7 Doors in 11 Months While Investing Out-of-State

Ashley:
This is Real Estate Rookie, episode 167.

Hashim:
The markets I was interested in when I started, people that are investors, brokers, real estate agents, general contractors, all of those, I started pulling and reaching out. The way I approach it was more around the networking piece and then helping each other.

Ashley:
My name is Ashley Kehr, and I am here with my co-host, Tony Robinson.

Tony:
Welcome to the Real Estate Rookie Podcast, where every week, twice a week, we bring you the inspiration, information, education to get started, or keep going in your journey as a new real estate investor. So, Ashley Kehr, what’s going on? What’s new in your world?

Ashley:
Well, I think we should talk about how me and you got to hang out because that’s always an exciting and fun time when we get to see each other in person and not on Zoom.

Tony:
And this one was actually for a really good cause. Last year at BPCON, all the hosts for the podcast, they decided to offer up different things for a charity, and I think it was called A Hero’s Home?

Ashley:
Yeah, it was. Yep.

Tony:
Yeah. So it was a charity that the benefited veterans. And what Ash and I decided that we’d offer up is whoever won us, got to spend an entire day with us. We were going to fly out to whatever part of the country they were in. And this past Tuesday, Ash and I got to hang out with Susan [Lee-Hill 00:01:24] and spend a day in Tacoma, walking around some of her properties and then just really getting to know her and hopefully giving her some value on her journey as a new investor.

Ashley:
Yeah. So Tony and I have both actually met Susan before, she was in two of the Rookie Bootcamps and then we also met her at the BiggerPockets conference and also at an event in Seattle. I met her another time too. So it was awesome to get to hang out with her again and to see the first investment property that she purchased. And we got to walk through it while I was in the middle of rehab. We actually brought with us our friend Serena from Fixated Real Estate and she took Susan through the property and said… just because she was familiar with the Tacoma area, and gave her some tips and pointers on things she could do to really increase the value, but also to save money. So that was awesome. Thank you so much to Serena for doing that with us.

Ashley:
We got to have breakfast, we got to go out to eat. Who doesn’t love eating?

Tony:
There was some mimosas, some Bloody Marys.

Ashley:
Yeah. We also got tour some of the properties that Fixated Real Estate is doing too to also show Susan other projects that are going on in the area. So hopefully, she took a lot of value from it. And I think Tony and I actually learned a bunch of things too getting to hang out-

Tony:
Oh, totally.

Ashley:
Yeah. So it was definitely a great day and lots of fun.

Tony:
Yeah. We’ve got a great episode line for today as well, right, Ashley? This was a fantastic episode, I think really, really crucial listen for anyone that’s a new investor that’s looking to invest out of state. Our guest today was Hashim Ismail. He’s based in SoCal, not too far from where I’m at, but he’s actually investing in Memphis. So you get to hear his story about how he built his team, how he leveraged BiggerPockets, how he renovated and rehabbed from afar. And he’s been able to complete seven deals, so he’s got seven units done in only 11 months. Amazing, crazy story.

Ashley:
And he tells you exactly what kind of financing he used to be able to do this, how he could grow and scale sales quickly within that short amount of time, but also building a team out of state and leveraging the BiggerPockets Forums to do so. I had Hashim in one of my bootcamps and he talks a little bit about Tyler Madden, who was a TA in one of the bootcamps and just finding a mentor that can provide value to him. And then he talks about a couple other mentors and goes on to thank a couple people at the end of the episode, which I think was really awesome. I don’t think we’ve ever had anyone actually do that before. So that was really nice.

Tony:
Hashim, welcome to the Real Estate Rookie podcast, brother. We’re super excited to have you. Man, why don’t you start off by telling us a little bit about your story, your background, who you are and how you got started in real estate investing?

Hashim:
Yeah. Thank you, Tony. Thanks, Ashley. I’m excited and humbled by the opportunity to be here. I’ve listened to a lot of you guys’ show, and I’m excited. Man, I’ll say I’m a dreamer, I’m a lifelong learner, I’m an optimist, and I’m a catalyst. But I have a daytime job and I work in the life science industry and my background is engineering and science and I’ve done different things in the industry. And currently, I do business development and sales, that’s my W2. And then about 11 months or so ago, I happened on and discovered the passion for real estate investing, and I also do that as well.

Tony:
You said how many months ago?

Hashim:
About 11 months, going on a year now. Last April, 2021.

Tony:
Okay. And just really quick, if you can set the table, Hashim, in those 11 months, how many transactions deals have you done? What does your portfolio look like today 11 months later?

Hashim:
So currently I have seven and there’s another one that I’m working on in a different market right now. So seven to eight.

Ashley:
Awesome. Well, congratulations. That’s great momentum. So let’s start with that first purchase. Did you get stuck in any analysis paralysis? Did you just jump and dive right in?

Hashim:
Very good question. I was in somewhat of analysis paralysis for, I want to say maybe two years prior to that. I was listening to the OG podcast prior and then the Rookie Podcast and reading books, but it was hard to actually take that first step. There’s all this information and it’s a matter of, “Okay, how do I actually do it?” And then finally, I put a goal for myself end of 2020, and then 2021, I decided to pull the trigger. And one of the things that I actually leveraged was the networking piece and using the BiggerPockets forum. I was like, “Let me start.” And then I went to the forums and started looking for people I can talk to and started connecting and talking to people in different markets, and that’s how it all started.

