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

All right , rob , so I'm going to get right into it . So can you give us a brief overview of your journey in commercial real estate ?

I started up . I was sitting in a class junior year of business school and I sold Steve's Pizza across the street for half a million bucks . I was like this is where I got to be . So then I caught the bug and I've been at it ever since .

I was an everything broker for a very long time , as most people are in the small local markets like this and then I niched down into the apartment space three years ago and now all I focus on is large multifamily .

He's sitting on the other side of my desk . He's all scared , remember that . And he listed my . I think I was your first customerased those offices for me . He leased a couple of office suites for me . So we're going to go right to my next set of questions is how can an investor navigate potential risk in the current market ?

The market is funky right now , so we got interest rates going up . We have buyers thinking that their properties are still sellers , thinking that their properties are still sellers , thinking that their properties are still worth what they were worth in 2022 and 2021 . So how can a new investor or an investor navigate potential risk in this market ?

Be careful with the insurance , the cost of turnovers and , obviously , price . You got to always what we thought was a good deal before . Assume prices have come down 20% , so go down even more , so then you're buying correctly to protect yourself from a potential another 20 decline .

What do you attribute that to ? And are you seeing that here in our local markets in the Lehigh Valley and the Monroe County and the Poconos market ?

That contractor , that builder , the developer got that loan two years ago at about 4% and now they have to refi or to keep it or they have to sell because they're going back to the bank at seven and a half 8% and they're working on tight margins . So they weren't prepared for that Doesn't fit the bank's DSCR . So the debt is huge right now .

That's what I'm going after People who have maturity dates today . In commercial real estate it's typically five-year notes fixed for five years . So you know , anyone who bought five years ago is probably coming up with that today . So the debt is definitely a big opportunity today .

So I just refied a five unit two days ago that I bought in my fire property . You guys seen that one on social media right , the one that was burned down . So I bought in my fire property you guys seen that one on social media right , the one that was burned down . So I just refinanced that property two days ago .

So that's only fixed for five years , guys , and it balloons in 10 . If you buy a list , let's say today , of investors that bought properties five years ago that are units , are between five and , let's say , 20 , right , and they got financing five years ago you know their term is coming due . Five years ago they had a rate of 5% , 4% .

I mean it wasn't 2% yet Five years ago it was a little higher , but four and a half 5% right Now . I just refied a five unit at 7.75 . I refied another property in December sorry , in January at eight and a half at the SCR single family . I only have two single families in my portfolio outside of my primary residence and eight and a half Guys .

I got a lot of experience . I got an impressive track record for the banks , right , and they gave me an 8.5% interest rate back in December . So back in January , but January the markets were really , really scared . Nick , you actually did that loan for me . As a matter of fact , my lender's in the room here , right ?

So just again , major major gold that he shared there . So I want to open up the room . I'm going to ask him one more question , but I want to open up the room for the audience to ask questions . You guys good with that , all right . So , rob , what are some of the biggest mistakes you see new investors make and how can they ?

So you really have to know , know your stuff , know your exit . Know that you have , uh , cash flow enough I wouldn't follow the herd . Everyone's about the one percent . Know that you have a cashflow enough I wouldn't follow the herd . Everyone's about the 1% rule . Or you have to hit that 1.25 DSCR .

We're here for big cashflow , so then we , if something happens , we are protected . What was the ?

25 , 20 units or so , 20 units up in tannersville and then we got in the numbers and the numbers just weren't there and we were like , now we got to get out and the seller was just on some other , you know , he thought that his property was worth significantly more than it . That we can make , make it work . So what advice are you getting ?

So , so we have some . How many people are new in the room ? Raise your hand . So we got one , two , three , four , five . So about five , six people are new in the room , right ? That that are not don't have any experience , rob , what would you , what advice would you tell them to learn how to run the numbers ?

First of all , how many people in the room want rentals , want to build a rental portfolio ? I'm going to say 90% of the room . So what advice are you giving them ? Because this is not something they teach you in school , right , this is not something you learn in school . As a matter of fact , the realtors in the room .

Can you show me your residential realtors in the room ? Raise your hand . One , two , three , four , five , six residential realtors . Okay , put your hands out how many of you know in the room ?

