San Diego to Lexington: Garrison Haddon's Out-of-State Playbook

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0:00 Hello and welcome back to the owner meeting podcast by multif family strategy. I am so excited to have Garrison on today. Garrison one, welcome
0:07 to my house. Second, welcome to the pod. Absolutely. Appreciate it. Thanks for having me. Absolutely. Garrison uh he lives in San
0:14 Diego, California. However, he invests in Lexington, Kentucky. Lexington, Kentucky. So, out of state
0:21 strategy, he's actually joined multif family strategy and gone through the mentorship program where he's gone from buying a single family and small multi
0:27 to larger multif family. We're going to talk about those transactions, how to scale from small rentals into larger
0:34 rentals, very much like I started. I started with duplexes, but same thing. And uh where his portfolio is at today
0:40 and what's next for him. So, love sharing with owners who have done the thing that you want to do. I think Garrison's in a perfect place where this
0:47 is attainable for anyone if you focus up and get the right set of strategies. So,
0:52 Garrison, tell us a little bit about the uh your background here. Why why Lexington, Kentucky? Yeah, it's a it's a
0:58 long story and I'm going to keep it short so this doesn't turn into a uh 45 minute podcast here, but I knew San
1:04 Diego wasn't the place for me. Uh California is not very uh landlord friendly to say the least. That is true.
1:09 Uh so started looking out of state in 2021 I believe it was and uh looked at a
1:14 bunch of different markets and with my limited knowledge at the time really just listening to podcasts and
1:20 mainly Bigger Pockets. I decided somewhere in the Midwest or the South was somewhere I'd start looking and
1:26 started doing market research and uh long story short, decided I wanted to invest somewhere. I had some sort of
1:32 boots on the ground, somebody I trusted. So, I had a friend named Darren Huber who's a Michigan city in Yep.
1:37 Uh so, I actually bought my first deal with Darren. He's a realtor up there. Had a portfolio of his own. Bought a duplex up in Michigan City. Uh bought it
1:44 for I think $90,000. It brought in about 1,500 a month after some property management nightmares I won't go into
1:51 and some some headaches. We learned a few things for a small property though. That's pretty decent cash flow. It was great. It was great. Older home
1:57 needed some work, but it was a good start. Yeah. Uh after we had the place for a little while, I started learning a little bit more about the fundamentals of of real
2:04 estate and it's it's more than the cash flow, more in the appreciation side, and we weren't going to see that in my
2:09 opinion in in that market. uh and the market was quite limited in in size and scope uh and for what I wanted long term
2:15 with growth into multif family. I I saw that as as a limiting factor. That's something a lot of people bring up is is do you actually have to choose
2:22 between cash flow and appreciation or can you stack the deck so that you can choose both instead of one or the other.
2:28 Yeah, I I and I think that's part of why I chose Lexington. I think it's a good mixture of both. Uh it is not a rapidly
2:33 growing market. You know, it is not like some of the areas you're investing here in Texas where the population growth is
2:39 just immense. It's insane. Uh Lexington is like slow and steady,
2:44 which for me was really what I was looking for. Uh I have a W2 that is my what I call my down payment generator.
2:50 Yep. Uh that I plan on keeping for quite some time as I build the portfolio. And I wanted more of a a slow and steady
2:56 growth. Uh something I could depend on that's not going to have the the es and flows that some of the growth markets might
3:01 have. Yeah. Uh so anyways, pivoted out of Michigan City, sold the duplex uh and
3:06 moved towards Lexington and and started buying properties there. How'd you do on the sale of the duplex by the way?
3:11 Really well, actually. Uh we got an incredible deal on it. We bought it in I think January. January in northern
3:18 Indiana. It's cold and snowy. Uh so I imagine we didn't have as much competition as we probably would have in
3:23 the springtime. I think we Yeah, we paid about 90,000 for it and I think we sold it for 170 or
3:28 80. Oo, that's we nearly doubled our money in uh we owned it for about three years. Great
3:33 deal. Would do it again, but just in a different market. Yeah, we decided Lexington was our place. We didn't want to be split amongst multiple markets and
3:40 uh which I think is extremely smart that direction. So, so you entered Lexington. What was the first deal in Lexington?
3:45 First deal was a 4unit. Uh I call it a 40 unit. It's legally two duplexes. They're matching side by side.
3:51 Perfect. Great deal. I don't know if I'll ever sell it. The places were built in like 2015. We've had so few problems with
3:56 them. Uh got a great deal on them. So, it was a good base hit to get started. Mhm. Uh, and then after that, we let's see. I
4:05 I I we bought the four unit. I started running out of money uh and decided I need another way to make more money. So,
4:10 I tried flipping houses. Uh doing it from across the country was a interesting process.
4:15 That would that would be hard. I've done some I've done some large renovation projects and then uh lease up's been
4:20 hard. Managing contractors. It the the fix and either fix and hold or fix and flip.
