Connect, Collaborate, and Conquer the Poconos Market (from the EPIC Meet Up)

This episode was recorded during the EPIC Meet Up last May 2, 2024.

If you're interested in learning when the next meet up, follow us on social media and stay tuned!

Unlock the secrets to thriving in the tempest of commercial real estate with multifamily property specialist Rob Velez. Our latest episode takes you through Rob's impressive journey from collegiate beginnings to industry savviness. Step into the world of managing risks and maximizing opportunities in an unpredictable market. With Rob's expertise, we dissect the impact of interest rate hikes and the decline in multifamily transactions while serving up valuable tactics for investors braving today's financial climate. Whether you're a seasoned pro or new to the game, you'll come away with indispensable tools for debt management, bracing for property value dips, and leveraging rental growth in hot markets like Boston.

Experience the dynamism of real estate market trends and delve into specialized topics such as the ingenious tax benefits of cost segregation. Rob and I break down the complexities of evaluating mixed-use properties and the art of pricing commercial spaces to amplify investment returns. Listeners will gain a keen understanding of the layers that shape market trends, including the ripple effects from the West Coast and how pivotal shifts, like new train services, are reshaping locales like the Poconos, opening doors to economic prosperity and reshaping the real estate canvas.

Strap in as we navigate through the intricate web of investment strategies, from creative financing to savvy tax maneuvers, and the nuanced art of negotiation with tenants. The episode doesn't shy away from the nitty-gritty of landlord-tenant dynamics, offering a treasure trove of strategies for handling rent arrears and evictions with finesse. By the end of our conversation, you'll be equipped with a blueprint for building robust relationships with tenants, mastering the complexities of collections, and staying ahead of the curve with actionable intelligence in the world of real estate investing. Join us for a journey that promises to transform the way you perceive and tackle the challenges and opportunities within commercial real estate.

This episode is brought to you by Premier Ridge Capital.

Sign Up for our Newsletter and get our FREE E-Book where you'll learn everything you need to know about creating financial freedom through multifamily syndication.

Visit www.premierridgecapital.com now!

Introducing the 60 Day Deal Finder!
Visit: www.MartinREIMastery.com
Use the Coupon Code: WEALTHYAFfor 20%  off!

This episode is brought to you by Premier Ridge Capital.
Build Generational Wealth As A Passive Investor In Multifamily Real Estate Syndication!
Visit www.premierridgecapital.com to find out more.

Support the Show.

Episode Transcript

Speaker 1 (00:02):
Today we have a special guest, rob Velez.
He's a commercial real estateexpert in the market and we're
going to have the audience ask abunch of questions, and I'm
going to start it off and askhim a few questions.
So, rob, welcome my friend,appreciate you being here.
Thank you so much for having me.
All right, rob, so I'm going toget right into it.
So can you give us a briefoverview of your journey in

(00:25):
commercial real estate?

Speaker 2 (00:27):
Sure, so I started.
I was a junior in college,right here at ESU I've been in
Stroudsburg since fifth gradeand a broker, daniel Parrish.
She was looking for someone whodidn't know anything, so I
interviewed with him and forsome reason he gave me a job
because I knew nothing aboutcommercial real estate or real
estate period and took me underhis wing.

(00:50):
I started up.
I was sitting in a class junioryear of business school and I
sold Steve's Pizza across thestreet for half a million bucks.
I was like this is where I gotto be.
So then I caught the bug andI've been at it ever since.
I was an everything broker fora very long time, as most people
are in the small local marketslike this and then I niched down

(01:12):
into the apartment space threeyears ago and now all I focus on
is large multifamily.

Speaker 1 (01:18):
Great.
What he's not telling you is Iremember him just graduating and
he comes to my office.
I called his boss Dan.
Remember that.
I called his boss Dan because Ihave some offices that I
subleased in the back.
I said, dan, I want to rentthese offices.
And here comes Dan with thiskid.
This kid is scared.
He's sitting on the other sideof my desk.
He's all scared, remember that.
And he listed my.

(01:40):
I think I was your firstcustomerased those offices for
me.
He leased a couple of officesuites for me.
So we're going to go right tomy next set of questions is how
can an investor navigatepotential risk in the current
market?
The market is funky right now,so we got interest rates going
up.
We have buyers thinking thattheir properties are still
sellers, thinking that theirproperties are still sellers,

(02:02):
thinking that their propertiesare still worth what they were
worth in 2022 and 2021.
So how can a new investor or aninvestor navigate potential
risk in this market?

Speaker 2 (02:14):
Yeah, I think you have to focus on the debt,
because the debt is a big partof the problem today.
A lot of people who have debtthat is maturing, people took
short-term debt A lot offlippers here.
That is debt that's not fixed.
So you got to really be carefulwith your debt.
Today, expenses are going up.
Be careful with the insurance,the cost of turnovers and,

(02:37):
obviously, price.
You got to always what wethought was a good deal before.
Assume prices have come down20%, so go down even more, so
then you're buying correctly toprotect yourself from a
potential another 20 decline.

Speaker 1 (02:53):
you'll be okay so, rob, you and I were talking not
too long ago and, um, I had saw,I saw a, I saw a costar report
and in the costar report therethere was a.
The report said thatmultifamily in 2023 guys,
transactions were down by 56%.

(03:14):
Let that sink in for a minute,right?
Multifamily transactions weredown 56% last year, rob.
What do you attribute that to?
And are you seeing that here inour local markets in the Lehigh
Valley and the Monroe Countyand the Poconos market?

Speaker 2 (03:31):
Yeah, so it is definitely was down probably
more than that.
65% in transactions affected,mostly in the Sunbelt market.
That's what's mostly gettingaffected, but it was the debt.
The debt was the biggestproblem.
We went from 4% to 8% in six,eight months and people were not
prepared for that, sodefinitely the debt.

Speaker 1 (03:54):
What are you seeing sellers are doing to navigate
those and where do you see thepotential opportunities for
people in the room here rightand for investors may be
listening to us that want to getinto the game?

Speaker 2 (04:08):
Potential opportunity .
I'm going to keep going back tothe debt.
So you find somebody that has amaturity date coming up, let's
say, a new construction, any newconstruction you find today.
That contractor, that builder,the developer got that loan two
years ago at about 4% and nowthey have to refi or to keep it
or they have to sell becausethey're going back to the bank

(04:29):
at seven and a half 8% andthey're working on tight margins
.
So they weren't prepared forthat Doesn't fit the bank's DSCR
.
So the debt is huge right now.
That's what I'm going afterPeople who have maturity dates
today.
In commercial real estate it'stypically five-year notes fixed
for five years.
So you know, anyone who boughtfive years ago is probably

(04:51):
coming up with that today.
So the debt is definitely a bigopportunity today.

Speaker 1 (04:56):
I think you touch on something really powerful guys
and he really just hit onsomething really really powerful
.
If you guys want to get into,if you want to buy apartments or
commercial we're talkingcommercial stuff that's five
units and bigger or mixed use hejust shared some real gold and
gems.
They're five years right.

