How Mike Newton Built 28 Units in Gary, Indiana and Owns the Market

Original automatic captions. Names, numbers, and punctuation may contain transcription errors.

0:00 Well, it appreciate everybody for being here. I'm glad that you're here. I've seen some faces before. Some of you guys
0:06 watch my channel, stuff like that. This is a great place to be. Cody and Krishnner are both incredibly successful, very, very smart, very, very
0:13 talented young people who have done amazing things with real estate. Uh, and I'm very grateful for the opportunity to
0:18 be here. I am very sad that Dion's not here. If for those of you who watch his channel know Dion, he's an amazing guy.
0:23 He just got engaged. He's in Thailand right now. Apparently, he couldn't make it. He couldn't make the 10 the 20our flight or whatever. Mike Newton. You can
0:30 find me on YouTube or Instagram if you want to reach out to me and send a message. I'm happy to chat with anybody, but Millennial Mike's where you can find
0:35 me. I started by doing a house hack here in Washington area. How many people are
0:40 local to Washington State? Most of us in here. Okay, perfect. And probably like me, as you look around at the numbers in
0:47 Washington, you say these numbers are really hard to make sense of when it comes to finding cash flow, right? A
0:52 $800,000 duplex with a 20% down payment that's going to rent for maybe 2500 to
0:58 3,000 aside is not going to cash flow. Especially when you factor in a property management if you're not going to
1:03 self-manage. It's not going to cash flow. You're going to be negative. So then you're like, oh well, you know, maybe I'm going to get some of that
1:09 appreciation. Well, it's already 800,000. How much appreciation is there left to squeeze out of people? Probably
1:14 not a lot. And so I had that same realization back in 2019. I had bought
1:19 my first duplex in 2018 and I was like, "All right, I want to buy another one." And I didn't know about Cody and
1:25 Christian strategy of massive multi-unit seller financed by calling people and harassing them. Uh, I mean, friends with
1:31 them, making friends with them. I I didn't know about that strategy. I hadn't met Dion yet. Hadn't met Matt yet
1:36 Matt yet. Hadn't even met Zuber yet. And so, I was sitting there saying, "Well, what can I do?" Now, I grew up in Grand
1:43 Forks, North Dakota, another town most people have never been to and never heard of. And I remember thinking, well,
1:49 prices in the Midwest are just so much more affordable. Houses are 200,000
1:54 instead of 800,000. So, I started looking in these other markets. And I didn't end up going to Grand Forks,
2:00 North Dakota, where I was from. I through networking on YouTube, I had met another retired police officer who was
2:07 from the east coast, and he was investing in Indiana. And he said, "Mike, you should consider investing in
2:13 Gary, Indiana." And I went, "Sure." googled Gary Indiana and went heck no
2:18 absolutely not because as Christian pointed out it's the former murder capital of the country the 1993 champ I
2:26 don't think they have a pennant for that one anywhere in the city just hanging them pretty sure they don't right there's always next year we're in
2:32 a rebuilding season yeah uh the gangs are recruiting actively ways also onethird of all buildings in Gary
2:38 Indiana are abandoned there's about 13,000 abandoned structures when you Google Gary Indiana and you start
2:44 looking at the Google images you're like is this post civil war war torn Syria or is this a city inside of the United
2:50 States and it is actually from the United States believe it or not and what got it into that condition is a whole
2:56 amalgamation of different problems from local corruption at the mayoral level to
3:02 the NAFTA which happened in like the 70s when we started shipping our manufacturing jobs to China and to
3:08 Mexico. It was a city built on the industry of steel. It was founded by the US Steel Company in 1906. At one point
3:16 there was 90,000 US steel jobs in Gary. The height of its population it was like
3:21 270,000 people. Now it's 70,000 people. So when you go online on like a Bigger
3:27 Pockets forum or you just Google and now chat GPT tells you, yeah, here are the metrics you should look at when considering which city to invest in.
3:34 Rising population, absolutely not. Low crime rates, absolutely not. Low vacancy rates or tenant turnover, absolutely
3:40 not. great school systems definitely not like every single metric that you can think of that you would assess a city or
3:46 a market to invest in does not make uh it does not it does not meet those
3:52 standards and so most people would say well why in the world did you ever think to invest there what made you change
3:57 your mind it's not because I'm dumb it's not because I didn't do my homework and come up with all of these attacks or
4:03 criticisms of the market um it was because as I sat there and I looked for a good cash flowing market and my friend
4:08 kept saying to me he's like look I I bought one and then I bought a few more and then I worked my up to like 10 or 11
4:14 and he wasn't having all of these problems that I had thought that I was going to have and so I was like, "Okay,
4:21 I'll try it." I I found a 60,000. The prices aren't quite this good anymore, but a $60,000 turnkey rental. It was
4:28 fully remodeled tenant inside at $60,000. And I was like, "Well, if I do 20% down, that's 12 grand plus closing
4:35 costs, call it 15. If I make a, $,000 mistake, I'd rather make that on a
4:40 $60,000 house than a $150,000 mistake on a $600,000 house. So, I I'll I'll risk
4:47 it. We'll see what happens. So, I buy the property and the tenant pays. And I, you know, my property manager is going
4:52 to call me any minute. There was going to be a gang war, a double homicide. The house is on fire. What's going to And it
4:58 just it the call never came. It never happened. So, I was like, "All right, I bought the first one. It wasn't that hard. It didn't cost me that much money.