4:26 Either of those models where you're doing heavy value ad I found are a lot easier when you're actually in market.
4:32 Yeah. Yeah. If I was in market it would have been a very different scenario. Uh I have quite a bit of construction experience and could have stepped in a
4:38 lot of times to fix the problems before they became uh real big ones but uh difficult to say
4:44 the least. Okay. And how many how many of those did you try? We did two. Uh they were both nightmares
4:50 in different ways. Okay. I'm going to ask more about this later. So so stay tuned. I'm going to imagine this might fall into our uh the
4:56 category of our last question here. We'll see. So, what did work when you're building your business in Lexington? So,
5:01 you started with four units, two sidebyside duplexes. What did expansion look like from there? And at what point did you join multif family strategy? And
5:08 then what did it look like afterwards? Yeah, our our expansion I would consider slow. Uh we did our four unit that one
5:13 year and then kind of dabbled in flipping and and had a lot of headaches with that that slowed me down and
5:18 prevented me from wanting to buy more properties. uh I had a lot of capital tied up in the flips and it stopped me from buying more more deals. He in the
5:26 process bought another duplex probably about a year after the four unit. Uh we bought another single family. One of the
5:31 flips we decided to keep because I actually fell in love with it even though it was a nightmare. Love the
5:36 neighborhood, loved the house by the time it was done and really just kind of became frustrated with the lack of
5:41 growth. Uh and started looking for opportunities and ways to to find someone to kind of
5:46 help me level up. And that's when I stumbled across multi family strategy probably on Instagram I imagine.
5:52 Most likely. Most likely. But uh that or YouTube or Big Pockets or any of the places that were showing up at the
5:58 time? Yeah. And it it uh what you had done and what you were promoting kind of resonated with me and where I wanted to go and uh that's
6:04 how many rentals did you have at that time? Did you just have the five? We had let's see I think we had seven at
6:10 the time. Okay. Yeah. And then you joined uh not too far after uh you actually did buy a commercial
6:15 multif family property. Yeah. So, I joined early 2025.
6:22 I would say maybe February or so. Yeah. About about a year ago from when we're filming this. Yeah. About a year ago. Um and spent my
6:30 I I took my time. Slow and steady wins the race kind of guy. Yeah. M made a bunch of connections and
6:36 and uh met a lot of new multif family owners in the area and and ended up transacting with one of them. Uh we
6:42 bought a 9-unit in August of last year. Uh right near college campus. Great
6:47 brick brick building. Uh really happy with it. Sucker for brick buildings. Yeah. Uh and since then uh have been
6:54 banging my head against the wall a little bit looking for more deals. Uh a lot of owners in the market that I have
7:00 uh have with met haveve shared a lot of deals. Uh I have a lot of great connections there, but the pricing just
7:06 usually doesn't make sense until recently. Until recently. So you have you have a deal. This this is actually a fun story and this is I I
7:13 I love this and we talked about this last night over dinner, but this is what a little bit of persistence and a few
7:19 connections gets you. So So talk about this 26 unit that you are now in a contract for. Yeah. So, in uh let's call it November
7:26 of last year, my realtor Scott Peace, who is absolutely great, good friend of mine now and has done great for me, uh
7:33 brought me a 26 unit in in Lexington that was off market um supposed to be a
7:40 wellperforming asset in good condition and uh we started going back and forth with the owner who was a bit difficult
7:45 to deal with at times. It probably took us I would say on the order of a month to get like a crystal clear picture of
7:52 how the property was actually performing. Should not have been a month but some owners are difficult.
7:57 Y so persistence and persistence and we finally got to terms uh that we all agreed on which was really exciting. And
8:03 on a Saturday we had a a meeting with uh Scott Frederick who's the other other
8:09 realtor involved and the owner uh and came to came to terms on a deal. uh
8:14 purchase price, uh the partial owner financing, everything that was going to put the deal together, and Scott went to
8:20 work and wrote up the deal. There we go. And I love these blended debt projects. You have partial seller financing. What is the what does the
8:26 debt stack look like on this? Yeah, so we've got about 15% seller financing on this. Uh and then I'm
8:32 probably going to do about 15 20% down depending on how the bank underwrites it here in these next couple weeks.