(05:18):
So I just refied a five unittwo days ago that I bought in my
fire property.
You guys seen that one onsocial media right, the one that
was burned down.
So I bought in my fire propertyyou guys seen that one on
social media right, the one thatwas burned down.
So I just refinanced thatproperty two days ago.
So that's only fixed for fiveyears, guys, and it balloons in
10.
If you buy a list, let's saytoday, of investors that bought

(05:39):
properties five years ago thatare units, are between five and,
let's say, 20, right, and theygot financing five years ago you
know their term is coming due.
Five years ago they had a rateof 5%, 4%.
I mean it wasn't 2% yet Fiveyears ago it was a little higher

(05:59):
, but four and a half 5% rightNow.
I just refied a five unit at7.75.
I refied another property inDecember sorry, in January at
eight and a half at the SCRsingle family.
I only have two single familiesin my portfolio outside of my
primary residence and eight anda half Guys.

(06:19):
I got a lot of experience.
I got an impressive trackrecord for the banks, right, and
they gave me an 8.5% interestrate back in December.
So back in January, but Januarythe markets were really, really
scared.
Nick, you actually did thatloan for me.
As a matter of fact, mylender's in the room here, right
?
So just again, major major goldthat he shared there.

(06:43):
So I want to open up the room.
I'm going to ask him one morequestion, but I want to open up
the room for the audience to askquestions.
You guys good with that, allright.
So, rob, what are some of thebiggest mistakes you see new
investors make and how can they?

Speaker 2 (06:58):
be avoided.
They're looking at the seller'snumbers, realtor's numbers, and
they think that's gold.
You know, but they're takingthat at face value and you
really can't take what thesellers or the realtor says at
face value.
They're not on your side.
Um, even if a bank approves adeal doesn't mean that it is a
great deal.
So you really have to know,know your stuff, know your exit.

(07:20):
Know that you have, uh, cashflow enough I wouldn't follow
the herd.
Everyone's about the onepercent.
Know that you have a cashflowenough I wouldn't follow the
herd.
Everyone's about the 1% rule.
Or you have to hit that 1.25DSCR.
We're here for big cashflow, sothen we, if something happens,
we are protected.
What was the?

Speaker 1 (07:35):
last deal that you were, that we had on the
contract with you that weactually backed out of the deal.

Speaker 2 (07:42):
Cabins, cottages.
Yeah, the cott, the cottages weliterally.

Speaker 1 (07:44):
We literally experienced this on a deal that
I had on the contract.
Well, how many cottages werethere?
25, 20 units or so, 20 units upin tannersville and then we got
in the numbers and the numbersjust weren't there and we were
like, now we got to get out andthe seller was just on some
other, you know, he thought thathis property was worth
significantly more than it.
That we can make, make it work.

(08:05):
So what advice are you getting?
So, so we have some.
How many people are new in theroom?
Raise your hand.
So we got one, two, three, four, five.
So about five, six people arenew in the room, right?
That that are not don't haveany experience, rob, what would
you, what advice would you tellthem to learn how to run the
numbers?
First of all, how many peoplein the room want rentals, want

(08:26):
to build a rental portfolio?
I'm going to say 90% of theroom.
So what advice are you givingthem?
Because this is not somethingthey teach you in school, right,
this is not something you learnin school.
As a matter of fact, therealtors in the room.
Can you show me yourresidential realtors in the room
?
Raise your hand.
One, two, three, four, five,six residential realtors.

(08:46):
Okay, put your hands out howmany of you know in the room?
Not to put you on the spot, butI just want to point
residential guys how many of youwere taught in your brokerage
on the residential side what caprates are and how to figure out
what a trading cap rate is?
Zero people raise their handright.
So this is something that youneed to learn from someone

(09:08):
that's doing it, and that's thelanguage of money.
When I started this meetup, Isaid this is a money game.
You need to learn the languageof money.
So you're out there.
They're teaching you to sling,to sling.
I used to sell insurance.
I'm thinking policies, lifeinsurance policies.
They're teaching you to slinghouses, but they're not teaching
you the language of money, howto work with guys like us.

(09:29):
You need to learn this language.
So what advice are you givingto the realtors in the room and
to the new guys in the room?
How do they get thatinformation?
How do they get trained up,coached up to get?

Speaker 2 (09:42):
that info.
Yeah, I mean, if you want toexcel, and excel quick, you have
to find a mentor.
That's probably the best way todo it.
But we, you know, you haveYouTube and everyone is running
a cap rate formula on YouTube.
So you find someone who'sreputable, someone who has the
experience, the units, not justanybody and then it's just
practice.
You have to have your at bats,you have to underwrite deals

(10:04):
every single day.
You have to be an expert in.
You know where you're trying togo to.
And for the realtors, I wouldsay get into a firm or a
brokerage or a group that'sinvesting.
That's why I have to do alittle bit of residential.
Ideally they're all commercial,but if that's where you want to
go, surround yourself with itwant to go surround yourself

(10:25):
with it.

Speaker 1 (10:26):
Yeah, yeah, this is really good.
I just want to see by a show ofhands how many people in the
room have a coach.
I'm the only one.
Two, three, four, five, six,six of us have a coach.
Seven of us have a coach rightout of like 20, right, if you
want to excel and you want to gofast, you've got to have
mentorship, you've got to have acoach.
No-transcript a tangent aboutthis, but it's so important

(11:08):
because when you have a coach oryou have a mentor let's say
Rob's your mentor you're goingto Rob and you're going to be
like, hey, man, does this dealmake sense?
And Rob's going to tell you didyou look at this?
Did you look at that 20%expense ratio?
Are they stupid?
What is this broker talkingabout?
20, a well-ran multi-family andthe country well-ran.

(11:29):
The average numbers is 50, soit's a red flag.
But you only get that when youhave the right mentorship, the
right coaching, right makessense, or you're surrounded with
the right people.
You're in rooms like thisgetting the information, you are
who you spend time with and youare who you listen to.
Period of the story.
That's it Rob and I are heretalking about, and you're a fly

(11:51):
on the wall and we're talkingabout multimillion-dollar deals
and you're making $50,000,$60,000 a year and me and Rob
are talking about, hey, I'mgoing to flip this property here
, I'm about to.
I didn't pay taxes this yearwhich I didn't, by the way,
publicly, legally I did a costsag.
Yeah, I don't win man, Ifreaking paid a hundred grand
the year before that.
This year I didn't pay thetaxes because I did a cost sag.
Right, because of the people Iwas surrounding myself with,

(12:13):
Like, I was like, hey, I had alot of pain the year before, I
paid a lot of money in taxes.
And I was talking to my circle,to my master, I was like yo, why
didn't you do a concert?
And I was like I don't know,but guess what?
I'm doing it now.
Right, I did it.
We got my taxes today Zeroliability, amazing, right,
amazing.
That's a freaking win.

(12:33):
And that's legal, right, guys,that's legally.
But that's only because of thepeople I surround myself with,
the conversations I'm having,people I'm having with, and
sometimes you pay for thataccess.
You've got to pay to play,you've got to pay to get that
information.
But it's that one idea.
That one idea, guys, right,that one idea you get.
That makes a million bucks.
So, rob, my final question, andI'm going to open it up to the

(12:54):
audience what are the pros andcons of different property types
retail, office, industrial forinvestors with varying risk
tolerance?