Ashley:
I definitely want touch on that on how you used the BiggerPockets Forums and leveraged that. But before we do that, let’s talk a little bit about you set a goal for yourself. Can you tell us what that goal was specifically and then how you held yourself accountable? Did you have action items that you created to reach your goal?

Hashim:
Every year, I try around December and sometimes it goes to January to set goals for myself for the coming year. December 2020, I remember I put different goals for myself, and one of them was around real estate investing. And by then, obviously I hadn’t done anything. But that’s a good point, Ashley, because I normally use goals and I read it down to push me to do things outside of my comfort zone and things that I haven’t done before. At the time when I wrote it down, I didn’t have everything mapped out as to how I’m going to do it, but I brought it down and I was going to push myself and use it as a form of accountability to get it done.

Hashim:
Obviously, I had some ideas because I’ve been listening to the podcast, reading the books, and I had ideas and I used the goal to drive me to start executing and hold myself accountable.

Ashley:
Then for the forums, how did you take advantage of them? I’m very curious as to what really worked for you because you can go into the forums, you can ask questions, get great responses, you can go through and read through other people’s questions, but you said you used it to network.

Hashim:
Yeah. So what I did and I know there is another tool on the platform that you can actually network and you can apply different filters, which is really cool. But at the forums, what I do is, I actually put in keywords for what I’m looking for. So for example, when I was just starting, I had a couple of markets in mind and I would type those keywords, and then a whole lot of information around that market would come up, which is good. Some of it helps me understand the market at a very high level of different perspective and some of it is me meeting those people that, “Hey, an investor from so-and-so market or a contractor from so-and-so so market or a broker or real estate agent from so-and-so market.”

Hashim:
So I start figuring out who I want to reach out to, write their information down, start connecting with them, sending them messages. And I get on the phone and talk to people who’s available, who’s willing to talk.

Tony:
So Hashim, a couple of follow-up questions there. First, I love of your use of the BiggerPockets Forums. And honestly, that echoes a lot of what my situation was like when I first got started as well; the markets that I was interested in, I was just searching through the forums to see who I could connect with in those markets. But I want to talk a little bit about where you are. So what city are you in and then what city or state are your investments in?

Hashim:
Yeah. So I live in Southern California, similar to you, Tony, specifically San Diego. And I actually invest out of state, I invest in Memphis, Tennessee.

Tony:
Got you. Okay. So many people who are listening, they’re going to be in a similar situation where maybe they live in an expensive market like San Diego and they want to make their dollar stretch so they’re going to go out of state. So when you went into the forms, who did you start looking for first? Was there, “Hey, I want to find an agent first”? Or, “Hey, I want to find a lender first”? So who were you looking for first? And then as you were reaching out to those folks, what was your pitch? How were you breaking the ice and opening up that dialogue with those folks?

Hashim:
When I was just starting, Tony, I knew in my mind I needed to find a team, and that means somebody reliable as far as general contractor, ideally, and a realtor or a broker. Either a realtor or broker or some way to get deals and some way to understand the market. So when I was just starting, I didn’t have it all mapped out as to who is priority, but what I was going after was a certain persona and profile of people that I wanted to connect with. And part of that was also actually investors in the local market to see what they can share with me, anything I can learn from them going into the market, if it’s even a good idea from their experience, what their take on the market is, anything.

Hashim:
So the markets I was interested in when I typed people that are investors, brokers, real estate agents, general contractors, all of those I started pulling and reaching out. And that’s a good point, Tony, you bring up around that initial reach out, these people don’t know me, I don’t know them and the way I approach it was more around the networking piece and then help each other. And that’s how I phrased it. And it’s true in business for me, even in my W2 side of things. I network with a lot of people, I reach out to a lot of people. And part of it is, “Can we find ways that we could possibly help each other out?”

Hashim:
Obviously, at the time I needed more help from them, but there could be other ways possibly that I could give in return. I didn’t know what that would be, it depends on the person, what they’re looking for. But if there is a way I can help them in return or I can add value to them, that’s always something I have in mind as I’m talking and reaching out.

Ashley:
So do you put that in your first message that you’re willing to provide value to them? There’s that book, Bluefishing by Steve Sims, where he preaches that you provide value by giving somebody what they need before they even know they need it, or something that they want before they even know that they want it. So are you going in and messaging someone and saying, “Hey, I could do this for you,” or are you just saying in general, “Let me know what you need and I can help you”?

Hashim:
So what I do is initially when I was just starting and reaching out, just because I was not experienced in real estate investing at all, I would give a little and I would keep it brief, because I don’t want to bore people. But when I reach out, I keep it brief, what I’m looking for. And then I give them a little bit about my background, “Hey, this the industry I’m in. I’ve been in this industry.” By the time I’ve been in industry for a while and I’ve done different things, and I’m decently connected in my industry, so I offered that, “If you need anything within that, I’m happy to help, whether you or somebody else that you know.”

Hashim:
And that’s almost like a hook. If they have a need, I’m genuinely happy to help. And if not, at least they can possibly see that I want this to be mutually beneficial. And if not, at least we got to network and connect, and that’s how I lead it.

Tony:
Yeah. I just want to share one story because this is real life for me. A lot of you guys know I got my first deal back in October of 2019, that was my very first real estate deal. And around that time, I knew that I wanted to get into apartment syndication. That was my goal when I first started, is I wanted to just learn the ropes of real estate with a couple single family transactions, but my goal was to graduate into apartment syndication. And apartment syndication is like a much bigger ordeal than regular single family investing from the money raising to the syndication creation, to the property management. There’s a lot that goes into it.

