EP73 Scaling Wealth Through Owner Financing: Brian Audia’s Unique Investing Playbook

[00:00:00] Pick something and stay consistent and put massive action behind it. Consistency is key. From cornfields to high-rises, office to industrial, houses to hotels, and every other asset class in real estate, we cover the people, the projects, and the profit. Welcome to the Investing in Iowa Show. This show is for go-doers, action-takers, and business owners. It's for people like you who are sick of Uncle Sam taking a huge bite of your apple.

[00:00:29] If you're looking to get ahead of what's taking place in Iowa, learn who is doing what and how you can get in on the action, you're in the right place. Hosted by Neil Timmins, an Iowa native who has been involved in over $300 million in real estate right here in Iowa. Recording in studio from West Des Moines, here's your host, Neil Timmins. I've got Brian Audia here on the show. Brian, welcome. Thanks for having me. I appreciate it.

[00:00:56] I'm excited to hear, say, for the audience to say, who are you? Where are you from? What do you do? I live in Iowa now, originally from Canada. Moved here just over two years ago, two and a half years ago. And I do primarily single-family real estate, creative finance, that sort of thing. I have a business partner. We are actively looking for commercial deals and luxury fix and flips. And I also do some consulting in the construction tech space as well. So, well-rounded. I would say so. All right. So, I'll ask the question, but I want the story. Sure.

[00:01:25] How did you come here from Canada? How did I come here from Canada? I came here from Canada. I was traveling in 2010. And I met a lady who would become my wife here in Iowa. And it was long distance at first. We kept in touch, realized we were interested in one another. Trips started happening back and forth. And in early 2011, we found out our first was on the way. That was a bit of a surprise.

[00:01:52] We were madly in love. We knew we were going to be together. So, that wasn't an issue. It was just figuring that out. So, I had a contracting business at the time. She worked for Wells Fargo. So, we were like, well, you can't quit your business. Yeah, we moved. We got married. Moved my wife, Sam, and our first, our daughter, Gia, to Canada in the winter of 2012. We lived there for a number of years. And then... What part of Canada? North of Toronto, about 90 miles north of Toronto. A small town, 40,000 people, called Orillia. Okay.

[00:02:20] So, yeah. Not too far. Close enough. We were on a main thoroughfare. Like, I've described this before. Where we lived in Canada was right on kind of the southern edge of a vacation home area for wealthy people. So, Muskoka is to Toronto what the Hamptons are to New York City. So, I couldn't name you a town. But imagine living 90 miles east of Queens, right? Kind of on the main thoroughfare on the way to the... Imagine, like, it's kind of like that, right?

[00:02:45] So, small town, but busy enough. And we had gone through quite a boom in our area as far as real estate bubble almost. It was very... Things were picking up. And I'd been 18 years in roofing contracting. I was second generation. My dad had been doing it since 1967. Took over in 2004 after not having been involved in the family business much. I had a younger than that. I didn't have the same work ethic or appreciation for that in my younger years or my teens that I did in my 20s.

[00:03:14] So, got done with school. Realized I didn't want to do what I'd, you know, do that anymore. And started in roofing. And it was tough. I took over at one crew. My dad wasn't interested anymore. Great man. I love my dad. But when he was done, he was done. And, you know, learned a lot on my own. I got a, you know, I got an established name and a phone that rang, right? We started with one crew. We built that up over the years. We eventually sold after 18 years in business at five crews, a few million dollars in revenue.

[00:03:41] I was lucky enough to find a buyer. But we decided in 2021, you know, I was tired. And just a few circumstances came together between the value and real estate that we had. It was just time in life. And my wife and I sat down and I said, you know, hey, what do you think about? There was an opportunity that came up here that never panned out, but it was sort of the, it was the catalyst for the conversation to say, hey, what do you think about moving back to where you're from? One thing led to another and here we are. Yeah.

[00:04:08] Yeah. Well, that's, that's incredible. All right. Sell the business, sell the house, pick our chips. Yeah. Pick it all up. And then, you know, it's out what I hear you saying. It sounds like going back into the roofing business here was just not, not going to happen. No, no, not. I was tired. I was just really tired. And I didn't realize at the time, not that it would have made any difference, but running a roofing business in Canada, I now know because I consult in the space. Running a roofing business in Canada is much different than operating a roofing business in the United States for several reasons.