Speaker 2 (13:04):
So we'll run through each sector a little bit.
Office is very difficult.
It's always been difficult,especially in our market, and
now, after the pandemic, it'seven more.
This is very hard to lease.
So if you were to buy an officebuilding, that vacancy could
sit vacant for four to four, sixmonths.
You just have no idea withoffice.

(13:24):
And then industrial, if youtake all the big this is what I
heard from a reputable source, Idon't know where it come from,
but take all the huge citiesaround us.
Boston should be fine becausethe lease is up very, very
quickly.
We have a still strong demand.
In the Sunbelt markets there'sa lot of new construction, like
in Texas and all those markets,so rents are going down.

Speaker 1 (13:48):
But in our markets, where there's not tons of
construction, our rents are notare going to be okay, so so just
for for for the record, theNortheast where we are, by the
way, guys is the only place inthe country that's still strong
real estate in the market isstill strong.
The only place in the countrythat's still strong real estate
the market is still strong.
The only place in the countrywhere we're seeing rent is still
growing Boston, massachusetts,all of the Northeast right,

(14:09):
we're still seeing rent stillgrowing, although my property
manager's here and I'm notnecessarily seeing that, but
that's what the data is saying,right, that the Northeast is
still strong.
Actually, melo, you sent me anarticle.
Yeah, you sent me a Coal reportjust a few days ago.
But, yes, so the Northeast.
So we're in a good spot, guys.
But also, I want you all to knowthat, being in the Northeast,

(14:33):
the meltdowns usually happenfrom the West Coast and then
they come this way, but theyhappen over there first, right,
and California has been, and wehave a lot of California
listeners.
So, big up to you guys, loveyou guys.
But you guys know it is what itis, right, they're getting hurt
right now over there inCalifornia.
It's weird because I talked toa lot of people in California
and they're like, oh, we'restill getting multiple offers

(14:55):
and all of this craziness.
And then I talked to otherpeople and they're like no,
we're not, we're not gettingthat.
So it's market dependent, areadependent.
But we're in a strong.
So far, so good, we're stillstrong.
But again, I will rely.
I'm going to defer back to youguys, the realtors, because you
guys are boots on the ground.
I'm just an investor, right,I'm just a guy that's looking at

(15:16):
the data and making decisions,but you guys that are selling
out there are out there talkingto people every day and know
what's really happening.
My property manager back thereis the one boots on the ground,
talking to people.
He knows what's happening.
I'm just a guy putting thedeals together, right, so I want
to take questions.
So do we have any questions?
I want you guys to come up withsome questions, please.
Josh, come up, Josh, and Joshis coming up and he's going to

(15:40):
ask his question.
Go ahead, josh.

Speaker 5 (15:42):
So I basically wanted to ask I'm sure everyone in the
room wants to know the cost segsituation with the no taxes.
Could you explain a little moreon that?

Speaker 1 (15:50):
So that question is for me, all right.
Thank you, josh.
Cost segregation is a studythat's done to accelerate
depreciation on assets.
So I literally met with myaccountant today.
I told you guys a few minutesago, I want to get my taxes
today, my, my, my, my, my, mypaperwork today, and, um, so I
own a 57 unit apartment building.
So what we did is we hire afirm, they go out and then they

(16:13):
itemize every item and then wetake accelerated depreciation on
on every item.
So in that particular asset wehad, I'm going to say 300, I'm
going to say like $480,000,something like that.
I know my set.
I'm a GP, I'm a general partnerin that deal, right, I have a
partner.
I own 35% of the shares.

(16:34):
Of the 35%, equity is mine andmy business partner owns 35 and
then the rest is investors, likeyou guys.
So it could just be.
I opened it up for asubscription, so 35% of those
credits are mine.
So what happens is fulldisclosure.
I'm not a, I'm not a CPA, right?
I just have smart people aroundme talking to me and advising
me.

(16:59):
So, um, I don't know if hecalled the credits or whatever
he calls it.
I was telling him I was at, Iwas in his office and I was like
do I have any leftover?
Right, because I'm not paying?
Okay, do I have leftover fornext year Because I need to
think about the next cost seg Ineed to do?
Right, because I don't want topay next year.
And he was like it's not credit.
He called this something else,right, cpa language, I don't
care, I just so.
But it's a certain amount ofcredits I'm going to call it
credits you get, and now youwrite that off against your tax

(17:22):
liability.
So let's say you earned, yes,yes, and it carries over.
So you have a tax liability of$100,000 and I have $400,000 in
cost said credits.
I now apply $100,000, boom,brings my liability to zero.
Beautiful thing, that is afreaking beautiful thing.
Right?
So you have a W-2 job andyou're a high income earner and

(17:44):
you're paying a lot of money.
You start investing in assetslike mine or groups like mine,
and when we do a cost seg study,you get your share and boom, it
brings down your.
You got that, man, becauseyou're an investor in that deal.
Right?
You get that depreciation.
You get to write it off on yourtaxes.
I hope that answers yourquestion, josh.
Anyone else?

(18:04):
So bring up some questions.
Please, jeremy, come up.

Speaker 6 (18:08):
Okay.
So my commercial question ishow do you price out the square
footage on commercial units whenyou have mixed commercial and
residential?
So if you have a six-unitresidential, three-unit
commercial, how would you priceout those three unit commercial
places?
It's kind of hard to figure out.

Speaker 2 (18:27):
For sure.
Great question.
So the commercial spaces, youwould just do it separately If
it's because they're kind ofbased off the cap rate.
A lot is on the income, so ifyou were to have an AT&T and a
barbershop, you're not going tovalue each same cap rate, so you
really have to do each oneseparately empty.
How do you, how do you marketto to get somebody in there?

(18:48):
How would you price out forlease companies?
Uh, based off of comps.
So you're going to start offwith the comps so you see who in
the area has retail space andwhat they're leasing at, and
it's probably around 12 bucks afoot.
You know, a thousand squarefeet, thousand a month, give or
take if you're in our market,but go off of the comps If
you're going after you have agreat space, class A space, and

(19:08):
you can go after a nationaltenant.
You may put no price there andthen when they call you jack
them up to 18 bucks a foot, butit's really just off comps.
Perfect, we got one morequestion here.

Speaker 1 (19:19):
Anyone else got questions?
Just come up, just come up,just come up, just come up, just
line up, so we can knock themout, okay, I have a few.
Hi, this is Natasha.
Natasha's got a few questions.

Speaker 3 (19:27):
My question is first, because, if I'm not mistaken,
you don't need a separatelicense to do commercial correct
.

Speaker 2 (19:40):
So how do you get into the commercial space?
You just have to surroundyourself in the commercial world
.
You just have to stop sellingresidential.
You're no longer theresidential broker.
All you do is commercial realestate and you just have to take
on that identity and all youfocus on.
All you prospect for when yourbuyers call you find me a house.
I'm sorry, I don't do thatanymore.
You just got to burn allbridges and go for it.