Tony:
So I knew that I wanted someone that could teach me the ropes. And there was a guy on BiggerPockets, I literally logged to my BiggerPockets profile, and I’m looking at the messages I sent him two years ago. And he had posted on BiggerPockets that he was writing a book and he was looking for feedback on the first chapter of his book or something like that. So I saw that, jumped on the survey, read the book, gave him some feedback, and then I shot him a separate message. And I said, “Hey, my name’s Tony Robinson. I just finished your survey on your book, etc, etc.” But I said, “Hey, I think I might be able to provide some value to you as you work to launch the book. I worked in digital marketing for several years while I was in college and I have a pretty good handle on Facebook ads and so on and so on.”

Tony:
So I pitched this guy on saying, “Hey, I’ll help you market your book for free if you in exchange, give me some guidance on the syndication piece.” And his response back to me was, “Tony, yes, Facebook marketing will be of value to me.” And then he connected me with his assistant. I did some work for him. We never did a deal together or anything, but it just proves that if you can find a way… I hadn’t even done a deal yet. This was before I’d even done my first deal, but I still found a way to provide value to this other super experienced investor.

Tony:
So for all of you that are listening, I guarantee that you have some skill, ability, capacity, even if it’s just time, even if you’re just offering time to do the task that this other investor doesn’t want to do, you are going to be able to provide value to that person. If someone came to me and said, “Tony, I’ll come to your house and sort the big stack of mail that’s piled up in the corner of your office in exchange for short term rental advice,” I’ll probably do that. So Hashim, I love that you did that, but I just wanted to share my story because hopefully, it resonates with folks as well.

Hashim:
Thank you, Tony. That’s an awesome story.

Ashley:
I think that never goes away, even when you’re just learning something, doing that is super valuable. But all your life, you can do that in all aspects of creating value for someone, or in return, hopefully getting something that provides value to you that you need to learn more of or you want to be a part of. I wanted to learn house flipping, so I reached out to my friend, James Dainard and said, “I want to flip a house with you.” So what I’m doing is I’m creating content for him that he can put on his social media, he can put onto his YouTube, all of the things that I’m learning, and that is of value to him because that is a pain point for him, is creating content.

Ashley:
So I’m doing that for him, in exchange, he’s giving me 50% ownership and we’re splitting the money on a property and I’m learning every little single thing that you can do during a house flip. So I think that value never goes away of trying to help somebody and figure out what they need too, like Tony said, that was great. He didn’t ask for or even know that he probably needed the Facebook ads yet, and then you provided value.

Tony:
So I just want to ask one question, Ash, is there any one that you’re looking at right now that you’re thinking about like, “Man, how can I provide value to this person?” Someone that you’re looking up to,

Ashley:
Well, the most recent is James, because we’re doing our house flip right now. So I just got back last night from flying out to him to create content. So I’m spending money to fly out there, stay in hotels and film content with him, and then I invested into the deal too. Yeah, he’s my most recent one, I guess

Tony:
For me it’s Grant Cardone I’ve always been a fan of Grant, but I’ve been watching a lot more of his interviews and stuff and just his perspective on where he’s trying to take Cardone Capital. And a lot of what he’s doing, I want to replicate in the short-term rental space. If anyone knows what Grant Cardone’s looking for, help me out so I can start working with him to… So Hashim, thank you for letting us go on that tangent man, I thought it might be of value to the listener to hear that story. Anyway, you hit the around running, networking on BiggerPockets, you were able to start building some relationships.

Tony:
So who was that key person that allowed you to find that first deal? Did you find an agent and they gave you a deal? Was it a wholesaler? How did those relationship that you built lead to you getting that first out-of-state deal in Memphis, Tennessee?

Hashim:
I quickly realized I was going through that exercise having… especially being out of state. So these places I was looking at, I have never been and I don’t really know the market that well and I was learning as I was going. It was very apparent to me immediately, people on the ground, people that know the market, A-team, you’re going to need that, instrumental to succeed or else there’s no way on this. And I came across a gentleman by the name of Steven [Akerndona 00:16:53] and he has a business in the area and essentially he’s a one-stop shop and he’s a broker on one end, if you want to buy or sell homes. But also on the other end, he has a general contracting and project management business.

Hashim:
And I connected with him. And I remember we had a call, and our call was supposed to be 30 minutes, we ended up over an hour. I told him all about my goals, what I’m looking to do in the market, where I am in my journey, which is very beginning, but where I would like to go. And I share with him what I’ve done in the past. In the past I’ve been able to navigate different parts of the business and teach myself and learn and grow, and I’ve done different things within my industry. So I correlated that and said, “Although this is where I am, I can do it.” And I shared with him what my goals were.

Hashim:
And then in return, he shared with me what he’s done in the past, where he is also in value, how he can help me get to my goal. And we clicked. I started working with him. For me, my mind is also process-centric. And Ashley, I know you’re big on that, even during the Rookie Bootcamp that we took, you were one of the whole… Well, the sessions was just dedicated to processes, that’s how my mind works. And for me it was more, do one proof of concept, and then see if it works, see how you can scale. And within that, also try to narrow and mitigate your risks as much as you can.

Hashim:
We can’t control everything at the end of the day, anything in life is probabilities. But try to narrow and mitigate your risk and lower your risk as much as you can and then go for it. And that was my first deal.

Ashley:
Hashim, what are some examples of ways that you mitigated your risk?

Hashim:
And that may go a little bit into my approach to how I pick deals or how I select deals. Do you guys want us to-

Ashley:
Yeah, let’s go into that. Sure.

