Flipping America 533, Multi-Family Investing with Bill HamFlipping America

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We’ve documented 85 possible careers in real estate and real estate investing. With all of the sub-branches and variations, it’s likely there are more than a thousand ways to make a million bucks in real estate. Today we are going to talk about one of the best, on Flipping America.

Bill Ham was an airline pilot who thought he had a nice life and easy money. Then he got into real estate, particularly multi-family, and he found just exactly what he had been missing. He’s joining us in just a few moments.

We will take some of your questions on the next show, so send them to questions@flippingamerica.net. You’ll get an answer even if we don’t use it on the show.

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Expected Air Date: Friday 7/25/2022

Guest: Bill Ham, bill.ham@bpgmail.com

Transcript

[0:00] We’ve documented 85 possible careers in real estate and real estate investing with all of the sub branches and variations it’s likely there are more than a 1000 ways to make a one 1 million bucks in real estate today we’re gonna talk about one of the best.

[0:13] Music.

[0:41] Bill ham was an airline pilot who thought he had a nice life and easy money,

Then he got into real estate particularly multi-family and he found just exactly what he had been missing,

He’ll be joining us in just a few moments for a full interview. Now, on the next episode, we’re gonna take some of your questions so be sure to send in the questions of flipping America. Net.

You’ll get an answer from us even if we don’t use your question on the show also you can follow us on Facebook at Flipping America Media Facebook. Com,

At Flipping America Media Twitter and Instagram at Flipping America,

Question. Also, invite you to our new YouTube channel, YouTube. Com forward slash Flipping America. Our sponsor today is flipping America funding, get the money you need for your business, your training, your projects, your infrastructure, flipping America, funding it.

Funding is a one stop shop at Flipping America Funding. Com. Here we go with the interview. Bill has been on the flipping America show but.

I don’t think any of you have had a chance to hear that show yet. So, take a minute Bill and just tell us a little bit about yourself.

[1:54] Yeah, appreciate it. I am a multi-family owner, operator, for 17 years, in the Georgia market, 11 Atlanta,

I’m a pilot by trade. I had closed my very first deal which is a duplex and with duplex I walked away from the aviation career full time.

When in real estate full time,

It’s it’s an interesting journey. Made a lot of money while lost a few here and they got it. All in all, done really well. Yeah, I haven’t well. Hey, you know, I meant to.

[2:34] Ask you this before did you still your pilot’s license.

[2:38] I I do. It’s not currently. Yes, I do start my life. So, it had to go gift a fresh enough. Yeah, you could just fly around your own corporate yet.

[2:47] Exactly. Yeah. Yeah. Yeah.

[2:59] Let me let me just make an adjustment or.

[3:08] Yeah.

[3:12] Okay say something Bill now and then.

[3:22] I notice my camera seems very laggy.

[3:31] She said that didn’t help too much but that I have all the buttons set right I think.

[3:42] Yep.

[3:54] Let’s try that. Now, say something Bill. Alright, is that getting any better? Test 123, you know, is that sound to me better? How many money out here?

Okay that was it.

I finally hit the right button. Man, my family buttons.

But you know I have to change everything when I’m just doing a normal Zoom call. Anyway, alright. So, I apologize for that everybody. Okay. So, Bill’s been an airline pilot and,

Danny bought a duplex and he walked away from his career.

[4:30] Yeah, that’s pretty much it. My first 402 units. I was able to purchase with only creative financing. So, not using any,

So I was able to use lease options seller financing things like that,

That was the first portfolio got that accomplished and then as it started moving into larger properties I moved into syndication,

And that’s the majority of what I do now is is find and syndicate deals you know bring on investors and partners and do larger multifamily ass,

I need you to explain for her by what you mean and how you pulled off this creative deal structure because that might be how all of us broke people need to do it to begin with.

[5:19] Well, that’s a great question. Because I actually wrote a book on that. That’s that’s creative cash. That was why I wrote the very first book,

Creative cash. Thank you. Yeah, there you go. And in on Amazon, with the first book I wrote, creative cash is to teach that subject right there of how to,

Create,

You know and there are ways to do it in in,

Probably one of the biggest values that you can bring in the state world. So, the key here, the fundamentals are you have to find a seller that has a need or an issue in some manner, some kind of,

Problem in the new with with create a financing the idea is that you’re gonna create a problem solving offer.

[6:10] And you’re gonna make that problem solving offer and that’s how you’re gonna get into deals early on when cash might be limited,

So it doesn’t mean that every deal you come across is a fit for creative financing. It doesn’t mean they create a financing as a one size fits all. It’s also your problems. Solution. It is not. It’s just to increase probability of closing,

If you haven’t dealt,

And it it the numbers don’t work for whatever reason all I’m saying is instead of thrown in the trash and moving on pull it back out of the trash and apply some creative,

Financing techniques, see if that changes anything.

