being
displaced, because somebodybought the dinky little house.
And now they got to findsomewhere else to live. And
according Section 8 rules, ifthey don't use their
(47:39):
entitlement. After 90 days, inSection 8 feels free to give it
to somebody else.
Aaron Norris (47:46):
I did not know that.
Ward Hanigan (47:47):
90 days to find someplace. And so, they're kind
of panicky. S,o you can be agreat help to them, Aaron. If
you have my flyer because it'sgot my name and number and I got
a lot of units in this area, andjust give it to them. And I
maybe at that time, I might haveany vacancy. So, why don't you
take one? So he does well, youand I know he probably doesn't
(48:07):
say Section 8, but doesn't wantto admit it to a stranger. So,
I'm saying that like toprospers. Just and then I go,
'Aaron, you want to get ahead ofme?' Oh, yeah, sure. So, nobody
can get upset because they letyou their ahead of time. Yeah.
And so, then I and intro myself,I introduce myself down the
line. So, by the time the linestarts moving, I'm at least
(48:30):
halfway through it, handing outmy flyer, because they don't
want anybody handing anythingout there. Okay, so I'm hitting
because I'm part of the line. Ithink it's cool.
Aaron Norris (48:41):
Well, it's a list that nobody else has what a
creative way to target a marketthat is not on TikTok or
probably social media all thatmuch. It's, it's just a very
unique way to approach thebusiness. I've always loved the
dingbat rental. I left, I toldSean before we got on the air
that I'm like, I think at onepoint, his average day was like
17 years. Well, I guess wehaven't, I hadn't asked that in
(49:04):
a long time. So, to have thatlong of a stay is insane.
Ward Hanigan (49:08):
Well, people are living a lot longer enough, even
the oldest.
Aaron Norris (49:11):
Well, how are they as tenants as far as calling you
and needing things?
Ward Hanigan (49:15):
Never! Never their attitude is that they're
effusive. Absolutely effusive.
And I need, I use this, by theway, in their gratitude, right?
And so, you might ask me, okay,well, let's say using your
technique of getting in line atthe senior Nutrition Center and
holding out flyers, you said,what if three of the people in
(49:39):
line or four, you know, call youup and they want to take a look
at it and they want an appication in the center. Now, my
uestion is, well, how do you decde amongst these three peo
le or four people which one toake? And my answer is the one
who is very, very obvious exhbiting gratitude. They'll tha
(50:03):
k me for giving them an appication. They'll thank me for
you know, letting me, tet thesee the unit they think in and
it never stops. But I found outis when they're paying me eve
y month I have one lady. And I'vnot just one lady, we have a c
uple ladies, but just one oneShe for 30 some years, rig
(50:25):
t? She sent me a rent in a thak you card every month, eve
y single month. And it she's blesing me in Spanish, you kno
, that such a wonderful lanlord. And, you know, blah, bla
, blah. And so, she did, she staed until she had to move out
(50:49):
People say how long am I goig to be staying here? And I sai
, until you have to go out feefirst. You think that would irr
tate them? Ah, I love heaing that. Really? Yeah. I rem
mber one time. She's this galShe was so funny. She says rea
ly I've been, I've been upst by, or surprised by lan
lord said tell me that. But itoesn't turn out to be the tru
(51:12):
h. And I said you got a pin? Andshe said, Well, yes, I need a p
n. I said, so she went and gotme a pin. And I said okay, I'm
going to prick my finger witthis pin. And I'm going to wri
e and blood that and you can sta. No, no, no, no, no, you don
t have to do that.
Aaron Norris (51:34):
Well, I just I love when we get a chance to
talk about niches on the showand realizing people can bring
you know their passion or find areally hyperlocal niche that
nobody else wants or owns. Imean, this is definitely very
nichey.
Ward Hanigan (51:47):
In my, in my experience Sean, is you don't
have to be concerned aboutblabbing about it to everybody
around you end of the day.
Nobody, but nobody, but no, hedoes it. I have a class, and I
teach people how to do this. Youthink that you know, after you
paid me $900 you know, you'd goout and you do it. And I give
you the manual all the forms.
(52:09):
That's say call me anytime youdo get stuck. This doesn't end
here. You know, it's ends whenyou die, because I don't talk to
dead people. But you know. Andso, anyhow, it I have trained
probably, I don't know, let'ssay two dozen people. Not one of
them has yet done it. Hmm.
Aaron Norris (52:33):
Why do you think that is?
Ward Hanigan (52:35):
I think what it is, is someday, someday I'm
going to do this someday,someday, someday. And they just
put it off, put it off and putit off. They're actually a
little bit embarrassed that whenI see them then, oh, I know
you're gonna ask me if I getstarted yet. But no, I have one
gal that didn't bother taking myclass. She heard about it
because I was giving a talk outin Palm Desert. And we needed to
(53:02):
about another 30 minutes to fillthe time. And so, besides
talking about the trustee,organizer of the club says 'hey,
Ward watch, tell him about thatcrazy thing you got what do you
call it doing something ratherthing?' That's right. So, I did
she was in the audience. her jawdropped. Wow. So, then she, she
(53:27):
had 1,000,001 questions and shewas getting so excited and on
and on. So, I said hey, you callmy number anytime you want, and
blah, blah, blah. And that soshe never took the class, she
attends the class over thephone. You know, it asked me all
the questions and blah, blah,blah. And now that's 5 years
(53:47):
ago, she's got 10, 10 absolutelyamazing. And she was she called
me up and her name is Julie, andshe says this truly, you know, I
don't think I ever thanked you.
Because I'm doing my taxes. AndI now notice that I am making
about $4,000 a month, free andclear. All right off of my
(54:14):
rentals. I got mortgage paymentsand net. But net, net, net. And
I did that and I now see that Ican retire and have a very, very
solid income and you're right,nobody moves. Nobody's creating
any aggravations on and on. Andyou, she, she just did it by of
(54:38):
onstant calling me and this andthat. And I had fun. And you kno
, showing her. She uses. She buydifferent size propert
es, two bedrooms. Okay with he. I prophesized that she's,
he's going to have a much hiher vacancy rate than I do. And
(54:59):
so, it's going to be workingout to be probably, she has a v
cancy probably every five yers. And she's rents to younger
people. Her heart goes out toounded warriors type. And so,
I said, well, you're going tfind out that even though
hey're wounded, they got that midset of a 28 year old. And so,
(55:20):
a wanderlust and not being suck in one spot all their l
fe and you want to go and seethe world, we want to do it in a
wheelchair, or with, you know, aartificial leg or somethi
g. And so, she does have, bt her eyes are open, she does ha
e a much higher vacancy than Iould tolerate. Okay. And it's a
rogram called VASH. Veteranis V. It's a, it's a combina
(55:44):
ion of VA, and a Section 8. OkayAnd so, but she now knows s
e's forewarned. And first fr me, and then, then through
experience, that it's not aserfect as what I had.