[00:04:38] But I was fortunate enough to land a gig. Like I said, that first opportunity that we planned on doing when I came, didn't work out. Immigration takes a long time, by the way. That was part of the stopper. And I had an opportunity to work with the tech firm that I'd hired in my own company to help us with sales and marketing when I was there. So the owner of that is in, he's Canadian, most of the businesses in the U.S. So we were able to kind of have a workaround where I worked as a Canadian person for a Canadian company while physically sitting at a desk in the U.S.

[00:05:08] There's some clients that are mostly in the U.S. It was this weird, this weird workaround brought a lot of value. I took a lot out of our engagement that I was able to bring to other clients and, and that sort of paid the bills for a first bit of the first. I didn't get right into real estate when I started because I had this misconception that you need money, your own money to get into real estate. So it wasn't until that was going very well. I rose quickly in the company, you know, as a small startup growing rapidly, was able to get a lot organized for them and also learn a ton myself.

[00:05:37] The CEO is a, he's a genius, both in marketing and sales and technology and the whole space. So it was, it was, and still is a great experience. I still spend time there. And the summer of 2023, I finally sold the commercial building that I had back in Canada. So I'm like, okay, now I've got, now I've got some cash. The exchange rate played with this a little bit. Yeah. We bought our house. Yeah. So held it in Canadian. So anybody listening, go back to a chart of the USD Canadian dollar exchange in the summer of 2022.

[00:06:06] And I held the proceeds from the sale of our home in July in Canadian funds and didn't convert it to us to buy our home until November. Go back, look at the chart, do math. So the sale of the commercial building is what gave us a bit of cash. And I had my eye on a, on a bird course from a guy by the name of Sam Prim runs faster freedom at a St. Louis. Great guy, very active on social.

[00:06:29] I thought, you know what? I'm going to, I'm going to, I'm going to, this is my time. I'm going to do real estate in the U S now. I'd always wanted to, I'd read Robert Kiyosaki's rich dad, poor dad in my early twenties. And was always very just enamored with the idea of doing real estate, doing business in general in the U S because of the differences, operational differences, the tax advantages that are available to U S investors versus Canada.

[00:06:51] And, uh, you know, now is my chance. I thought, so let's do this. So I buy the course and I'm going through the modules. And one of them was, you know what? You got to get out there and network. You have to, you know, go to meetups, go find, here's where you find meetups. Here's what you do. So I was like, you know what I do as I'm told I can follow instructions. I'm going to go find some meetups. And I found this meetup that was meeting at Smokey Row, um, up North of the freeway. And, um, I just said, Hey, I'm going to check this out. I'm going to go. Um, the two gentlemen that were running it, that one was Adam and another guy by the name of Luke.

[00:07:21] And it's like, okay, here, you know, I'm going to meet some, going to meet some rental investors, some single family home rental investors. And these guys were talking about something completely different. I didn't know what, and I was like, are they, are they selling something? Like what's, what's going on here? So, you know, I think, I can't remember. It was either, it was one of them. Their line was, you know, how would you like to make rental income without fixing any toilets or answering any, any tenant calls? I'm like, well, yeah. So listen, it was a good conversation around the room. We did some intros, you know, typical meetup style. And this was really interesting. So I went up and talked to them.

[00:07:51] Afterwards. And, um, they'd mentioned this book, you know, and I was like, what's that book again? And he's like, invest in debt by Jimmy Napier. Here's the website to go order it on. It's too expensive on Amazon. Go to this website. So I was like, okay, I can follow instructions. So I, I ordered it, bought it. I read it. And it's very like, he's kind of that folksy, uh, shucks. Like if you've ever read, uh, Oh, what's his name? How to win friends and influence people. Yeah. Yeah. Um, it's that kind of language. You got to read through that a little bit, but he goes, he basically runs down.

[00:08:20] It's basically an opus on note investing, right? How to flip paper and how to calculate for time value of money and how to position yourself in deals to do these, right? To do these sorts of things. I'm like, okay, I got the concept. I downloaded the financial calculator on my phone. I can, I can work this, you know, what's next. So nothing really happened with that meetup. I think they wanted to be regular. So I really say, I don't know how I got this lucky to land that one meetup. Cause I think there was one in-person meetup with that group again. And then, and one zoom and that was about it. But in the meantime, I had, I was messaging Adam a little bit.