8:37 Oh, that's exciting. So, mostly bank finance, 15% seller. What interest rate are you getting with the seller? seller's 1% over prime. Uh, and this was
8:45 the only way he was willing to sell it. Uh, he is set on the amount of owner financing he wanted. Uh, it's a
8:51 three-year term with the option to extend to five. We are buy midterm debt. It's midterm debt, but we're buying the
8:56 property at about $600,000 under what it's valued at. Oh, so you're going to have no problem
9:03 refinancing that. Yeah, no problem refinancing. I'll probably do that. probably push it to year two and a half or three just to
9:09 give myself a little more time to to get the property uh value up even a little more so when we refi out it'll be
9:14 that much sweeter. Now, this is something I I hear often. So, if you've ever talked to banks and they a lot of banks won't allow the
9:21 seller second. That's that's a sticking point for a lot of people. How did you find the right lender who will allow you to have second position
9:27 debt where you can do this blended debt product? And this is the value of a good realtor or broker. Uh once again, Scott, who was
9:35 the one that brought me the deal, recommended uh a local credit union for the 9 unit I previously bought. So I
9:40 used them on the 9-unit, uh created a a relationship with them and uh had already had those conversations uh
9:47 to see if that was something they were willing to do on future deals. So I brought this to them, kind of explained how we were structuring the deal, and they're totally comfortable with it.
9:54 See, this is this is really I think this is really important. First of all, credit unions typically are going to be better to work with than banks more
9:59 often than not. That's like the first thing you look at, local or regional credit unions. Do they service this area
10:06 or even better if they just service the city? Uh for Steenville, Texas, I have a credit union that does only Stevenville,
10:13 Texas and Houston, Texas, which are nowhere near each other. So, it's kind of weird, but they just have two branches. There's two branches in their
10:18 charter. They have to deploy capital into multif family in those markets. So, we bring all of these lenders all the
10:24 way to their maximum amount. In this particular case, lender per client will lend up to $3 million. So, I was able to
10:30 knock out uh two and then it looks like I'll be able to refinance one. We'll have three deals with them for a total
10:36 balance. They were able to push it a little bit to about $3.2 million. I'll be just over their cap. But again,
10:42 you're allowed to work with these and get a little bit more creative with the credit union than you could you couldn't go to Chase Bank and be like, "Hey guys,
10:48 fund this." Yeah. But if you're like, "Hey, where do I where do I go?" Look up in your area the word credit union. And then when you find them, check how many
10:55 branches they have. If they have one or two branches, they're a smaller credit union. highest odds you have of success and then next go to regional banks. Same
11:02 thing, small banks is usually in their charter. Yeah, absolutely. And to unpack the deal a little bit more, uh it probably
11:07 sounded simple as we spoke through it just a few minutes ago. We didn't get it that Sunday when the owner was supposed
11:12 to sign. Oh, yeah. Yeah. Yeah. It fell apart. So, so Christian and I talked about this deal back in December and obviously wanted his input on it and
11:19 he he gave me the thumbs up and ready to go. It's actually a great deal. It's just it was a great deal. Yeah. So, Saturday night I I had a drink
11:25 and was super excited. you know, I'm going into contract and wait for the signature. And uh turns out the owner
11:30 went out to dinner with someone else that day, that Saturday night, who uh who got the deal instead.
11:36 That would that would tick me off so much. I I I would be done working with them forever, but obviously that's not
11:41 what you did. That's [clears throat] not what I did. Uh I had a little insider information through Scott once again. He Lexington's
11:47 not that big of a city, so everybody knows everybody. Uh and actually found out who who got
11:52 the deal. Uh he's another realtor in town who I hadworked with. I'veorked with, you know, a bunch of people in
11:58 town trying to search for offm markets and uh the guy that went into contract on it. I I shot him a text when I found
12:04 out that he was potentially one bought it and said, "Hey, any chance you're buying a 26 unit Lexington?" And his
12:10 response was something along the lines of, "Why you asking?" [laughter] So instantly knew like, "Yeah, he's
12:16 buying it." And he's he's just like, "How you know how did you know what's going on?" Yeah. So that that kind of opened the
12:22 conversation and he gave me a little information on the deal and long story short, he uh he was unable to
12:27 get the money together for the down payment. Uh he had gone into it assuming he could do I think around 10% down uh
12:32 and the bank said no to it. Uh unable to get the rest of the funds together, fell out of contract uh and we were able
12:39 to swoop back in, make the same exact deal with the owner just two months later. Mhm. And here we are uh about a week into
12:45 contract. God, that's so exciting. And this would uh this would a little bit more than double your portfolio, right? You have a little less than
12:50 a couple more. Yeah. I have uh as of today 16 uh as of 4 days from now
12:56 I'm buying a single family which is technically for my 10-month old daughter. Oh I want to talk about this too. So
13:02 they'll make a 17 but it's her money to keep and then the 26 will have more than double us.