Aaron Norris (56:06):
Well, 25 years, most people would be very happy
with half that turn rate. So wewe have run out of time, we've
gone way over. And we, we didn'tget, we have to have you back
another time to talk abouttitle, my brother went to your
course I know a lot of peoplewho've gone through your course,
I am going to be going throughyour title course. As soon as we
finally get to meet, I want togo through it in person. You
(56:27):
were one of the most creativeand well-off people in the
business. I think they shouldname ADUs after you actually.
So, Ding Bat ADUs, I like it.
But you know what, if peoplewant to get ahold of you, what's
the best way for them to reachout to you?
Ward Hanigan (56:41):
The best way actually is call our office
number at 619-283-5444. Or westill have our website up for
the foreclosure game, though. Ithink it's over. And that is the
www.foreclosureforum.com. Thereis a archive ton of articles
(57:05):
I've written. And some of it canbe germane today. Some not. I
have handy little things likehow to roach-proof your
property? Absolutely guaranteedRoach proven to one time you
don't have to do it again. Andstuff like that. And so, yeah,
(57:26):
or give us a call. I love phonecalls. In fact, I'll do anything
to generate more phone calls,because that's what keeps me on
my toes and keeps me sharp. It'speople asking me these
questions. And it forces me toreview that subject matter
before it's gone stale.
Aaron Norris (57:46):
And if you go to the San Diego Creative Investors
Association live, Ward istypically in the back at a table
and more than willing to answerquestion which I've always
appreciated. So, Ward, I willmake sure to definitely post all
that information on the website.
And thanks! Thank you forlistening 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
(58:08):
you'll be forwarded to thePropertyRadar community where
you can ask questions about thecurrent show and even see
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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 34, featuringWard Hanigan. Ward has one of
the most interesting real estatebackgrounds I've ever heard. He
started as an orphan eventuallygot into becoming an A&W
franchisee holder in Mexico,then to stocks, commercial real
estate, law, and then intodingbat rentals, you're gonna be
(00:27):
very interested to hear hisjourney into real estate and
later on the show, how hefinally focused on a very
specific niche that nobody elseseems to want. And he's got
marketing lists that nobody elsehas, because of the way that he
approaches his dingbat rentals.
And now Accessory DwellingUnits, you won't want to miss
the show. Well, Ward, I reallyappreciate you joining us today.
(00:48):
And my first question is, whatkeeps you excited about
investing in real estate?
Ward Hanigan (00:53):
All the girls.
Yes, yes.
Sean O'Toole (00:59):
You're in a different real estate business
than I am.
Ward Hanigan (01:04):
No, it's just, it's just a quest. You know, you
find out something that you likethat. And you've mastered it,
once you've mastered it, itcomes from a pain in the butt to
a passion. And if you live longenough, I prophesize. That's
what's going to happen topeople. And so right now, it's
just a passion. And I keepscore, you know, with proving
(01:29):
over and over again to myself,that what I'm doing is valuable,
because I'm getting a lot ofmoney. As long as I can teach
somebody teaching element is, isvery important to me. And I've
never been that sort of thing.
Sean O'Toole (01:44):
When I first came across you almost 20 years ago
in 2002, when I was firststarting in the foreclosure biz.
Ward Hanigan (01:51):
Right.
Sean O'Toole (01:51):
And I never took one of your classes because I
had a very experienced mentorthat had done hundreds and
hundreds of foreclosures. Butyou know, I always wanted to
come to him with smartquestions. So, I spent a lot of
time on your siteForeclosureForum.com, to at
least try to find the answerfirst. You know, I think that's,
anybody who wants a mentor outthere. Like, try to find the
(02:13):
answer on your own. First,you'll ingratiate yourself a lot
more. And but yeah, your site, Ithink was 2002 was around and
was had a lot of goodinformation.
Ward Hanigan (02:24):
Yeah, we endeavor to use it primarily for the
betterment of the people thatcame. And so, I absolutely
insisted, we're not going tohave any ads, I could care less
if we made buku money with adsand all that crap, and selling
people's emails, and I'm notinterested in it okay, because I
(02:44):
make enough money, my, my, youknow, major foreclosure
activity. And also, I love thefreedom. If I'm not dead, I'm
not going to step on somebody'stoes, you know, because they're
an advertiser. And, and I thinkthey, what they're advertising
is overpriced, or some otherdamn thing.
Aaron Norris (03:02):
Now, your background is an economist and
law. Did you practice either ofthose professionally?
Ward Hanigan (03:08):
No.
Aaron Norris (03:11):
Why is that?
That's a lot of schooling.
Ward Hanigan (03:13):
It was because of money. And yeah, I was
fascinated when I was in juniorcollege, and also in when I went
to the University in culturalanthropology. I just loved it.
I'm much more interested and insociety and stuff like that. So,
(03:36):
but I got into, I was recruitedon campus by IBM. And so, I
became, I was more interested insales rather than technical end
of it. So, I went into officeequipment sales instead of
computers. But I liked the, Iliked the stuff you go out and
meet people and talk to themand, and convince them to make
(04:02):
things better for themselves bybuying your service or either
that or buying your products.
They didn't have a businessmajor. So, the next best thing
was economics.
Aaron Norris (04:12):
So then, how did you fall into real estate?
Ward Hanigan (04:13):
I fell into real estate because IBM I loved it.
The first year was all very new.
Uh, second year, in fact, I didtoo well, I in one year, sort of
unheard of. But when normallyyou don't get to the IBM 100%
Club, to sales, for sales, whereyou take a fantastic trip
(04:34):
anywhere in the United Statesand sometimes foreign countries
as a reward for being top inyour division, your district as
far as sales are concerned. Anduh...
Sean O'Toole (04:47):
And you've nailed it.
Ward Hanigan (04:49):
And I did it in spades. And it was funny because
it, embarrassed. There's onlytwo guys out of Riverside
district that went to the 100%Club and, and I went, and I just
pissed all the other salesmenoff. I won the 100% Club. And
(05:10):
when I came when we started thenext year, they they increase
the quota, I could care lessfine. You want me to climb
another mountain? That's okaywith me I get it that didn't
bother me for what reallybothered me and I hadn't thought
about before, was it cut myterritory. And that's the way I
felt. I felt like this is myterritory, I had this very, very
(05:34):
strong ownership feeling aboutmy territory. And I'm the one
that fertilized it. And I'm theone that organized, I'm the one
that you know, got people justprimed to buy with the next
budget just on and on, and Ijust could not get over it. I
just could not get over it. Andso, finally in discussed it, I
(05:56):
find I just quit, shockedeverybody. And the manager
really wanted to find out why Iquit because he didn't want to
be criticized that I think bysupervisors, here's his hot
shot, and he quits. And so, whatthe hell did you do to them. And
so, anyways, I left IBM for thatreason. And I, in him, it was a
(06:20):
A&W Root Beer stand. And in asummer, Hemet is hotter than
hell. And so, I would go inthere on the day, the day that I
usually went to him it whateverit was a Wednesday or Thursday
or something, and drink a, anA&W Root Beer. And when I think
about it now, I could have oneright now. But anyhow. There's
(06:43):
only one person in there besidesme and as the guy that owns the
joint. And so, I said, 'Wow,how'd you get this place?' And
I'm making small talk, you know,and, and this is cool. And he
had the district manager for A&WRoot Beer right there where
there's his register, he says,'Here is this guy's card. He's
the area manager. And if youwant to talk about a franchise',
(07:07):
and wow, I thought I think ofhis card. And that night I saw I
looked at the card. I thoughtA&W. I know enough people, you
know, it was raised some money,and buy an A&W franchise, and I
wanted to put it into onebecause I noticed that when I
went down to marry a Mexicangirl, and she has a zillion
(07:30):
relatives in Mexico, and nowthat she's up United States they
want to come up at Christmastime. They want to come up on
New Year's Day like, I they likecome up on Valentine's Day or
something. I'm always going downto the airport in Tijuana to
pick up some friends orrelatives. And, and while I'm
waiting for the plane to come,I'm still standing around and
(07:53):
waiting downtown, Revolucin,and there's a ruler's drugstore
there and they got a lunchcounter. And no matter when you
go in the lunch counter, isjammed with tourists. And as a
lion going out the front door.