Not to put you on the spot , but I just want to point residential guys how many of you were taught in your brokerage on the residential side what cap rates are and how to figure out what a trading cap rate is ? Zero people raise their hand right . So this is something that you need to learn from someone that's doing it , and that's the language of money .

When I started this meetup , I said this is a money game . You need to learn the language of money . So you're out there . They're teaching you to sling , to sling . I used to sell insurance . I'm thinking policies , life insurance policies . They're teaching you to sling houses , but they're not teaching you the language of money , how to work with guys like us .

You need to learn this language . So what advice are you giving to the realtors in the room and to the new guys in the room ? How do they get that information ? How do they get trained up , coached up to get ?

You have to have your at bats , you have to underwrite deals every single day . You have to be an expert in . You know where you're trying to go to . And for the realtors , I would say get into a firm or a brokerage or a group that's investing . That's why I have to do a little bit of residential .

Ideally they're all commercial , but if that's where you want to go , surround yourself with it want to go surround yourself with it .

Seven of us have a coach right out of like 20 , right , if you want to excel and you want to go fast , you've got to have mentorship , you've got to have a coach .

No-transcript a tangent about this , but it's so important because when you have a coach or you have a mentor let's say Rob's your mentor you're going to Rob and you're going to be like , hey , man , does this deal make sense ? And Rob's going to tell you did you look at this ? Did you look at that 20% expense ratio ? Are they stupid ?

What is this broker talking about ? 20 , a well-ran multi-family and the country well-ran . The average numbers is 50 , so it's a red flag . But you only get that when you have the right mentorship , the right coaching , right makes sense , or you're surrounded with the right people .

You're in rooms like this getting the information , you are who you spend time with and you are who you listen to . Period of the story .

That's it Rob and I are here talking about , and you're a fly on the wall and we're talking about multimillion-dollar deals and you're making $50,000 , $60,000 a year and me and Rob are talking about , hey , I'm going to flip this property here , I'm about to . I didn't pay taxes this year which I didn't , by the way , publicly , legally I did a cost sag .

Yeah , I don't win man , I freaking paid a hundred grand the year before that . This year I didn't pay the taxes because I did a cost sag . Right , because of the people I was surrounding myself with , Like , I was like , hey , I had a lot of pain the year before , I paid a lot of money in taxes .

And I was talking to my circle , to my master , I was like yo , why didn't you do a concert ? And I was like I don't know , but guess what ? I'm doing it now . Right , I did it . We got my taxes today Zero liability , amazing , right , amazing . That's a freaking win . And that's legal , right , guys , that's legally .

But that's only because of the people I surround myself with , the conversations I'm having , people I'm having with , and sometimes you pay for that access . You've got to pay to play , you've got to pay to get that information . But it's that one idea . That one idea , guys , right , that one idea you get . That makes a million bucks .

So , rob , my final question , and I'm going to open it up to the audience what are the pros and cons of different property types retail , office , industrial for investors with varying risk tolerance ?

And then industrial , if you take all the big this is what I heard from a reputable source , I don't know where it come from , but take all the huge cities around

us . Boston should be fine because the lease is up very , very quickly . We have a still strong demand . In the Sunbelt markets there's a lot of new construction , like in Texas and all those markets , so rents are going down .

The only place in the country that's still strong real estate the market is still strong .

The only place in the country where we're seeing rent is still growing Boston , massachusetts , all of the Northeast right , we're still seeing rent still growing , although my property manager's here and I'm not necessarily seeing that , but that's what the data is saying , right , that the Northeast is still strong . Actually , melo , you sent me an article .

Yeah , you sent me a Coal report just a few days ago . But , yes , so the Northeast . So we're in a good spot , guys .

But also , I want you all to know that , being in the Northeast , the meltdowns usually happen from the West Coast and then they come this way , but they happen over there first , right , and California has been , and we have a lot of California listeners . So , big up to you guys , love you guys .

But you guys know it is what it is , right , they're getting hurt right now over there in California . It's weird because I talked to a lot of people in California and they're like , oh , we're still getting multiple offers and all of this craziness . And then I talked to other people and they're like no , we're not , we're not getting that .

So it's market dependent , area dependent . But we're in a strong . So far , so good , we're still strong . But again , I will rely . I'm going to defer back to you guys , the realtors , because you guys are boots on the ground .