Speaker 1 (19:59):
By the way, he just did that to me.
I called him what two weeks ago?
And I was like Rob, I got thisvacancies man.
Remember those little officeswhen you started with me?
Eight years later, he's stilltrying to get it.
I'm like yo, dude, I got acouple I need to rent.
He was like sorry, man, I don'tdo that, it doesn't align with

(20:20):
my goals.
So I just align with where he'sgoing.
So big up to you, bro, for that.

Speaker 3 (20:24):
And have you ever done residential, so that you
can compare the two, or you justcame right out of the box and
did commercial.

Speaker 2 (20:30):
Right out of the box and commercial.
But when I went to my interviewI didn't know I was going to a
commercial firm, so I just gotlucky.
I didn't know residentialcommercial.
He got very lucky.

Speaker 1 (20:43):
I never filled a house in my life and just got
lucky Because when he came in uminto the commercial world I w I
wanted my daughter.
A couple of years later I wasgetting my daughter license and
I called Dan and I know his, Iknow his boss Like I've done
business with his boss years agoand he told me, no, he won't
take my daughter until that's mykid, like I was teaching.

(21:03):
I was like yo, dude, like I'mgoing to teach her, like you
ain't got like I'm going toteach her.
He said, nah, he will.
He won't take anyone that's new, that doesn't know the that's
not already in the marketexperience and know the market.

Speaker 3 (21:14):
And then one last question on S&I.
What is the cap rate?

Speaker 2 (21:18):
What is the cap rate?
A cap rate is pretty much howthey evaluate your return on
investment.
So it is your net, your income.
Very simple formula for caprate Income minus expenses
divided by your purchase price.
Income minus expenses equalsNOI.
You take your NOI divided byyour purchase price.

Speaker 7 (21:40):
That is your cap rate ?

Speaker 1 (21:41):
percentage.
Next question.
Thank you, Natasha.
Let's give her a hand, by theway, for that.
Great questions Next question.
Thank you, Natasha.
Let's give her a hand, by theway, for that.
Great questions Great question.
Lewis is coming up.

Speaker 2 (21:55):
All right.
So I have a question about howdo you prevent yourself from
what's happening to theseinvestors now, like you said,
where they've got theseproperties?
Five years ago?
Now the interest rates arechanging and their numbers don't
work for them.
Five years ago now, theinterest rates are changing and
their numbers don't work forthem.
Uh man, some is sometimes it'sjust bad luck.
I mean, if you got some peoplegot loans 10 years ago and it's
maturing now you got a loan in2014,.
You did everything right.
You just happened to come upagainst a bad debt cycle.

(22:17):
It's just really not much youcan.
You can do there.
Um, now I'll tell you what youcould could do.

Speaker 1 (22:23):
Please Let me give you some strategies right.
So when you're underwritingyour deals, you always
underwrite with multiple exits.
If you buy right, you'll nevergo wrong.
You always make your money whenyou buy.
And if you buy a property, makesure you stress test the shit
out of it, and those of you thathave been my students know that
I teach you guys that Stresstest.

(22:48):
What's your exit?
What other exit do you have Ifthis doesn't work?
Will it cash flow?
If that doesn't work, will thiswork right?
So, as long as you buy right,if you buy right, I'm a bigger
believer that if you buy aproperty right and you finance
it right, you have options.
I just refinanced a property at75% loan to value right now.
But let me give you an exampleof what I mean by that right.
You got to be a student of thisgame.
I had an option.

(23:08):
I had a buyer for that property.
Could have sold that, but Iactually had it on the contract,
could have sold that property.
I decided not to sell thatproperty, lewis, and the reason
I decided not to sell thatproperty was because, when I
look at the overall overarchingpicture of the market, I'm going
to get into some other stuff alittle bit more sophisticated, a
little bit more high level, butplease, guys, stay with me.

(23:29):
We have 1.8 million immigrantsthat came into our country over
the last 18 months, two years.
Yes, we all know that.
We all seen on the news, right,that's that we know of.
That have to go back to court,that we know of.
So we'll just go to a million,but we know it.
Significantly more than that,we had a crisis, right, a
shortage of housing of 3.5 to 4million prior to that.

(23:51):
Yes, okay, when I do the math,that's 6 million, but let's be
conservative.
Right, there's overdevelopmentright now, and the Sunbelts have
millions of units.
I think they have 2 millionunits coming online right now.
They're going to get absorbed,right, they're going to get
absorbed really quick, but wehave this migration issue.
Here's what else is happening.
Is that new developers thedevelopments that you're seeing

(24:12):
happening coming up right noware people I think one of you
mentioned I think you mentionedit, rob are developers that got
these loans two years ago, whenthe interest rates were in the
fours.
Those numbers don't pencilanymore Right now.
Permits for new developmentsare down, so development have
slowed down.
So what does that mean?
When you think about that andyou seriously think and you

(24:33):
analyze that, that means in acouple of years, rents are going
to go up.
Now, I know it's not sustainable, guys, but it's just logic
because demand is going to go up.
Because where are we puttingthese people that just came into
our country?
Where are we putting them?
Where are we putting them?
We got to put them somewhere.
So the government is going tohave to throw money at the

(24:54):
problem they created.
Entrepreneurs bring value tothe marketplace and we solve
problems.
So when I was looking at this,when I was looking at this thing
holistically, my decision wasI'm going to keep this property
because I'm betting that inthree to five years it's going
to be worth even more becauseI'm anticipating demand.

(25:17):
See that?
So I'm studying the marketplace.
So, to answer your question, aslong as you buy right, studying
the marketplace.
So, to answer your question, aslong as you buy right and
you're studying the data, Ishared stats with you guys.
There's a reason why I sharedthe stats with you guys.
And you're studying the data,you can make better informed
decisions.
Does that make sense, right?
So it's all in how you buy andthat's how you, that's how I

(25:40):
manage my risk, that's how Isleep at night.
Hey, when my students come tome like, hey, this deal, what do
I tell you guys?
What do the numbers say?
I don't care how you feel aboutthe property, what does the
data say?
And then we make the decisionbased on the data.
Is there another part to yourquestion, norris?
Thank you, let's give him ahand.
We have Javon.

Speaker 8 (25:59):
How you doing.
I'm Javon, everybody Nice tomeet you.
Hey, javon.
Okay, my first question is aninvestor question.
In your experience, what arethe most important qualities or
skills that a successful realestate investor should possess?
Should I?

Speaker 2 (26:14):
Yes, is there more to that or is that, I don't know?
Deals you got to know how tofind deals.
Most important thing If youfind a deal, you can find the
money, you can find a partner,you find a lender, you find
everything.
You find a good deal.
Okay, and I have one morequestion.

Speaker 8 (26:31):
Let's say uh, what do you see as the most promising
opportunities or trends in thePocono real estate market right
now?
And then?
Yes, I know it's a greatquestion, but Martin.

Speaker 1 (26:37):
Um, so I'm going to go ahead and put it out there.
We I met with the mayor of thecity of Scranton.
I'm actually meeting with thestate senator I had him on my
podcast a couple weeks ago MartyFlynn.
We're actually meeting tomorrowfor lunch and we know already
for sure that we have the Amtraktrain.