They would buy Woolworthshamburgers and stuff like that,
because it just didn't knowabout how they could trust
(08:15):
eating Mexican food. And I gowow, I can take advantage of
that. The A&W thing clicked inmy mind. I thought wow, A&W
everybody knows A&W, that's howI started and I bought the A&W
Root Beer franchise for BajaCalifornia Norte, and so what I
did is I raised $90,000 withsome, some people that knew me.
Sean O'Toole (08:39):
What year was this, Ward?
Ward Hanigan (08:42):
That was a 65-ish.
Sean O'Toole (08:44):
So, there's a lot of money it's not $90,000 today.
Ward Hanigan (08:47):
No. Yeah. And I didn't have any money to put in.
So, I said I work for nothingfor free, no salary. I just get
my portion of the of the profit.
I thought it would be profit alot faster. You know, I put a I
was completely wrong as to whomy customer was absolutely 180
degrees upside down on that one.
(09:11):
I thought it was going to beAmerican toursist going down
Revolucin to the racetrack. Andso, I spent all this money and
we actually built on leased landwhich is crazy. The world's
largest A&W Root Beer stand atthe time. See, I got out of A&W
and, and that's a story initself as you can imagine. And
(09:32):
then so, I stayed in San Diego,I fell in love with San Diego. I
had an economics background. So,I decided to become, go to
Shearson, Hammill & Co. in LaJolla and try being a
stockbroker. And again, I tookoff like crazy even though I had
an empty book of, what we callbook of customers. But I quickly
(09:56):
found out that it's really ashady business. And so, I saw
there was a, an ad to paper.
Countrywide, Countrywidefunding. So, Countrywide was a
brand new outfit in 1969, in LosAngeles, and a year after that,
they decided to open up anoffice in San Diego, the first
(10:18):
expansion. And so, Mozilointerviewed me. Okay.
Sean O'Toole (10:24):
Personally? Wow.
Ward Hanigan (10:26):
Yeah. And gave me the job. There's two people
hired in San Diego. Again...
Sean O'Toole (10:32):
How big, how big was Countrywide? I mean, this
is, where it's just for theviewers, we're talking about
Countrywide financial, which waskind of the epicenter of the
foreclosure crisis. Mozilo was,you know...
Ward Hanigan (10:42):
Mozilo was it was a conniver, right?
Sean O'Toole (10:46):
Yeah. It was one of the biggest names in the
whole foreclosure thing. Andwe're talking a huge company
that was still sold to Bank ofAmerica. And how big were they
when you interviewed?
Ward Hanigan (10:56):
Oh, it was just one dickie office, you know, I
mean, he would use othercompanies forms and copy of
them, and just put Countrywide'sname on it. And that was the
form that we would use, youknow, to, to interview people
for mortgages and stuff likethat. I remember one time it had
a question on it. And it sayssomething like, 'Are you
(11:20):
interested in, I'm going toshorter, like mortgage term
insurance?' you know, this whatit was really about. But anyhow,
and nobody knew anything aboutit. My office, and I called up
LA, and nobody knew anythingabout it up in LA, when did this
Countrywide form and you don'tknow what it is, you know. So,
they give me a clue about itoriginally was somebody else's
(11:40):
form. Anyways, they gave a spiffif you checked, yes. And because
there was a premium that wascharged, you know, as they added
it to every monthly payment, ormortgage term insurance, we did
the interview with husband andwife in their home while I was
qualifying, take the applicationfor a loan and I'd say okay,
(12:01):
Tom, when you die, not if, butwhen you die. Do you want June
here to be saddled with thecontinuing payments on his
mortgage? Or would you like tohave the house fully paid off at
the time you die? And he can sayhe couldn't say in front of his
wife. Now, they're strugglingwith a mortgage. And so, it was
(12:25):
100%? Yes, yes. Yes. And so, itgot to Angelo's attention. That
the CA who in San Diego, WardHannigan is, as was used up all
the S&H Green Stamps. And so, hecalls me up. The Saturday was
our sales meeting, down here,was is up in LA. And he wanted
(12:50):
me to come up Saturday and ittells the salesforce up and says
what was my approach by gettingpeople to agree to pay a little
extra and, and I tried to tellAngelo over the phone. I said
look, it's, it doesn't comingout of my territory on Saturday
to go up there. It doesn't itisn't that. It's so simple. Let
(13:10):
me tell you how I do it rightover the phone. And so, I mean,
you could do it. It's just, it'snot that I'm, he was into it. He
said, 'Hey, I told you I wantyou up here. I want you at our
sales meeting. It starts at09:30 on Saturday, and he end
his conversation bam! So, I wentup there and I purposely I
walked in said either the guysthat had about six or eight or
(13:32):
10 salespeople or something likethat, 'Mr. Jones, all right,
when you die, do you want Neelyover here to be saddled with the
mortgage, having to deal withmortgage payments when now
you're gone and had incomesgone? Or just for the price of,
and IBM taught me to sell thedifference, and so I suggested
for the price of a pack ofcigarettes, all right, once a
(13:54):
week, okay, she could do, wouldbe completely paid off if
something tragic happened toyou, pal. Okay, that's it. See
you guys later. That was anywaysso...
Sean O'Toole (14:09):
Ward you have led such a full life. And let's pull
forward to Ding-Bat rental and,and also what you're doing today
because you know, you are afterall these years you're still
after it, still making ithappen, still closing deals. I
understand you got some stuffgoing with ADUs. And let's,
(14:30):
let's pull forward to today andgive folks some.
Ward Hanigan (14:35):
Okay.
Sean O'Toole (14:35):
Some stuff they can use in the market right now.