5:04 The rent's coming in. I'll try another one. So then I bought a $50,000 turnkey rental property. This one didn't have a
5:09 tenant in it. I placed a tenant. That same tenant is there today. Never missed a payment. Uh and then I bought another
5:15 one and another one and another one. And of course over the years prices have gone up. The numbers aren't quite as
5:20 good. But you could still find single family houses, threebedroom, one bath for $90 to $115,000. They're going to
5:27 rent for between $1,100 to $1,500 a month. They're numbers that make way more sense than they than the numbers
5:34 here do. Right? And because of that, that's what enticed me to start in that market. Now, I'm not here to sell you
5:40 guys on investing in Gary. I have a lot of people who who have invested in Gary. I have a lot of people who have said,
5:45 "Oh, I'm just going to take this concept. I'm going to go to Southbend, Indiana, or Indianapolis, Indiana, or
5:51 uh, you know, some cities in Alabama. Birmingham, Alabama is a kind of a similar market. some of the the sea
5:56 cities in Ohio are very similar in terms of the demographics, in terms of the cost of properties. And if you're not
6:02 interested in cheap Midwest rental properties, then don't invest there. Again, my job is not to sit here and convert you guys, just to tell you guys
6:08 my story. And if you have questions, I'm happy to answer them. As I've continued to buy properties there, one of the things that I've really noticed is that
6:15 what worked in 2018, 2019, 2020 is not the same as what's working today. And so
6:21 one of the skills that you as an investor need to develop is the ability
6:26 to move, to change, to adapt, or as Bill Bear Grills would say, to improvise, adapt, and overcome. You have to
6:33 recognize that what used to work doesn't work anymore. And that's probably why a lot of people are in this room. Real
6:38 quick, by show of hands, who currently owns a rental property? Okay, that's most of the people in this room. And then Christian, I'm glad you got your
6:44 hand up. I was concerned for a second. So, for a lot of you guys, you've been buying and I don't know what your portfolios look like. I'll share with
6:51 you really quickly mine. I have 28 units in four different states. I own in Washington, Illinois, Indiana, and now I
6:57 have one in Florida. Um, and I've been buying since 2018. Most recent one that I acquired was this year in 2025. Most
7:04 of the properties that I most of the units that I have bought have actually come since 2023. So, after interest
7:10 rates went up and after we had a bunch of massive appreciation. But how I found the properties is totally different than
7:16 when I first started. The way that I financed the properties totally different than from when I first started. The networking aspect of this
7:22 game is very very critical, which is again why I'm excited that you guys are all here. Make friends with each other.
7:27 Introduce yourself to me, Cody and Christian. I think actually what I want to talk about briefly because Christian
7:33 talked about, you know, hey, we're done being influencers. I don't enjoy making YouTube videos because of how cheesy
7:38 they are. And I and I know that Christian and Cody, we we don't actually like enjoy from the give me a bunch of
7:44 attention like the cheesy influencers you think of on Instagram or Tik Tok are. We understand that the networking
7:50 capability behind making videos is unparalleled. It really became evident
7:55 to me when I had been making YouTube videos for years. Just casually
8:00 uploading stuff like, "Oh, hey, I bought my first rental." Not trying to be Bigger Pockets, not even trying to be Michael Zuber, just I'm gonna make a
8:07 video about this rental or how I did some financing and I'll upload it. Who cares if it does well or not? I'm not going to put a bunch of effort into
8:13 editing or thumbnails. But as I started to make videos about Gary, Indiana, I
8:18 realized nobody else does. Literally nobody. And as I started to upload more and more like how did I house hack or
8:25 excuse me, not house hack. I did that here in Washington, but how did I do seller financing? How did I do private money? How did I do a duplex or a
8:31 forplex in Gary, Indiana? The way that the algorithm works, when you type in real estate investing into YouTube,
8:37 millions of videos pop up. If you scroll through the top 100 pages, I'm not any of them. But if you type in real estate
8:44 investing, Gary Indiana, the first 100 videos, all me. You're going to see my
8:49 face over and over again. And that's good because what happens when all of the local people who want to sell a
8:56 property or they want to network or they're interested in learning about investing when they do a YouTube search
9:01 about Gary Indiana real estate, they see me. Then who do they reach out to? Me. How do I get a bunch of deals? No one
9:06 else has access to. I'm the only guy that talks about this stuff on Instagram and on YouTube. So, I would actually encourage all of you to put that
9:12 influencer hat back on. And not that you need to become some like cheesy, over-the-top, really excited real estate
9:19 agent or something like that, but if you niche down to your specific county or a
9:25 few specific cities, you'll realize there's no competition. Even until recently, I would keep track on Seattle.
9:32 There really was not anyone specifically doing Seattlebased videos, a massive city, consistently. It doesn't take that
9:39 many videos over a short time to become the algorithm's preferred choice for me. It took like 6 months and like 10
9:47 videos. And then now anything I do with Gary Indiana in the title and again you guys are welcome to look on YouTube.
9:52 Gary Indiana real estate investing. You're going to see me over and over and over again. And I don't have a marketing team. Any of the editing is my own
9:58 editing. Just uploading putting some hashtags on there and and some other types of tags on there. 10 minutes of
10:04 watching how to make a YouTube video and you'll be able to make one that will work for your market and that could even
10:09 work in some of the bigger cities like I said like Seattle. So that's my advice to you guys because when it comes to
10:15 finding good cash flow deals now really they have to come off market most likely and you're going to have to come up with
10:21 some creative method of financing whether that's private money, hard money, seller financing, all of the above. It's going to be very tough to do
10:27 it with traditional conventional financing. Not impossible, just tough. Well, this is my assistant. So, a lot of
10:33 the times when people think about if I wasn't interested in investing out of state or at a distance, how do I get
10:40 started? So, my advice to you guys, I'm going to go through a little process here of how you could get started investing at a distance is first, well,
10:47 do you have any connections to any of these other markets? Before you say, well, I'm just going to Google Chad GBT.
10:53 What the best cash flow markets are before you do that, do you know anybody in any other markets? Again, for me, I
10:58 thought about North Dakota. And then eventually it came to I have a friend who's investing in Indiana. Let me
11:03 piggyback off of their success. And I would recommend piggybacking off of someone else's success first. Because if
11:09 you just pick what chat GPT says is the highest cash flow market, you don't know
11:14 anybody. And that's a problem because the most important people on your out ofstate investing team, it's not who you
11:20 would think it is. It's not necessarily your property manager, your real estate agent, your contractors, your handyman. The most important person in your out
11:26 ofstate investing team are your network of other investors. Who do you go to when you have a question? Is this a good
11:33 deal? Will I get it rented? What should it rent for? There's a there's some repairs that need to be made before it's
11:38 we close on it. What does a roof cost in Washington state versus Indiana? I can do full roofs for $7,500 in Indiana.