13:07 Absolutely. This is such a cool especially as a multif family owner. This is this is the type of stuff that makes single family makes sense to me. Uh you are buying a
13:14 house specifically for your 10-month-old 10month old daughter. Uh, so she's going to be a landlord before most of your kids. Well
13:20 done. Uh, here's If the goal is generational wealth, what a great way to start out. Like, hey, you got you got your first rental. You're you're not
13:26 passing a ton of money over. You're not like, "Hey, here's here's your inheritance early. You set aside a
13:32 property." Tell us about this house and how you found this deal. Yeah. So, uh, I found this deal once
13:37 again through networking, which is where almost all of my good deals have come from. Yep. Thanks to Christian who pushed me to go do that because I I'm
13:43 not I don't look forward to owner calls, but I do it. Uh anyways, uh owner in Richmond, Kentucky, which is a suburb of
13:49 Lexington. Mhm. Owns in the ballpark of 800 units. Uh made great friends with him. Every time
13:55 I'm in town, he invites me over to his house, which is, you know, mansion on a hill. Very successful. That's fun. That's fun.
14:01 Very intelligent. Been a great mentor of mine. Uh and he has a a group of about
14:06 10 people that he informs when he wants to sell properties. So somehow I have weasled my way into that list. uh he
14:12 believes in me and likes me enough to think that I'm worthy. So, uh call it
14:18 two months back, he sent out a text uh to those 10 or so of us of the properties he's selling. The properties
14:24 are like handwritten on a piece of paper. This guy's very old school. Uh you know, literally handwritten takes
14:30 a picture of a handwritten piece of paper. Address, number of units, how much rent it's bringing in per month, and the price. He prices everything at
14:36 like the 1% rule. 1% rule doesn't really work in today's interest rating. Yeah,
14:41 that that usually puts you somewhere right around break even. Maybe maybe like one to two% cash flow on a decent
14:48 deal. Yeah. And I don't want to buy a 1% deal if there's no upside. And for those who are unaware, the the
14:53 the 1% rule is simply it's a like not even back of the napkin math. It's like before the napkin math. It's like back
14:58 of your hand math of if the rent is like the monthly rent is 1% of the purchase price. It used to
15:06 be it's likely a good deal. That's when interest rates were 4% though. Now that your expenses are higher, the 1% is only
15:11 a measure of income, not expenses. So that does that's why that rule has changed where used to be your cash flow
15:17 benchmark is now your break even benchmark. Exactly. So anyways, he he's good at managing his property. So his deals at
15:24 1% there's very little upside. Yeah. Cuz he's got a lot of units, knows what he's doing, right? So anyways, he priced
15:30 them all at 1% rule. Well, he happened to have a little single family home in Richmond that is cute as hay. Mhm. uh two bed, one bath, original wood
15:37 floors, built in the 40s. Oh, I love that. I love that. Uh he bought it in a portfolio from another investor of I think a a large
15:45 number of homes in multif family. Oh, and he's he's keeping the bigger properties and selling. He's keeping the big ones and selling
15:50 the little ones. That's a great way to get a great price on on deals. You buy the portfolio, sell
15:55 off pieces you don't want. Yeah. And uh he never raised the rent. He's had it for I think four or five years and decided he he doesn't need the
16:01 complication anymore. So So he hasn't raised the rent on the the family that lives there. So the rent's $900 a month.
16:06 Mhm. It should be probably 14,500. So we sold it at the 1% rule,
16:11 $90,000. The property just appraised for $180,000. Oh, that's fantastic. That's fantastic.
16:18 Day one is plus $90,000 on on my daughter's net worth, which is super
16:24 exciting for me to be able to kick her off like this. On average, real estate doubles about
16:30 every 15 years in value. Now granted on our last market runup we saw that accelerate sometimes takes longer but on
16:35 average so by the time she's like 18 and
16:41 had you know when she's an adult she's going to have probably a couple hundred thousand in equity
16:47 in that property in a single house that's also bringing in rent I mean that's that's an amazing what a fun starting point. What did the
16:53 what did the financing look like on that? Just conventional financing. Yeah, we used the same credit union that we're using on the 26 unit. uh 20% down.
17:00 So 20% of of $90,000 18 plus closing costs. Um
17:05 so pretty simple. So basically an investment of like around 25k. Yeah. And that was my plan. Uh I am
17:11 technically like gifting her the $25,000 to go buy this property and then obviously I will manage it because
17:17 10-month-old can't can't help manage it much yet. But, uh, I I want to raise her
17:23 being part of that process, whether it's as simple as picking paint colors when she's a little kid, or or driving by,
17:29 uh, and then kind of, you know, having her her grow into that, and hopefully fall in love with the real estate thing. She might be one of the first investors
17:35 uh, who do not have to say, "Hey, I wish I bought real estate earlier." Yeah, absolutely. She might just say, "I
17:40 wish my dad bought me more." Yep. Which I'm guessing is what she's gonna say, "Wow, dad, why didn't you buy more of these houses? You buy these low
17:45 to no down. This is pretty incredible." And and that is that is part of the plan. uh as I slowly put it into motion,
17:51 I would like to continue to leverage that property as it grows and buy her more properties with that same seed of
17:57 $25,000 I put in on day one. Yeah. Are you guys planning on having more kids? More kids. So So is that the goal? Each each kids
18:03 gets their starter house? Absolutely. That's the plan. Oh, that's so cool. That's so cool. Is anyone going to get upset that their
18:09 starter house does better than the other one? Uh yeah. I [laughter] [gasps] I imagine that could probably happen.