Ward Hanigan (14:37):
You know, here's one man song and maybe they can
sing it too. I'm convinced thatwe now have progressed medically
in both devices and medicinesand stuff like that. treatments
that the average person if theydon't play the no-no games, you
know, no booze, no drugs. No, Idon't alcohol, all this
(15:03):
nonsense, and you're not a realDaredevil, you probably can have
the expectancy of livingapproximately to 100. And so,
the problem is that you're goingto be replaced, I guarantee it,
you're going to be replaced atabout 50 to 60 years of age, no
matter how good you're at, orwhat you're doing. And so now,
(15:25):
the problem is that since youdidn't think it was important
enough to create something whileyou had an active income, so,
that it would give you a passiveincome in the second half of
your life, the second half ofyour life is gonna be a long
period of time, that's going tobe 40 to 50 years. And so, you
got to start taking somethingthat you make out of the first
(15:47):
half of your life, all right,and given an opportunity to come
to fruition at the beginning ofyour second half, so, that it's
going to carry you through. Andso, that turned out to, for me,
that turned out to invest insomething that I don't have to
babysit, invest in somethingthat I don't have to keep
(16:08):
staying. So, it doesn't requiremy active presence. And so,
that's why I say it's a passiveincome type thing that occurred
to me when I was 40, 45. I wasmaking so much money in
foreclosures that I didn't thinkthat I need, didn't need to, to,
to do anything else. But thatbecause I never made 40, 50, 60,
(16:29):
$80,000 in a crack and I just'whoo!' you know.
Sean O'Toole (16:35):
What year was that we were going so crazy with
foreclosures?
Ward Hanigan (16:39):
I got started in foreclosures in '82. Okay, I
work for Countrywide for abouttwo or three years. Then I
decided, you know, I can sellrings around these guys, mostly
guys are selling real estate.
And those days were retired, theguys really didn't intend to
really understand anything aboutmortgages and mortgage rates.
(16:59):
And let's say they sold or they,they, they sold the house. And
now they got to find a lendertrying to pass the lousy the
salespeople so that they wouldsteer the buyer to this mortgage
rep or that mortgage rep orsomething else. And I remember
Weyerhaeuser was, had suchcrappy rates, because
(17:20):
Countrywide was trying to veryquickly get market share.
They're the new boy on theblock, and they want to elbow
their way into the trough. Andso, they have really low, low,
much lower interest rates. So, Iremember one day just couldn't
believe it. This guy TOs hismortgage to like Weyerhaeuser. I
(17:41):
knew Weyerhaeuser's fees andeverything else. and they just
stuck compared to Countrywide, Isaid, 'why did you do that to
your clients?' And he picks up apack of Wrigley's gum. And all
that he's got, a thing that,that they gave him. That's what
he got for steering the goddamndeal to, I couldn't believe it.
(18:05):
It just oh, you did not onlyscrew your, the, the listing
that you got your, your owner,all right for a pack of gum. I
walked out of the damn officeand said, Hey, I can do this
standing on one leg.
Sean O'Toole (18:25):
Yeah, the mortgage sides are much harder and a lot
of ways on all that stuff youhave to do. So, you have this
great combo. You got sales fromIBM, right? You got
entrepreneurship from a A&W.
Now, you've got, you know, goodreal estate knowledge from
Countrywide and doing a bunch ofmortgages. So, you put all that
together, you're in the realestate business, you're doing a
lot of foreclosures. Jump todingbats.
Ward Hanigan (18:48):
Okay, so let's jump to being dingbats. So, what
are the things you do when youstart acquiring property when
you're selling it is you mightdo a 1031 exchange. And so, I
did a couple of those. And onetime, this guy he wanted us to
take from his side, not only hisapartment house, but this
(19:10):
stinking little one bedroom, onebath, old piece of junk, you
know, and he dug his heels andhe said, 'No, I don't want this
and I, but I and I got it and Isell, I'll agree to your trade
with your property and myapartment house and stuff like
that. But you got to take thisthing too. Basically, I took
(19:31):
that as part of my share of thedeal. So, I took this trade and
then about a year later, twoyears later, I completely forgot
about it. And I TO'd it to EricI said 'Hey do something with
this, you know, sell it tosomething.' And I don't know why
but about a year, or it's twoyears later I asked and said
Eric, what do we, did we eversell that one bedroom, one bath
(19:53):
piece of crap that we had totake? And he said no, no, no, we
didn't sell Dad. We still haveit. And I go 'What? We still got
it?' Yeah, we can't sell it.
Nobody wants to buy it's tooold. and blah, blah, blah. Who's
gonna brag about buying a onebedroom? A 60 year old one
bedroom, one bath house? I said'damn, still got it?' Yeah. So,
'well, how many times you haveto rent it out to somebody?' 'No
(20:15):
'cause the lady that lived therewhen we bought it is still
there.' I'm gonna go 'Wow, thatwas not my experience'. When I'm
selling when I was in the, I gotinto the apartment business, by
the way. Okay, as an agent, sobecame an agent. And when I left
the...
Aaron Norris (20:36):
Countrywide, yeah.
Ward Hanigan (20:37):
Yeah. Countrywide.
And so, I worked for 10 yearsthen buying and selling
apartment houses as an agent.
And so, I had gone to lawschool. But I, nobody wanted to
hire me because I went to a noname school. So, I wasn't going
to go into practice myself,because I knew that I didn't
(20:58):
really know I only knew half oflaw. And that is the book part.
I didn't have the experience ofknowing that way around a court
how to frame an argument infront of a jury, you know, all
that kind of stuff.
Sean O'Toole (21:11):
More of doing apartments and practicing law?
Ward Hanigan (21:13):
Oh, yeah. So, I said I'd do it someday, when I,
you know, get older, sellingreal estate, lots of times, you
have to be creative in financingto put the deal together. And
so, I learned from a guy inPhoenix showed me how to do
wrap-around deeds of trust. Ididn't even know what the hell
(21:35):
he's talking about, and they areall inclusive. And so, I
mastered that. And then I foundthat it doesn't pay to be the
only person in your whole area,that knows because no one else
wants to, we're gonna deal withyou, 'cause they don't
understand it. And so, how canthey tell their seller, let's
cooperate with this, and wecarry back and all inclusive
(21:58):
deed of trust, and blah, blah,blah. So, I had to start a class
under the, the ages of the titlecompany. So, I was told,
convinced the title companythat, hey, let me teach this
class, in your boardroom onweekends. And I have an attorney
buddy, I met in my law school,he was a, he was a real estate
attorney. But he got his licensein the Navy, he would come to me
(22:21):
and breaks in the Senate andasked me what was the crux of
this case that we're talkingabout? What was the element?
That's in it. And so, after awhile, we came pals. And so, I
tell them, I said, Hey, I needto, I need to, to convince the
title company. Let me teach aclass. It's actually I want to
tell them, you're teaching aclass, I'll show you what, what
(22:43):
you need, and what equipment youneed and stuff like that.
Taught...puts class on it saysit was the attorneys class. And
that's how I started with my, Ifound out that it takes two to
tango, you just cannot be theonly genius in town, you got to
be able to do business withpeople and you got to if they're
(23:04):
not there, you got to trainsomebody so that you can you
know, dance. I considered...
Sean O'Toole (23:10):
That started your career in real estate education,
then because you've had a longcareer now doing that and
teaching people the business.
That was the first one.
Ward Hanigan (23:18):
Yeah, probably right. And I started fast
started buying commissions ofpromoters, salespeople that, you
know, we're living on a dime.
And, and so we would besplitting commissions, because
we tell somebody, 'Hey, let's doa wrap-around deed of trust. So,
we don't have to pay off thatmortgage'. And we're going to do
it in such a way that will neverbe discovered that you're
getting around to doing on saleclause, I had to explain all
(23:40):
that kind of stuff.