That you probably wouldn’t have done in the in the you know prior to that because of using creative fancy. So again, I’m not saying it’s the only solution. It’s just meant to increase probability of closing. Yeah, I love what you said about problem solving and it bears repeating.

Problem solving and we’re finding we’re looking for sellers that have a problem and then we develop a solution okay that’s really good give us a specific example of a type of a problem that you can solve.

[7:17] Yeah, easy. Burned out landlord. You know, someone who who may not have a distressed asset but is personally distressed.

Maybe they’re tired of being a landlord. They’re tired of collecting rent. They’re they’re tired of management.

You know, they’re just tired of this stuff. That’s a great scenario for something like a master lease option where you go in and basically rent a property with the right to buy it someday in the future. And that’s a great way to take control of something,

That that is just operationally distressed. You know, maybe sellers distressed and that’s a good way for you to get in,

I don’t wanna use the term no money down but you know it’s a good way to get in with a lot less money down.

So that’s just one specific scenario.

That can be a fit for create a financing,

As as Linding gets more,

That’s when create a financing becomes very prominent because what happens is we find that the the traditional lenders will stop funding distressed assets.

[8:37] So anybody that’s a seller that doesn’t have a pristine piece of real estate with pursine operations.

May find that buyers are struggling to get loans on their property.

In what you have to be able to do with identify that asset that seller and make the seller realize that that’s their problem not your problem.

And so creative financing can’t be something that’s meant to cover up your inability to close or your lack of experience for funding,

You don’t want the seller to think you’re asking for for seller financing because you have no money,

That’s not a good idea. You need creative financing to be the solution to a problem. You did not create but you are the the,

That’s how you convince somebody to do creative until they’re financing so it’s a it’s about finding somebody with a problem solving their problem and then getting what you want.

For a moment there.

[9:38] Hey think that we are headed for a.

Yeah, right, right, right. Well, I believe that we are headed for AA recession.

I don’t think we’re gonna see AA huge crash in values. But I think we’re gonna definitely see a leveling off in where I believe the greatest opportunity is going to exist.

Is is people,

How long comes you? So, what does one.

[10:23] Right well the opportunity.

It there’s no such thing as.

Because in every kind of economic news there there is there is an opportunity you just have to know where to look for it and in fact when the economy is struggling a little bit,

It’s actually easier to do what we do.

The balancing act there is to not wish for the economy to tank so we can make some more money,

Hey Facebook.

But we also know that the nature of the economy is cyclical and it’s beyond the scope of our conversation today. Cover that. But when those cycles come and go, if you know how to look for opportunity, there’s an opportunity in every cycle.

Even in the one that we’ve been has been very difficult to find deals but it’s been really easy to sell,

Okay so have somebody get started in this man it seems daunting it seems overwhelming what do you do to get started buying apartments.

[11:43] It has so I I recommend two books that haven’t been on Amazon if you know it. No whatever you know honestly speaking if you are interested in in getting into real estate I recommend that you start with cheap information first,

And I tell everybody that spin your huddle before you spend your dollars. There are books. There are podcasts. You can join this program. There are lots of ways to get really quality information

Without breaking the bank doing it,

You don’t have to sign up for a big giant program and spend $10 thousand right at the gate if you can and it’s your reputable program. Good. There’s nothing wrong with that but don’t feel like you need to go invest 10, 2030, $40 thousand to get into the business. You do not,

So, I tell everybody, you know, go get a book. They’re 20 bucks. Go get you know, podcast, webinars, videos, do all that stuff,

Once you’ve maximized the low level you know entry level free type information,

Then, you start investing in in more higher level education. Then, you start paying a little more for it. Then, maybe you look for a mentor.

Your things that nature but in the beginning you’re not really gonna know what a good teacher is you’re not really gonna know what it is you need to learn and you may wind up spending a lot of money on on high-level programs that are not fit for you,

So I am I have a program. Literally telling you don’t even sign up for my program. If you haven’t gone and bought the book and they in the other stuff.

[13:10] You’ll learn a tremendous amount and then you’ll know where to spend your money. That’s my number one tip is is cheap info first.

That’s good. I I really like that. That resonates with me as well. What what are.

Okay, give us a few ways that let’s say I wanted to go out this afternoon and start looking for a multifamily cuz I wanna get in this business. Where would I go to look? Would I just start driving around or what do you do,

Yeah,

50 units and under and 50 units in above,

So if we’re talking about 50 units and under the way we source those deals is a little bit different than the way you source them the big giant ones you know 50 units and under I would say the best thing to do is is buy a list,

And start trying to contact owners directly so you may wanna go to go online and just I don’t use any particular company I’m not representing anybody but,

Go online and just look for companies that that sell list services that the list and purchase a list and then read that to us directly,

My students have had the best traction with that lately. You certainly could drive around and look for properties. That’s a lot of time spent for a little bit of result. I don’t necessarily recommend you do that.

