Joe Mueller started out as a real estate investor when he was just 18. He bought his first house at 19, and became an agent to make investing easier. As an agent he started listing REO and HUD homes like I do, and then started his own brokerage. Joe now has an office that sells hundreds of homes a year, he has a wholesale business, he owns close to 60 rental properties, and he flips houses as well. Joe is a busy guy with a career that is very similar to mine and we talk all about it on this episode of the InvestFourMore Real Estate Podcast.
How did Joe get his start in real estate?
Joe loved real estate since the time he was in elementary school. He grew up in Chicago but was moved to a school district miles away in a small town when he was in young. He noticed that there were huge price differences between houses that were only a mile or two away. He started researching real estate and knew what he wanted to do when he grew up. As soon as he turned 18 he got a credit card and bought a Carlton Sheets real estate investing program. His parents were not real happy with his decision, but he knew what he wanted.
He started going to foreclose auctions as part of his research. He had no MLS access, no Zillow or any other way to value properties. He was so young that real estate agents would not help him because they didn’t take him seriously. He had to figure out values from the auctions he went to and reading classified adds in the newspaper. Joe ended up buying his first house at 19 and sold it to another investor without doing any work for a $5,000 profit.
How did Joe’s real estate business progress?
Joe started buying houses from multiple sources including the MLS. He decided he needed to get his real estate license so he could save money and get more deals. When Joe was at one of the foreclosure auctions he realized the banks were bidding on their own properties. He talked to the bank, who found out Joe was a real estate agent. That was when Joe’s REO listing career began. He started to sign up for REO listings everywhere and built his REO business up to a point where he sold over 500 houses in one year.
How is Joe investing in real estate today?
Joe is doing about 15 wholesale deals a year from the direct marketing they send out. He is also buying as many rentals as he can and flipping about five houses a year. He looks for rentals that will produce at least $500 in cash flow per month and is buying in multiple states. Joe is also getting deals from the MLS, auctions, and networking with other agents and investors.
How can you get in touch with Joe?
Joe loves to help investors find deals in Chicago and has his own podcast as well. You can find his podcast, The Investor Empowerment Series Radio Show here: http://www.investorempowermentradio.com/. You can find Joe’s real estate broker here: http://tanisgroupllc.com/ or you can email Joe directly at firstname.lastname@example.org.
Build a Rental Property Empire on Sale!
I wanted to give a quick heads up that Build a Rental Property Empire is on sale for less than $11 on Amazon right now. This is the cheapest Amazon has ever sold the paperback version. I have no control over their sales and have not idea how long the sale will last.
[0:00:59.0] MF: Hey everyone, it’s Mark Ferguson with Invest Four More, welcome to another episode of the Invest Four More real estate podcast. Today, I’m speaking with Joe Mueller with the TANIS Group Realty. Joe and I have corresponded quite a bit over the years, we have very similar backgrounds. We’re both in the REO business, agents, also do a lot of investing ourselves. I’m excited to talk to Joe, hear about his story, what he’s up to now and hopefully he can provide some great insight for the listeners.
Joe, thank you so much for being on the show, how are you doing?
[0:01:29.9] JM: I’m doing great Mark, thank you very much for giving me the opportunity. I do appreciate it.
[0:01:34.2] MF: Yeah, thank you for being on the show, I know we have similar backgrounds and do similar things now in real estate but I love to start with what first got you into the business? What were you doing at the time and what got you interested in real estate?
[0:01:47.7] JM: Dude, you’re going to love this answer. It’s like posted on my meet up page and my Facebook I think but basically when I was like 15, nope, hold on, I got to go back now. When I was in elementary school, they redistricted my school district and I ended up going from a school like in a downtown urban area in the suburbs of Chicago, and they moved me to like a 20, 30 minute drive away to this little town, kind of out of the way but also in the same district called Carpentersville.
So I went through elementary school in this little town, which was totally different than where I had been exposed to in the first eight to 10 years of my life and I was given a project at some point in like 4th or 5th or 6th grade and it had to do with classified ads in the newspaper. What I had to do was — what part of the project was is basically like rewrite classified ads as part of like English class and what I was looking at was the real estate stuff for sale in this particular community and I was fascinated with the fact that my parents told me that our house was like a $200,000 house and that when I was looking in the paper in this other town where I went to school, I’m seeing houses that were only selling for somewhere between 60, 70, $80,000.
I think that sparked my initial curiosity over how however it sounds ridiculous because I was like literally in like whatever fourth or 5th grade. But when I got older, it never kind of ceased because I was kind of growing in that same community. I had friends that lived in that neighborhood and again, we’re talking a difference of the house I grew up in, we’ll call it 1,800 or 2,000 square feet to this friends of mine who lived in houses that were like a thousand square feet.