Sean O'Toole (23:44):
I'd like to explain for our viewers really
quickly, a wrap-around deed oftrust. So, if I as the owner, I
have a good mortgage at a goodrate. You want to buy the house
from me, right. But maybe youcan't qualify or you can't get
as good a rate, what we do is weput a wrap around my existing
mortgage that says you're goingto make payments, basically, to
(24:06):
me, and I'm going to makepayments on that mortgage, and
you get to now live in thehouse. So, you're going to
become the new owner. You'regoing to give me a mortgage, but
I'm going to keep my mortgageand so it wraps around. And
that's that's the all inclusive,it includes the underlying
mortgage or wrap-aroundmortgage.
Ward Hanigan (24:24):
And then you get sophisticated and you make sure
it's collected by a neutralthird party and no collection
service. Here in San Diego. It'scalled Toro, something Toro Note
Collections. So, it wouldn'tcome undone. Because sometimes
the guy that you sold tooriginally he now turns around
and sells it somebody else andhe doesn't explain it quite good
enough and starts to come apart.
Anyways, one of these my, myinclusive mortgages it was sold
(24:49):
the property department housewas sold more than once or twice
after I sold it. And so, all ofa sudden now they guy that the
original owner who he wrappedhis mortgage, he calls me up and
says 'Ward, he said, youconvinced me to carry back this
all inclusive deed of trust. Andnow there's no payments on it.
(25:11):
What the hell am I supposed todo?' And I said, 'Well, you
start a foreclosure'. And hesaid, 'Well, how do I do that?'
We started getting into thedetails, you know, that
motivated me. I'm going lawschool at the time, that
motivated me to go to lawlibrary, and got every book
written on for closures. InCalifornia, foreclosures, not
(25:33):
interested in other states,California foreclosures, I
started buying wrap-aroundmortgages because nobody wanted
to buy a wrap-around. Alright,people in town like to buy a
mortgage for some income, andit's an add on and they want an
ordinary mortgage Ain't nothingnew. And so I knew that I could
drive a better bargain bywilling to buy if I'm the only
(25:56):
willing buyer. All right, Idon't have to be as much as if
everybody knew what that was.
And so I have mortgages comingout my ears. But I didn't like
about mortgages, and I stilldon't to this day, is that that
the person in control is thepayer, because if the interest
(26:17):
is, is up here, and he can finda new loan down here, all right,
then he's logically going towant to refi. And so, I get paid
off earlier than expected. Ifound out later, there's a lot
of wisdom in not trying to getthe greatest part of a deal, you
got to have leave something infor the other side, or they have
(26:39):
no incentive to stay in thedeal. And that took learning.
Sean O'Toole (26:43):
On that apartment deal. You ended up with the ding
bat, right. There's the onebedroom, one bath, tenant had
stayed in there for a while.
Ward Hanigan (26:52):
Right.
Sean O'Toole (26:53):
And which was a surprise to you. Because in
apartments, you saw a lot ofturnover, you see no surprises
person stayed in.
Ward Hanigan (27:00):
You get a lot of turnover, because I had
actually, I really hadexperience with one bedrooms, I
had a guy convinced the guy tobuy a six-unit apartment
building, and he were all onebedroom, one bath. It's like a
friggin motel. Because, youknow, people are just coming and
landing and finding, gettingtheir whereabouts at the town
(27:25):
and, and this and that. And, aswith anyone make any commitment
until they found the best placeto buy a house, and they
understood the town and wherethe values were, you know, all
that kind of stuff. So, theystayed here. And they would
leave. And so, I had 100%turnover, and I was a great
manager. So, my bias was I don'twant one bedroom, one bath. I
(27:47):
mean, you couldn't find a guythat was more polarized and
saying, one bedroom, one bath,stick it . In spite of that, I
so curious, because myexperience with the apartment
houses, they didn't just leavetheir lousy tennis and I hear
this little lady, she's doingnothing terrible to the
property, she keeps it clean andneat. She pays promptly on time.
(28:11):
She's very sweet. And on and on.
And I can add the differencebetween this and this. And it
just got me very curious. Andso, I found out that she's on
this thing called Section 8, andfound that she's really not
paying us to read Section 8 ispaying us directly to our
checking account, she pays atiny part 10 to 20% of the rent
out of her own pocket. And thegovernment, the federal
(28:36):
government through Section 8pays their difference. And wow.
And so, it's very hard to findlandlords that agree to Section
8 situation. And so she justabsolutely was petrified that I
was going to sell the property,and she'd have to move, or I was
so she never wanted to doanything lawn noise-wise. Taking
(29:00):
care of the property just on andon and on. And wow. So, I
started...
Sean O'Toole (29:13):
Super reliable tenants gonna stay there
forever. Completely differentsituation
Ward Hanigan (29:17):
Now. Yeah, I didn't realize it's gonna be
forever. I tried. You know, infact, actually, I said, Oh,
well, if that works, maybe I doa duplex and so duplex didn't
work. I couldn't figure out whyfor a while. Now, I don't. And
anything else that has to bemust absolutely have to be a
single standalone, one bedroom,one bath, one story house, okay,
(29:41):
otherwise, you're going tojeopardize the amount of time
they stay. Right now, they'restaying 24 to 26 years...
Sean O'Toole (29:51):
That's how long tenants are staying tenants of
your properties?
Ward Hanigan (29:55):
And so can you imagine a cash flow coming in at
you know 180, 200, 240 monthswithout interruption, not one
interruption. All right...
Sean O'Toole (30:07):
These properties are the, are selling cheap
because nobody wants them.
Ward Hanigan (30:10):
Nobody wants them, but I love it. I love what
Sean O'Toole (30:11):
So, you've got all these one bedrooms, and some of
nobody wants. Man! and you'retalking to the right guy, and I
them have enough land, I guess,to add ADUs. So, now you're
adding one bedroom ADUs. Andthat's not upsetting the
just had this big smirk on myface, you know, all the time.
applecart because it's no commonwall.