I'm just an investor , right , I'm just a guy that's looking at the data and making decisions , but you guys that are selling out there are out there talking to people every day and know what's really happening . My property manager back there is the one boots on the ground , talking to people . He knows what's happening .

I'm just a guy putting the deals together , right , so I want to take questions . So do we have any questions ? I want you guys to come up with some questions , please . Josh , come up , Josh , and Josh is coming up and he's going to ask his question . Go ahead , josh .

So what we did is we hire a firm , they go out and then they itemize every item and then we take accelerated depreciation on on every item . So in that particular asset we had , I'm going to say 300 , I'm going to say like $480,000 , something like that . I know my set . I'm a GP , I'm a general partner in that deal , right , I have a partner .

I own 35% of the shares . Of the 35% , equity is mine and my business partner owns 35 and then the rest is investors , like you guys . So it could just be . I opened it up for a subscription , so 35% of those credits are mine . So what happens is full disclosure . I'm not a , I'm not a CPA , right ?

I just have smart people around me talking to me and advising me . So , um , I don't know if he called the credits or whatever he calls it . I was telling him I was at , I was in his office and I was like do I have any leftover ? Right , because I'm not paying ?

Okay , do I have leftover for next year Because I need to think about the next cost seg I need to do ? Right , because I don't want to pay next year . And he was like it's not credit . He called this something else , right , cpa language , I don't care , I just so .

But it's a certain amount of credits I'm going to call it credits you get , and now you write that off against your tax liability . So let's say you earned , yes , yes , and it carries over . So you have a tax liability of $100,000 and I have $400,000 in cost said credits . I now apply $100,000 , boom , brings my liability to zero .

Beautiful thing , that is a freaking beautiful thing . Right ? So you have a W-2 job and you're a high income earner and you're paying a lot of money . You start investing in assets like mine or groups like mine , and when we do a cost seg study , you get your share and boom , it brings down your . You got that , man , because you're an investor in that deal .

Right ? You get that depreciation . You get to write it off on your taxes . I hope that answers your question , josh . Anyone else ? So bring up some questions . Please , jeremy , come up .

How do you , how do you market to to get somebody in there ? How would you price out for lease companies ? Uh , based off of comps . So you're going to start off with the comps so you see who in the area has retail space and what they're leasing at , and it's probably around 12 bucks a foot .

You know , a thousand square feet , thousand a month , give or take if you're in our market , but go off of the comps If you're going after you have a great space , class A space , and you can go after a national tenant . You may put no price there and then when they call you jack them up to 18 bucks a foot , but it's really just off comps .

Perfect , we got one more question here .

I'm sorry , I don't do that anymore . You just got to burn all bridges and go for it .

So I just align with where he's going . So big up to you , bro , for that .

A couple of years later I was getting my daughter license and I called Dan and I know his , I know his boss Like I've done business with his boss years ago and he told me , no , he won't take my daughter until that's my kid , like I was teaching . I was like yo , dude , like I'm going to teach her , like you ain't got like I'm going to teach her .

He said , nah , he will . He won't take anyone that's new , that doesn't know the that's not already in the market experience and know the market .

Uh man , some is sometimes it's

just bad luck . I mean , if you got some people got loans 10 years ago and it's maturing now you got a loan in 2014, . You did everything right . You just happened to come up against a bad debt cycle . It's just really not much you can . You can do there . Um , now I'll tell you what you could could do .

And if you buy a property , make sure you stress test the shit out of it , and those of you that have been my students know that I teach you guys that Stress test . What's your exit ? What other exit do you have If this doesn't work ? Will it cash flow ? If that doesn't work , will this work right ?

So , as long as you buy right , if you buy right , I'm a bigger believer that if you buy a property right and you finance it right , you have options . I just refinanced a property at 75% loan to value right now . But let me give you an example of what I mean by that right . You got to be a student of this game . I had an option .

I had a buyer for that property . Could have sold that , but I actually had it on the contract , could have sold that property .

I decided not to sell that property , lewis , and the reason I decided not to sell that property was because , when I look at the overall overarching picture of the market , I'm going to get into some other stuff a little bit more sophisticated , a little bit more high level , but please , guys , stay with me .