[00:08:50] Yeah. And, uh, he and I got Adam Romano. Yeah. And he and I got together for coffee one morning and lo and behold, we both have two golden retrievers. We each have an English cream and a red golden retriever. And we each have a golden retriever named Charlie. So that long lost foreign brother. Yeah. How, how close does it, and we're both Italian background. So how close does it get? He and I hit it off and, um, you know, it's like, Hey, how can I, how can I help you in your business? How can we, I'd love to learn more about what you guys are talking about. Is there anything I can do? Sure.

[00:09:20] So I was in touch. Um, and he immediately introduced me to Luke, uh, Luke Shelton. Um, I just started doing, you know, what I was told to do. Like, this is how you kind of start. And this is what you have to look into it. Here's how we structure things. And we just started, just started a conversation and, and kind of, and got into creative single family note investing from there.

[00:09:42] Accidentally at that meetup. Um, I also met, um, another investor here in town, uh, by the name of Andrew Long. Um, Andrew has a construction business here in town. Um, and he and I didn't keep in touch right away, but we, we started messaging later that fall cause I knew he was getting into commercial and, uh, he's my business partner now commercial. So haven't done any deals there yet. Actively looking underwrite a ton. You know, he's got his construction business. I do single family. So it's very, you know, as in when we can make time to pursue this, but, uh,

[00:10:11] actively doing that as well. So a lot of good came from that fateful Saturday morning in July. My heavens. Yeah. Creative single family note investing. Yes, sir. For the audience to say, describe it. What does it even mean? What does it mean? So what is note investing? What's, you know, what's flipping paper. So basically what it involves is let me backtrack a bit. So the, the usual burr method will involve, you know, getting the house at, you know, some sort of discount if you can, you know, the typical formula that everybody knows is, you know, ARV times 70% minus repairs as a flipper.

[00:10:41] If you can get it for that, you're doing okay. Right. You've got your systems in place. You know, you can manage the renovation. You've got enough headroom in the 30% to go make some money. Wash, rinse, repeat. So in, in note investing, it's flipping or wholetailing is another kind of middle there you can do. Um, in note investing, we're still trying to negotiate a discount on the home. You know, we talk about the five main motivators. You know, somebody's getting divorced, you know, it's inherited and they can't do the repairs. They're relocating. I don't know why I'm forgetting the fifth one off the top of my head. It'll come to me, but you know, whatever.

[00:11:11] Whatever, whatever a seller is, you know, the kind of position they're in. And sometimes their situation or the house itself just isn't a fit for the retail market. So it might not be a flip, but maybe it's something that we can get at some sort of discount and, you know, turn around and sell it to another aunt, like a homestead buyer, a private buyer, and create a note and find an owner finance it on the sell side. All right. Let me pause real quick. What I hear you saying is you're, you're buying a house, buy an actual real property and then you're creating a note.

[00:11:40] Then we create the note when we sell it. Yeah. Yeah. Yeah. All right. So yeah. Got it. I just wanted to, I wanted to make that distinction versus buying it out of the front end. Yeah. Creatively. And then somehow doing something with a note on the back end. Yeah. So we don't, so in that, so it's basically buy to discount, sell it and create the arbitrage and monthly cashflow on the note. Are you doing work on these properties? Sometimes. So those are, those are the large categories. And then, so then there's, there's several different ways you can buy a house at a discount on the front end.

[00:12:10] And there's several different ways you can sell or what we call disposition that house on the back end. It's all in the art of the deal. It's all in being able to engineer these creative solutions that are win-wins for, for sellers. Like I need to be perfectly clear. There's situations that drive folks to our phone, like that makes it so we're having a conversation, but there's never, you know, there's, we want to create win-wins for them. Like to make sure that they, the cash they need or the structure they need to get out. Sometimes they're, they're in over their head on payments. We can take those over, get them cash.

[00:12:38] They need to move on, move that sort of thing, you know, whatever we're looking to create that win-win and get them out of a situation that they don't want to be in. So, so sometimes that involves, you know, if it's a, if it's a property that's owned outright free and clear, we can work something out. Sometimes since they just need cash, we can do that. Sometimes they want a certain value for the home, but we can structure the deal. So they, they get some of it at closing and then we work out a payment plan with them directly.

[00:13:03] It's typically done when they want too much, meaning, meaning more than what you were able to budget from a cash perspective. Exactly. So, and then there's, there's all sorts of possibilities in there. You know, there's a, there's a term floating around the investing community a lot in the last few years called sub two or subject to where you take title subject to the existing mortgage. We do that a fair bit. And, you know, again, depending on the circumstance, the interest rate, the bank involved, you know, that's a viable solution both for us and our sellers. Sometimes there's cash for them at walk away, sometimes not just depending on it.