And right now as a consequence,I have 20 I have an almost all
of them have been there 20, 25years. And but the ding bat, th
brand new and the ADU they builon the back of the house. T
(30:33):
ey're already own boys. She hd Jim the why because she's y
ung, she's 51 years old, okay, ian odd quirk or missing c
g or something that doesn't alow her to hold a regular job. B
t other than that, she can lve a large takes care of her p
operty, she could cook she ets she does as she drives car, b
ah, blah, blah. So, anyways, se pays me $1383 a month, okay? F
(30:59):
r the that's the payment sandard. That Section 8 goes to o
a one bedroom, if it's a two bdrooms it's more, if it's t
ree bedroom and they go up to sx bedrooms. So, it says zero b
droom, if it's a loft or a sudio there you go from zero to a
out six months times five. And bt I'm, now, very, if I got a d
(31:20):
al, I would, I would, I would, Iwould 'Oh, okay, sure I buy t
o bedroom, and there I'll buy atwo-bedroom house. And so, t
ey only stayed about half the tme. And so, most people would g
ve their eyeballs for somebody tat would stay, you know, 15 y
ars. Wow, Jesus, I could add 3or 25, please, sell it. And s
(31:42):
, I got around to purging my cllection and selling out e
ery, anything that did not mtch the profile. I mean, I e
en have duplexes with one bdroom in the front and one b
droom in the back. Absolutely. Idoesn't work. That's good. T
ey said about turnover by once eery 12 years have a common, w
(32:04):
at's the real problem is a cmmon wall. Okay, people s
elled especially elderly teasure more than anybody. All r
ght, peace and quiet. And so, iyou have a common wall with a n
Ward Hanigan (32:14):
And most of the time, I wish that was it. But
ighbor, ah, as far as they're cncerned, it's driving them n
most of the time, they're not onover a large enough lot to allow
ts, or they might have an agel. All right, but then that a
a building another ADU. Okay. Itjust happened to be that
gel moves out, and all of a sdden, now comes a turd. As as t
particular neighborhood calledShelltown and San Diego that was
e guy on the other side that Woa, oh, man, you know, and t
designed from the get-go 1940. Iwas born in 1940. So, 80 years
en she wants to move. So, I gt two vacancies. He's moving b
(32:36):
cause he's an idiot. And she mves because she is all riled u
ago, then zoned so that you puta house in the front facing the
that the guy is his, he has te audacity to he'd be playing h
street and a house in the backfacing an alleyway.
s TV after nine o'clock at nght. You know`, stuff like t
at. And house also, sound tavels though them like, you k
ow, a tissue box.
Sean O'Toole (33:03):
Wow.
Ward Hanigan (33:03):
And so, now that 80 years, it's style. Little by
(33:37):
little, it's been completelybuilt out. Okay. And so, but
there's enough leftover that ifI live long enough, what I'm
going to do is go through thoseneighborhoods, here's my new
plan is to, is to go to a guywho never took advantage of
building anything on the backend of the property. And I say
'Listen, I want to do a deal,which is not going to cost you a
(33:59):
penny out of your pocket. Notnow. Not ever. Okay, I'm going
to build a house that you'regoing to see because I have the
availability to show it to youand the inside the tenant is
happy to get 25 to 50 bucks forme to open it up and let us walk
inside that you're going toadmit that it's a really very,
(34:20):
very, very nice ADU'. Okay, it'sonly 492 square feet. I had a
specially designed by anarchitect who took my son's
ideas and my ideas, put themtogether and we got the ideal,
the most fantastic ideal unitfor a citizen, or it's got 36
(34:45):
inch wide doors everywhere. It'sgot not one stair, and the whole
place is super insulated. So,they're not wasting their
energy. You know, it getsoverheated or too cold and all
this kind of stuff. I mean Ieven put in or some huge tenant
to plug in your electric car.
So, I got that electric outletto handle that charge and
electric cars. So, 90% of mytenants don't have enough money
(35:08):
to have a car. Yeah. And...
Sean O'Toole (35:14):
We're running out of time.
Ward Hanigan (35:16):
Oh.
Sean O'Toole (35:16):
So, you've got this amazing ADU. And you're
partnering now with folks thatown these special lots in
Shelltown and putting the ADU inthe back and...
Ward Hanigan (35:30):
I use all my own money, because I got tons of it.
So, I'm using money, and I buildeverything, so not a penny out
of the pocket. And then for thenext 25 years, I manage it.
Okay, if anything goes wrong, Ipay for it. Never a penny out of
his pocket, but I get all therent for it. Okay.
Sean O'Toole (35:48):
What if they decide they want to sell what
happens, then?
Ward Hanigan (35:52):
I've made all my money back, plus another several
$100,000. And I can better...
Sean O'Toole (35:59):
Keep going.
Unfortunately, I have a hardstop right now. So, I'm going to
go and say goodbye Ward. Awesometo have you on and learn so much
from you over the years. Andthank you for all that you've
given to so many in the realestate business. And I'll let
you guys continue.
Aaron Norris (36:15):
I want to back up for a second and explain how
brilliant it is what you justdid. So, it's a list that nobody
else is going to have. So, youwere talking about a very
specific neighborhood where itwas designed with an alley,
where it's almost like you cancome in and build this ADU and
put a wall down the center ofthe lot. And for all intents and
purposes, it's two separateunits, completely two detached
separate units, right?
Ward Hanigan (36:36):
Right. And one piece of ground.
Aaron Norris (36:38):
And the design wise, that's perfect. And you
already know the ADU's thatwork. Is there a garage on
these? Or is it just...
Ward Hanigan (36:45):
You know, most of the, most Section 8 don't have
enough money to afford a car.
And so, it's not a negative ifyou have no parking. All right,
you're gonna be walkingeverywhere. The breeze, I had
some space on the back, allright, to put a driveway. And I
elongated it so that you canhave tandem park. So, you put
two spaces, and you approach ofcourse from the alley. And, but
(37:08):
and it just a fluke, this galthat I put in, she needed to off
street parking places becauseher daughter who's ready to
leave probably is already goneon because she's she only had
another year in school. Andshe's going to move to somewhere
(37:29):
in LA. But she got extra moneyfrom the state because she had a
daughter. Okay, that saysthey're gonna pay more for
dependent. And, but so most oftime if I can do it while I'm
building the house. Yeah, whynot put the parking driveway? I
(37:50):
didn't, I don't have there'snothing over there. It's just a
it's just a driveway in theback. And so, then I noticed
well, okay, so here's a, there'san alleyway and an alley. The
difference between an alleywayand an alley is an alley is
wider. And an alley allows someparking in the back and has
(38:14):
lighting. Okay, this is analleyway. So, it's not wide
enough to allow parking. And ithas no lighting of thinking
about yourself as a 60 to 65year old gal is she going to
want to walk at night, cominghome. I mean, after she's goes
to the supermarket that's threeblocks away and carry groceries
(38:35):
in a dark alley. And there's nolights and on. So, I said no,
that's going to maybe agitate orbother her enough to where she
might want to move faster than25 years. So , what I did was I,
I, I put a sidewalk on theinside of my property line going
(38:58):
from my unit all the way up theproperty line on the east side
to the sidewalk in the front andputting a down there and put the
mailbox there. Okay. And then Iin this in this gate that I
built halfway through the gatethat split the lot. I put a
gate, excuse me a fence. And so,that and that's operated to
(39:23):
where the people in the frontcan't come in her yard and she
can't go in their yard. Shebecause the fence is kind of
like a quarter. And it givessome security and privacy to
both people. So, yeah, that'show it worked.
Aaron Norris (39:45):
So, she can decide whether to park in the front or
the back then as well.
Ward Hanigan (39:48):
Yeah, but the problems's the front, the street
is when you have, you have asingle lot but you have two
houses on almost every singlelot. You've doubled the
population and neighborhood andnow there's almost always two
families or more living in eachhouse. And so, the little
parking is premium thing. Infact, they got a thing going on
(40:09):
in my mind that if she evermoves, I get a gal that doesn't
have a car, I'm thinking, I'lltell you what, sweetheart, why
don't I rent out the parkingspace to someone in the
neighborhood, right now splitthe rent with your 50/50.