We have 1.8 million immigrants that came into our country over the last 18 months , two years . Yes , we all know that . We all seen on the news , right , that's that we know of . That have to go back to court , that we know of . So we'll just go to a million , but we know it .

Significantly more than that , we had a crisis , right , a shortage of housing of 3.5 to 4 million prior to that . Yes , okay , when I do the math , that's 6 million , but let's be conservative . Right , there's overdevelopment right now , and the Sunbelts have millions of units . I think they have 2 million units coming online right now .

They're going to get absorbed , right , they're going to get absorbed really quick , but we have this migration issue . Here's what else is happening .

Is that new developers the developments that you're seeing happening coming up right now are people I think one of you mentioned I think you mentioned it , rob are developers that got these loans two years ago , when the interest rates were in the fours . Those numbers don't pencil anymore Right now .

Permits for new developments are down , so development have slowed down . So what does that mean ? When you think about that and you seriously think and you analyze that , that means in a couple of years , rents are going to go up . Now , I know it's not sustainable , guys , but it's just logic because demand is going to go up .

Because where are we putting these people that just came into our country ? Where are we putting them ? Where are we putting them ? We got to put them somewhere . So the government is going to have to throw money at the problem they created . Entrepreneurs bring value to the marketplace and we solve problems .

So when I was looking at this , when I was looking at this thing holistically , my decision was I'm going to keep this property because I'm betting that in three to five years it's going to be worth even more because I'm anticipating demand . See that ? So I'm studying the marketplace .

So , to answer your question , as long as you buy right , studying the marketplace . So , to answer your question , as long as you buy right and you're studying the data , I shared stats with you guys . There's a reason why I shared the stats with you guys . And you're studying the data , you can make better informed decisions . Does that make sense , right ?

So it's all in how you buy and that's how you , that's how I manage my risk , that's how I sleep at night . Hey , when my students come to me like , hey , this deal , what do I tell you guys ? What do the numbers say ? I don't care how you feel about the property , what does the data say ? And then we make the decision based on the data .

Is there another part to your question , norris ? Thank you , let's give him a hand . We have Javon .

By the way , how many of you came to the Poconos from New York or wherever because of this train ? I was one of them . The train right . 20 years ago . I moved to Poconos . The train right . It's finally coming . So they got the funding and the train is stopping in North Cortland , here in East Stroudsburg

, then it's going to Tobyhanna and then it's going to Scranton . That's the last stop . So when you ask about opportunity , and I'm going to put it out here . So all my listeners and all that , all of you that are here , thank you for coming here . Here it is , buy near the train . Here it is , buy near the train . Here's what I could tell you .

Another insight . You want me to give you another insight tip ? Yes , you guys want it . Yeah , so okay . So I was told by very credible sources that by 2028 , the train will be functioning and running up and down the northeast , from New York into Scranton and making all those stops .

So your biggest opportunity I would be looking around those areas , buying and holding around those areas . So Scranton , where in Scranton , so it's by the mall , so by the Steamtown Mall downtown is what Jeremy is from Scranton . So you know we're doing some deals right now in that Scranton market . Jeremy is going to be doing some deals in that Scranton .

So you know we're doing some deals right now in that Scranton market . Jeremy is going to be doing some deals in that Scranton . So we're anticipating . So the market's not there yet but we're looking down the road of what's coming . Anticipation is power guys right , the only way you can anticipate is if you're studying . Make sense .

Okay , and my last question is .

But they get a lot of investors as well , like they're looking for I've seen the barrows yeah , yeah , yeah , so it's a developer and you could Google the map and they're looking to do storage apartments , a hotel and then that retail as well .

And the same thing with residential . It's just a numbers game . You got to really be out there every day and looking for deals .

And showing them comps and data and all of those things of that nature and same top of mind , if you have a deal , you're more likely to get the phone call answered , to get a response , to get a listing from somebody . Bringing someone deals is probably the best way to build .

Look , the difference between Rob , regular resi agent , right , when I talk to them , is that I can call Rob and I can be like yo , rob , what's happening in the market ? And Rob and I can have high level conversations . What are you seeing ? What's happening with the sellers ? What's happening in vacancies ? By the way , rob's got a .