Eventually, it just came to a point where when I was in high school, I saw this late night infomercial about real estate and it was the Carlton Sheets “No Money Down” program. I made a goal that when I got my first credit card, at the time it was only like $100 or $150 bucks honestly. I got a credit card when I became employed at like a local pizza place and that was the first thing I bought, which was at the time, my mom was mad at me for like spending $150 bucks, which was like a whole paycheck, on some real estate class but that kind of started my education process in the investing in real estate and its never stopped since.
I was reading those books and any book I could get it at the high school library, I was reading. When I began to drive I started actually going to these —I would call them meetups now, but these investment clubs when I was like 17, 18, 1 years old and I didn’t have the resources to pay a thousand dollars for some dude to come in over the weekend and teach me how to buy short sales. It just didn’t work that way so I was kind of forced to self-educate through whatever means I had available and it just kept growing, I mean even to this day, I’m still pretty much doing the same thing which is I’m addicted to Audible and any book I can grab on Amazon about real estate and I just continue to go to these meetings, continue to educate myself and continue to grow as a business. That’s the long story of how it all started.
[0:05:20.6] MF: There’s no question about real estate, from when you’re a very young age, that’s what you want to be and that’s for sure.
[0:05:27.1] JM: It was yeah, it was something that I was something that I was not — so my parents owned one rental property that was a condo they lived in and it wasn’t a household discussion. Like, you know, they were pushing me in directions that I didn’t feel were right for me but I went through with some of those commitments like I finished, I went through college and I ended up actually graduated with a bachelors but I started in the process because I felt like, “Okay, my parents are saying,” — they associated real estate with like being a real estate broker and a successful planner.
In the interim when I was going to school, I was again just trying to educate myself to the point where when I was like 18, 19 years old, I was going to the county auction, the foreclosure sales. So I was bouncing between Cook country, Chicago area, there’s a couple of different counties that I was going to and I saw how that worked. Again, I was a kid so I was like the odd ball in the room. I then took that next step to figuring out, “Okay, how do I buy one of these properties?” Because at the time, we’re talking like 1998 maybe. The market was good.
So I’m doing all this research on this properties that are going up for sale because I figured that was the next step. How do I figure out if you can make money investing in real estate through this route and that was basically grabbing classified ads that the foreclosure notices were posted in, writing down the dates, property addresses, driving to the properties, trying to figure out some type of value and you got to keep in mind like, I didn’t have the resources that an investor would have nowadays. I mean, there was not Zillow out there at that point in order to help me verify some type of an ARV, After repair value or current value on a property.
I did engage the services of a handful of real estate brokers that I was trying to explain to what my plan was and of course, being that age, I’m pretty sure they didn’t think I was a very viable client. It was incredibly difficult for me to try to determine value. Then it all goes back to those ridiculous classified ads or the fact that I had to basically look to see what else was for sale through the newspaper and look at the picture and determine whether or not it was a similar house or whatever. That was kind of my start.
I was able to determine how to read title reports and that was by myself physically going to the recorder’s office of that county and sitting there for hours and hours, trying to determine first mortgages versus second mortgages, leans on properties, things like that. Eventually I was able to take that knowledge and through some friends and family type connections to drop some money in order to buy a property. I think I bought my first auction house somewhere around the age of 19 or so. To be honest, I don’t remember, and I took it from there.
Irony of that is, I was still a one man band, I was doing a lot of the work myself or trying to. So I’m sure that, you know, you go back and check those properties now, I’m sure there’s some things that needed to be fixed. But kind of self-taught, reading books on it, this old house electrical guide, whatever. But I was also trying to put lipstick on a pig. My attitude towards rehabbing houses was a lot different back then. Now granted, when I fell into a situation where I wasn’t comfortable with the property and again now we’re talking, we’re moving up that scale of time, I was able to sell a lot of these properties, what now I would call would be a whole tail deal.
I would buy them and then I could resell them to ultimately a homeowner or an investor without doing any work and make a little bit of money. Again, those challenges that I faced with dealing with real estate brokers basically led me to get my license when I was 21 in order to access the MLS, verify coms, get in and look at other houses and then effectively list those properties myself to sell. Whether they were rehabbed by me or not. That led — what’s that?
[0:09:49.9] MF: I was just going to say, on your first deal before we get too far, how did you do on it? Did you flip it, did you — how did the numbers look, if you remember?