Aaron Norris (40:26):
There you go.
There you go. Now, when you'reapproaching people that you
don't own the property, whathappens if they decide to sell?
Ward Hanigan (40:35):
I put on a property, she can't lease the
land, because if you lease morethan three years, and I want to
go 25 years, then the assessorconsiders it the equivalent of a
sale and wants to reassess theproperty. So, I know he's not
going to want to do something,which causes a reassessment of
his property, increasing histaxes, and he not getting some
(40:57):
money for that.
Aaron Norris (40:58):
Okay.
Ward Hanigan (40:58):
So, I figured out, okay, there are forgiveness
loans out there, for cities forwhatever reason, they might get
cops to move into toughneighborhoods, and this and
that, they'll provide a juniornote, and which is usually the
down payment. And if he staysthere, 10 years or five years,
or whatever the time period is,they'll forgive the note, you
(41:19):
won't have to pay it. So, it'sa, it's not an installment note,
it's a straight note, nopayments until the end. And so,
that induces that, that a doctoror that whatever, to stay in
that neighborhood, and, andnormalize the neighborhood,
(41:39):
right. With cops, stuff likethat. So I've got that I've got
a forgiveness note. So, if he,if for some reason, whatever,
who cares, they want to sell theproperty in a snap, and they
want to pay off my loan, but myloan is going to be for the
exact amount that it costs me tobuild it.
Aaron Norris (41:58):
Okay.
Ward Hanigan (41:59):
And then it's going to have an interest rate,
that's going to be modest. Okay.
And but it's not going to bedoing payable. Uh, if I am
allowed to stay there in placefor 25 years, I'm collecting the
rent.
Aaron Norris (42:15):
That is very interesting. Now, I, you and I
briefly talked about this,there's two different ways to
approach this stick build wall,for the stick build structure of
the 452, 492 square feet, theremight be a reassessment by the
county, a little bit of propertytaxes, so, the owner might have
to pay property tax unless it'sa structure like a tiny home,
(42:37):
so.
Ward Hanigan (42:38):
Yeah, the tiny homes are too impermanent for me
and I think would be tooimpermanent for my tenant. If
you want to get rich in life,and I really believe in, is find
out what your customer wants.
And then what?
Aaron Norris (42:55):
Deliver it.
Ward Hanigan (42:56):
Yeah, give it to him. Okay. And so, yeah, I
didn't know who my customer was.
See, because I thought a tenant,was a tenant, was a tenant that
I never distinguished between,you know, senior, as a tenant,
as someone on Section 8 as atenant, or you know, that kind
of thing. And all of a sudden, Ihad to sit down and figure out
who am I really want as acustomer. So, I say, you know,
(43:18):
birds of a feather do what flocktogether. So, where does seniors
go where to older people go, oh,senior rec center. Wow. So,
you're not going to find any 18to 49 year old, going to a
senior rec center and learninghow to play bocce ball or
(43:39):
something. So, good idea. Andthen I learned that they have
senior nutrition centers, ah,that is a gym. So, I don't have
to advertise anywhere I do oncein a while and Section 8
nationwide website's calledgosection8.com you go there and
drill down to the state you'reinterested to the county, the
(44:04):
city, the blah, blah, blah. Andyou'll find a bulletin board set
aside for that local area forlandlords and tenants to
announce themselves, okay. Andbut I would the way I like is
with the way I I think Iinvented and that is these
nutrition centers. There's manynutrition centers in a
(44:27):
metropolis as our branchlibraries is enabled. So San
Diego is an example we have ateam, a senior nutrition
centers, and we have 15 branchlibraries in San Diego. Wow.
Okay. So, if you ever wonderwhere that's going to be where
(44:50):
it is in your neighborhood, justfind out where the branch lib
ary is and you find you're proably going to be A Nutrition Cen
er in that little, in that comunity, that neighborhood. And
so, they usually start at 11 o'cock in the morning. And they go
o about 1230. Right at noon, thedon't give breakfast and mos
(45:13):
of them don't give suppers. I'vheard some of them do. But any
ays, most of us just ate lunh, a nice, nutritious lunch. Tha
's kind of like I call it orpanage food because I grew up in
n orphanage where you have caseroles and you have, you kno
, a biscuit. Right? You have ovecooked lima beans, like so. Oka
(45:37):
. So, but it's real cheap. Ifou're senior, of course, bei
g government, they can't not letyou be a customer. And you mig
t have a guest, but somebody isounger than 62, then they pay
double. So, it's like $6, or maye $7, rather than a three for
(46:02):
the senior.
Aaron Norris (46:05):
So, do you go as sponsor? How do you, How are you
connecting there?
Ward Hanigan (46:09):
Well, what I do is I go on Lombardi time. So, if
this thing starts at 11 o'clock,I'm there at 10:45, 15 minutes
early to make sure I'm at thehead of the queue, or the line
that is starting to start rightabout on 11. And I want to be at
the head of the line, becauseI'm going to have about 20 or
30, flyers, a picture of myvacancy, and some of the
(46:33):
pertinent stuff about it anddirection how to get there. And
a offered that, hey, if you wantus to pick you up and take and
show it to you and take you backhome fine. Because some of them
are so poor, they can't, theydon't want to spend money to or
Uber or a cab. And so I'm there.
So, when someone comes up behindme, it's just very sociable and
(46:55):
logical, I would turn around andsay, 'Oh, hi, my name is Ward,
what's yours?' And you sayAaron, and I go, you look a
little bit too prosperous, to beenrolled in Section 8, but I bet
you you get a lot of friends andaccomplices, not accomplices,
but acquaintances, and maybeeven relatives that are on
(47:18):
Section 8. And not as lucky asyou. But what I want to do is
give you a flyer and in casesome of those people all of a
sudden need to find anotherplace to land because of being
displaced, because somebodybought the dinky little house.
And now they got to findsomewhere else to live. And
according Section 8 rules, ifthey don't use their
(47:39):
entitlement. After 90 days, inSection 8 feels free to give it
to somebody else.
Aaron Norris (47:46):
I did not know that.
Ward Hanigan (47:47):
90 days to find someplace. And so, they're kind
of panicky. S,o you can be agreat help to them, Aaron. If
you have my flyer because it'sgot my name and number and I got
a lot of units in this area, andjust give it to them. And I
maybe at that time, I might haveany vacancy. So, why don't you
take one? So he does well, youand I know he probably doesn't
(48:07):
say Section 8, but doesn't wantto admit it to a stranger. So,
I'm saying that like toprospers. Just and then I go,
'Aaron, you want to get ahead ofme?' Oh, yeah, sure. So, nobody
can get upset because they letyou their ahead of time. Yeah.
And so, then I and intro myself,I introduce myself down the
line. So, by the time the linestarts moving, I'm at least
(48:30):
halfway through it, handing outmy flyer, because they don't
want anybody handing anythingout there. Okay, so I'm hitting
because I'm part of the line. Ithink it's cool.