By the way , rob's got a , he's got a report here for you guys . Rob , I don't know if you want to share this with them . He's got a report so I could talk to Rob about . Rob can pull , pull , pull information from me where he provides value to me , where the information he's sharing with me allows me to make better investment decisions .

Does that make sense , right , guys ? So I can call Rob and be like hey , rob , what's happening in Monroe County with the rent ? Are they going sideways ? Are they going up ? What's happening ? Are they going down ? And Rob can go co-star , pull a report , send it to me within seconds and we can have an intelligent conversation around that .

And I can have a conversation with Rob like hey man , what do you think about this area ? What are you seeing there , right ? Can I execute on this plan based on this data ? That's how you provide value , right , by bringing pertinent information that allows me to make better decisions and that makes me money , because I'm this is about making money .

This is about nothing else . This is secondary about . True , for the matter is , if we're going to be honest as investors , we have a mission , right .

So my mission for my company is to provide quality housing , yeah , right , but I also have a responsibility , first to the people that lend me the money , and I always tell my contractors it's like hey , man , I love you , but my loyalty , I still have a level up and I got to report to my investors , my investors no investors , unhappy investors no me , no you .

I got to report to my investors . My investors , know investors , unhappy investors know me , know you . I got to keep my investors happy . Make sense , right . So if you're bringing , if you're an agent , bring me value that makes me money , that I could be better value to my investors . Period , end of story .

So find an agent to pull you a list off the MLS and then you skip , trace that list , start calling them , start texting them and do anything you can to that list . That is strictly commercial real estate which would be easy to pull , just to remove the residential ones . And then you got to pay .

You know nobody wants to pay , so I pay a hefty amount for CoStar . That's where the big deals , all the commercial real estate is at . They're the number one commercial real estate , you know , like Zillow , for example . So you got to pay .

I'm in India , hit me up on WhatsApp Free app Just driving by . So you just got to get creative .

So what are some tips you can give on creating a team , like what positions go in play into scaling that business ?

So that would be the first one and then from there you know transaction coordinator and things like that , but I think deal flow would be the number one , the Excellent .

financing ? And the reason why I ask ?

Because I , you know , I've been listening to going to meetups different things , not necessarily in this area , this is the first one I went to in this area but I hear a lot of investors talking about creative ways to finance deals , especially , you know , with people not having large , you know , deposits and money and different things like that .

So they're coming up with creative ways to also , you know , gain access to properties and stuff like that .

Unfortunately , you guys are trained , unfortunately , that if it's not the traditional , you got to put 10% down , go get a mortgage . Unfortunately , you guys are wired that way , am I right , marcello ? You guys are wired that way that if I say I want to do this creatively , the realtor immediately says what's the word ? That's what ?

That's illegal Bullshit , that's not , that's illegal . That's the first thing that most inexperienced agents say . Because you're not trained , it's not even your fault , you don't know that's illegal . You can't do that . So I'll give you an example . So I went and I got this property . I did it with a bandit sign .

I put a bandit sign up , got this deal , got this guy called me . He was stressed , he wanted $22,000 for it . I didn't have $22,000 . I said I'll give you five and I'll give you the 14 , or whatever the difference was , or the 16 when I flipped the house . Here's a promise I already know , he transferred the deed over to me .

He didn't want nothing to do with it anymore , he just was good . So that's a way to do a creative deal . You can take over someone's mortgage right . It depends on the strategy . You could do a sub two , you could do a sub two . You could wrap the mortgage right . So there's different ways to do different things .

Here's the secret to real estate you , ready , ready . The key is take control of the asset . That's the key is to take control of the asset . I need to take control of the asset . If I can take control of the asset with favorable terms , then I can get creative and do whatever I need to do to make some money . I'll give you a perfect example .

So one of my students today calls me , one of my mentees . She calls me , by the way , sabrina got her first deal locked up today . She's about to make $200,000 on an ovation . She calls me , she's . She calls me , she's frantic . She's like I don't know , barn , I got this deal .

Uh , there's a cop across two doors down 435 , it's 185 000 and I'm like all right , calm down . She was like what do I do ? I was like call the wholesaler and lock that shit up right now and we'll worry about what we the strategy is going to be later . Right , we know the deal makes sense . We , we know the numbers make sense .