18:15 There's potential for that. It's hard to be mad about a free house, though. That's that's amazing. What a what a what a great story and what a
18:21 great idea on how to start them young. Like, hey, there's going to be a point, you know, when they're I'm guessing, you know, end to early teens where you're
18:28 like, "Hey, this is your property and here's the fundamentals of how it works." They're going to understand, "Hey, there's a tenant problem. How are
18:33 you going to solve this?" Hey, guess what? We got a call. There's a pipe leak at your property. Like, right? Let's call the plumber. It's a it's a master class on how to run
18:40 Yep. a piece of real estate in a really small attainable scale sub$und00,000 acquisition, but worth
18:46 almost 200k. I mean, that's it's great. That's super fun. What a great application of skills. Yeah. And it it it's fun for me. It it's
18:52 a feel-good thing. It's something I had started thinking about when my wife was pregnant. And uh I've been shopping for
18:59 the right property for a while. And I told myself before she turns one and she's 10 months now. So like I was already like kind of sweating it. I'm
19:06 running out of time here. And it's a personal deadline. Yeah. Uh but I'm hard on myself. So I, you know, actually get
19:11 out there and do the work. And finally this one came up and I was like absolutely it's perfect. Absolutely. Oh, that's so cool. That's so cool.
19:18 Well, congratulations there. That one closes this week, right? Closes Friday. This is the first time I'll actually close on a property in
19:24 person. Uh which is kind of exciting because I'm closing with the largest owner I know in the area and we're
19:29 Oh, that's so that's great. Go out to breakfast before and uh be good to see him anyways. He's he's he's
19:34 a great guy. So So the takeaway here is the takeaway of almost every podcast. You met with people who've done the thing that you
19:40 want to do and then you did the thing that they did. Yeah, absolutely. And and they are there for me to lean on. I mean, I I could
19:45 call some of these owners at any time and ask a question and they're more than happy to share. Uh I am the same way. If
19:51 someone were to call me right now and say, "Hey, I want to buy my first rental. Can I have some advice?"
19:56 Yeah, absolutely. Yeah. More than happy. Yeah. Well, that's the fun thing. Most of the owners, like we like talking
20:01 about real estate. Yeah. And most of our family doesn't care about real estate for the most part. Like I don't I don't get to share
20:07 real estate with my friends and family. That's not something it it consumes most of my life and I don't get to talk about that with most people. So, when there's
20:13 someone who's getting into the game, they want to learn more. I mean, of course, I want to go out and have coffee and talk about real estate. It's a it's
20:18 a no-brainer. And those end up being the people that I transact with. When I sold my RV park, cuz I don't sell
20:25 a lot of real estate. I almost never sell. It was sold at a significant discount to someone who I liked because I knew him. We worked together. He's
20:31 been out to my Robin Hood events. Like, we built a personal relationship first. I bought it for 300, put 300 into it,
20:37 sold it for a million one. So, I made half a million dollars in a year. I'm I'm a happy camper. And then that allowed me to move to Texas. That was
20:42 the liquidity I used for the house. Well, then he is getting an appraisal that we're expecting to come in around
20:48 1.6 here somewhere end of this month, early early next month. He should make
20:53 the same 500,000 that I made on the same deal. I just didn't want to run a remote RV
20:59 park once I moved out of the state. That was the thing for me is my my partner on that deal lives an hour and a half away
21:04 and he's a top tier broker. He is so busy and I live 2,000 mi away. Yeah.
21:10 So, I'm like, "This no longer makes sense to me." Those pieces happen only if you have relationships. Like, no one
21:15 else got a shot at that deal, right? He would came over to my house, we talked about, he's like, "That sounds
21:21 like exactly what I want to do." And he's knocked it out of the park. Yeah, that's awesome. Yeah, that's uh one of
21:26 the things I've really enjoyed about multif family strategy is having that group of people that are like-minded and doing the same thing because I've also
21:31 struggled with the same thing. I don't have a lot of friends that are are in the real estate space uh that I can, you
21:38 know, share some of my big wins with and and talk about a lot of the the details. Yeah. Uh we've got a group chat with with some
21:45 of the uh uh multif family uh folks here and uh it's great. We're always bouncing
21:50 around ideas and Yep. and talking about stuff that uh you know a lot of people wouldn't understand if
21:56 they didn't own own large multif family and real estate. Exactly. And it's having that community of people uh and seeing other people win
22:02 is is also a big push for me to realize like, holy cow, Bill just bought 14 more units. I need to get it into gear.