(26:58):
By the way, how many of youcame to the Poconos from New
York or wherever because of thistrain?
I was one of them.
The train right.
20 years ago.
I moved to Poconos.
The train right.
It's finally coming.
So they got the funding and thetrain is stopping in North
Cortland, here in EastStroudsburg, then it's going to
Tobyhanna and then it's going toScranton.
That's the last stop.
So when you ask aboutopportunity, and I'm going to

(27:19):
put it out here.
So all my listeners and allthat, all of you that are here,
thank you for coming here.
Here it is, buy near the train.
Here it is, buy near the train.
Here's what I could tell you.
Another insight.
You want me to give you anotherinsight tip?
Yes, you guys want it.
Yeah, so okay.
So I was told by very crediblesources that by 2028, the train
will be functioning and runningup and down the northeast, from

(27:43):
New York into Scranton andmaking all those stops.
So your biggest opportunity Iwould be looking around those
areas, buying and holding aroundthose areas.
So Scranton, where in Scranton,so it's by the mall, so by the
Steamtown Mall downtown is whatJeremy is from Scranton.
So you know we're doing somedeals right now in that Scranton
market.

(28:03):
Jeremy is going to be doingsome deals in that Scranton.
So you know we're doing somedeals right now in that Scranton
market.
Jeremy is going to be doingsome deals in that Scranton.
So we're anticipating.
So the market's not there yetbut we're looking down the road
of what's coming.
Anticipation is power guysright, the only way you can
anticipate is if you're studying.
Make sense.
Okay, and my last question is.

Speaker 2 (28:37):
I know you said earlier you were doing that
conversation with Starbucks Iwas wondering about in that area
of Marshall's Creek.
I see the Smithfield Gatewayand I'm guessing there's
something else coming.
What is necessarily that?
Is there just funding coming infor those those things,
especially with huge projectslike that State and government
funding?
But they get a lot of investorsas well, like they're looking
for I've seen the barrows yeah,yeah, yeah, so it's a developer
and you could Google the map andthey're looking to do storage
apartments, a hotel and thenthat retail as well.

Speaker 1 (29:01):
Thank you.
Let's give Jayvon a hand.
We got Slade coming on up.

Speaker 9 (29:05):
So this is a question for the commercial real estate
agent.
It's a two-part question.
I know beginning residentialreal estate agents still have
trouble with lead generation orlisting generation.
How does a commercial agentstart with that?
He's a beast at that by the way.

Speaker 2 (29:20):
It's just finding deals.
Tell them how you really do it.
You got to be really good atfinding deals.
You got to be an inspector.
You know, like in I don't knowwhat they call it, but you have
to be really good at findingdeals and finding people.
And you find an LLC trying tofind the person.
It's just a numbers game,that's it.

(29:41):
And the same thing withresidential.
It's just a numbers game.
You got to really be out thereevery day and looking for deals.

Speaker 9 (29:47):
And then when you do find those leads and say they're
an investor, how do you providevalue to the investor?
That's a great question.

Speaker 2 (29:55):
The seller lead yeah, how do I provide value?
Um, I break return transactions.
I think the best way of meproviding value is that everyone
that's calling them is askingfor a listing and when I call
them up I'm just like give me arent roll, I have Martin here,
we'll make you an offer at 24hours, you know.
So I think that's prettyvaluable.
And showing them comps and dataand all of those things of that

(30:18):
nature and same top of mind, ifyou have a deal, you're more
likely to get the phone callanswered, to get a response, to
get a listing from somebody.
Bringing someone deals isprobably the best way to build.

Speaker 1 (30:33):
I can tell you let's give Slade a hand, guys, for
answering that question.
But I can tell you, guys, as aninvestor, right, being on the
other side of that, the way youcould bring me the most value is
by bringing me value.
How do you bring me value?
You bring me data.
Look, the difference betweenRob, regular resi agent, right,
when I talk to them, is that Ican call Rob and I can be like
yo, rob, what's happening in themarket?
And Rob and I can have highlevel conversations.

(30:55):
What are you seeing?
What's happening with thesellers?
What's happening in vacancies?
By the way, rob's got a.
By the way, rob's got a, he'sgot a report here for you guys.
Rob, I don't know if you wantto share this with them.
He's got a report so I couldtalk to Rob about.
Rob can pull, pull, pullinformation from me where he
provides value to me, where theinformation he's sharing with me
allows me to make betterinvestment decisions.

(31:16):
Does that make sense, right,guys?
So I can call Rob and be likehey, rob, what's happening in
Monroe County with the rent?
Are they going sideways?
Are they going up?
What's happening?
Are they going down?
And Rob can go co-star, pull areport, send it to me within
seconds and we can have anintelligent conversation around
that.
And I can have a conversationwith Rob like hey man, what do

(31:38):
you think about this area?
What are you seeing there,right?
Can I execute on this planbased on this data?
That's how you provide value,right, by bringing pertinent
information that allows me tomake better decisions and that
makes me money, because I'm thisis about making money.
This is about nothing else.
This is secondary about.

(31:58):
True, for the matter is, ifwe're going to be honest as
investors, we have a mission,right.
So my mission for my company isto provide quality housing,
yeah, right, but I also have aresponsibility, first to the
people that lend me the money,and I always tell my contractors
it's like hey, man, I love you,but my loyalty, I still have a
level up and I got to report tomy investors, my investors no

(32:20):
investors, unhappy investors nome, no you.
I got to report to my investors.
My investors, know investors,unhappy investors know me, know
you.
I got to keep my investorshappy.
Make sense, right.
So if you're bringing, ifyou're an agent, bring me value
that makes me money, that Icould be better value to my
investors.
Period, end of story.

Speaker 5 (32:37):
Let's go with Josh.
So I feel like the lastgentleman asked a similar
question.
I'll still ask my question,Okay, so as an outsider looking
in, it seems like commercialreal estate versus residential
is a lot harder to find leadslike buyers and sellers.
So what are some creative waysthat you find these leads deals?

Speaker 2 (32:59):
you know, by buyers and sellers.
Mls is fire.
You know like they have greatdata.
So I would just pull the list.
It's just a list that you pulland what you go after.
If you're going afterresidential, that's what you're
going to find.
You start going aftercommercial, that's what you're
going to find.
So find an agent to pull you alist off the MLS and then you
skip, trace that list, startcalling them, start texting them

(33:21):
and do anything you can to thatlist.
That is strictly commercialreal estate which would be easy
to pull, just to remove theresidential ones.
And then you got to pay.
You know nobody wants to pay,so I pay a hefty amount for
CoStar.
That's where the big deals, allthe commercial real estate is
at.
They're the number onecommercial real estate, you know

(33:42):
, like Zillow, for example.
So you got to pay.

Speaker 1 (33:48):
I tried to get him to let me get access to his costar
.
He couldn't do it, so I wind upgetting my own subscription.
It's expensive.

Speaker 2 (33:57):
I was one of my recent deals, a motel deal I
sold in wind gap.
I was just driving by.
I see a name.
I'm like that's a apartment,looking building.
And I saw a name.
I went off Facebook.
I typed in Gateway Motel.
I DM'd him any interest inselling and he's like, yeah,
half a million bucks.
I'm in India, hit me up onWhatsApp Free app Just driving
by.
So you just got to get creative.