It doesn't matter If you go in there and you clean the property up and you got a dumpster . You clean it and sweep it , mop it , put some smelly goods and you do nothing else and you throw it on the market . You buy it for $185 and you throw it on the market for $275 . It'll fly off your shelf , right . So there's different ways .

She could have also locked it up , novated , right , locked it up novated or do a double closing . We're throwing the market , do a double closing . So there's just a lot of strategies . It's basically as creative as you can get . That's basically it .

The problem is that you have regular residential agents with brokers that they're all trying to protect their licenses , and I get it , I respect it , I'm not mad at you .

That's why me personally as an investor , guys respect to you , guys that are realtors , me personally as an investor have not decided to get licensed , not interested , because I love my freedom and I like to go out there and be creative and do things and have conversations and I don't have to wear the . I don't have to take off .

Put on the realtor hat and then the investor hat , and then I got to disclose the disclosing . I just want to have a conversation . Here's my offer , here's what I want to do . You don't like that ? I want to do this . You don't like that , I want to do this . Right , I could just have conversations with people . Make sense .

So when I saw your meetup , I said , okay , let me come because you can keep absorbing the information , but if you don't have a community and someone at a time right . So that's one of my issues .

Number two I wanted to go back to the building out here because I was actually in a meeting I'm on a committee for government affairs we had the president for the building association come out and he actually spoke to the inventory issue that we are having out here and it's like what you said earlier the cost and how everything is going up .

So a lot of he said from like 1,200 to fourteen hundred properties that used to be built per year , they're now down to about three to four hundred because of the cost of everything going up . So they can't if there's not a market for it , they're not going to build it .

So that speaks to the short inventory that we have right now and that's what we were in a meeting about , that we have right now and that's what we were in a meeting about . They were also talking about possibly making wholesalers get licensed .

I bought an article to that meetup and I said hey guys , here it is , chicago is making wholesalers be licensed . So now in Chicago I think in my Chicago listeners just bear with me , I don't know , I don't remember this is too long , but I know that if you're not a broker , you can only transact and only brokers can transact wholesales .

You got to be a broker , I think in the city of Chicago , something like that . You had to be licensed , but outside of a broker you had to be . You can only transact two or three deals . But there's ways around it , guys . I'm not going to get into it in this podcast here , but I've talked to investors of ways that .

I'll just say it I could lock up a property with one entity , with this entity , right , and then sell you the entity . Hey Louis , you want to buy this crib ? No problem , I have this entity that has this property on the contract . Let me sell you this entity , now you buy everything that you buy the entity and everything it owns Part of what it owns .

Is this contract Done , deal Right ? So there's creative ways to do that and I don't know if that's legal or not . So , hey , guys , listening , you're trying to know if it's legal . I'm just giving an idea . I'm a creative guy and I'm in circles with a lot of real smart people and this is a discussion that was had . So just full disclosure .

Okay , so yes , to your point and to the point I was making earlier . She just confirmed it . At this building thing , builders are slowing down because the cost of money is too high . This is a money game , guys . This is a money game . This is not anything else . This is a simple money game . We just use assets , real assets , to make money .

So when the cost is too high , we see slowdown in construction . And what is that going to create ? What is that going to create when we already have a shortage here ? More shortage , right , it's more , more .

It's going to put more pressure , more demand , and it's going to more demand and more pressure on housing and those that can solve that problem will become rich . Yes , is that exciting ? You're in this room . So you got the information right . Those that can solve that problem and think , hey , how can I solve that problem ?

Can find opportunities and become rich in three , five years . Whatever intentions you set for your life Make sense . Any other questions , natasha ?

In the back end I've been having tenants that I'll go do the eviction process , win the judgment , but I don't have a forwarding address so then I can't . I'm finding it hard to pursue actually getting the money after I win the judgment . So those are my two questions .

And I told him actually I have this 11 unit I bought two years ago and I want to do a cost sag because I don't want to pay next year . Right , that's my next one in the bank . Right , I'm thinking about what's in the bank so I can keep taking , go , go , go , take my depreciation . And he said to me and I'm no CPA , this is the advice he gave me .

He said how much you spend ? I said I think I spent 250 in those , in those 11 units , rehabbing it . And he said to me if you didn't , if you didn't spend , uh , if you're not over a million cost basis . This is the language he used and again , not a CPA the language of money . We all have to get familiar with it .