Hashim:
Okay. So what I do is I have maybe a three or four steps, and this is again, me trying to create processes around things that I do. I have about three or four steps that I take when I’m looking at potential deals, so we can go through that. So the first thing I do is, and this is like a prequel for anything, any property I’m looking at, is really looking at the zip code and neighborhood, “Do I want to own a property in this zip code or this neighborhood?” That’s the first thing I look at. And then I use Google Maps to look at Street Views and just see what’s around it. Are there parks? Are there schools? Is there a Starbucks? Is there a Walmart? How does the street, how does the house look streetwise?

Hashim:
That gives me also an idea of the kind of tenants I’m going to be expecting, younger tenants, more family centric, and so on and so forth. If it checks what I want, then I go into a four-step thing. And the first thing I do is data gathering. In that step, I want to understand, what is the market value or the ARV for that property? What are comps around it? What sold only recently? What’s not sold? What price range are they selling at? What are rents like? And that’s really important because different markets can withhold and absorb different rents. And then ultimately, what the rehab is for that property.

Hashim:
So I focus mostly on BRRRR, and that is a key data and key input to the whole BRRRR process, as you guys know. And what I do for that is I go online, I use Zillow, Realtor, Redfin. These are all sites that I use to start getting…. And this is all just rough data that you start gathering. And then I go to the rehab piece. And that is not a strength of mine, I will say. I have so much more to learn on that front. But I’ve done a few and now I can take a guess, take a guesstimate, “Okay, I need to do a bathroom, I need to do kitchen, the roof. This is what I’m looking at ballpark.”

Hashim:
And then by then, I know what their asking price is for the property. And then I just look at that and you can quickly tell, “Okay, is it feeling like it’s going to work or no?” And then from there, I actually go into my plug… Now, I have all that data, plug it into the calculator and I use the BiggerPockets calculator and then also use an offline calculator. And then I see what the numbers look like. And if they all check the boxes, I get with my team, my mentor, I have them look over it, make sure I didn’t miss anything. And if it’s all good, them and their team, they go and physically walk the property and they fully assess it.

Hashim:
And that means taking pictures, understanding what exactly we need to do by different categories now, later, later down the road, and then what that estimated cost would be to bring it up to what we like to rehab it to. And there’s reasons behind it, getting better rents, getting tenants, better cash flow, so on and so forth. I’ll pause here. With all these steps, if you guys see, there’s already redundancy in the steps. So I take a stab at it, I have my estimation. My team take a stab at it, they have their estimation and they go and physically walk it. And all of that is validating all this inputs and data that we have.

Hashim:
And on top of all of that, one last thing that I do is what I call a desk appraisal. And when you’re doing a BRRRR, the ARV and the rehab is so crucial to really making a break in that deal for you. And I use professionals to give me estimates on both of these. I do take a stab at them myself, but ultimately I use professionals. So the desk appraisal is literally using your license appraiser and providing them with your scope of work as to what you’re going to do to the property, and they tell you what their opinion of the value of that property would be if you did what you said you were going to do on it. And if everything checks, then it’s a deal and we move forward with it.

Tony:
Hashim, I can tell that you’ve got an engineering background because you’re so methodical and systematic with your approach to investing. So I love that part, man. So first, thank you for sharing that framework. I think any new investor can copy those same steps and use that as a way to gain some confidence in their ability to look at deals and give them the thumbs up or the thumbs down. Now, one piece I want to dig a little bit deeper on is the rehab estimation. I think most rookie investors that are listening to this podcast, they probably feel good with the first step of checking out the neighborhood, how does it look? And what do the schools look like? Are there jobs and things like that?

Tony:
They probably feel good about the sales comps as well. Most people feel confident going into Zillow and saying, “Hey, this is a really nice house. What did it sell for?” Most people can do that. I think where a lot of new investors get stuck is estimating the rehab costs. You’ve done this now seven times in the last year or so, so I’m sure you’ve figured it out. But if you go back to Hashim on that very first deal, so deal number one, how did you go about estimating those rehab costs and were your estimates in line with what we actually ended up spending?

Hashim:
Tony, that very first rehab or first BRRRR that I did, I had no idea where to even start with my estimates on the rehab, because that was my very first time doing it and I’m looking at the pictures of the house, I’m looking at my assessment. By then, I didn’t have all this process in place, I was doing these steps, but it wasn’t fully mapped all like I have it now. What I did though is I started Googling and going online and saying, “Hey, bathroom remodel, what is that roughly?” And obviously, the data is not necessarily easily found, but I started just rough estimates together.

Hashim:
But also at that time, I needed to lean on my team a lot more. They’re the experts, I am not. And that is when I call my team, the gentleman I mentioned and his team, and I needed a lot of help, them helping guiding me as to what that may look like. Also, I took a lot of inputs from them and that was also a way of me to start to learn. Because after that, offline, I went back to them and I was like, “Hey, help me understand. So each of these, how would you break it down? A three bedroom, two bath home, 13, 14, 1500 square foot. If these are the things we need to do on them in the future, help me understand, roughly, how do we break it down?”

Hashim:
And then that started giving me some data points and some ideas. And I started noting that down and everyone, every deal I went through, I would try to apply that. And to this day, I’m not 100% spot on, I’m still learning that aspect, but it helps. But the more you do it, the more it helps and the more you become better at it, anything else.

Ashley:
Yeah. We’re actually having… Or if you guys haven’t listened yet, you go back to James Dainard’s episodes, we did two of them, a Wednesday one, and a Saturday one as a Rookie Reply, and he talks all about estimating rehab costs and construction costs. It is a deep dive coming from expert. Tony, I know you know everything. Do you have those episode numbers?