Speaker 5 (34:18):
Who's that question?
So, as someone who is lookingto scale this business, like
doing commercial real estate,like yourself, what are some
advice you can give on creatinga team, because I'm sure there's
tons of phone calls, tons ofreaching out, doing drive-bys,
like you said.
So what are some tips you cangive on creating a team, like

(34:38):
what positions go in play intoscaling that business?

Speaker 2 (34:42):
So commercial real estate, there's less
transactions, so you don't needas big as a team as maybe you
would in the residential side.
But I think the first teammember that I have right now
that I've hired is deal flow.
You know, I'm gonna havesomeone who's out there 20 hours
a week prospecting for deals,um.
So that would be the first oneand then from there you know
transaction coordinator andthings like that, but I think

(35:05):
deal flow would be the numberone, the Excellent.

Speaker 1 (35:07):
All right, go ahead.
Thank you, perfect Thank you,guys.
Is there any more questions?
Give them a hand.
One more question from Natashaand then we'll take one more, if
you have one more after Natasha.

Speaker 3 (35:17):
All right.
So actually I have threequestions.
So first question is forinvesting, do you do any
creative financing?
And the reason why I ask?
Because I, you know, I've beenlistening to going to meetups
different things, notnecessarily in this area, this
is the first one I went to inthis area but I hear a lot of

(35:37):
investors talking about creativeways to finance deals,
especially, you know, withpeople not having large, you
know, deposits and money anddifferent things like that.
So they're coming up withcreative ways to also, you know,
gain access to properties andstuff like that.

Speaker 1 (35:52):
Is that for me or for Rob?
Okay, so creative, creativefinancing.
I mean, I'll tell you, I did myfirst.
My very first flip was acreative financier.
You know a lot of residentialagents.
You guys are trained,unfortunately, that if it's not
the traditional, you got to put10% down, go get a mortgage.
Unfortunately, you guys aretrained, unfortunately, that if
it's not the traditional, yougot to put 10% down, go get a

(36:15):
mortgage.
Unfortunately, you guys arewired that way, am I right,
marcello?
You guys are wired that waythat if I say I want to do this
creatively, the realtorimmediately says what's the word
?
That's what?
That's illegal Bullshit, that'snot, that's illegal.
That's the first thing thatmost inexperienced agents say.
Because you're not trained,it's not even your fault, you
don't know that's illegal.

(36:35):
You can't do that.
So I'll give you an example.
So I went and I got thisproperty.
I did it with a bandit sign.
I put a bandit sign up, gotthis deal, got this guy called
me.
He was stressed, he wanted$22,000 for it.
I didn't have $22,000.
I said I'll give you five andI'll give you the 14, or
whatever the difference was, orthe 16 when I flipped the house.

(36:56):
Here's a promise I already know, he transferred the deed over
to me.
He didn't want nothing to dowith it anymore, he just was
good.
So that's a way to do acreative deal.
You can take over someone'smortgage right.
It depends on the strategy.
You could do a sub two, youcould do a sub two.
You could wrap the mortgageright.
So there's different ways to dodifferent things.

(37:18):
Here's the secret to realestate you, ready, ready.
The key is take control of theasset.
That's the key is to takecontrol of the asset.
I need to take control of theasset.
If I can take control of theasset with favorable terms, then
I can get creative and dowhatever I need to do to make
some money.
I'll give you a perfect example.
So one of my students todaycalls me, one of my mentees.

(37:38):
She calls me, by the way,sabrina got her first deal
locked up today.
She's about to make $200,000 onan ovation.
She calls me, she's.
She calls me, she's frantic.
She's like I don't know, barn,I got this deal.
Uh, there's a cop across twodoors down 435, it's 185 000 and
I'm like all right, calm down.
She was like what do I do?

(37:59):
I was like call the wholesalerand lock that shit up right now
and we'll worry about what wethe strategy is going to be
later.
Right, we know the deal makessense.
We, we know the numbers makesense.
It doesn't matter If you go inthere and you clean the property
up and you got a dumpster.
You clean it and sweep it, mopit, put some smelly goods and
you do nothing else and youthrow it on the market.
You buy it for $185 and youthrow it on the market for $275.

(38:22):
It'll fly off your shelf, right.
So there's different ways.
She could have also locked itup, novated, right, locked it up
novated or do a double closing.
We're throwing the market, do adouble closing.
So there's just a lot ofstrategies.
It's basically as creative asyou can get.
That's basically it.
The problem is that you haveregular residential agents with
brokers that they're all tryingto protect their licenses, and I

(38:45):
get it, I respect it, I'm notmad at you.
That's why me personally as aninvestor, guys respect to you,
guys that are realtors, mepersonally as an investor have
not decided to get licensed, notinterested, because I love my
freedom and I like to go outthere and be creative and do
things and have conversationsand I don't have to wear the.
I don't have to take off.
Put on the realtor hat and thenthe investor hat, and then I

(39:06):
got to disclose the disclosing.
I just want to have aconversation.
Here's my offer, here's what Iwant to do.
You don't like that?
I want to do this.
You don't like that, I want todo this.
Right, I could just haveconversations with people.
Make sense.

Speaker 3 (39:18):
And it's, it's, it's and that's why I asked you,
because I've been watching a lotmeeting a lot of different
people about different creativeways to finance.
When it comes to investing, myissue is I don't have anybody
locally.
So when I saw your meetup, Isaid, okay, let me come because
you can keep absorbing theinformation, but if you don't
have a community and someone ata time right.

(39:39):
So that's one of my issues.
Number two I wanted to go backto the building out here because
I was actually in a meeting I'mon a committee for government
affairs we had the president forthe building association come
out and he actually spoke to theinventory issue that we are
having out here and it's likewhat you said earlier the cost

(40:02):
and how everything is going up.
So a lot of he said from like1,200 to fourteen hundred
properties that used to be builtper year, they're now down to
about three to four hundredbecause of the cost of
everything going up.
So they can't if there's not amarket for it, they're not going
to build it.
So that speaks to the shortinventory that we have right now

(40:26):
and that's what we were in ameeting about, that we have
right now and that's what wewere in a meeting about.
They were also talking aboutpossibly making wholesalers get
licensed.

Speaker 1 (40:35):
Yeah, well, that's already in Philly.
So you guys remember, rob,Veronica, you guys were in that
meetup.
I think, mark, you were in thatmeetup.
One of my first meetups inPerkins I'm going to say 19,
2019, we had this meetup andChicago, the city of Chicago,
chicago, illinois, chicago.
I bought an article to thatmeetup and I said hey guys, here

(40:56):
it is, chicago is makingwholesalers be licensed.
So now in Chicago I think in myChicago listeners just bear
with me, I don't know, I don'tremember this is too long, but I
know that if you're not abroker, you can only transact
and only brokers can transactwholesales.
You got to be a broker, I thinkin the city of Chicago,
something like that.
You had to be licensed, butoutside of a broker you had to

(41:17):
be.
You can only transact two orthree deals.
But there's ways around it,guys.
I'm not going to get into it inthis podcast here, but I've
talked to investors of ways that.
I'll just say it I could lockup a property with one entity,
with this entity, right, andthen sell you the entity.
Hey Louis, you want to buy thiscrib?
No problem, I have this entitythat has this property on the

(41:39):
contract.
Let me sell you this entity,now you buy everything that you
buy the entity and everything itowns Part of what it owns.
Is this contract Done, dealRight?
So there's creative ways to dothat and I don't know if that's
legal or not.
So, hey, guys, listening,you're trying to know if it's
legal.
I'm just giving an idea.
I'm a creative guy and I'm incircles with a lot of real smart

(42:00):
people and this is a discussionthat was had.
So just full disclosure.
Okay, so yes, to your point andto the point I was making
earlier.
She just confirmed it.
At this building thing, buildersare slowing down because the
cost of money is too high.
This is a money game, guys.
This is a money game.
This is not anything else.
This is a simple money game.
We just use assets, real assets, to make money.
So when the cost is too high,we see slowdown in construction.