[00:13:33] So we try and get them as much as we can make sure we take over the payments, be on time with those, make it a headache. They don't need to worry about that's another way, you know, a couple, couple of ways in between. Right. So it's a Swiss army knife of a bag of tricks, if you will, or bag of tools, probably by the way. Yeah. As it relates to what you can do on the front end. Yeah. And a lot of it's driven based on the seller situation. Yep. Yeah. Their goals, their goals, you know, condition of the house, market value of the house, that sort of thing.

[00:13:58] And it's really putting all that together to see what we can come up with for the best solution that works for them and works for us. If we find a winner, we, you know, we buy the house and move on from there. And then there's, of course, there's a few options we can, we have at our disposal on the sell side. Well, you know, that's where I'm going. Got the house good, whatever that, whatever that solution was to, to buy it. And now it's time to go. Hey, Iowa investors. This is Ava Bowkamp, chief of staff at Legacy Impact Investors.

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[00:14:54] They are for qualified, accredited investors only. If you want to learn more, please visit LegacyImpactInvestors.com to apply. I want to talk about the middle. So the middle being what do you do with the house? And I want you to answer that, and then I'm going to give a little nugget for the audience. That's kind of interesting. What do we do with it in the middle? Again, it depends. So I've had them where... So my first property when I did this, my first contract I ever got was a house that hadn't been occupied in over 12 years.

[00:15:25] This is a good one. You talk about running a thriving contracting company to moving internationally to your first contract in your new business venture. It's a 1,500 square foot, three bed, one bath that hasn't been lived in for 12 years because the last occupant lit the kitchen on fire and it was never repaired. And you can't see the floor for all the junk in it in central Alabama. So again, remotely, nowhere close to it. You dropped the nugget.

[00:15:50] That's one of the pieces I want to stay here is you're executing this business, whether it's anywhere in Iowa to anywhere in the country. Yes. All of these are remote. Yes, sir. And I've only ever seen one of my houses in person and there's an interesting story around that one too.

[00:16:06] You know, we buy this thing and it was, of course, super cheap by current market standards and negotiate an arrangement with the seller and able to sell it on the back end and make something there. So it's, they don't have to be, they don't have to be big deals and they don't have to be clean. This one in particular, to answer your question, what do we do? This one in particular, I did nothing. No. I just threw it on the market. No money into it. That was the coaching I was receiving at the time.

[00:16:36] And I still agree that was the best thing to do with that. And, you know, we, we just, we put it on the market. So my, there's again, several different ways of marketing these houses. My, my personal favorite, which is the one I stick with, especially remotely is a Facebook marketplace. And we have a system for that. And you go through, kiss a lot of frogs to find a prince or princess. And eventually you find your, you know, you got a lot of people calling you crazy. A lot of people laughing you off the phone. And eventually a lot of people offering you less than what you paid for it, even though you got a great deal on it.

[00:17:03] And then all of a sudden, one day you find your buyer, you make an agreement, you sell it. And that's it. So sometimes we, sometimes I don't touch them. Sometimes I don't have to. I had, I had one recently would not have guessed this from the way our conversations had gone up to. He's like, yep, I got some stuff to do. I'll clean it. Lo and behold, giant mess. Got to clean it. Okay. In comes the handyman. In comes the cleaning crew. You know, a few thousand bucks later, we've, we've got it ready for sale. So you just kind of have to be prepared for anything and everything.

[00:17:29] I don't, I've, I've had a couple where the option was to rehab it remotely. Haven't done it yet. I imagine I will someday, but yeah, anything and everything in between. A lot of it is either do nothing or do some, do some light handyman, a few thousand dollars worth of stuff to get it cleaned out, to make it fairly presentable. Yeah. Yeah.

[00:18:15] Okay. Whole tail or maybe it is a flip or something else. And that works. My, my preferred is you need those other ones because this business, and we might get into this today. This business is incredibly cash intensive and the building up of the notes, that cashflow doesn't happen overnight. So you're, you're burning capital, both for your personal living expenses, whatever your marketing and your other business expenses are, and you need to keep that going.