Tony:
165 and 166.

Ashley:
I knew it. Yeah, but I loved how you talked about doing the breakdown and you said you just wanted to understand what the costs would be for everything in case you went and got another property the same. And that’s so valuable. So my asset manager, Darrell, he is working with a contractor where they gave us a quote for one apartment, and then a little bit later we got a quote for a different apartment that was smaller, but the painting charge was higher. And so we went back to them, well, he went back to them and said, “Hey, look at this huge difference.” And we actually talked to the owner where the guy that was doing the estimating was just throwing out numbers and there was really no math to it.

Ashley:
So going forward it’s, “Okay, how much per square foot is it going to cost us in paint?” So I think that’s really valuable to understand exactly what you’re getting charged for, then you can build out an estimate based on those prices each time you go and look at a property that needs to be rehabbed

Hashim:
Absolutely.

Tony:
I want to talk really quickly about my first experience rehab as well. So very similar, Hashim. I went out of state for my first rehab and had no real sense of what it would cost to do that kind of work. But I found a contractor and the first thing that I asked him, I was like, “Hey, here are the kind of houses that I’m looking at.” I was just sending him the Zillow listing and I’d say, “Here’s what I wanted to look like,” I’d send him a comp, and I’d say, “Just like ballpark, what do you think this might cost. Without you even walking it, but just give me like a ballpark number.” Or he would send me a property they had recently renovated and I’d say, “Hey, what did that cost? What did you charge that person?”

Tony:
And if you talk to enough contractors and they give you those ballpark numbers, at least now you’ve got a good rule of thumb to use. Now, when we started rehabbing in Joshua Tree, I had friends who are already flipping out here and I said, “Hey, what’s your price per square foot that you guys are typically seeing on your rehabs?” And they were able to share some numbers with me as well. So asking the contractor for their most recent cost to other customers for comparable jobs, and then talking to other investors about what they’re spending is another way to give you a good ballpark.

Hashim:
That’s a really good point, Tony, and that’s one thing I’m starting to shift my mind more too. And the more I do, the more I’m learning is it boils down to a square foot. Even when I’m looking at deals now, what’s the price per square foot? When I was just starting, I remember a year ago, 11 months ago, and I was just starting, it was, oh, how many bedroom? How many bath? It still is today how many bedroom, how many bath, but also what’s the square footage? What’s the cost of square footage to rehab or to buy? That’s a good point.

Tony:
So I just really quick before we move on to the financing piece, Ash, I know you want to get that, but I just want to go back to the desk of appraisal that you mentioned, because I think that might be a new concept for a lot of folks. I don’t want to pass up on that. So first Hashim, what is the benefit of a desk appraisal versus a traditional appraisal? And then what’s a typical cost and turnaround time on the desk appraisal?

Hashim:
Yeah. So for me in my process desk appraisal is really important because I want to be as certain as I can, nothing’s 100%, but I want to be as certain as I can in that ARV value because that’s really going to make or break the deal for me, especially with the kind of rehabs that we do. They’re extensive and we’re putting quite a bit of money into doing the rehabs. So to me, that is important. The benefit of that is, A, it gives me more confidence and I know for certain that the deal would work out numbers wise. And then as far as the difference between that and actual appraisal, the desk appraisal as the name suggests, they don’t actually need to physically go into the property, they can do it from their desk.

Hashim:
And what they use is the scope of work, so I provide them with the scope of work. This is what we’re going to do in the property. And then obviously they have information on the property based on their tools and online, where the property is located, square footage, so on and so forth. And then they factor in what we’re going to do to the property. And what that gives them is what the end product would be. And so they can give an opinion on what that end product is valued at that current market. So that’s what I do. And as far as pricing, when you think about it, the only cost, it depends on the appraiser, but roughly between 150 to $180 is what it costs.

Hashim:
When I think about that in my business and process, $180 is so worth me knowing what I’m getting into and also so worth me knowing what I’m expecting out of this deal and mitigating, talking about risk, like mitigating the risk a lot. So it’s totally worth it for me, that $180.

Ashley:
Well, that’s a great tip for anybody that is looking for that ARV as to get a pretty close estimate as to what it’s going to be. And I agree that $150 is well worth the opportunity cost of getting that information instead of not having any idea and just winging it as to what the ARV could be. So thank you for that. Before we move on to really digging into one of your deals, I just want to know, how are you financing all these properties as a rookie investor? You can get one, two properties and then it gets to that point, like, “Okay, well, how do I get the next deal? How do I pay for it? I just spent all my money.” So how have you been able to grow and scale so quickly on the financing side?

Hashim:
What I did is for my financing, part of my analysis paralysis for years actually was around the amount of money that it takes to actually get real estate going. I learned that I can leverage my assets and my stocks and brokerage accounts and get a line of credit on that. And then I can pull as much as I want to up to the limit, of course, and I can use that money to invest. And that is how I got started. So I called my brokerage E-Trade and I was able to leverage my stocks and assets in there and get a line of credit against that at a very decent interest rate, by the way. So that’s how I financed that very first deal, and that’s how actually I finance all my deal so far.

Hashim:
And then in tandem with that, obviously when you do the BRRRR, you’re able to refi, the money is not stuck or sitting. So all my deals are at different stages right now, but what I’m expecting is for most of these deals, I’m able to pull back all my money, and some of them I’m actually able to pull out even more of what I put in it. So I’m able to go back and pay down that line of credit.