(42:24):
And what is that going tocreate?
What is that going to createwhen we already have a shortage
here?
More shortage, right, it's more, more.
It's going to put more pressure, more demand, and it's going to
more demand and more pressureon housing and those that can
solve that problem will becomerich.
Yes, is that exciting?
You're in this room.
So you got the informationright.
Those that can solve thatproblem and think, hey, how can

(42:46):
I solve that problem?
Can find opportunities andbecome rich in three, five years
.
Whatever intentions you set foryour life Make sense.
Any other questions, natasha?

Speaker 3 (42:55):
Last question is are you taking students still?

Speaker 1 (42:58):
Yes, yes, so we can talk about that later.
So I got a couple people we cantalk about.
Let's give her a hand.
Let's give her a hand.
Marcelo, you got a question.

Speaker 4 (43:11):
Marcelo's coming up.
That's a two-part question.
I wanted to dive in a littlemore on the cost seg, like on
how to, like one, anticipatelike the cost for that.
Are you paying that up front?
And the second part of thequestion was more on like
collective rents.
In the back end I've beenhaving tenants that I'll go do
the eviction process, win thejudgment, but I don't have a
forwarding address so then Ican't.
I'm finding it hard to pursueactually getting the money after

(43:35):
I win the judgment.
So those are my two questions.

Speaker 1 (43:37):
Okay, so the second question, I'll actually refer it
to my PM.
He's here so he handles thatstuff for us.
On the first question, the costsag.
So the first question was inthe cost sag when to pursue it.
I actually had this discussionwith my CPA today.
I was like, hey, dude, I'mabout to finish this, this, my
12 unit.
And I told him actually I havethis 11 unit I bought two years

(43:58):
ago and I want to do a cost sagbecause I don't want to pay next
year.
Right, that's my next one inthe bank.
Right, I'm thinking aboutwhat's in the bank so I can keep
taking, go, go, go, take mydepreciation.
And he said to me and I'm noCPA, this is the advice he gave
me.
He said how much you spend?
I said I think I spent 250 inthose, in those 11 units,
rehabbing it.
And he said to me if you didn't,if you didn't spend, uh, if

(44:20):
you're not over a million costbasis.
This is the language he usedand again, not a CPA the
language of money.
We all have to get familiarwith it.
If you don't have a milliondollars in cost basis, it may
not make sense, but if you own abunch of little stuff, if your
stuff is smaller, again, youmight want to talk to a CPA.
But, more important, I want youto talk to a cost side company.

(44:41):
I could give you the one I use.
So we spend $8,000 for onebuilding and then we spent like
another 7,000 for anotherbuilding.
So we spent like $15,000, butit's 57 units in two different
locations right around thecorner from each other.
So, um, that was the cost, thatwas the cost, so that's a

(45:01):
write-off for me and myinvestors.
So we write that off.
And then I got half a million incredits, right.
So that's a win.
Like that's a win.
Like man, you breathe, right.
When you got that kind ofcredits and you know you got
that in the back, you sleep goodat night, you know.
I know now that, hey, man, Ihave a million dollars, I could
go kill it, I could go flip andkill it with my flips and I
could sleep good at night.

(45:21):
You know what I mean.
I could go make, I could gokill it.
So this is why I'm a big, firmbeliever of having a rental
portfolio right, having thatpassive because of the
depreciation, the tax write-off.
Honestly, in my whole careerthis is the first year that you
hear things like Donald Trumpdoesn't pay taxes.
Remember that, remember thatwhole fiasco.

(45:43):
Right, he doesn't pay taxes.
Well, guys, he doesn't paytaxes legally.
Duh, this is what he does,right, he went, he got big ass
building, he got cost egg studyLegally.
The government says it's okayto do this.
Then he writes it off againstand it's legal.
So this is my first yearactually doing it and it's it
feels good man.

Speaker 4 (46:04):
You have to continue for the 10 years.
So there Can you pause it?
How does that work?
What do you mean?
Continue for 10 years?
It's like 27 and a half years.
You can squeeze it to 10 years.

Speaker 1 (46:14):
Yeah.
So the general rule that mywhat my CPA just told me he was
like don't do a cost seg ifyou're going to sell it in a
couple of years, because there'ssomething of so if you're going

(46:35):
to sell it in a couple of years, you recapture it, but you can
recapture it at a higher taxrate.
So there's some things to it.
You recapture your depreciationat like an earned or something,
not a CPA, but like an earnedincome rate when you sell it.
So now I'm recapturing that.
So now I'm going to pay ahigher tax than I would have
paid.
But this asset we're looking,we're holding this thing is
making us money right now.
This thing is just a machinemaking us money.
It's a good, we've got greatmanagers.
It's just doing good for usright now.
So you know we're waiting forthe rates to come down and when
the rates come down, then I'mtalking to Rob and I'm like Rob

(46:56):
give me a million dollars forthis thing and call it a night,
all right.
So it depends To answer yourquestion.
It depends.
Make sure you understand whatyour tax and what your strategy
is Like.
Hey man, do you feel confidentyou're going to hold this?
So I'll give you an example.
So the 12 unit right, and thatwe're redeveloping right now,
that one I talked to my CPAabout.
He said definitely we want todo a cost seg.

(47:17):
We want to do it now becauseyou have it's empty,
everything's new.
We want to do it now.
You're over a million in thatproject.
So we want to go, we're goingto go ahead and do a cost seg
immediately after we're donewith the construction in June.
We're going to take all of ourcredits.
But here's the second part tothis guys Ready, ready, who

(47:37):
loves real estate, come on, comeon.
I'm going to get excited when Ithink about this one.
So it's in an opportunity zone.
Opportunity zone says if I holdit for 10 years and I sell it,
no capital gains taxes.
If I do a and this is me and mycreative thinking, I'm not a
CPA, so CPAs, I'm going to runthis by my CPA.
But this is me and my, mygenius mind here.

(47:59):
Right, if I go and do a costseg and I say I get 250,000 in
credits and I hold it and then Isell it in 10 and then I got no
capital gains, baby, that's agood deal.
And I cashflow it for 10 yearsand I cashflow it every year for
10 years.
Is that good or good guys?

(48:19):
Come on, come on.
That excites me, that excitesme, right.
And there's deals like that forall of us out there.
You just got to know theinformation.
You just got to know theinformation.
You just got to get out thereand do it Good.