[00:18:38] So you have to have an eye for those wholesales, wholetails, sometimes even retail exits along the way to keep the cash replenished and manage your, as your cash out on the notes and your cash in on your down payments appropriately to, to, to mitigate that. Yeah. Yeah. Preferred as notes. All right. So talk about the creation of note. You know, maybe, maybe define for people when you resell it, what does that mean? What does the deal, you know, what does one look like? So that you create a note and what kind of, what kind of cashflow, you know, give me just one right over home plate. What does that look like?

[00:19:08] Sure. So one of the, one of the best ones I've done this year so far is we, we had a seller in Alabama and just outside of mobile and wife got a new job, young family, and they were moving out of state and they needed to sell like soon. They're like, we want to wait till the kids are out of school. But after that, we got to be gone. I got to get down there and set up. So we've done some repairs to the house, but it's, you know, we, we don't want to deal slash don't have time to deal with the retail market. So we negotiated and we came up with one amount.

[00:19:37] The picture showed quite another story. So I was like, Hey, I, I understand you did some repairs and that's a delicate conversation because he did all the work himself. Yeah. He did repairs. He did the work. He's proud. And you're like, but wouldn't I hire the contractor? Yeah. Yeah. It's a, how did I word it? It was the, the standard of work inside the home is not the same as the comparables in the air. I believe that's how I worded it. So I said, listen, I can't do this. They're like, well, can you do this? No, you know, best to let's just part ways as friends. You know, I'm not going to take any more of your time. They came back two weeks later.

[00:20:06] Hey, can you do this? Which incidentally was less than we originally talked about, which I'll, I will never understand that, but I wasn't going to argue. So all said and done, he took, we took title to the property subject to the existing mortgage there. When we closed $118,000 remaining on the balance, gave them 20,000 instead of the agreed upon. The originally agreed upon was more than 40. We had the 20,000 walk away. We covered all the closing costs. Okay. So now we're 140 cost basis into this property.

[00:20:34] We redid my analysis on the market because it had been several weeks at this point. And when you're selling owner finance, you got to remember, we have a product in this, in this niche that puts the sticker price on a house at more than it would be if you put it on the retail market. Right. Because we solve a problem not only for our sellers, but also for our buyers. So our buyers are coming to us from possibly being renters. Maybe they've got some beat up credit and not ideal for them to go to a bank right now.

[00:21:03] These are people who sit below that, call it that market sphere of bankable bank, you know, of the ability to go get a Benny Freddie, a conventional mortgage, a FHA, whatever. They do not qualify in many cases. For the better part of two decades as a contracting business owner, I was that person. Right. Because again, what do you do? You keep your taxable income down. For lots of reasons. Not just ding credit because they don't pay people. Tons.

[00:21:29] Yes, I'm very attuned to business owners and then certainly realtors in this community. Nobody wants, you know, let's keep the taxable income as low as we can possibly get. Yeah. Why would you go through that real estate purchasing equivalent of an IRS audit? Right. When it's just, okay, I can deal with this person, maybe pay a little more interest. And then if I want to slash have time, whatever, I might refinance out of it later. Maybe I don't. So it's attractive. So, you know, we try and position it a little above, a little above market. So we decided to go in.

[00:21:57] I'd originally comped it around 170-ish, 180. I put it on the market on Facebook Marketplace for 2099 and actually got it under contract at that. And my first buyer put non-refundable earnest down and then walked away from it. Wow. Right. So we actually, we didn't keep that. I don't believe in that. We got him some of his money back just for time and effort, had to keep some of it. He understood. So then we go back out and market it. Eventually, I had to lower it to 199.9 and we found our buyer.

[00:22:26] So this particular buyer, and I don't recommend this, but this particular buyer, we ended up accepting a lower down payment on the property than we normally. Normally, something like this, we're looking for 15 to 20,000. It was about this time the market was starting to turn. So higher down payments and where we sit now in January 2025, that we're entrenched in that reality. But this buyer had verifiable guaranteed income way and above where the payment would be. So they were okay with a higher payment. They just couldn't bring a ton to the pay.