22:09 You know, that kind of stuff. One of the fun things about being in community is like it's easy to get in your own head when you get resistance.
22:14 Like you mentioned that 26 unit. It could be really demoralizing when you're like, "Hey, I thought I was going to contract for this." You've been hunting
22:19 and hunting and hunting. You find the deal. You get a verbal agreement and then it doesn't come together. It's really easy to go like,
22:25 "Ah, maybe maybe I have tapped out this market." like I don't I don't know if this is coming together.
22:30 Then you see other people doing the same steps succeeding and then you get to ask yourself like well if if they're succeeding then it's doable and it it
22:38 makes it so much easier to to stay engaged and stay plugged in. Yeah, there can be success in any market if you work hard enough. Uh yes,
22:44 I I am not boots on the ground. I'm in Lexington at best a few times a year. I absolutely could scale faster if I lived
22:50 there. Mhm. But I'm very happy where I live and my family's there and I've made the decision that it might be a bit slower
22:55 for me to scale and that's okay with me. That's my style is different than others. Uh rocking forward 26 units at a
23:01 time though. It's not the That's great. Yeah. You need to transact what like twice a year and you can you know conservatively you season those.
23:08 Yeah. You're adding like doing pretty good. You know two deals of that size doing well on stabilization. You're probably
23:13 cash flowing another $10,000 a month. Like I think fully stabilized. I'm guessing probably $5,000 a month cash flow. Like fully stabilized.
23:18 Yeah. Day one, it's like 10% cash on cash return where I'm buying it today. Uh, oh, that's a good starting point. Double
23:24 digits is always fantastic. Yeah, we actually got updated financials this morning. Uh, and they're better than I expected by a little bit, which
23:30 is like super exciting and rare. Usually they're a little worse than expected. Got a couple more questions. So, yeah,
23:36 we'll hold for a second, but so far it's a little better than I thought. So, yeah, 10% cash on cash and it cash flows
23:42 about $3,000 a month uh on day one. There's a little bit of upside in it. It's a bit more of a turnkey property
23:47 than I would normally shop for. Yeah. But the numbers work on day one. And well, and it doesn't take a lot of rent
23:53 increases to find another thousand cash flow. So you you get that thing fully fully stabilized. So maybe that adds
23:58 four, right? And that's You do one other deal like that, you know, $8,000 a month. That makes it Yeah.
24:03 That makes it 83 is your your benchmark to make six figures a year, right? Rentals. I mean, you're right there.
24:08 Yeah. Exactly. So fantastic. It's got great potential. All the units have been remodeled in the last 5 years. All the
24:14 plumbing's been redone. All the electrical's been redone. Like only question mark is the roof, but other
24:19 than that, pretty happy so far. Obviously, we get to go inspect it here in a couple days. Yeah.
24:24 Well, the nice thing, too, is even if there is a problem with the roof, you replace that thing once. They last a long time. Traditionally, they last in
24:30 Texas, I noticed they last a little bit shorter than uh than other places. You don't like in Washington state, you do a 50-year roof. That's like a normal thing
24:36 to do. You would never do that in Texas because on a 50-year roof, you're going to have some windstorm that damaged it where you're going to
24:41 replace it before 30 years anyway. So, it's not going to last. Yeah. So, you do 15 year roofs here knowing that you're going to replace them within 15 years, no matter what you
24:48 buy. So, oh, that's uh I love that strategy. Okay, let's get into the stupid D. So, when you're new, it's the
24:54 dumbest you'll ever be, right? You're never going to be dumber than when you haven't done it before. Absolutely. This regard, you you have the best mentor in
25:00 the world, which he happens to have. Uh but you can have the best mentorship group, you have the best community, you can have all the pieces. You're going
25:05 the most mistakes you're ever going to make is when you are new because you know the least that you will know. That's just factually true. What is the
25:11 highest stupid tax that you have paid so far on the real estate journey? [laughter] I I would say in simple terms, my my
25:18 stupid tax was do not flip houses uh from long distance. Okay. I I feel like there's a story
25:23 here. I mean, there's many stories. We we could go on. Why Why would you Why would you not flip
25:28 a house? We from distance. our very first flip house. I was uh
25:35 probably a little over excited by uh you know listening to too many podcasts and seeing other people be successful at it
25:41 and not having a mentor that did it. I I didn't have someone to to help me walk through the process. If I had a
25:46 mentor, they probably would have told me, "No, stupid. Don't buy that house." [snorts and laughter] So, anyways, I bought a house uh that uh
25:54 needed a lot more work than we thought. Oh. I sent a contractor out that was a recommendation of another contractor who
26:01 I trusted and still the the contractor that recommended him. Still great guy. Still love the dude. Uh but he
26:08 recommended one of his subs that kind of did sideborg and he thought would be a good fit to help us keep the budget
26:13 under control. Yeah. Uh it's kind of the exact opposite of what happened. So we ended up hiring
26:18 this guy and he went out there looked at the property. I made the mistake I I made a bunch of mistakes on this one. [laughter]
26:23 Uh, it's kind of embarrassing to share, but I didn't pay for a home inspection. Yep. Yep. Because that was another 500 bucks off
26:30 the off the top that I figured I trust this contractor. He's supposed to be good. Yes. Yes. Yes. I'll have the contractor go crawl around
26:36 and look at it. And he's a professional. Yeah. He should know what it needs. So contractor went out. Uh, I did not fly
26:43 out to Lexington cuz that's cost me 1,500 bucks at the least to fly San Diego to Lexington and stay there.