Speaker 4 (48:26):
Brother, you had another question.
Yeah, then the second one, Iguess, is to the property
manager.

Speaker 7 (48:30):
I wrote a lot of notes because collection bad
debt we call it bad debt, right.
So I mean, how many of you gotbad tenants that don't pay?
Right?
So we've always said collectionis either favorable if it's
collected, it's unfavorable ifit's not collected.
Right.
So how do we collect that money?
Number one you should have agood rapport with your tenants,
right, because I've had.
You know, we say in thisbusiness, bad things happen to

(48:50):
good people all the time.
Right, you fall.
You know the moratorium, theCARES Act, right, all the stuff
that happened during COVID.
We were helping getting peoplegovernment funding so they
wouldn't, you know, lose theirhousing, even though we couldn't
act on the right of possession.
So what is the right of underthe magistrate?
Right, instead of Pennsylvania,you can represent yourself or a
management company canrepresent you, and what you need
to do is file for non-paymentof rent.

(49:11):
You have a court date, you havea hearing, you go to court.
Now, if you're looking to getpossession of that property, you
have to go to court to file foreviction.
However, it could be a pay andstay, or it can be a pay and you
want them out, right?
So when you go in front of thejudge.
The judge is going to ask youdo you want this to be a pay and
stay?
And you say yes or no If it's abad tenant.
They don't have a rapport withyou, they never pay their rent,

(49:32):
they're always late, they alwayshave stories.
You know, maybe it's just timeto say, hey, how about I don't
take you to court?
I have a month, a month and ahalf security.
How about you get out in 30days and won't go after you for

(49:53):
collections?
You have an application on them, so you have their social
security, you have their license, you have a contract, you have
a lease agreement.
You have all the balls in yourcourt, like it is in your court.
But if you want to be the goodcop, bad cop I always have a
good rapport with my tenants Isay listen, I understand you
lost your job.
You know you're behind amonth's rent right now in
collections.
We have a month and a half insecurity.
How about you?
Let me advertise a property forrent.
You let me show the property,because ultimately, what you
want to do is get a new tenantin there right To to list.
You know, to rent the property.

(50:13):
Hopefully you get a little more, more market rate.
But you also want to hopefullyhave a good rapport with that
tenant, because you don't alwayswant to kick a person out.
You always tell people in 28years I've been doing it, I
started in this business in 1995.
We didn't have smartphones, wehad yellow pages.
We had newspaper ads.
We had the apartment guidebooks Remember those big
apartment books.
You can find housing.
And I always tell people.
I see a lot of.
I see my mom in this business.

(50:34):
I see a single mom strugglingwith kids to put food on the
table.
Keep a roof over your head.
So we know bad things happen.
But if it's a bad tenant, what'sa bad tenant?
They don't communicate with you, they don't pay their rent,
they don't care.
Take me to court, evict me.
Okay, we'll do that.
So there's a couple of thingsyou can do.
One you can try to do a paymentplan.
You know, out of court.
If you have to go to court,obviously go through as much as

(50:55):
you can through the wholeprocess.
I also also recommend I have aone page sheet in my office
hanging on my wall.
It's all the government fundedprograms.
So I go to the single mom and Isay here's a list of all the
companies you can call and allthe government funding programs
you can call.
They have free money for peoplelike you that are facing
eviction.
Try to get the free money.
Sometimes they'll pay up to sixmonths rent.
I had one lady fall behind.

(51:15):
They paid four months of herrent.
She got four months ahead ofrent.
I said now start paying yourrent every month.
You'll never fall behind.
That's what you need to do.
You got to talk to your tenants.
If you have a bad tenant, gothrough the process.
Possession If you're looking toget possession, you know, on my
lease, my lease protects me,protects my investors, my
landlords.
My lease stipulates I canterminate at any time with

(51:36):
30-day notice.
You can move in today and 30days from now and say hey,
listen, you know the landlorddecided to sell the house.
Here's a 30-day notice.
We have to sell it.
Maybe I'll help you find.
So come in as a good cop, helpthem find an alternative housing
.
If you have other friendsinvestors, property management
companies I have inventory.
I have friends that I can callhey, do you have a place?
I have a lady.
I just sold their house andthey need to move.

(51:57):
I'm looking for another place.
Non-renewal.
You don't have to have a legalreason why you don't have to
non-renew someone.
You literally can just say thisis a non-renewal notice, I'm
not renewing your lease.
Unfortunately, you have to getout at the end of your lease

(52:19):
term and then, if that doesn'twork, 30-day collections.
There's collection agencieseverywhere, right?
You want to credit report.
How many lenders are here.
You're looking to get amortgage.
You got to get those collectionaccounts off of your credit.
You go through a collectionagency, you have that
application, you have the socialsecurity number for that client
who you just evicted and you'retrying to get that money.
Report them to a collectionagency.
It's not going to be favorableincome today, but rest assured,

(52:41):
if they owe you two, threemonths rent when they do try to
apply for that mortgage threeyears from now, that's going to
come up on their credit report.
Guess, who's going to get moneythree years from now for that
tenant you evicted three yearsago?
You're going to get it.
Yeah, they're going to give youa BS, sometimes 50-50, 70-30,
whatever you agree, depends onhow many accounts you have.
Yeah, it'd be nice to get apaycheck three years from now,
right?
And then also in somejurisdictions, if you have their

(53:05):
employment, you can take thatjudgment to the court and the
magistrate recorded on themonetary judgment and they can
garnish their checks if you havetheir employment.
So I've only did that one timeand it didn't work because he
quit that job and went somewhereelse.
But I can tell you there's norunning.
That's always going to be ontheir account.
You can't run from your creditscore, you can't run from your

(53:27):
collection accounts.
So there's a lot of ways youcan do, but I would always go
through that.
Be the good guy, go to them,say I know you fell behind,
let's get a payment plan.
You're behind two months.
I have a month and a half insecurity.
How about you get out in 30days?
I'll give you a 30 day, 45 daypayment plan so I don't have to
go through.
Know that's the best way if youhave a good relationship, but

(53:48):
if it's a bad tenant you want toget them out.

Speaker 2 (53:49):
Go through the eviction process and go, all you
know all hands on back Wheneveryou try to get it yourself.
Uh, uh.
You said you go to thecollection agency.
Never try to get it yourself.

Speaker 7 (54:00):
Are you guys in the collection?
No, I always first.
I always try to collect itmyself for sure.
Yeah, absolutely.
You know, if it's a good tenantlike.
I've had some situation with agood tenant and they're like,
listen, I'm starting my new jobin two weeks.
I lost my job so I fell behinda month and a half or two, so
keep my deposit.
I'll either play spotless, I'mgoing to put a lockbox on the
key, I'm going to give a 24-hournotice, I'm going to start

(54:21):
showing that property in hopesof pre-leasing it Because,
remember, the idea is to get ofit and then let them exit.
Do a payment plan if you haveto, and then it kind of works.
You don't have to go to court,there's no filing fees, there's
no eviction, all that stuff.
Very cool.

Speaker 1 (54:34):
Thank you.
Let's give Melo and Marcello ahand, thank you.