[0:09:58.5] JM: Yeah, I ended up doing a whole tail deal on it. I ended up selling it to another investor that I had met through one of the investment clubs and I made, and I don’t remember the exact amount but it was less than $10,000. It was a couple of thousand dollars, probably around five. I don’t remember the exact — I should have saved that HUD Statement because that would be like an up in the wall nowadays but at the time, I still wasn’t even sure if this was something that I was going to do full-time, part-time, as a hobby, or never, you know?
The interesting part about what you mentioned about the REO side of the business is my main method at that point became, going to foreclosure auctions at the court house as well as scouring the MLS for any opportunities. I had some access to money, I was able to borrow to do that, that’s one challenge that a lot of investors faced that I think I was able to tackle and I had other people that were interested in lending to me back even when I was very young because the numbers made sense.
Now, it wasn’t like I was making a killing but I was making something and the market was on the upswing at this point. Basically in Chicago, you could buy a house on a Monday and by Friday you could have it re-listed and you could mark it up five or $10,000. Now, with listing commissions and closing cost and stuff like that doesn’t really make sense. But it was ridiculous how easy it was to sell a property and increase the value at that point and we’re talking early 2000’s. I was kind of running that game. I was more of, always like a volume base guy, I was never looking for like the big home run, I was just looking for the base hits and hoping not to lose my butt on any of them because there’s always that chance when you’re buying at auction.
I really liked the MLS back so that became another, eventually somewhat took over my interest in bidding at auctions because it added that extra security blanket, that safety net of being able to get inside these properties and determine an actual value. To be honest, I would say, looking back, I was fairly reckless when I was young, when I was just getting started. I don’t want to deceive the audience, it’s not like I was doing 10 a year. I was doing less than a handful, like a couple of properties a year when I first started.
Continuing to go into those auctions, as a licensed broker, opened up the door for the REO business, I was confronted by a — well I shouldn’t say that. I was out bid at an auction by a guy who — this was the first time this has ever happened and I’ve seen it since but they say, “Okay, the bid is, $100,000 and I bid a dollar over,” and this guy stand in the background goes, some weird number.
He’s like, $151,269.27. I’m like, “What the heck?” So he won the bid, he comes up to me after the auction and he hands me a card and he says, “Do you want to buy this house?” I said, “Well, not anymore dude. You just ate up all my money. No way.” Well, we ended up chatting a little bit and I told him I was a broker, just casual conversation. It turns out, he was like the vice president of this bank in Ohio, like a mom and pop operation type thing, I don’t know if it was family owned or whatever but he had some properties in foreclosure and we developed a relationship.
I kind of became like his little mini boots on the ground. He took me out to lunch once or twice and he says, “Hey, can you go check out this one?” Call me on a random Wednesday, “Do you have an opportunity to check out this property in the next few days? It’s going to be going up for auction two months from now,” or whatever. I kind of did a little bit of that work for him, taking some photos and, you know, it turned into like BPO’s and then one of those properties that he acquired or the bank took back, he asked if I would list. I said, “Of course,” an I had no idea what REO was or how that really worked but I distinctly remember breaking into the first house myself like with a screw driver and a drill and the police getting called on me and all that fun stuff.
Luckily I had some paperwork from this guy saying that I was the broker so I didn’t get in trouble. That’s honestly what started it. That really appealed to me because I felt like, and again, now looking back maybe not the greatest opportunity as an investor but I felt like, “Wow, now I’ve got a contact with the bank, how could I go wrong? Because I might be able to buy this houses directly from the bank before they even get on the MLS, right?”
In the end, that’s not really what happened at all because as we know as REO brokers, pretty much against all rules for the REO broker to buy any of the properties that they’re representing. A lot of the banks won’t even let you buy from them at all so any of your listings are definitely off limits all the time, at least that’s what I’ve experienced and you know. It started with that one property and then he sent me a second property and then I heard about this cool thing called Equator, which back in the day was called REOtrans.com and it was basically a transaction management system for bank owned properties.
That kind of took me to the next level by — I took an interest in how that website worked, I did a little bit of advertising on it or I put myself on there, I should say. I don’t even remember if they had advertising back then but then next thing you know, I’m literally 4 o’clock in the afternoon on a Friday, I get a phone call to my cellphone from some guy from some bank like, “Hey, I’ve got this property within your area, are you interested in managing it?” I’m like, “Yeah.”
Just kind of self-educated myself in the REO. Same as you, ended up hearing about, now the internet has become something everyone used. Hearing about some of those REO organizations that are out there and I don’t think all of it even exist anymore, most of them probably don’t but I do know there was about a million banks across the world and now there’s like 10% of that left.