Ashley:
Let’s talk about that line of credit because I think that is one of the greatest tools that someone can use if they have it available. So if you have a non-retirement brokerage account with investments in it, you can have a bank put a line of credit. So those investments are acting as collateral for the loan. And since that is so liquid, pulling out your investments, that’s more liquid to a bank than using your house as collateral, that you’re willing to get way better terms such as a really low interest rate on it. And then it does vary, doesn’t it? So if your brokerage account dips or increases, doesn’t the line of credit, the availability and the interest rate change with that too, Hashim, is that correct?

Hashim:
It does. And I think every brokerage does it a little different, but yes depending on what you have. So when I did at the time, roughly it was a rough math, they took about 50%. It could give you a line of credit up to 50%. And I know that changed since I did it. And some brokerages do it differently. So every stock or asset actually carry a different weight. So some stocks are able to give you up to 60, 70% of it, some stocks only 50%, some stocks, less than that. So it’s weighted depending on the stock, how much they’re able to give you against.

Hashim:
And then you’re right, Ashley, when they give you a line of credit, as you would imagine that asset or the stock is going to fluctuate with the market, it’s going to go up., it’s going to go down. As that fluctuates, how much line of credit you have is going to shift as well. So you want to be mindful of that also as you’re using the line of credit, you don’t want to exhaust it all the way and not have a way to pay back in case the market go down and you need to pay some of it. One thing I want to add actually on the financing part, maybe before we shift gears is, where I am right now in my journey and the way I’m looking at this, that’s how I started and I’m still leveraging line of credit mainly.

Hashim:
Ashley, you remember when I took the Rookie Bootcamp, one of the sessions was entirely dedicated to financing. And at that time, I literally had offers in three properties. If all those offers would’ve gone through, I had no idea how I would’ve gone. And I remember we talked about it and Tyler, so Tyler was TA. And I remember we discussed that at length in one of the sessions, but now where I am is my mind is so much more open to other avenues of financing, the hard money, the private money, different ways of being creative with the financing. And as I’m growing and expanding, my line of credit or the refinancing piece is not going to be enough. I need to do other things if I want to keep growing at this rate so it’s not a limiting factor.

Hashim:
And that’s where having your mind open to other ways of financing, like the hard money, the private money, local banks is crucial, and I encourage everybody to explore that option as well.

Tony:
Hashim, you just hit on a really important concept of maturing as a real estate investor. And I want to take a second to really drive that point home. When you first get started as an investor, there are so many things that seem scary to you. For most people, the idea of just submitting the offer is exceptionally scary. But once you start submitting offers, you put offers out in your sleep. But that first one, there was so much fear and anxiety and nervousness around it, but once you do more, you get the hang of it. Your first rehab, you’re probably tense and checking in on the GC every other day and like, “Hey, what’s going on? How’s this? How’s that?”

Tony:
And now, you got rehabs and maybe you’re checking in once a week, maybe once every other week and things are humming and going. From the financing piece, I love what you said there about had all three of those deals hit at once, you probably would’ve panicked. But the good thing is that every time you experience something new as a real estate investor, you’re able add one more tool to your tool belt. You’re able to add one more skill to your skillset. And if you do that over and over and over again, you start expanding the world of opportunity that’s available to you as a real estate investor, because if you can take down one deal with hard money, another deal with private money, another deal with your line of credit, another deal with a JV, now, you’ve got the ability to scale faster than other people do.

Tony:
So my point in all this is saying, for all of you that are listening, accept the fact that it’s going to be scary at the beginning, but understand that the only way that you mature and the only way you get better is if you push through that fear and you find some creative solutions to keep going. So Hashim, you dropped the knowledge bomb there, I don’t know if you’ve realized it, but I had to go back and really, really drop that point home for you.

Hashim:
Thank you.

Tony:
So Ash, anything else for you? Should we hit the deal review here?

Ashley:
Do you have a deal for us, Hashim, that we can go through?

Hashim:
Yeah, let’s do my very first and scariest one.

Ashley:
Let’s hear it. So we’re just going to ask you a couple of brief questions real quick just to set the stage for the deal review, and then we can get into the story of it. Where was the property located

Hashim:
In Memphis, Tennessee?

Ashley:
What strategy were you using for the property?

Hashim:
It was a BRRRR.

Ashley:
How much did you purchase it for?

Hashim:
The purchase price was $100,000.

Ashley:
And how much did you put into the rehab?

Hashim:
The rehab was $45,000.

Ashley:
Okay. Do you want to start off with telling us how you got the deal and then how the rehab went and then afterwards, renting it and refinancing it?

Hashim:
Yes. I got the deal from wholesaler and that was all also new for me, working with wholesalers, exploring wholesalers. And actually, that deal took from the first time I saw it to the first time I purchased, it took about two months. And the reason for that is I was really hesitating and running the numbers over and over and over before I pulled the trigger and then the deal went off. So somebody got under contract. And then I was very bummed and somehow they fell through contract and he came back and I pulled the trigger immediately on it. Anyways, I purchased it from a wholesaler, $100,000, and then I went through all the steps that I talked about as to how I select or make sure the deal it fits my criteria, what I’m looking for.

Hashim:
It wasn’t as totally defined back then, but these were the framework that I went by. And then we went under contract and then after that we closed, and then we started with the rehab. Total rehab was $5,000 and it took about two and half to three months to do the rehab. It was extensive rehab. And then after that, with closing costs and then with refi… Actually, before I went to refi, after that, so the deal was done about three months, and then by then I’m 145,000 into the deal. And then I went to the bank and while I was looking to rent, I handed it over to a property management company at the time. And then I started on the refi because it was my first refi too.