[00:22:55] Your offset there was, we'll take a risk, if you will, on a lower down payment because we believe that the ability for an ongoing payment is much higher than the alternative. Exactly. And what we did in that, so I took their income and I said, just to give a little more security for you and us, why don't we do a top up to your monthly payment to contribute towards the down? And if you're steady with that for 24 months, I'll rebalance and we'll kill that extra 500

[00:23:23] bucks a month and I'll lower you. Yep. That sounded good. Okay. So I want to break it down. Yeah. What I heard you say there is you had their monthly payment. Cool. He made enough money that you were like, good. We need more money for the down payment. So let's round it up $500 a month. It's 6,000 bucks a year. He's making 500 bucks additional every month that's contributing to his down payment. It's going straight to principal. Correct. For two years. And then at the end of two years, you're going to come back in and then essentially kind of re-amortize or when that thing falls off.

[00:23:52] You're going to write, make true in terms of what the payment should be at that point because he's made up that down payment. Bingo. Okay. Understand. Now, and this is why, this is why this is so cool because this is a problem that a bank would not be able to. They couldn't solve that. This just wouldn't. They don't have the flexibility. It doesn't fit in your little box. So it's like, okay, well, let's get, this is why it's creative finance. Let's get creative with this and, and solve a problem. You know, they're steady with it. It's been, I forget how long that one's been now. I think five or six months.

[00:24:21] So 18 months, if they're steady with it, guaranteed income, they have been, you know, they're not only going to lower their payment by the, the additional principal, they're going to lower it again when we rebalance it. So yeah. So we've, so then the, then let's break it. What kind of interest rate and then what kind of money are you making then as a result of the note? Got it. So, so this one, we were a little, we were into the deal for some cash because I gave my seller 20,000, but I only took in 25 closing day.

[00:24:49] So, but we've been topping that up with an extra 500 a month. So we got some money in this deal. Okay. Between 15 and 20,000 by the time we're done with closing costs and that sort of thing. So typically what we like to do is be cash positive on the deal. If we can, this one didn't work out that way, but then on the backend, though, that note, not including that extra few hundred bucks a month, the underlying is only 950 that we service every month on a sub two.

[00:25:16] We take in $1,950 before the top. Correct. So you're taking in, I'm rounding a grand a month. P-I-T-I out is nine, call it 950. P-I-T-I in is 1950. Yeah. Correct. Yeah. You recover cash real quick. That's why we did the lower down payment. That's why we did this structure because we were, we were able to do that. So had we, had we not sold and maybe gone into a couple more price reductions, we'd have to look at that again.

[00:25:42] But again, Swiss Army knife, if you understand back to the whole, the first meetup I went to, the first book I read on this, you know, invest in debt is you learn different ways and you know, you mentor with people. So I've got great mentors. Those mentors have great mentors. We've now been to a couple of masterminds, you know, out of town for these things where you're, you're in the same room with people that are doing exactly what you're doing, but better. And depending on the operator at scale, that's a neat business. So you're, and you're constantly keeping up on market changes, what other people are doing,

[00:26:12] getting, you know, so you're, you're always learning. So you get to, you get to learn how to slice and dice these deals again, win-win situations. Yeah. Yeah. So it's incredible your ability to be able to do that. And then you don't, you know, it's all without tenants and termites and toilets. Well, it's tenants, I guess, but termites and toilets, because if something goes awry in the house and all houses, something does go awry. Yeah. That's the reality of any real estate is they're responsible for it. Of course. Yep.

[00:26:38] And you, and you get that, you know, one, one mentor I have in this game, he's like, you know, cause those, those texts and those calls do come, Hey, I think this is going on. It's like, yeah. And you know, he's like, I'm Wells Fargo. Like you just, the first time a message comes across like that, not to be, you're not being insensitive. It's not anything like that. It's just the, you know, this is the relationship between, between buyer and borrower. Yeah. Borrow. Yeah. Not a tenant. Yeah. Fix it. Right. Right. So, you know, we get all sorts of things.

[00:27:06] Like I have, I have one buyer that, you know, we've gone back and forth about our payment arrangement a couple of times and, you know, he calls it the rent, you know, it's like, no, no, you're, you're an owner. You know, the odd time you get asked for permission to do something. It's like, you know, in our contract, like this is your, you know, if it needs a permit, pull a permit, leave it the way you found it. But other than that, I don't care what you do. Improve it. Please improve. Yeah. You want to build a fence, build a fence. Please improve our collateral. Exactly.

[00:27:31] If you're a house flipper, execute the birth strategy or do double closings and are in need of money. Little Guy Loans is your go-to lender here in the Des Moines area. Time is money. Loan approvals in 24 hours. Closings in five days. Little Guy Loans was founded by Neil Timmons, an investor just like you. Since he has been in over 10,000 homes in Des Moines, there's never an appraisal.