I was subscribing to everything I could, marketing myself to banks and I think in our biggest year, which was after the crash, we probably closed somewhere over 550 properties maybe and that was literally, like I had a staff of like 15 or 16 people working on all those properties. It was insane. I continued to invest and now I’ve kind of changed gears a little bit where I have focused mainly on the investment side of real estate while continuing to grow my REO business through these times we’ve dealt with as we both know. The inventory I had back in 2010 is nothing close to what I have now.
But in turn, I’ve created great relationships with investors and clients and I have a great network of other investors that help me not only find the properties but also them or you know, sell to them. Things are available, you just got to kind of push on and deal with those things. I think a lot of other REO brokers, at least in my area never probably bought any other house besides their personal residence and I think that’s fairly typical for what you see in the real estate brokerage business.
Most brokers don’t own any real estate investments which is odd to me but again, going back forever. Like at this point, technically had been in what I call it for like 20 years. If you want to call my initial education but actively working somewhere around 15 or 16 as a broker and buying the properties. Currently, as a company, we offer a lot more than we did 10 years ago when REO was the cool, hot thing. That’s where most of the income was derived from. We have a property management arm with two employees that basically just focus on managing for our clients.
We have a wholesale division that I started back in 2015 where I’m doing active motivated seller type marketing we’ll call it. Using that opportunity to draw in more inventory that I can then either resell to another investor off market. You know, purchase myself or find a way to connect and create opportunity is what I would say is the best way to put it. We’ve definitely changed and in that process, starting from myself as the only broker, now we have 20 active real estate brokers and they all have their own little businesses, right? Because as a broker, essentially you’re under the umbrella of a company but you’re like your own little business.
Some of them do very well, doing 80 to a hundred transactions a year which is awesome and some just do a handful here and there. I mean, it’s kind of up to them on how far they want to pursue that. I would say, at this point, started from a classified ad to the point of a self-sustaining business. We have three offices, two in Chicago and one in Wisconsin. We’re actively selling between 200 to 300 properties per year and that includes, like I said, retail or other investment properties and we have a full time staff of about 10 that has been here for a long time including family members. I’ve got like half my family freaking working here, that’s crazy.
That’s the long, long version of how it all started.
[0:19:28.3] MF: Right, on the wholesale division you made for motivated sellers, I have a lot of people asking me about, you know, being an agent and the downside of trying to market as an agent because you have more rate requirements, guidelines, have you run into any problems with that? I do it myself and I don’t really see a huge problem with being an agent and marketing that way.
[0:19:48.8] JM: So, yeah, I mean, I personally do not deal directly with the motivated sellers, I have in the past but I made it a practice not to. What I did is I, again, reached back into my network and found someone that had experience, a lot of experience as a wholesaler and needed something to take his business to the next level.
His name is Dan Clarton and he’s been a wholesaler like four or five years but what ended up happening is we created a joint venture where I’m handling certain aspects of the business and he’s kind of the guy that goes out and physically sits at the kitchen table. The reason why I do that, and I’m sure you can appreciate this and so will the audience, is if I’m sitting there at the kitchen table with a motivated seller, I basically have an ethical and legal responsibility to tell that seller like, “Hey, I think your house is worth $100,000 but I’m willing to buy it for $50.”
I’m not really that good of a people person, I’m great at like the business systems in the background and, you know, getting the model flowing, we’ll call it. But, you know, physically me dealing with the sellers, it’s never been a good thing that I’ve really felt good about just because I’m not good at it, you know? As an REO broker, you’re kind of like a lone wolf out there to be honest. Everyone’s trying to hunt you down at the same time you’re out there just trying to find your food, you know? It’s crazy.
So yeah, we created a joint venture so I’m basically part of like the marketing plan. I get paid based on the amount of marketing that goes out there and then when we forward a transaction to an investor or we market it to an investor, everything’s done as legally and ethically as required but it’s never really been a challenge as far as the wholesale side of the business. I do get that same question like, “Hey, I’m interested in becoming licensed but you think that’s a bad thing?” That is a debated topic on every investor forum I’ve ever read, like Bigger Pockets or whatever on a bunch of podcast. I could go either way.
I mean, I feel like my success wouldn’t have been what it was without being a broker. I do not feel like any opportunities were lost as a result because, you know, the brokering aspect requires certain things to do regarding having a license. I feel like if anything, it’s definitely added to it. There are certain people out there though when you’re dealing with a motivated seller, they’re typically calling in to whatever your marketing piece is, whether be a yellow letter, or a bandit sign, or postcard, however you do your marketing.