11:45 Literally, I have thought about I will pay my roofing team and then pay them to get a U-Haul, buy the materials there,
11:52 drive here to Washington, install it, put them all up in a hotel, and then drive them home and it would be cheaper than doing roof here. Yes. Oh, they're
11:59 old. Oh, they're all most from the through the 1950s. Yeah. Do I just sit up at home every night and just like, oh
12:05 my god, what's going to happen? I mean, yeah. I mean, with older properties comes maintenance issues. Like, who here
12:12 in Washington has a radiator in their house? Does anybody I was talking to my son about what a radiator is. My son
12:18 right here. He had drawn a picture of his babysitter who at her house she has
12:23 an electric radiator. Like you plug it, it just looks like a radiator for the aesthetic. Most people know what a radiator is, right? Old Midwest style
12:30 heating. A boiler system heats up water, pumps it through a metal like thing that sits in the corner of the room and that
12:36 heats up and then radiates heat. It's not something that we have here. They go out and break. The boilers go down.
12:42 They're a nightmare to fix. The pipes burst all through the house. It's a night. I hate radiator systems. That's
12:47 why we have HVAC. That's why we have we have heaters or sometimes electrical baseboard heating is something that's popular like the 70s and 80s. With older
12:54 houses come problems. There are problems. Roofs are old. Foundations might be sinking. Indiana itself because
13:00 it Gary is near the Great Lake. It's actually there's a lot of sand in the ground and so it's not like really really firm ground. So, so sometimes
13:07 foundations will sink a lot and those are problems that you have to come to learn and understand and then figure out
13:12 how you're going to address. Now, do old houses scare me? Not really that much. As mentioned earlier, our friend, the
13:17 lumberjack landlord, well, he's from the east coast where everything gets another hundred years older. And so, all of the
13:22 properties he gets are from 1850 to 1880. So, he looks at me and goes, "Ah, you'd have nothing to you got nothing to
13:28 worry about. These things are great. They'll last forever and they won't last forever, but if you take care of them really well, they'll last certainly
13:34 longer than we're going to be alive." And that also with buying older houses comes with proper inspections. Somebody
13:39 you need on your team. Always scope your sewers. Always. I don't care how well it looks like it's going to work. Always
13:45 scope the sewers. Pay the 250 bucks. Let the camera line go down because you'll pay for it later as I have. Okay. But
13:51 building your team. Back to building your team. How to get started investing in the distance. You need a good team. The team starts with other investors in
13:57 the area. And you need these people because most of the time they're going to act as some sort of mentor. They're
14:03 going to be the person who you go to with questions, like I did with my friend, the other cop from the East Coast. His name was Mark. Mark, who's
14:10 your property manager? Mark, who do you use for home inspections? Mark, I have a roofing problem. When was the last time you had a roof done? What's their phone
14:16 number? Can I call them? Versus, I'm going to go to Google and people can manipulate what the stars ratings are.
14:21 People can pay to be put up at the top. People can pay to have negative reviews removed. I mean, if you guys actually
14:27 knew what this place had as a rating, it'd be crazy, right? But they are really good. I'm just kidding, guys. I'm just kidding. Just kidding. But that's
14:32 the way that businesses work. And I worked well before I was a cop. I I worked at a company where if we got a
14:38 bad review, you can just pay to have that stuff. You can contest it, right? And so I like word of mouth. Now, you
14:43 might say, "Well, Mike, okay, but how do I find somebody? What if I don't know anybody? I know somebody in some market. That market's not for me. I still want
14:49 to invest at a distance. How do I find people?" Well, again, I'm going to point you back to social media. And I know that it sucks, but when you say, "I'm
14:56 interested in Kentucky because Kentucky or Tennessee are low cost of living
15:02 markets. They've got cheap rental properties." So, I'm going to go on YouTube, Instagram, and Facebook, and I'm going to type in Harden County,
15:08 Kentucky real estate investing. What groups pop up? What videos pop up? Oh, it's some video with a creator with
15:15 2,000 subscribers. He's not famous enough that he can't respond to my questions. is when I leave a comment, he's thrilled someone watched his video,
15:22 he or her, and he's going to respond very actively and he and oh great, now he's got an idea for his next video cuz
15:28 that's exactly what I think of when I make my videos. Oh, someone watched it, someone responded. I'll respond to these
15:33 questions. And most of the time now, people reach out to me directly on Instagram and I respond to almost everybody who reaches out to me. I've
15:39 finally hit the point where where I now get enough traffic from videos on Instagram that it's it's hard for me to
15:45 get back to everybody. But that took years of me making content and years of me investing before I finally reached
15:50 that point. So if you're interested in another market, start with social media because you'd be very surprised how many
15:57 people are out there trying to talk about what they're doing and you can get a lot of advice for free. The
16:02 lumberjack, Michael Zuber, and Dion, for those of you guys who know them, what their consulting fees are. I I don't
16:09 It's absurd. I mean, thousands of dollars an hour or I have a YouTube channel with 200 subscribers. Hey,
16:15 Michael Zuber, Mr. D Million Net worth dude with 180 units in California. Do you want to do a YouTube video together?