If you don't have a million dollars in cost basis , it may not make sense , but if you own a bunch of little stuff , if your stuff is smaller , again , you might want to talk to a CPA . But , more important , I want you to talk to a cost side company . I could give you the one I use .

So we spend $8,000 for one building and then we spent like another 7,000 for another building . So we spent like $15,000 , but it's 57 units in two different locations right around the corner from each other . So , um , that was the cost , that was the cost , so that's a write-off for me and my investors . So we write that off .

And then I got half a million in credits , right . So that's a win . Like that's a win . Like man , you breathe , right . When you got that kind of credits and you know you got that in the back , you sleep good at night , you know .

I know now that , hey , man , I have a million dollars , I could go kill it , I could go flip and kill it with my flips and I could sleep good at night . You know what I mean . I could go make , I could go kill it .

So this is why I'm a big , firm believer of having a rental portfolio right , having that passive because of the depreciation , the tax write-off . Honestly , in my whole career this is the first year that you hear things like Donald Trump doesn't pay taxes . Remember that , remember that whole fiasco . Right , he doesn't pay taxes .

Well , guys , he doesn't pay taxes legally . Duh , this is what he does , right , he went , he got big ass building , he got cost egg study Legally . The government says it's okay to do this . Then he writes it off against and it's legal . So this is my first year actually doing it and it's it feels good man .

You recapture your depreciation at like an earned or something , not a CPA , but like an earned income rate when you sell it . So now I'm recapturing that . So now I'm going to pay a higher tax than I would have paid . But this asset we're looking , we're holding this thing is making us money right now . This thing is just a machine making us money .

It's a good , we've got great managers . It's just doing good for us right now . So you know we're waiting for the rates to come down and when the rates come down , then I'm talking to Rob and I'm like Rob give me a million dollars for this thing and call it a night , all right . So it depends To answer your question . It depends .

Make sure you understand what your tax and what your strategy is Like . Hey man , do you feel confident you're going to hold this ? So I'll give you an example . So the 12 unit right , and that we're redeveloping right now , that one I talked to my CPA about . He said definitely we want to do a cost seg .

We want to do it now because you have it's empty , everything's new . We want to do it now . You're over a million in that project . So we want to go , we're going to go ahead and do a cost seg immediately after we're done with the construction in June . We're going to take all of our credits .

But here's the second part to this guys Ready , ready , who loves real estate , come on , come on . I'm going to get excited when I think about this one . So it's in an opportunity zone . Opportunity zone says if I hold it for 10 years and I sell it , no capital gains taxes .

If I do a and this is me and my creative thinking , I'm not a CPA , so CPAs , I'm going to run this by my CPA . But this is me and my , my genius mind here . Right , if I go and do a cost seg and I say I get 250,000 in credits and I hold it and then I sell it in 10 and then I got no capital gains , baby , that's a good deal .

And I cashflow it for 10 years and I cashflow it every year for 10 years . Is that good or good guys ? Come on , come on . That excites me , that excites me , right . And there's deals like that for all of us out there . You just got to know the information . You just got to know the information . You just got to get out there and do it Good .

Number one you should have a good rapport with your tenants , right , because I've had . You know , we say in this business , bad things happen to good people all the time . Right , you fall . You know the moratorium , the CARES Act , right , all the stuff that happened during COVID .

We were helping getting people government funding so they wouldn't , you know , lose their housing , even though we couldn't act on the right of possession . So what is the right of under the magistrate ? Right , instead of Pennsylvania , you can represent yourself or a management company can represent you , and what you need to do is file for non-payment of rent .

You have a court date , you have a hearing , you go to court . Now , if you're looking to get possession of that property , you have to go to court to file for eviction . However , it could be a pay and stay , or it can be a pay and you want them out , right ? So when you go in front of the judge .

The judge is going to ask you do you want this to be a pay and stay ? And you say yes or no If it's a bad tenant . They don't have a rapport with you , they never pay their rent , they're always late , they always have stories . You know , maybe it's just time to say , hey , how about I don't take you to court ?

I have a month , a month and a half security . How about you get out in 30 days and won't go after you for collections ? You have an application on them , so you have their social security , you have their license , you have a contract , you have a lease agreement . You have all the balls in your court , like it is in your court .