They already know that real estate brokers exist, they’ve made the conscious choice not to work with one or they put themselves in a situation where maybe time is not on their side so they really can’t work with them if they’ve tried to, maybe it’s a foreclosure situation. They’ve only got 30 days before the auction. I mean, it could be pretty challenging to get that property listed on the MLS, sold, funded, and all those pieces to work in order to make that situation right again. I think that’s my answer is, it’s a great idea, it’s a great resource, the data that’s out there as a result of being a broker is incredible but I’m just not that smart. I need that stuff in order to succeed where I think there’s a lot of investors out there that are able to tap into certain analytics that you can find on the internet and data and pound the pavement a different way than I would and come up with the same, if not better information.
I mean, let’s be realistic, I mean, just through public records nowadays, I mean, basically everything’s available. Depending on how hard you want to look in to it. Yeah, I mean, I would say, if you’re interested in working with people then maybe becoming a broker is a good idea like as far as listing and selling properties but it’s not right for everyone and as an investor, I don’t know, I can’t make that decision for someone else. For me, I wouldn’t change a thing.
[0:23:48.6] MF: Right. Well, it’s funny too because I know what you’re saying about people not wanting to work with agents or for whatever reason they haven’t chosen to work with an agent. When we’re doing direct marketing, we’re starting to ramp that up again but I took a little time off, but in the past, I would get four, five listings myself from those marketing pieces as an agent that I wasn’t even trying to get.
Because either I couldn’t pay that enough to make it work for them but they could get more money on selling an MLS and for whatever reason, they just hadn’t tried, they didn’t have the motivation to talk to an agent but when someone contacts them, okay sure, we’ll put in the MLS and sell it. It’s a great way to get listings.
[0:24:28.6] JM: That’s exactly what my thought process was so, you know, I’ve had those situations as well where we come up with a property that has a lot of meat on the bone in a good area, when I’m talking like $70,000 loan balance, foreclosure just gets started and, you know, in Illinois, it takes like a year to foreclose on anything.
The property’s worth 180 or 200,000 and it’s in great shape. In those cases, you know, I play a little bit more heavier of a role by basically explaining to that seller like “You know honestly the right thing for you to do here based on your situation or what you’ve told me is just list the property because you’re going to make significantly more money than selling to an investor, which trust me in this particular case they were literary pounding on this lady’s door on a weekly basis trying to get her to sign a contract for $85 or $90,000 and she knew that, “Well I don’t know, I mean I think my house is worth more.”
So yeah, we’ve helped a lot of people just like you mentioned and we’ve gotten listings out of it as a result. It’s just one of those additional streams that can be created through this type of business and that’s what I really appreciated. So now every time we sit down with a seller for an appointment, there is the two components of, “Hey we’ve got a broker available. Do you want that person to be part of it?” Which is going to be me or are you just interested in just speaking to somebody that can purchase your property without putting it on the MLS and do some type of what we call a quick sale type method.
It goes both ways, I would say most people seem to have a tendency again, like they’re intelligent enough to know they could have called the broker already but for some reason, they want to work with a guy who buys houses. So it’s taken that role where my partner in the wholesale side that we do the joint venturing on, I would say he’s probably about 75% to 85% are actually going more cash purchase, wholesale type method as opposed to listings but it’s amazing because I get a lot of, over the years I’ve had a lot of questions about how that all works.
Beginning investors in general have this thought process, which totally makes sense. Which is, “How is it possible that somebody would want to sell a house that’s worth a 120,000 for 60 grand and how does that work?” and the answers are limitless because we have seen so many different situations where everything from family disputes, to divorce, to deaths to I need money yesterday to bail somebody out of jail type situation, I mean it is the oddest thing and at the end of the day, we actually do a video testimonial with every seller we work with just to have on record and use for additional marketing when we meet with other seller.
These people are ecstatic that whatever their problem was we made go away and I can’t say enough about it. Because if there was something wrong with what I was doing, I wouldn’t be doing it. But the fact is these people know, they know what those houses I mean 90% of the time they actually know what the property is worth and what it could sell for but they just need to fix one little piece of that puzzle faster than what maybe an MLS sale could do for them. It really is interesting the dynamic of how the human mind works with that type of thing and people that aren’t dealing with those situations probably can’t understand how that could happen but trust me, everyday it happens. It’s amazing.
[0:27:53.5] MF: For sure. All right I’m curious, now you’re obviously doing all these wholesales and have the broker side, are you keeping rentals for yourself? Are you doing rehabs at all or just the wholesale?
[0:28:04.6] JM: No, that’s another component. So yeah, in 2016 we had 15 wholesale deals we process through me, my office, the marketing. Which I was pretty happy with because it was our first real full year of giving it a go and that’s five to 6,000 mailing pieces a month. That’s a bandit sign campaign. We have something we started called Bandit Signs on Wheels. We didn’t start it, we hacked onto somebody else’s concept but hey, whatever and we have people out there with “We buy houses for cash” type sign at the back of their cars. I mean that’s brought in a deal here and there.