And then, you know, you’re starting to move up the food chain. What I recommend next?

Is to create a list of all of the realty companies in your city.

[14:39] So go to their home websites that’s where you’re gonna find the majority deals

There are websites like Luke net.

Or CREXI. Com. Those are our all sort of market forums. Most people start there and understand there are a lot of deals there but you never, that’s a flea market for real estate. You know, you’re never gonna find meaning detail on this website.

So what you wanna do is go to those websites.

That’s the secret trick. Go to their home website, try and get on their email address, put your email address in there, and start looking at deals that are on their home website. That’s that sort of the best way to get started.

And in the next tip would be.

And go call the realtor and go look at it. That’s the shortest, fastest way to start looking at deals right there,

No magic answer.

[15:49] When you’re out there looking at properties how do you know whether you’re looking at a deal or not how do you,

You you have to know first off. When people ask me that like what is a good deal? I always answer with another question and say, well, what is your cost of capital?

So to me a good deal is a deal that.

Hey Facebook,

So, you have to kinda stop and say, okay, what is it gonna cost me? Well, we know 7580, percent of the price is gonna be the interest rate for the loan.

[16:39] Okay fine what about the down payment,

If I’m gonna use your money or some investor’s money I need to know what kind of rate of return you want to get on your money.

Because if you say, yeah, well, I’ll invest in every deal that you show me that produces a 10% cash on cash,

Okay now I know that Roger’s in a deal it’ll produce 10% so now he a good deal is a deal that produces 10% but if Roger comes to me and says hey Bill I’m I’m good with three% cash flow.

Great. Now, every deal is a good deal that produces three% cash flow or better. If I’m using Rogers money,

That’s why you can’t really answer that question in AA here’s the instructions. Here’s what a good deal is. It fits here. It looks like this. It goes in here. You can’t answer that question that way because everyone has different requirements for their money.

So, yeah, start with what’s the cost of your own money. That’s that’s the answer.

Caprate figures in there somehow and if everybody that’s inquired a little bit about or watch videos on commercial hear about capitalization rate tell us what it is and what,

What impact it has in this whole thing.

[18:01] Yeah alright so capate simple math is just basically the value of the property the price the value divided by it’s net operating income.

That’s that’s the math. Pretty simple. What were.

How many years would it take for for the revenue of this property to pay back off the price that’s basically what we’re asking what the formula says but you know what? Who cares? That’s nonsense equation. It doesn’t tell,

It’s like, oh, great. If if I paid for this property, I’ll catch you and return all my money in 5 years, five cap rate.

Cap rate in layman’s terms is a way for us to quickly.

Created by an asset class.

Alright as opposed to a car dealership or something else. Everything has a cap rate. So we’re about multifamily cap rates then what we’re saying is,

How does everyone in this market value a stream of income created by multifamily.

[19:12] Let’s say you wanna buy a house to live in and you look up and down the street and you say, well, what is everybody else paying? You know, am I paying more or less than everybody else’s pay then that’s how I’m gonna value the deal. Operates the same way.

Cap rate is a number that we can use to say i am paying more or less than other people in the market.

That’s what we use it for,

Valuation, right? So, the lower the capory.

[19:42] The more expensive the deal is based on extreme revenue, alright? So, for example, if if I look around and and I have a deal and I can buy this property for a seven cap,

That doesn’t tell me anything. It’s not enough information. So what?

If I look around and say, well, I can buy a deal at a seven cap rate and everybody else in the area is paying a five cap rate,

Then I’m paying less than everyone else. It’s an inverse.

But I am paying a five cat braid on paying more than everyone else

How other people are valuing a stream of income. See now the the first example about kind of a house that’s based strictly on the sales price.

Takes in the account, the price, and the amount of revenue that the properties producing. So, that’s why that’s why it’s called capitalization rate. But that’s all we truly use it for.

Is to just be on the tell are you paying more or less than everybody,

When it comes to extreme cash flow.

[20:52] Yeah. Alright. Yup. And you know, we we could sit here and,

Do the mask for you and work it all out and then we would wake you up when we’re done because you’re gonna go to sleep kind of a nerdy math conversation. So, how do you find out what the local market cap it really is?

[21:15] Research carnival sale data is the direct answer what I recommend you do is now that you’ve gone back over to these realtors websites remember you’ve you’ve now figured out who all the main realtors in your market,

And when I see realtors I don’t mean every single realtor out there when I say,

The realtors what I mean are the ones that specialize in asset class your working on. So, for today’s conversation, if you’re trying to buy multifamily, you wanna go to the realty websites that specialize in multi.

Now that you’re at their websites what I recommend you do is is look at about four or five deals in a market and if you can help it look at four five deals from different realtors.