16:20 Sure. Oh, cool. I just got free consulting for whatever I want because I'm just making a video. It's weird how
16:26 the and I hate to say this, the influencer economy works like that. Now, sure, some of these people are divas and
16:31 they'll be like, "My fee is, you know, $10,000." Okay, well, next. But a lot of them are just they're just happy to have
16:37 conversations. And the little little bit of clout that you have from making a
16:43 channel, documenting what you're doing, and then asking someone to have a conversation, it goes a long way. Don't
16:50 underestimate it. So again, I get it. You say, you look at yourself and you're like, I'm not an influencer. Don't be an
16:55 influencer. Make videos where you just narrate. Walk around with your camera of your properties and then narrate it. You
17:00 don't have to be on camera. Like there's so many different ways that you can get yourself out there to establish a brand
17:06 as the dominant force in your chosen city for your chosen investment type. And then the returns on that are
17:12 massive. So now let me explain some of the returns I've had on that other than the networking aspect which has brought
17:17 me to be a speaker in front of you today because Cody and Christian I met through YouTube the YouTube I don't even know
17:22 what to call it the YouTube umbrella that is Michael Zuber I guess. I met him I met them both I think for the first time I met you guys was at his first
17:28 event in Fresno. Was that when I met you guys for the first time? And then Dion and I spoke there and then we spoke here for you guys a few months later. I think
17:34 that's how it went. All those I've spoken in Vegas in front of hundreds of people several times now
17:40 because I just made a YouTube channel 8 years ago and with 200 subscribers messaged Michael Zuber and said, "Do you
17:45 want to talk?" And then it spiraled into this. Okay. So, there were those benefits, but the other benefits come
17:51 from somebody reaching out to me on Instagram and saying, "I have this house that's $20,000. It needs some work on
17:58 it. Are you interested in buying it?" And I go out there and I'm like, "Yeah, the work that needs to be done is replace the boiler system with an HVAC
18:05 system, rip out the green carpet, put a couple windows in. So, I'm going to 15 20 grand into this thing and it's going
18:10 to be worth and I just did the cash out refi on it. It appraised at $28,000." I paid 40, turned it into $28,000 and
18:18 there's room for an entire additional unit in the basement. I also split it from a single family into a duplex, a top top bottom. Those opportunities came
18:25 because people watched a video, a video that I have, and if you check my channel, my videos have 300 views, 500.
18:31 Like, I'm not a popular influencer creat like my most popular stuff will have like 800 views on it. That's not a lot,
18:37 but those 800 people are all in Gary, Indiana. And those are the 800 people I
18:43 want to know. They're all in Lake County or Gary or in that surrounding area. So, I get first look at all this stuff. So,
18:49 please take that stuff seriously. That's how you start to build your outofstate investing network. Once you find those
18:55 local influencers and you send them messages and you befriend them and you ask for their advice, it's another trick
19:02 that Cody and Christian talk about. When you cold call these people and they tell you and you say, "Hey, I'm interested in
19:08 how you got to all of these units. What could I do?" And then they they give you some advice, right? This is their strategy. They give you advice and then
19:14 what do they tell you to do next? Go do exactly what they said and report back to them once. For anybody who's ever been a coach or a mentor or a parent,
19:21 when you tell someone to do something, you're developing this special relationship where you now feel a little
19:26 obligated to try to make sure that what you've given them is good, solid advice. And so you now you're a little bit more
19:32 invested in that next conversation and in their outcomes. And you're going to work a little bit harder to try to give
19:37 them special attention, which is what you guys want to get those deals and everything. So don't underestimate that. So, okay, we've built that network.
19:44 We've got one or two people in some distant market and we think that we have somebody on our side who's going to help
19:49 us through this process. Now, what do we do next? Well, okay, well, we got to look at properties. Now, I still look at Realtor.com or Zillow, whatever you
19:54 prefer. Maybe you have MLS access. Great. Maybe you're using a real estate agent. Great. I prefer not to work with one direct real estate agent because
20:01 when I'm looking at houses on realtor.com or Zillow, at the bottom somewhere it says the listing agent. So,
20:07 I like to call the listing agent directly. This forces me to network with a ton of new real estate agents and
20:13 explain to them what my buy box is. What am I looking for? Now they know if they something comes across their desk in the
20:18 next week, they probably will remember me and they might call me back. It's happened. But it forces me to network with new people and continue to build a
20:24 new team of competent individuals because you can tell real quick who sucks on the phone, who doesn't understand what investors mean when they
20:30 say seller financing, and who's actually smart. When you say, "Would your buyer or excuse me, would your seller be
20:36 interested in seller financing?" And they don't know what that is. Well, that's not the real estate agent. you probably want to work with. When you
20:41 say, "Yeah, are they interested in carrying paper?" Like that phrase right there. Would they be interested in carrying paper? You have to be an
20:47 investor specialized agent to understand what that means. So when they say, "Yeah, I think they might be interested in some owner financing." Oh, I'm
20:53 talking to somebody who's smart who knows. And if this seller isn't, maybe this agent knows some other sellers who
21:00 would sir. Nope. No. You follow all roads to their end. So just because they
21:06 don't understand, you can educate somebody on what owner financing is. It's tough. It's very tough. Most real
21:11 estate agents don't like the complexity of it, but it's not impossible depending on what situation the seller is in and
21:18 where the market is. We've had a shift. It was a sellers market for several years. Right now, I wouldn't say it's
21:23 necessarily a buyer market because sellers aren't coming down on their prices, but and in fact, and a lot of times they're just delisting or they're
21:30 becoming accidental landlords, but it's not quite the sellers market that it used to be. But people are more willing
21:35 to learn about alternative financing because they understand at least to a small degree, oh interest rates are
21:41 affecting what's going on here. So I have coached some people and another one I've coached wholesalers and how to
21:47 proposition seller financing. It's another good tip that you guys could take. If you're not working with wholesalers and you're not talking to
21:53 wholesalers, you should be. Where can you find them? Facebook Marketplace, Craigslist. When you go on Facebook
21:59 Marketplace or Craigslist and you see a house for sale, it's for sale by owner or it's a wholesaler. It's not going to
22:04 be somebody who's a real estate agent, they wouldn't list it there. Where do they list on the MLS? So, when you see something on Facebook Marketplace or
22:10 Craigslist, it's a homeowner or wholesaler. When you drive around the city and you see we buy houses for cash,
22:15 those are all wholesalers. Well, I don't have a house to sell, but I'd certainly like to get on your cash buyer list. You call those people up. And what I did, I
22:22 met a guy again through YouTube. His name is Dung Thai, Asian guy who lives out of New York and he did wholesaling
22:29 in the New York area. He watched some of my videos and said, "Mike, I want to I want to do some wholesaling in Indiana for you. I'm going to find you a deal."