But if you want to be the good cop , bad cop I always have a good rapport with my tenants I say listen , I understand you lost your job . You know you're behind a month's rent right now in collections . We have a month and a half in security . How about you ? Let me advertise a property for rent .

You let me show the property , because ultimately , what you want to do is get a new tenant in there right To to list . You know , to rent the property . Hopefully you get a little more , more market rate . But you also want to hopefully have a good rapport with that tenant , because you don't always want to kick a person out .

You always tell people in 28 years I've been doing it , I started in this business in 1995 . We didn't have smartphones , we had yellow pages . We had newspaper ads . We had the apartment guide books Remember those big apartment books . You can find housing . And I always tell people . I see a lot of . I see my mom in this business .

I see a single mom struggling with kids to put food on the table . Keep a roof over your head . So we know bad things happen . But if it's a bad tenant , what's a bad tenant ? They don't communicate with you , they don't pay their rent , they don't care . Take me to court , evict me . Okay , we'll do that . So there's a couple of things you can do .

One you can try to do a payment plan . You know , out of court . If you have to go to court , obviously go through as much as you can through the whole process . I also also recommend I have a one page sheet in my office hanging on my wall . It's all the government funded programs .

So I go to the single mom and I say here's a list of all the companies you can call and all the government funding programs you can call . They have free money for people like you that are facing eviction . Try to get the free money . Sometimes they'll pay up to six months rent . I had one lady fall behind . They paid four months of her rent .

She got four months ahead of rent . I said now start paying your rent every month . You'll never fall behind . That's what you need to do . You got to talk to your tenants . If you have a bad tenant , go through the process . Possession If you're looking to get possession , you know , on my lease , my lease protects me , protects my investors , my landlords .

My lease stipulates I can terminate at any time with 30-day notice . You can move in today and 30 days from now and say hey , listen , you know the landlord decided to sell the house . Here's a 30-day notice . We have to sell it . Maybe I'll help you find . So come in as a good cop , help them find an alternative housing .

If you have other friends investors , property management companies I have inventory . I have friends that I can call hey , do you have a place ? I have a lady . I just sold their house and they need to move . I'm looking for another place . Non-renewal . You don't have to have a legal reason why you don't have to non-renew someone .

You literally can just say this is a non-renewal notice , I'm not renewing your lease . Unfortunately , you have to get out at the end of your lease term and then , if that doesn't work , 30-day collections . There's collection agencies everywhere , right ? You want to credit report . How many lenders are here . You're looking to get a mortgage .

You got to get those collection accounts off of your credit . You go through a collection agency , you have that application , you have the social security number for that client who you just evicted and you're trying to get that money . Report them to a collection agency .

It's not going to be favorable income today , but rest assured , if they owe you two , three months rent when they do try to apply for that mortgage three years from now , that's going to come up on their credit report . Guess , who's going to get money three years from now for that tenant you evicted three years ago ? You're going to get it .

Yeah , they're going to give you a BS , sometimes 50-50 , 70-30 , whatever you agree , depends on how many accounts you have . Yeah , it'd be nice to get a paycheck three years from now , right ? And then also in some jurisdictions , if you have their employment , you can take that judgment

to the court and the magistrate recorded on the monetary judgment and they can garnish their checks if you have their employment . So I've only did that one time and it didn't work because he quit that job and went somewhere else . But I can tell you there's no running . That's always going to be on their account .

You can't run from your credit score , you can't run from your collection accounts . So there's a lot of ways you can do , but I would always go through that . Be the good guy , go to them , say I know you fell behind , let's get a payment plan . You're behind two months . I have a month and a half in security . How about you get out in 30 days ?

I'll give you a 30 day , 45 day payment plan so I don't have to go through . Know that's the best way if you have a good relationship , but if it's a bad tenant you want to get them out .

I'll either play spotless , I'm going to put a lockbox on the key , I'm going to give a 24-hour notice , I'm going to start showing that property in hopes of pre-leasing it Because , remember , the idea is to get of it and then let them exit . Do a payment plan if you have to , and then it kind of works .

You don't have to go to court , there's no filing fees , there's no eviction , all that stuff . Very cool .