Hashim:
So I was learning it and trying to figure things out. I was able to find a lender that, and I’m not sure if all lenders do that, but essentially, they were able to have me file and do everything ahead of time. So that once that six month hit, the very first day of the six month, the funds are immediately released into my account. So that’s pretty much what we did. You guys want to know what the ARV of that deal was?

Ashley:
Of course.

Tony:
Please. The big smile on your face is either really, really good or really, really bad. So I got to know.

Hashim:
Luckily it was good. So when we did the appraisal initially it was for 271,000. And the actual appraisal came in at 281,000.

Ashley:
Oh, that’s awesome. Congratulations.

Hashim:
Yeah. Thank you. So with that deal, I was able to get, I verified at 75% LTV and I was able to get all my money back that I put in it plus another 60,000. So I maximized what I can pull out of it. And then right now as we speak, the house is rented and it cash flows about $130 a month after expense. And I want touch on that because that is lower than what my goal is for cash flow and cash-and-cash, part of my criteria to the deals that I look for. But the reason it is that is because I was able to get an extra 60,000 out of that house. And I run different analysis. If I would’ve left that 60,000, what I put back into the house, the cash flow would’ve been in lieu what my criteria is, which is about 300 to 400 per door.

Ashley:
I think that’s so important. I’m so glad that you broke that out as to why your cash flow is lower. Sometimes we get a lot of people on here or even just you see it on social media, like, this house is cash flowing $1,000 per month, but also you don’t know how much money they put into the deal. So calculating your cash-on-cash return, so how much cash did you put into the deal and then how much cash are you getting out of it, I think is really important to look at and not do just what that cash flow number is, because like you said, you pulled an extra $60,000 out of that property. So for you, it was worth it getting that $60,000 more than that extra couple hundred a month going forward. And plus, your tenants are paying down that extra 60,000 for you.

Hashim:
Yeah.

Ashley:
I just had one question before we move on to our next segment here, but are you using a property management company for your tenants or are you self-managing remotely?

Hashim:
Right now I’m self-managing and I think whether rookie sees an investor out there, I think listening it is good in your journey to define really what you want, and whether you go with a property management company or you self-manage it yourself, I think there is value in being involved and at least learning it. And I know Ashley, you started in property management, you’ve shared that story multiple times, but I really like when you share that story and different times you bring it up. I think it’s really important for people, even if you outsource, and I don’t think I’m going to be able self-manage, especially my goals and where I want to go and growth, there is no way I’m going to be able to self-manage and that’s not what I want to do.

Hashim:
I’m trying to build a business and I want to leverage processes and systems and outsource as much as I can so I can focus on what I want to do and what I enjoy, but for now, I’m doing it. And I like it because I’m learning it and I’m learning inside out. And I think it’s much, much better for me to understand it by doing it and create processes around it so that when I’m ready to outsource, I know how to do it best, I know what to expect, I know how to pick the right property management company that fits my goals and my objectives of where I’m trying to go.

Tony:
Hashim, man, I love your story. And even if you’re only cash flowing $10 per month, you still did that with no money into the deal. That is still an infinite return, you’re still getting equity, your equity’s growing over time. So I don’t think you need to explain why you got this $130 per month in cash flow because it’s a great deal, man. Hashim, want to take to our next segment, which is the Rookie Request Line. So for all of you that are listening, you guys can reach us any time at 8885-ROOKIE to leave a voicemail, we might use it on the next show. So Hashim, are you ready for today’s question?

Hashim:
Let’s do it.

Kristen:
Hi. My name is Kristen, I am from Maryland. I had a question about growing a business exponentially with using the BRRRR method. Essentially with the BRRRR method, it takes about six months before you can refinance and get your cash out to get onto the next project. And doing that seems like the max amount of deals you could do per year would be two. So what’s the best way to exponentially grow your business if you can only get limited to doing about two deals a year? Thanks so much for any answer you can provide. Thanks. Bye.

Hashim:
Great question. So the first thing I’ll say is, and Tony and Ashley, open it up if you guys have anything else to add to it, but the first thing that’s coming to my mind is you don’t need to wait six months, which they call the seasoning period to do a refi on your property. It’s a different kind of refi though. So if you wait the six month and you have more equity into the property, you can maximize how much you can pull out of it. But if you do less than six months, you can pull out, lenders operate differently under this, but typically, you should be able to pull out at least what you put into the property if you don’t wait the seasoning or the six months period. That’s my first thought on that. And then I think scaling is really important and I touched on that as I was sharing my story.

Hashim:
One thing that also jumps to me is different sources of funding as Tony summarized it while I was sharing my story. Maybe think about different ways if possible in your end of how you can get funding, whether it’s hard money, private money lender, different banks, different types of loans possibly. I would encourage you to explore that if you can. Another thing that jumps at me is partnership. Perhaps, and I’m not sure where you are in your journey or maybe what your ultimate goals are, but if partners are a possibility or things that can fit into your goals or your business, or maybe something to also explore, people can have different things and strengths that they bring to the table. And sometimes it’s money, it’s funding.

Hashim:
You may not have that, but you may have other things that you can bring to the table, then you can find a partner where you guys can complement each other. And it’ll help create a win-win situation for both of you. That’s like my three thoughts and take on this, but Tony, Ashley.