22:35 Okay, sounds good. Um, and he's like, "What are you looking for? What's your buy box?" And I explained it to him and I then explained to him what seller
22:41 financing was. Does everybody have a basic idea what seller financing is? Okay, we can go over some of that more if we need to, but I think most people
22:47 understand it. Especially if you're in this class with uh Cody and Christian, this is probably the most educated group on seller financing. I explained to him
22:54 about what owner financing was and how to pitch it because I knew that a lot of
23:00 the houses I needed to buy that are in huge amounts of disrepair, they're not going to qualify for traditional financing and I'm going to get a much
23:05 better deal with a much better interest rate, lower money down or no money down if I can do owner financing. And so I educated him on how to proposition the
23:12 people he's calling on owner financing. And it took him a couple of weeks and he came to me with a $20,000 property that
23:20 I put 0% down on and I had a 0% interest rate on, right? Like the king of seller
23:26 financing deals, right? I had to pay $400 a month principal only until it was paid off. And um and I I bought that
23:32 property, put in a little bit of money to work it, and [snorts] then that uh then I cash out refi that one and got a
23:38 whole bunch of money back out. Paid him off. He was happy. I was happy. Good situation to be in. So, work with
23:44 wholesalers. I explained how to find them, how to work with them, and how to also think about how you can educate them to be on your team. They're the
23:50 ones already calling everybody in the market, already putting the billboards and the signs out, already sending the
23:56 mailers out. And when they get a call and they say, "We'll buy your house for cash." And the person says, "I don't
24:01 want to go that low." And I say, "Hey, if they don't want to go that low, if we think the house is worth 100 and you
24:07 offered 50 and they don't want 50, offer them 75 on terms." And then when they
24:12 ask, well, what are terms? Then we explain, well, we'll give you down payment. I mean, we'll pay you the money, you know, and we'll put on a time
24:17 frame and whatever makes sense for them. But we we get a second chance at that property. We didn't just give up. We
24:23 followed that all roads to their end. And then we found an end that worked for everybody. So, this all comes back to
24:29 the first point I made, which is you constantly have to be able to improvise, adapt, and overcome. Again, my very
24:34 first property in Gary, Indiana was what? It was a turnkey traditional financing, 20% down, tenant occupied,
24:42 positive cash flow with a with it was like an 18% cash on cash return. Day one
24:48 property that doesn't exist anymore. It just doesn't. What works now has been
24:53 seller financing, owner financing, buying properties that need some rehab, need some work, and then taking all
24:58 these skills that I've been fortunate enough to develop over the last several years, and now I can actually do better deals than I did then. I get way more of
25:04 the upside than I did then. Um, but it takes a lot more work from me to make that happen. Okay, so back to out of
25:09 state investing. Number one, start with the markets that you think you might have some interest in. Number two, if
25:15 you can't, pick a market that you would think is good based off of what the cash flow numbers look and the cash on cash
25:20 return numbers look. Number three, find yourself a network of other investors in the area using social media, using
25:26 Facebook, and all that stuff. Number four, continue building the team. Well, who else is important on your team for
25:32 out of state investing? I would say your property manager is going to be the next most important person. The property
25:37 manager is going to be the one who is the local expert when it comes to things like evictions, which is how you can get yourself in trouble. When it comes to
25:44 things like the local zoning and coding laws, who's responsible for shoveling snow, something we don't have a lot of
25:49 here, salting all the sidewalks, something that we don't have a problem with here usually, but they know those
25:54 special laws, who's responsible. They'll have a lease that says on this single family house, tenants responsible for
26:00 cutting the grass, shoveling the snow, and all this type of stuff. And they're also responsible for notifying us if the
26:06 gutters need to be cleaned so that we can keep water off. But then when it comes to 2 unit, 3 unit and above, it's
26:11 probably your responsibility to take care of the common areas. They know all of this stuff and and can help protect
26:17 you from getting stuck in some sort of legal battle just because you didn't know you don't know what you don't know.
26:23 So, property managers, well, how do we find a good property manager? Again, you can go to chat GPD or Google. People can
26:28 manipulate what their reviews are. Or you can go back up the chain to who your trusted local network is. You can go to
26:35 the Facebook page for the local investor Facebook page. There's a Gary Indiana real estate investing Facebook page. I
26:41 started it, but it has like,200 members. I was surprised no one has started it yet. I do nothing to promote this thing.
26:46 I created the Gary Indiana real estate investing Facebook page and every day 10 to 15 new requests to join this thing. I
26:51 think has it probably has like 2,000 members by now, but it's now this conglomerate of people in the area who
26:58 either want to invest or do invest. And when you post a question, who were you guys using for property managers and
27:03 why? Or you just scroll up through the previous posts, you can find that question or other questions you might
27:08 have already posted and then you can see all the people who are responding and then you can try to friend them or you
27:14 can reach out to. It's not that hard to network if you just are willing to put in the time. Sometimes I wonder like
27:21 what was it like 20, 30 years ago when all networking had to be done like this. This was all of it, right? You had to go
27:26 to that local meetup that they would charge a lot of money for people to attend. And now just click some buttons,
27:31 watch some videos, put down the brain rot as my son would call it, and just like watch something quality for a few
27:37 minutes and you can meet a bunch of cool people. Okay, so property managers, I would start by going back to your
27:42 preferred network and saying, "Who are you using? Why do you use them?" And then from there, you still want to vet these people because property managers
27:48 talk a good game. I'm sure a bunch of people in here have property managers. A bunch of people have rentals. We most people self-managing or property
27:53 managers. Yeah. Well, congrats to the self-managers. That is one of my goals moving forward is to self-manage more of
28:00 my own properties. But I think it's a great place to start with property managers. So, how do you find good ones?