Aaron Norris (48:41):
Well, it's a list that nobody else has what a
creative way to target a marketthat is not on TikTok or
probably social media all thatmuch. It's, it's just a very
unique way to approach thebusiness. I've always loved the
dingbat rental. I left, I toldSean before we got on the air
that I'm like, I think at onepoint, his average day was like
17 years. Well, I guess wehaven't, I hadn't asked that in
(49:04):
a long time. So, to have thatlong of a stay is insane.
Ward Hanigan (49:08):
Well, people are living a lot longer enough, even
the oldest.
Aaron Norris (49:11):
Well, how are they as tenants as far as calling you
and needing things?
Ward Hanigan (49:15):
Never! Never their attitude is that they're
effusive. Absolutely effusive.
And I need, I use this, by theway, in their gratitude, right?
And so, you might ask me, okay,well, let's say using your
technique of getting in line atthe senior Nutrition Center and
holding out flyers, you said,what if three of the people in
(49:39):
line or four, you know, call youup and they want to take a look
at it and they want an appication in the center. Now, my
uestion is, well, how do you decde amongst these three peo
le or four people which one toake? And my answer is the one
who is very, very obvious exhbiting gratitude. They'll tha
(50:03):
k me for giving them an appication. They'll thank me for
you know, letting me, tet thesee the unit they think in and
it never stops. But I found outis when they're paying me eve
y month I have one lady. And I'vnot just one lady, we have a c
uple ladies, but just one oneShe for 30 some years, rig
(50:25):
t? She sent me a rent in a thak you card every month, eve
y single month. And it she's blesing me in Spanish, you kno
, that such a wonderful lanlord. And, you know, blah, bla
, blah. And so, she did, she staed until she had to move out
(50:49):
People say how long am I goig to be staying here? And I sai
, until you have to go out feefirst. You think that would irr
tate them? Ah, I love heaing that. Really? Yeah. I rem
mber one time. She's this galShe was so funny. She says rea
ly I've been, I've been upst by, or surprised by lan
lord said tell me that. But itoesn't turn out to be the tru
(51:12):
h. And I said you got a pin? Andshe said, Well, yes, I need a p
n. I said, so she went and gotme a pin. And I said okay, I'm
going to prick my finger witthis pin. And I'm going to wri
e and blood that and you can sta. No, no, no, no, no, you don
t have to do that.
Aaron Norris (51:34):
Well, I just I love when we get a chance to
talk about niches on the showand realizing people can bring
you know their passion or find areally hyperlocal niche that
nobody else wants or owns. Imean, this is definitely very
nichey.
Ward Hanigan (51:47):
In my, in my experience Sean, is you don't
have to be concerned aboutblabbing about it to everybody
around you end of the day.
Nobody, but nobody, but no, hedoes it. I have a class, and I
teach people how to do this. Youthink that you know, after you
paid me $900 you know, you'd goout and you do it. And I give
you the manual all the forms.
(52:09):
That's say call me anytime youdo get stuck. This doesn't end
here. You know, it's ends whenyou die, because I don't talk to
dead people. But you know. Andso, anyhow, it I have trained
probably, I don't know, let'ssay two dozen people. Not one of
them has yet done it. Hmm.
Aaron Norris (52:33):
Why do you think that is?
Ward Hanigan (52:35):
I think what it is, is someday, someday I'm
going to do this someday,someday, someday. And they just
put it off, put it off and putit off. They're actually a
little bit embarrassed that whenI see them then, oh, I know
you're gonna ask me if I getstarted yet. But no, I have one
gal that didn't bother taking myclass. She heard about it
because I was giving a talk outin Palm Desert. And we needed to
(53:02):
about another 30 minutes to fillthe time. And so, besides
talking about the trustee,organizer of the club says 'hey,
Ward watch, tell him about thatcrazy thing you got what do you
call it doing something ratherthing?' That's right. So, I did
she was in the audience. her jawdropped. Wow. So, then she, she
(53:27):
had 1,000,001 questions and shewas getting so excited and on
and on. So, I said hey, you callmy number anytime you want, and
blah, blah, blah. And that soshe never took the class, she
attends the class over thephone. You know, it asked me all
the questions and blah, blah,blah. And now that's 5 years
(53:47):
ago, she's got 10, 10 absolutelyamazing. And she was she called
me up and her name is Julie, andshe says this truly, you know, I
don't think I ever thanked you.
Because I'm doing my taxes. AndI now notice that I am making
about $4,000 a month, free andclear. All right off of my
(54:14):
rentals. I got mortgage paymentsand net. But net, net, net. And
I did that and I now see that Ican retire and have a very, very
solid income and you're right,nobody moves. Nobody's creating
any aggravations on and on. Andyou, she, she just did it by of
(54:38):
onstant calling me and this andthat. And I had fun. And you kno
, showing her. She uses. She buydifferent size propert
es, two bedrooms. Okay with he. I prophesized that she's,
he's going to have a much hiher vacancy rate than I do. And
(54:59):
so, it's going to be workingout to be probably, she has a v
cancy probably every five yers. And she's rents to younger
people. Her heart goes out toounded warriors type. And so,
I said, well, you're going tfind out that even though
hey're wounded, they got that midset of a 28 year old. And so,
(55:20):
a wanderlust and not being suck in one spot all their l
fe and you want to go and seethe world, we want to do it in a
wheelchair, or with, you know, aartificial leg or somethi
g. And so, she does have, bt her eyes are open, she does ha
e a much higher vacancy than Iould tolerate. Okay. And it's a
rogram called VASH. Veteranis V. It's a, it's a combina
(55:44):
ion of VA, and a Section 8. OkayAnd so, but she now knows s
e's forewarned. And first fr me, and then, then through
experience, that it's not aserfect as what I had.
Aaron Norris (56:06):
Well, 25 years, most people would be very happy
with half that turn rate. So wewe have run out of time, we've
gone way over. And we, we didn'tget, we have to have you back
another time to talk abouttitle, my brother went to your
course I know a lot of peoplewho've gone through your course,
I am going to be going throughyour title course. As soon as we
finally get to meet, I want togo through it in person. You
(56:27):
were one of the most creativeand well-off people in the
business. I think they shouldname ADUs after you actually.
So, Ding Bat ADUs, I like it.
But you know what, if peoplewant to get ahold of you, what's
the best way for them to reachout to you?
Ward Hanigan (56:41):
The best way actually is call our office
number at 619-283-5444. Or westill have our website up for
the foreclosure game, though. Ithink it's over. And that is the
www.foreclosureforum.com. Thereis a archive ton of articles
(57:05):
I've written. And some of it canbe germane today. Some not. I
have handy little things likehow to roach-proof your
property? Absolutely guaranteedRoach proven to one time you
don't have to do it again. Andstuff like that. And so, yeah,
(57:26):
or give us a call. I love phonecalls. In fact, I'll do anything
to generate more phone calls,because that's what keeps me on
my toes and keeps me sharp. It'speople asking me these
questions. And it forces me toreview that subject matter
before it's gone stale.
Aaron Norris (57:46):
And if you go to the San Diego Creative Investors
Association live, Ward istypically in the back at a table
and more than willing to answerquestion which I've always
appreciated. So, Ward, I willmake sure to definitely post all
that information on the website.
And thanks! Thank you forlistening 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
(58:08):
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.
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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