26:48 This is why single family is so hard. You have to buy something that is worth making a trip out to San at least once. So, I started adding up all these
26:54 things. I was like, well, I could cut the trip out and I can not do the home and that's another couple grand 2500
26:59 maybe maybe even more on a small property. That's a small property. That's that makes a difference. That's a good portion of the margin.
27:05 Yep. Uh so anyways, I trusted this guy. He went out and inspected it and told me, "Hey, here's he he gave me a reasonable
27:12 list, what was reasonably put together of a about a $30,000 renovation budget."
27:19 seemed reasonable based on the pictures I had seen and what I've been told of the property and thought, "Yeah, let's buy it. Let's do it."
27:25 So, we paid and it's numbers are a bit fuzzy. We paid about 90,000 for it. That
27:31 $30,000 turned into 60 70. Mhm.
27:36 Uh we'll know the tally soon because we're doing taxes right about now. And obviously, we got to tally that up to
27:42 show how much money we lost. I I lost net loss uh on that property and it was
27:47 an absolute nightmare. Oh, so you lost time and you lost money. Oh my god. How How much did you end up losing on the property?
27:53 Probably 10 $15,000, but paying 10 or $15,000
27:58 to Oh my god. to go through the stress. Yes. And the time. Yeah. It was
28:04 I mean that's just absolutely nothing feels worse than like spending time and effort and then not only not making
28:09 money, you paid for the experience. I I paid for the best lessons I will
28:16 ever learn. I think you know what? So that that's how for 10 to 15 it could be a lot worse. Yeah. That's really not that bad to
28:22 learn that I am not good at flipping houses at a distance and it's not the business I want to run.
28:29 Oh, and that's that's really helpful. That's what I learned in hospitality uh where my mistake was closer to seven figures than you know five. But when you
28:36 do these deals like yeah know what your business is and know what you're doing. Yeah, it has really helped me kind of redirect and focus because my my plan at
28:43 the time, if I would have explained to someone two years ago what I was doing was, you know, I've got my W2 that pays
28:48 quite well. I'm an engineer. Uh, so I take my extra for my W2 and then I'm going to flip houses and make more.
28:54 I'm going to dump all that money in for down payments and we're going to buy duplexes and three and four units and some single families here and there. I'm
29:00 just going to keep growing until I'm happy. Yeah. Uh, I've realized that that's not the business I want to run. Y
29:05 I I do not flip houses. I will not touch a flip house. I don't care how big the numbers are, how much money I think I
29:11 could. No, you do it. I'm the I'm the same way now. Even with converting hotels, which I've done successfully before, I'm like, man, it
29:18 is so much work. The juice is almost never worth the squeeze. And even if it is on paper, I'm like, you know what? I
29:23 can just do the things that I already know I'm good at. Yeah. And that I feel like that for me has just like made me realize like I need to focus my business on my true
29:30 business case and not get distracted by all these little because there's lots of ways to make money in real estate. There's a lot of
29:36 ways. There's a million ways to make money in real estate. Everybody has their own best way. Whether it's multif family or flipping
29:42 or single family or section different flavors and there are a lot of extremely wealthy
29:48 people that have made money in all these different avenues. So, it's very easy to, you know, go scroll Instagram or
29:53 Facebook or Tik Tok or whatever. I found the next thing and find the next next great thing. Y
29:58 uh and get distracted by it and all of a sudden you're doing four different things. Yeah. Right now, what's really hot is boutique hotels. People are just all
30:04 nuts about boutique hotels because all the Airbnb people, their Airbnbs stopped working.
30:10 Massive declines and they're like, "What's the next closest thing?" We love boutique hotels. They're amazing. I guarantee what's going to happen.
30:15 Boutique hotels are going to run up. They're going to inventory is going to reduce and now you're not going to be able to do those
30:21 because you're competing with people who've already rushed to the space, right? That's why these single strategy things don't work. Multi family strategy is
30:28 actually based on learning multiple strategies to take out deals within your buy box. like you put together your
30:33 parameters, but it's choosing the right debt product and the right equity partnerships to knock out the deal. And that's your
30:38 whole anatomy of the deal, dealt that equity. But yeah, no, that's uh I talked to a lot of flippers, a lot of people invest in my deals, their house flippers
30:44 who are tired of losing money. Yeah, that is a that is very common. They're like, I would rather just dive in on a cash flow multi family deal than try to
30:51 go for the highest margin flip and the riskreward is just not there. It is the most headacheinducing thing I
30:56 have probably ever done. Oh my gosh. Yeah. The amount of times I wanted to curl up in a ball and and make it stop.