A lot of referral business which is amazing too. I’ve had investors more than once, two investors in the last four months came to me with opportunities that they just needed to get out of and having this face with a real estate brokerage, having my name all over everything, having the podcast I do out there and I apologize, I know I’m digressing but they see you as a trusted source and a knowledgeable resource and I’ve been able to help even just regular real estate investors so there’s an interesting component to the business that I’m really happy I got involved in.
That said, initially my goal was to drive in more inventory for myself. So I’m an active rental investor. I typically follow a fix to rent type model about I’d say 90% of my investments follow that model but I do still actively fix and flip a handful of houses per year and when I say that, I mean like when I buy a rental, regardless of what the exit strategy is, it could work either way. I try to build every acquisition into the rental situation but sometimes, it just makes a lot more sense to flip that house or sometimes it makes a lot more sense to keep it a rental.
So I make sure everything is purchased at a price that I can do both and if it doesn’t work one direction or the other then it just falls into the other category, “Okay this one’s going to be a better flip,” and that has happened more than once where I’ve done my initial purchase and then after I get into the property and start getting bids from contractors I’m like, “Oh crap the numbers aren’t going to make sense when it is all said and done and I refinance it with a bank and pay the taxes and the insurance is not going to work as a rental.
Because I am trying to achieve goals of, at minimum, my goal is $500 a month in net cash flow per property and that single family only we’re talking about at this point and if it’s under 400, that’s when after I run my numbers and I get my quotes and everything start to come together and if it’s under 400 then I give some serious thought to okay, maybe this is a better one just to fix up and resell and make a little bit of money on.
[0:30:54.7] MF: How many rentals do you have now?
[0:30:56.6] JM: I invest in three different markets so I’m in the Chicago area, Indianapolis, and Milwaukee right now and I do have one property up in Michigan and right now, I think the numbers are somewhere in the 60’s roughly 90 to a 100 units because I’ve got some multi’s in Indianapolis and Milwaukee. But yeah, quite a bit in those three markets that I have bought. I got into Indianapolis and Milwaukee when the getting was really good back in 2012 and maybe a little bit in 2013 and then I’ve just been sitting on those.
Stabilized the properties, make some money along the way but ultimately I think my exit strategy is going to be selling those at some point in the next 12 months because the way the market is and it’s a nice income producing portfolio for another investor at this point.
[0:31:50.0] MF: Right, very nice.
[0:31:51.5] JM: And I do have a specific number, it’s on a spreadsheet that I have but I just bought another house last week and I didn’t even look at it recently. So we’re probably in the 60’s somewhere for number of properties.
[0:32:03.8] MF: So you’ve got obviously a lot of stuff going on with your brokerage, property management, wholesaling, rentals, flips, are you happy with how things are now or do you have big goals for the future? What are your plans in the next year or two?
[0:32:17.7] JM: You know what? My plan initially last December in 2016 I set a goal for a cash flow number that I wanted to reach on a monthly basis just in 2017, which was $10,000 a month. I set that goal shooting for the stars knowing full well that I’d be ecstatic if I was able to achieve half that and so right now I think my main focus is just creating that number, which is like an ever living thing. It keeps changing but creating that number that I feel would satisfy my own needs and what I would have to do to survive happily.
Then it gets the company, the brokerage, like at what point if we do suffer another down turn and the estate brokerages start to get wiped out again to some degree, how much money would we we be adding to keep that sustainable, to keep my employees and my family working? But yeah, I think ultimate I haven’t set a number on a number of properties or maybe I should but with the wholesale side and the rental side and fix and flip side, I would say I’d be satisfied somewhere around 15 to 20 acquisitions to some degree and that’s where I landed somewhere around that last year as well and that keeps me really, really busy.
I’m experienced with managing a business and managing people. I know how to delegate, I know how to hire. But I went down that road in the last few years where I had general contractors doing work on flips, general contractors doing work on rentals, and I don’t feel like it really gave me that satisfaction number one, was the first problem because I wasn’t really involved in the project as much as I feel like I need to be and wanted to be, and then decisions get made that I ultimately feel like, “If I would have been here when you decided to put that countertop color in, I wouldn’t have done that.”
I’d feel a lot happier creating a little bit more responsibility for the day-to-day management of these projects and hiring subs and managing the contractors and creating relationships with the suppliers I’ll call it, the big box stores. Because ultimately I think I am saving more money, I’m creating a better profit margin and a better net monthly income and it just makes me happy to be involved. I mean you know what it is; it’s exciting to be a net part of the business and watch something go from an uninhabitable, condemned, ugly house to something that you can then move a family into with brand new kitchens, counters, appliances, updated electric, whatever it is and know that it’s a solid quality property that you’re going to have for the next 20 or 30 years, infinite number of years that I can also pass onto my kids.