28:05 Well, you can ask the questions that we've all Googled on how to ask. Well, you know, how many evictions are you going through? And um you know, what's
28:12 your current vacancy rate? And what's your process? And what's the fee that you charge monthly? and what's the fee
28:17 that you charge to place a tenant? And all those questions are important questions to have asked. All those questions are important to have in a
28:22 legal legally binding agreement between you and them. But ultimately, I I really think what it comes down to for finding
28:28 that quality property manager. It it has to be someone who has I would say
28:34 somebody who has like a minimum of five units and has worked with that property manager for like two to three years
28:40 minimum. If you take advice from someone who has one or two units or they've been doing it for six to 12 months, they
28:46 could be having a straightup luck. I have seen people refer property manager
28:51 A because property manager A is doing a great job. And then I use property manager A on one property to test them
28:58 and property manager A sucks. You guys are terrible. Your fees are ridiculous. I start reading through the contract.
29:04 I'm like, and I send it back to them. I'm like, you know that this isn't normal, right? And that this isn't normal, right? Like these are terrible.
29:10 like this is highly irregular. Oh, well, they do such a great job. Like, okay, you have one or two tenants. I'm not trying to be rude, but you're not the
29:16 expert yet. So, for me, I'm looking for of my network who has minimum five units
29:21 and minimum two to three years of experience with a property manager before I'll take a recommendation because a lot of people like to make a
29:27 decision and then talk it up positively because they're just hoping that if they speak it into the ether, it will exist
29:32 and they don't actually have the receipts yet to show that it exists. So, save yourself that trouble. That's how you find the property manager. After the
29:39 property manager, the next most important person is probably going to be handymen. Handyman and contractors. This
29:45 is where I have had the most heartache recently. And one of the things that's been the most frustrating is that
29:52 someone who was once great, sadly, they can be Judas's Scariot and they can fall from grace. It's tragic. You're like,
29:57 "But but but Tony, you were so good at what you were doing. You did such a great job on my properties. And I know
30:04 you have a little meth addiction and I know it got the better of you. But Tony, come back to the light side, my man. I
30:10 need you. I need those prices. I don't care if you work at 3:00 in the morning. That's great. Tony, unfortunately, is a lost cause. And at some point, you have
30:17 to have the hard conversations with Tony, and you have to say, "Tony, it's been good, but we got to part ways here." All right? It just is what it is.
30:24 And so one of the things that I've learned recently is that just because someone was good and you had trust and
30:31 they were doing a quality job, they might have and he did two or three properties for me. He did a great job on and then I put him on a bigger project
30:37 cuz he wanted to take on a bigger project. All right, let's try a bigger project. And I didn't I didn't have the
30:42 controls in place to manage him appropriately. I went off of past trust
30:47 and Tony combination of either being overwhelmed or making poor life choices
30:53 was incapable of getting it done and it cost me a bunch of money because he made mistakes, tried to cover it up, made
30:59 more mistakes. And when I finally went out there and said, "This isn't matching up. I no longer trust you even though
31:04 you did well here." And I went out and looked, I went, "Oh, Tony made some big mistakes." Tony called me to say, "Oh,
31:09 the basement flooded." And it was a crawl space that was like a dirt crawl space and the main water supply line had
31:15 rusted through and they shut the water off and it flooded the basement. He was like, "Yeah, we're going to have to dry all this out." And instead of drying it
31:21 all out and cleaning it up, he just put the subfloor back on top. And so then when I went out there a couple months later and I pulled the subfloor up, I
31:26 saw the puddles of water and the garbage and now all the mold and went, "Tony, what are you doing? Why would anybody do this?" Like, "What were you thinking?
31:32 We're boys." Apparently not. So, this is why I tell you like so contractors and
31:37 handyman incredibly important to have, but unfortunately they can make or break your out of state investing experience.
31:43 They can cost you a lot of money. And I see some people nodding their heads who've probably had similar experiences. So, you have to really control, have
31:50 controls in place and recognize that you are a leader. Who in here is like a manager or a boss or anything like that?
31:57 We got a couple people in here probably lead some teams. Good. I highly recommend that you view yourself as the
32:03 CEO or the leader or the president or the coach or whatever you need to say, but you are in charge. You are the boss.
32:10 Um, and that means that the buck stops with you. You're accountable for everything. The person at the end of the day who doesn't get to make excuses
32:16 because you have to foot the bill is you. And as much as you may like people and you want to be friendly and we all
32:23 like to have those relationships where we can just work off of trust. I think it was Reagan that said trust but verify. You have to verify because
32:29 people will not do what's expected but they will do what's inspected. And so
32:34 they have to know that you're going to inspect their work. When I first started investing, I didn't have to go to Gary,
32:40 Indiana very often. I had these turnkey rental properties that were recently renovated. As long as the rent came in,
32:45 maybe there was a little repair for a broken window or a gutter that fell down, no big deal. But as I started to
32:51 take on larger projects, full gut rehabs or massive remodels, I started to
32:56 realize you have to have the controls in place. You need to go and actually visit your market. Now, for me, I'm lucky. A
33:03 round trip from Seattle to Chicago is 150 bucks. If you buy it a few, you know, a month and a half in advance, it's 150 bucks. It's another reason why
33:09 you might want to research your out of state market and figure out, well, what would it cost for me to actually get out there and check it out. I want to make
33:15 sure I'm not spending a bunch of money. I have made it a goal and have gone now for the last 6 months or something. I go
33:21 every single month for 3 to four days. I take a long weekend and I go and I tell some of the people that I'm going, but
33:26 you know who I usually don't tell my property managers. I don't tell them cuz I want to show up and see what things
33:32 look like. I also won't tell contractors who are working on stuff because I want to go and show up. And it's so funny.