31:02 The only reason the only reason you would do it Yeah. is if you loved the renovation process,
31:08 you were involved and the project itself is what you want to do for a living, right? And that's I love that that that's the
31:14 appropriate time to flip houses. Absolutely. Uh and doing it from a distance just not the way to do it.
31:19 So hard. Well, guys, this was uh this was Garrison. Garrison is uh doing great
31:25 things. I'm really excited to see where he ends out the year cuz you're going to be you're going to be cruising towards 50 units.
31:30 Yeah. My my goal is to buy 40 this year. So, we've got 26 in contract and then my
31:36 daughter's one. So, that puts us at 27. I have my eyes on a 13 unit. I'm actually meeting Oh, put you right there.
31:41 Thursday morning. I think that's probably why my phone went off halfway through this. Oh, there we go. Uh asked him what time are we meeting for breakfast so we go walk through it.
31:47 So, Oh, there we go. That that could put me at my 40 if I can work a deal on that. Yeah. Uh we're trying to get creative on the financing.
31:54 He's got a number in mind that is a little too much, but he's willing to do deferred payments for probably five
31:59 years. Okay, there we go. So, it comes down to the uh comes down to the debt structure. It's a debt structure thing. The property's got a lot of potential. The
32:05 rents are low, so it's just how can I buy it to make a cash flow day one and then I think I have a good understanding
32:11 of where it can go. But walking through it, this would be cool. Oh, that's fun. I'm so happy that you're I'm so happy that you're successfully
32:17 buying commercial multif family. that that jump from the the sidebyside duplexes into a 9 unit, a 26 unit, a 13
32:25 unit, you have to succeed. I don't know what the correct English is going to say. So much less frequently.
32:30 That that's not English. You don't have to succeed as often. Like one or two deals moves you forward 5 to
32:36 $10,000 a month in permanent recurring income, right? The the amount of work to buy a single family versus like using this 26
32:43 unit as an example. Pretty similar. Yeah. I mean, you tried to buy 26 houses, it would have been way way way way way way harder.
32:49 Done like 26 trips to Lexington. That would have been terrible. And then then your travel cost would have eaten up all your margin.
32:54 And I I I could not. Yeah. I I would not. Um so the scalability is just it's
33:00 incredible. And it's what I'm looking for. I'm looking for, you know, I'm more of a passive investment obviously uh
33:06 with the the way I'm running my business. And yeah, buying 26 single families is far from passive.
33:12 And then they're all different. Yeah. That's the thing. Well, yeah. You have different problems, different plumbing, different electric. Yeah. You don't know. Yeah. Cuz like the
33:19 2016, for example, they're all the same. Yep. So, they're all going to have the same water he gear and the same sink and the
33:24 same dishwasher. Commonality, right? And you're able to run your business with replaceable parts.
33:29 Yes. Every unit looks roughly the same. I use the same paint like same paint SKUs for interiors of every property that I own.
33:36 Often same or similar cabinetry, countertops, flooring. You get standards. Whereas in different
33:41 houses, you're going to have different design. And you're going to It's a lot more work. Yeah. And it's a big question mark. Typically, you send a contractor out
33:47 there, they got to walk in and figure out, well, what's the paint color on the walls? Mhm. Do we have any idea what kind of
33:52 flooring this is? We need one plank. Yeah. Or can we not? Is it discontinued? Do we like We have no idea if it's a big
33:59 multif family complex. Yeah. You've probably got leftover from your last last unit turn. Yep. Most of my properties have a whole
34:04 bunch of extra flooring stored in the shed. We have all of our paints there. SKs are saved. It's Shiron Williams. So
34:10 I know like, hey, we can actually if if we forget to save the paint can, we can drive back. They already know what the property is. It's in their system. We
34:15 have our it so much easier to scale. Guys, this is the owner meeting podcast.
34:20 We meet with owners here uh specifically so that you can get all the benefits of meeting owners uh without having to do
34:26 the interview yourself. So if you're busy on the 9 to5, you're listening to this podcast driving in to work, uh that is exactly what this is for. Garrison
34:32 succeeded the same way everyone on this podcast succeeded. He met with people who he wanted to emulate their business
34:38 and then he copied their business and saved a whole bunch of time. I mean, that is that is the the the master strategy. So, we do that here for you.
34:44 So, like, subscribe, leave a comment, do all the things that help boost this channel, bring this out to more people. We appreciate you and we'll see you on
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