[0:35:12.1] MF: Right, no that makes sense and yeah, it’s challenging but it’s fun. How many rehabs do you think you have going at once?
[0:35:19.5] JM: Typically, so right now I finished two in January, I’ve got two currently going on and I have one that is on the market. So my hands are in about five properties or so. It probably varies between two to four on average that I’ve got my hand — and I say my hand in like it’s in some part of the process whether I’m under contract, ready to close things like that. Right now I am actively managing contractor after finishing those two projects in January 2017, which were both actual fix to rent rehabs and those are both under rental market right now.
I’ve got a couple other ones that are potentially in the pipe but again, I haven’t really done anything with those. I haven’t even seen the properties yet, but those are coming in from the off market type marketing as well as some of the other investors I deal with and I’ve committed to being the buyer whenever the time comes. That’s the way I’d like to say it because sometimes we get contracts settled outright away and very quickly.
Sometimes it’s a contract — we have one situation where the lady does not want to move until April. So it’s like I’m under contract to close on it but I hadn’t even thought about it yet and I will when that time comes but yeah, probably two to four at any given time. I’ve got my hand in something with it.
[0:36:38.5] MF: Okay, are you still looking into the MLS at all, or is that pretty dry where you’re at?
[0:36:43.3] JM: I do buy off the MLS still. It is not something that I would say creates a lot of opportunity at this point. You have to really, really know your numbers and have your team in place in order to get those deals closed so you can be profitable whether it be as a rental or as a fix and flip. Actually my last purchase last week was actually on the MLS and the numbers work on my end. They might not work for everyone else. I’m still I would say more recently become involved working again at the county courthouse type foreclosure auctions as a method to acquire.
So a handful of properties a year come in that way, MLS, off market marketing, I’m sure there are some other ones. Yeah, I mentioned earlier the referrals, I mean it’s amazing. This is a great piece of advice for your listeners. I technically started a meet up I think a couple years back and we just rented out one of my real estate offices, which is a more social type setting. We’ve got a full kitchen in it and a little bar and the fridge is stocked with some beer, it’s fun and I do have the proper insurance by the way but again, over the years we’ve done foreclosure.
Foreclosed home and rehab bus tours which has created just enough buzz where I think as an option people have a tendency to come to me and say, “Hey what do you think I should do?” Or, “What can I do with this property?” and sometimes that means I’m going to end up buying it and they make some money, sometimes I’ve listed it on the MLS, I’ve done that. So it’s interesting how just networking with people and creating relationships really ends up being one of the most successful methods of succeeding in this game.
[0:38:38.1] MF: Yeah for sure and I’ve had agents start to bring me some deals lately because they know I’m going to close. I do what I say, I’m not going to mess around with them and if they have motivated sellers who need something sold quick if they put it on the MLS half the time you get these investors who are going to back out after their first offer. So yeah, networking is an amazing way to get business for sure.
[0:39:00.6] JM: Yeah, absolutely and it’s really led to I definitely would not be a success — I wouldn’t have made it past the down turn if it wasn’t for starting up that meet up group and involving myself and offering something to other investors I think is how it all starts, right? Because if you host a meeting on how to work with a hard money lender for example and you get 20 or 30 people to show up, I mean everybody is there because they have that same interest.
They’re all either current investors or trying to be an investor and eventually some of those new people end up popping a deal here and there and then they say, “What do I do now?” and I get a lot of those type of phone calls and it’s not like the intention of the networking group or the meet up group was to create that but that’s ultimately what happened. So now there’s a lot of communication that goes back and forth with a lot of different people where I’m looking at opportunities.
I am doing some evaluation, I’m making suggestions and of course if I can help then I help and like you said even brokers have come to me and said, “Hey I’ve got this opportunity. I haven’t listed it yet. Are you interested? Blah, blah, blah,” and yeah, pull the trigger. That’s what I do just like you said.
[0:40:12.6] MF: Nice, very nice. Well Joe tons of great information. Thanks for providing all of this. It’s funny how similar our businesses are. I don’t have the property management side, well I sort of do. For my own properties, but not for other people so.
[0:40:26.3] JM: Well I’d like to just touch on that real quick because one of the things I need to do better is to sell myself. Being on your podcast obviously is one of the things so I’m not going to sales pitch anybody here, but just like you said, you’ve got what like 16 rentals right now something to that effect?