33:38 I'll be messaging somebody. I just had to fire a guy. Hey man, what's the status on this project? No response. Hey
33:44 man, what's the status on this project? No response. It's never a good thing. Hey man, what's the status on this project? Oh yeah, it's coming along great. Oh, okay. Good. Cool. Then I land
33:50 in town. Hey man, meet me over at the project. Oh, are you in town? Yeah, I am. All of a sudden, the messages start coming through. Oh yeah, we're still
33:55 working on this and we're doing this and this hasn't been completed yet. And it's like, all right, well, let's go have a conversation about it. Now, I have a
34:02 bunch of properties and I have a bunch of different teams and I've got some people who are really good and I've got some people who are okay and I've got
34:07 some people who are crap and we're we're getting rid of the chaff and uh we're trying to just keep the a team. But this
34:13 comes with recognizing that investing as much as it was sold in the past as passive income. It's not passive income.
34:20 It doesn't become passive income until you have gotten to the final stage of the real estate life cycle. I know Cody
34:26 and Christian talk about it. Lumberjack talks about it. But you have buy, stabilize, optimize, long-term operate.
34:32 Everybody likes to buy. Stabilizing and optimizing is where people need to become more educated about. And then it
34:38 isn't passive income until it's long-term operate. Until the tenants in there, it's been optimized, everybody's
34:43 paying, and we just maybe deal with occasional tenant turnover. Until you get to the end of that process, it's
34:49 very active income. And we do a disservice by calling it or perpetuating the myth that passive income exists
34:56 because we think everything should be solvable with just a phone call. And many things are. But nothing speaks as
35:01 strongly to these people or puts the fear of God in them than seeing the actual boss, which is how they all see
35:07 you showing up at their door unannounced ready for some answers. So use that power. Use it intelligently, but use
35:14 that power because they should recognize you're in charge. It's your money. It's
35:20 your investment. No one cares as much about your money as you do. I had a call last night for a HVAC unit. HVAC unit
35:27 went out. It's Indiana in the winter time. It's 0 degrees. We have to get it fixed. Emergency. So, I get the HVAC guy
35:32 over there. They give me a quote for 3,800 for a brand new system. The old one's 40 years old. Cool. Sounds good.
35:38 Get my second HVAC guy over there. Tell them I already had the first guy go over there. Something else you should always do. Tell them about each other. Oh,
35:45 yeah. I had I had one guy go over there and give me a quote. Why don't you go give me a quote? Oh, what? He quotes you. I'll let you know after you quote
35:50 me. I'll let you know after you quote me. So first guy 3,800. Second guy goes 3500. Now the second guy is my guy. So
35:57 I'm like So I asked him 3500 is that the best you can do? One question. 3500 is
36:03 that the best you can do? And all of a sudden it became 2,800. I saved myself $1,000 by having two people. And I saved
36:09 myself $700 with the same guy just by asking one question. And I I know I I
36:14 hear a lot of this type of education provided by like sales training guys like, "Hey, you know, you need to have
36:20 an answer for every objection, but like yes, if you want to make more money, just ask them that follow-up question.
36:25 Is that the best you can do?" I'm always amazed at how quickly people somehow come up with hundreds of dollars more.
36:31 And I'm well, that's really nice. I'm glad I asked that question. It saves me a lot of money. So, um, be aware of
36:36 that. You're the boss. You're in charge. Save your money. Nobody's going to look after it better than you. Check my time.
36:41 Make sure I'm not running too late. Oh, shoot. We only got like 10 minutes. Are there any questions that I should answer, sir? Uh, there's gangs all over
36:48 the city. Crime occurs all over the city. I've had one of my properties get shot at, although it wasn't targeted. I
36:54 think it was probably targeted somewhere else and just a stray bullet hit the property, but I have not had any gang
36:59 related activity occur in any of my properties at all. I did buy a property with stolen vehicles inside of it one
37:05 time. Pro tip for any of you guys, if you're wondering, if you ever come across a stolen vehicle, uh, just call the local police department and say, "I
37:11 think this vehicle is stolen." Give them the plate or the VIN. They'll confirm if it's stolen, and then it's the police department's job to come get it. You
37:18 don't have to pay for that tow. So, don't ever pay to tow a stolen vehicle. That's the cop's job. Good question,
37:23 sir. And he's like, why would they do that? Great question. He said, when he was a kid, his mom would travel
37:29 into the city. His mom would tell him to get out and go to the bathroom at some town before. Oh, yeah. So, they never
37:34 had to. Absolutely. Yeah. Yeah. I walked into a gas station for the first time when I was there and I
37:40 saw the clerk encased in bulletproof glass and I saw bars on all the windows and I went I'm in trouble. I should have
37:47 filled up somewhere else. But yes, and that's why I I don't know if I introd when I introduced myself. So I've been a police officer for 10 years, been on a
37:53 SWAT team for seven years. I just retired from the SWAT team. So I have more time to focus on investing and I
37:59 always carry when and Gary. So yes. Yes. We are property managers. The part that
38:04 was missing in your video was how you So what I have noticed this phenomenon
38:10 that I have noticed especially with this own one property with some partners and we switched property managers at some of
38:16 the partners' requests. They wanted to try a new property manager. And the new property manager comes on board and says, "Well, we can't rent these units
38:22 in the condition they're in. We've got to make all these repairs." All right. If the other partners want to do it,
38:27 fair enough. Okay. I'll pony up the money for it. We can replace all the windows, paint the cabinets, repaint the
38:32 walls. like it. All right. Um, sure, fair enough. All right, we'll do it. And we we take care of all the work. And we
38:38 really I I really have to go out there and manage this cuz they're not they're say, "Oh, it's done." And I'm like, "I'm here. It's not done." Oh, you're here.
38:44 [laughter] Let me meet you out there at the property. Oh, you're right. That's not done. How did we miss this? Like, how'd
38:49 you miss this? Yeah. When you put a window in, you caulk it. I don't know how you missed these giant gaps. Like, it's crazy. And so anyways, what I
38:56 recognized is not only did I have this experience, but some other people I've been networking and talking with have this experience is property managers
39:03 that do big construction jobs. They realized that they can charge 10% to manage a remodel on a $30,000 remodel.