[21:57] There’s your market data right there,

So if I go to a wheelchair website and then I see they have 123 main street listed on their website I’m on a download the offering memorandum,

Inside that listing inside that property package the realtor has already gone around and pulled all the comparable data from all the other properties and put it right there in that nice little property package.

[22:21] I can just download it read it.

Download four five of them and you’ve covered the market.

Packages it will cross communicate in your cover the market,

In and you’ll know what you’re looking at. So, so four, five different listings. Look at the comparable data inside the marketing package.

Alright I’ve put your website up there and I’m also gonna show the books that you’ve written because I wanna take AA little break right now to tell everybody we’ve had some people come in in the last few minutes,

Bill’s given away both these books to a couple of lucky people pick a number between one and 100 put it in the chat,

And Karen is monitoring the chat and she’s keeping record of the two people who get closest to the number that,

Has been preselected and then at the end of our time today we’re gonna announce the people that win these books and Bill’s gonna mail to you directly you might even commence him to.

[23:31] Put his autograph in the front and just once again that’s that’s Bill’s website right there real estate raw. Com,

If you wanna get some more training from Bill on this kind of thing. Alright, Bill, look, let’s say, I wanna be AA bird dog, and I wanna send you a deal.

You know, I’m in Atlanta. You’re in Atlanta.

[24:02] Wrong. Yeah, I’m looking at anything over about 20 units right now.

Northern Florida Georgia South Carolina North Carolina Tennessee.

If it’s not something I’m interested in, I may know some people. The only criteria for me personally is not for everybody, for me personally, it can’t be listed with a realtor.

Because I’m probably already working with that realtor and so I don’t want anybody to do is to send me a deal that’s already with a realtor that I have a relationship with,

And then come back and say, oh well, you know, you you try to steal the deal. No, I was already working with that realtor. So, that’s my number one car about you cannot send me a realtor’s deal because I get,

Funny, quick. Now, if you’re directly to an owner, please call me. I am very interested. So.

[25:01] Please don’t.

Alright.

They follow up question that is can you leave me in for a tiny percentage going forward,

The answer is possible to all those. Yes, it is possible to leave you in for a tiny percentage. I’m not gonna commit to anything today especially in this industry.

[25:31] What I will do to protect your interest and and I recommend that you do this with anybody,

You know, so if you have AD on this general information, if you have a deal, you do have to be careful about people stealing them from you.

I have shown up it rear groups in in started talking about the deal I was looking at down the street only to have somebody in the third row,

Write down the address and go steal it from me. It’s a real thing. It’s unfortunate but it happened. So, what I recommend is if you are looking to be a bird dog for me or for anyone.

Have that individual sign a non disclosure non-comvent agreement don’t go around you,

Cut you out and try and talk to them directly. So, I’d say let’s start with that. If you think you have something interesting,

We’ll we’ll go from there. We’ll we’ll work. We’ll talk around the commission. You know, appearing or something like that.

Price or car about I can give you more.

And if you don’t have a legal shield to me then you need to go to Roger B helps. Com and get signed up with legal shield.

[26:48] There you go.

Pay for Lulu.

[27:09] Yeah, don’t do that. Legal, illegal shield is great. Please legal shield. Before you go pull and stuff off the internet, anything with that.

[27:17] You know, legal shield doesn’t do everything that I need, but they do a lot of things that I need. And so.

For a small monthly fee.

You can set it for legal shield.

[27:49] You know.

Before you back out it’s not gonna happen you know don’t worry about any of this stuff that we’ve been talking about the day about market cycles and interest rates are up interest rates just get started.

Real estate market has been here for 1000 years it’s gonna be here for another 1000 years don’t get caught up on unnecessary details take action get in,

There was only one time that was better to buy real estate than today and that was yesterday, right? So, just just get in there. The if if your nervous,

You’re normal but if you don’t know where to get started, you’re with most people. That’s why we’re here.

Start with a cheap information you know the next step will become obvious but don’t worry too much about this high level conversation in the future market in the interest rates.

Just get started. All those things are are will be washed away in the past. I went through away. I went through all the crash. I’m still here. I’m fine.

Don’t take any of that stuff too seriously just get started.

[28:51] Alright.

Thanks for joining us everybody. We appreciate it. We, that’s all the time we have for the day. But just to let you know, we got some big things coming up in August. The Flipping America Go is coming out August the fifth.

My book is releasing August 23 Flipping Houses in 10 days.

And here’s your quote for the day. If you measure yourself by others, you will always be able to find smarter, stronger, faster, more successful people.

The true measure is yourself.

See you soon everybody.

You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app free in the app store,

Be sure to like us on Facebook find and follow us on Twitter and Instagram and.

[29:50] Music.

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Flipping America 533, Multi-Family Investing with Bill Ham

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