[0:40:44.0] MF: Yep, I had 16 but I sold a couple. So I’m down to 14 now.
[0:40:47.9] JM: So in order to effectively manage my own properties, it just made sense to scale it up a little bit and create an income-producing model that would work not only on my own investments but benefits other investors. So now we do management as a result and like you said, it’s not like — we’re not necessarily covering the whole nut of running the company off of what management provides but every little bit helps.
The one thing I do like about management is if you’re already doing it anyway like with a number of properties we manage just for my own portfolio, and then what we’ve grown with some other investors, I mean you’ve got the systems in place, you know the legal end of it, I’ve got like I said two girls that work with me that are basically helping with just property management and it creates a more efficient system for everybody. As opposed to the guy who might only own a handful of properties and is trying to run out and fix a leaky pipe by himself.
I mean sometimes that works but there’s a lot of times when it’s better to actually create a relationship and delegate some of that responsibility out to a third party, who I’m happy to fill the need for. If anyone has some more questions, obviously I can talk to them about it.
[0:42:01.5] MF: Cool, yeah for sure and then you also, we mentioned it shortly, briefly but you’ve got your own podcast as well that you recently started. How is that going?
[0:42:09.2] JM: Dude the podcast is awesome. I mean the podcast is fun, I was going to say hypocritical but it’s like hypercritical. Like you listen to yourself talking to people or talking to yourself about your ideas and concepts and it’s been an amazing ride. I’ve been doing it for the last nine months or so. I’m coming up on a year here in a couple of months. I’ve got 32 episodes out and they’re all different types of stuff. I had you on there, I had other investors, I’ve got guys on there that have hundreds of properties. I had guys on there that had a handful, and gals of course but yeah.
I try to create some type of value and that’s what I tell most of my guests on the show is, “All we’re trying to do is provide good information, motivate, and inspire the listener to help them understand that there is a possibility that they can get involved in this type of business and that it’s all attainable just from taking that jump.” So yeah, if anybody is interested in listening to that, you can find me on iTunes, and Stitcher, and YouTube. The name of the show is The Investor Empowerment Series Radio Show and you can get it actually right directly off my website which is investorempowermentradio.com.
[0:43:30.2] MF: Awesome. Well, Joe thank you so much for being on the show. A lot of great information. But before we head out of here, you mentioned trying to promote yourself a little bit. It’s our community that too but it’s part of the business, if people want to get in touch with you what’s the best way to reach you? How can you help people, as well? I mean, if you’re looking for an agent, if they’re looking for properties, if they’re in Chicago, give us a little more information on that.
[0:43:53.4] JM: Okay, so I have, just like everyone else, I’ve got a website, which is www.tanisgroupllc.com. You can email me directly email@example.com, you could call my office if you’re local, 847-594-4215. So we, myself and the brokers that work here, I mean, we’re basically immersed ourselves in focusing on working with real estate investors for the last four to five years. I had a slight touch with some of the hedge funds back in like 2012 maybe, 13 that were literally buying dozens of houses and that created kind of an opportunity for us to, again, create a model that would help find assets for investors and we still do that today.
So if anybody’s looking to purchase a fix and flip property or rental property, which in my opinion are as far as profit and you know, cash flow income, I mean, that’s my recommendation. You can turn a lot more properties into rentals than you can as a successful flip, depending on how much money you want to make. So we can help with that and then we do have our off market contingent as well which you can actually, I have a second website for that, if anybody’s interested in signing up on my website for the off market deals. It is reinvesthub.com.
[0:45:31.9] MF: Awesome. Not only can you offer, the agent side, you got wholesale deals, your podcast. Well, congratulations on all your success and building a pretty awesome business, I know it doesn’t come easy. It takes some time, that’s for sure. Yeah, we need to keep in touch for sure and I appreciate you being on the show. I learned a lot myself and it sounds like you’ve got a lot of things going on and having a lot of fun as well.
[0:45:57.2] JM: Yeah, like you said, the podcast is like my little retreat. It’s fun to do and sometimes I get frustrated when I’m on a deadline. Like, “Oh, I’ve got to get a podcast done by Monday!” But you know, it’s still — generally it’s fun and I get a lot of feedback from the listeners which is awesome. I love getting the feedback because it makes me feel like I’m actually providing some quality information and you know, that really helps and helps me kind of grow and drive me to continue to do it.
[0:46:23.9] MF: Right. I know how you feel. Cool, well Joe, thank you again. I really appreciate it. Let’s keep in touch, and yeah, great job on the show today.
[0:46:32.4] JM: Thank you for your time, I appreciate the opportunity, Mark.
[0:46:34.7] MF: All right, take care.