39:10 That's three grand versus 10% on a monthly rent of 1,200, which is 120 bucks at the end of the year that they'd
39:16 have to manage for three years to manage a property to make the same amount of money they get on one remodel. And so if
39:22 you were the head of that business and you said, "Where do I make most of my money?" You too would probably say, "We
39:28 should try to figure out how to do more work for our investors." And then what I really think happens is they go, "Crap.
39:33 We hired all these guys to do work for us. We don't have any work to be done. Go find a rental that needs work on it.
39:38 This rent we we can't rent that one." And so you have to be aware that just because they say something needs to be
39:45 done, it might not. Just because they say, "Oh, this would be a good idea. Well, maybe it's a good idea, but is it
39:50 necessary? Are we going to overimprove the property for the rent that we're going to get? So, you need to be the expert. And again, who do you go to to
39:56 ask? Network of other investors in the area. Mike, when was the last time you put quartz granite countertops in a Gary
40:01 rental? Never. Cuz the section 8 tenants are going to go, "Here's my hammer and I got to do some work and I got a
40:07 workbench cuz those are expensive. So, boom, boom, crack." No. Laminates. Oh, well, laminates crappy. Yes, it's cheap
40:13 and it looks like granite now. So, then we'll replace it for very, very cheap. But how do you find a property manager that doesn't do that? Tough question. I
40:20 don't think that every property manager that does manage remodels or does projects is necessarily doing it without
40:26 your best interest at heart, but they have mixed interests. They have mixed motives. And so, you have to be aware of
40:33 that and you have to be aware of their bias cuz they're looking at a big paycheck. And so, could you still use that property manager? Well, if they do
40:39 a good job of placing a tenant and getting it rented out just cuz they also want to make money on you here, you just have to be aware that it's your job to
40:44 tell them, "No, no, thank you. Maybe next time I'll consider it later. I appreciate the heads up, but no. So,
40:50 that would be my advice there. Other questions? Close to wrapping up here. Five minutes left, right? We're done at noon, right? Okay. Any other questions?
40:57 Yes, ma'am. Had any experience with eviction? I just finished an eviction a couple days ago. In fact, everybody was all up
41:03 in arms because the Lake County Sheriff's Department had said, "Boom, eviction moratorum until February." And
41:10 everyone was like, "What? Oh, wait. Why are they doing this?" And I was sitting saying, "Actually, I think this is news
41:15 as well. I don't remember them having an eviction moratorum from the sheriff's office since CO had occurred. And I
41:20 think what it came down to was they were anticipating that if the government shutdown had continued that there was going to be a bunch of section 8 tenants
41:26 who did not get their rent paid and then would therefore be thrown out on the street. And so they were like, we're not going to do any evictions. And if
41:32 anybody had asked landlords, I don't know about you guys, but just because section 8 doesn't pay, I wouldn't have thrown them out. They likely would have
41:38 backpaid. And so I would rather keep all those tenants and just get the backay. Yeah. So anyways, how about in evictions? Yes. I just had one that
41:44 closed the end of November and then I verified they were out on the 1st. I have never had to have a sheriff come
41:51 and officially kick somebody out. Most of the time it's not fun, right? No. Most of the time once you have the
41:57 notice, they're just going to go because they know that the next step is that if they don't go, the sheriff will show up
42:02 and they'll just be thrown out. Oh, way better. Again, another reason why I'm not a huge fan of investing here. Um,
42:09 and I have one house in Illinois. And God, I dread if I ever have to have an eviction in Illinois. I've signed up for
42:14 6 months. In Indiana, 3 weeks. If you have all your ducks in a row and you do things properly, which I assume everyone
42:20 does, here's the lease. Here's what you pay. You didn't pay. I sent you a notice. I posted. Here's the court date.
42:26 You go in, you tell the judge, I emailed it. Here's the notice. Here's the picture that I posted it. They didn't pay. The judge looks at him and goes,
42:32 "Do you have the full amount now?" "No, we don't." Cool. You're out. Here's your order. You're done. It's that easy. cost
42:37 600 bucks for the attorney. Yeah. Right. Unbelievable prices, right, ma'am?
42:42 Lake County, Indiana. Yeah. I haven't done any evictions in Florida. No. And I've luckily had no evictions in any of
42:47 my states other than Indiana, but that's where the bulk of everything I own is is in Indiana. So, I love section 8. I have
42:54 the majority section 8. And I think that section 8 is the play for these lowcost
42:59 or the these cheap rental markets because if you know again if you know anything about the the city of Gary the
43:05 state of Indiana this is a lower income. It's one of the rust belt states de-industrialized. They're the first
43:12 people during a recession to lose their jobs usually. And so I like section 8 because section 8 always pays. If the
43:18 tenant loses their job and they can't pay their portion of the rent anymore, well, at least I'm still getting 75% of
43:24 it. And I can make the decision of will I accept 75% or do I want to evict them now and try to get someone else? And if
43:29 it's in the middle of winter, if it's November, I'll go, "Oh, I'm just going to take the 75% until February and then
43:36 do the eviction and then get somebody because nobody wants to move Christmas. I mean, it's 0 degrees right now. There's 8 in of snow. There's going to
43:42 be another 8 in next week. No one wants to move then. So, what good does it help me to evict today if I can get keep some
43:48 money coming in? So, I like having that. I love section 8. Section 8 is also very county specific. Every housing authority
43:55 does things a little bit differently. Some are easier to work with, some are not easy to work with. Dion, my friend
44:00 Dion hates the I think it's Pierce County section 8 housing. He hates them, but he loves Olympias. And so, I can
44:06 speak for Gary and for the surrounding cities of Hammond and East Chicago who all can place residents in Gary, which
44:12 was always odd to me. They're all good programs to work with. I don't have any issues with them. So, but I I couldn't say your specific market, for instance.
44:20 Other questions before we wrap up? Anything else? Look at that. Right on time. One minute to spare. But thanks
44:25 guys for having me. It was very nice to meet all of you and I appreciate the opportunity. Cody and Gisha, thank