Ashley:
Yeah, I think that was great. Definitely looking for other banks that will do less than six, that don’t require a seasoning period, looking at the commercial side of lending, where there usually is no seasoning side at all. And then also just, I said finding a partner. That’s how I got started., and I did pretty much all of my deals in the first two years was with partners. So I think that’s definitely a huge advantage to be able to grow and scale that way. So now we’re going to move on to our Rookie Exam. Here we go. Are you ready, Hashim?

Hashim:
Should I have studied for this before?

Ashley:
Yes, you should have, it’s graded.

Tony:
Yes, that’s definitely. If you don’t pass, we actually don’t hear your episode. So there’s a lot hinging on this.

Hashim:
Oh, man. Okay. Let’s try.

Ashley:
One actionable thing rookie should do after listening to this episode.

Hashim:
I want to say, just do it, and perhaps before doing it, just really sit down and write down, what do you want to do. If you’re considering real estate investing, really write down what you want to do and have that goal drive you. So as Stephen Covey puts it in The 7 Habits of Highly Effective People, begin with the end in mind. And if you haven’t done that yet, I would highly encourage, sitting down thinking about it, writing it down. And Ashley, I know you said actionable, but I think that is writing the goal is action, I think it would drive a lot more actions and things coming out of that.

Ashley:
I 100% agree because you may think of something that you want or you want to do and that isn’t as impactful as actually taking the time to write it out, then even putting it somewhere where you see it every single day.

Tony:
All right. Hashim question number two. What is one tool, software, app or system that you use in your business?

Hashim:
Oh man, Ashley gave me so much, Ashley and Tyler during the bootcamp. I use Rent Ready for property management. And I also use Rentometer to help me gauge what my rents are going to be for a given property in a given market. I know you guys talk about Stessa as well, I haven’t fully used it yet, but that’s also the software I’m looking at as I’m growing. So these are three different softwares.

Tony:
Can I make a comment on Stessa really quick, please? I always thought, funny name, whatever, but I realized that Stessa is assets spelled backwards. So I was logging in the other day and the logo did this like spin around thing and I was like, “Holy crap. That’s what Stessa means.” So anyway, if anyone else was wondering where Stessa came from, it’s assets spelled backwards.

Ashley:
I remember on Instagram, this is probably like a couple of months ago, I feel like everybody that used Stessa was posting about it. One person realized it and everyone else was sharing it like, “Oh my God, I’m 30 years old, I just realized that [crosstalk 00:47:15].

Hashim:
I never thought about that, Tony.

Ashley:
Yeah, those are all great popular views. Go ahead, Hashim, were you going to say something else?

Hashim:
No, I was just going to say I’ve never thought of it, but now, my mind wouldn’t stop thinking of it that way when I see Stessa.

Ashley:
Okay. And then the last question is where do you plan on being in five years?

Hashim:
The way I’m looking at it is my focus is mostly… The reason I do BRRRR is because of cash flow ultimately. And I would like to be between 20 to $30,000 in cash flow in the next three to five years. And I’ve done some number crunching on the back end and the number of doors needed to get there is a bit scary, but it’s a goal I have for myself and I’m working towards that.

Ashley:
That’s awesome. Congratulations on that goal. And we’re excited to follow your journey to get that done.

Hashim:
Thank you guys.

Ashley:
Well, Hashim, can you tell everybody where they can find out some more information about you and reach out to you?

Hashim:
Yeah. I am not so active on social media, but you can find me on LinkedIn and also searching by my name, Hashim Ismail. Also you can reach me through my email, [[email protected] 00:48:24]. That’s where you can reach me via email. So these are two ways that you can connect with me. And maybe before we wrap up, I do want to give a shout out or thank you to a few folks if that’s okay.

Ashley:
Sure. That’s of course.

Hashim:
Yeah. I’m going to start with Stephen and Tyler. Thank you guys for all the coaching, mentoring and help throughout, I’ve learned a lot from you guys. Definitely my family for not doubting me, my girlfriend for always being there and keeping me fed. There’s days I was in my computer working so much and I forget to eat, but she’s there. So thank you for that. And definitely, the BiggerPockets community and you guys. And I’ve learned a lot over the years through the podcast, the bootcamp, books, forums, and all. And my Rookie Bootcamp Accountability group, thank you guys. You guys rock.

Ashley:
You forgot one. You had to pull a Snoop Dog and say, “I thank myself.”

Hashim:
There you go.

Ashley:
I want to thank me.

Tony:
I want to thank me. Well, Hashim, before we get out of here, one more person we want to highlight, and that’s our Rookie Rockstar for this week. So if you guys want to get highlighted on the show, get active in the Real Estate Rookie Facebook group, get active on the BiggerPockets Forums, get active in my DMs and Ashley’s DMS, we’ll try and pull some folks from there. But today’s Rookie Rockstar is Roberts Anthony Sr. And Roberts shared some numbers from a recent flip. So they bought it at $185,000 using a hard money loan, the repairs and the interest payments only came out to $40,000. They listed it at $297,000, which is already a good spread, but they actually end up selling for $320,000. So this is a six-figure flip. So Mr. Robert, Anthony Sr., congratulations on an amazingly well done job.

Ashley:
Well, Hashim, thank you so much for joining us. And it was definitely a pleasure to have you in the bootcamp and to have you on the podcast episode. So thank you so much for joining us.

Hashim:
Yep. Thank you guys.

Ashley:
I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. And if you guys are enjoying this podcast, please go to your favorite podcast platform and leave us a five-star review and tell us what you love about the podcast. And don’t forget to join the Real Estate Rookie Facebook group. We’ll see you guys on Saturday.