[00:27:57] Houses, multifamily and commercial property loans up to 1 million. Check out www.littleguyloans.com. I'm curious as to how you pull comps at these, you know, various places where I assume you don't have full MLS access to every location in which you're, which you're transacting. We do actually. And that's on purpose. Yeah, that's on purpose. When you, location, you said something very key there. When you're, because this all starts in the beginning when you're marketing, right? You're only going to get deals from where you market to.

[00:28:27] So in our marketing location, choosing your locations is very key. What kind of, what kind of houses do you want? Excuse me. What kind of houses do you want? What kind of, what kind of real estate, real property law structure do you want to deal with? You know, it's customary in this industry when you're creating notes on the sell side, those interest rates are going to be anywhere between, depending on the deal, 7.9 and 12%. Some states have usury laws where those interest rates are quite low. I love West Virginia and I will continue to market and do business there.

[00:28:57] But West Virginia's usury laws cap out at 9%. That includes points, includes anything like you, even on real estate deals, you can't go over that. So if you're going to be in a state like that, you got to be, be prepared for that. I love areas of West Virginia. So West Virginia puts a smile on my face. I like it. So I'll continue to do business there, but you have to know. So we only, we only market to places we want to be in. In this, when you're talking about comps, just the ability to pull comps is incredibly important in order to have that visibility or intelligence into the deal.

[00:29:25] So automatically for me as an investor, that precludes doing anything rural. You know, I'm talking anything more than a 15 minute drive from a city of 30 or 40,000 people. It's because the comps are too thin. If I don't know, if I can't determine, if I can't determine what it's worth in a very short period of time and by comps.

[00:29:45] So I have to say credit for how I comp goes 100% squarely to let's say 90% because, because Luke has a very interesting perspective in this as well. Adam Romano taught me how to comp. He's got background in real estate. He's done flips. His wife is a realtor. They've got extensive experience. For all the masterminds and meetups I've been to, Adam's probably one of the best people at comps I've ever met. It's imperative because when you buy that property with Acura comps, when you buy that

[00:30:14] property, you already know if you weren't lost, right? You make your money when you buy. That's right. It's nothing is truer than, that is not any truer than it is in real estate. So you have MLS access in all these locations. When you say MLS. MLS meaning like a realtor, which I'm still a realtor today, although I just never practiced, but I have the MLS. So I've been lost, just as every realtor in this city does as well. Yeah. To be able to go in and pull all the comparables that are there. I'm saying I'm not going to Zillow.

[00:30:41] I'm not going to, I'm not pulling some third party website. I'm pulling the association of realtors data for MLS. That's what I'm referring to specifically. Okay. So I misheard the question. So no, I don't. We pull comps strictly from Zillow, Realtor.com. Realtor.com. Yeah. Yeah. So yeah, I appreciate you clarifying that. So no, I do not have access to it. I asked because I know what giant pain in the butt it is to go get it when you're not a realtor in that particular city.

[00:31:11] So for me to go get it in West Virginia, let's say, is a Herculean effort. Sure. Yeah. There's a lot of things that one would have to go through. That's why I asked because that's a lot of effort. So I was curious about what the backside of this was. How do you determine past usury laws? I guess, how do you make a decision in terms of, is it red or blue? What goes into some of those factors? Where do you go, this state's a thumbs up, this one's a thumbs down. As far as the areas we market in?

[00:31:40] At the state level. As you know, Neil, we can't discriminate based on politics in a certain area. I wouldn't be telling the truth if I said that most of the states we market in are firmly red states. Not to say we choose it based on that, but you look at the latitude you have as far as arrangements and what you're ready to do. Is that a business friendly environment as it relates to my business, your business in these areas? Absolutely.

[00:32:06] Can I get a real estate deal done the way I know I need to for my business and in a way that's a fit for both my seller and my buyer in a way that's not going to hold up the deal? And that's where we go. My specific states, I like the Southeast. There's good value in there. So my buy box is anywhere between ARVs of, I like to say 100,000, but I will go a little lower than that if it's right.

[00:32:35] But call it 100,000 to around 300,000. Much more than that. They get harder to sell. Much lower than that. There's none. Harder to sell because the payments get exacerbated as a result of the interest rates. They do. We do. I do. And there's mixed feelings, opinions on this in the investor community. I like to look at what the rent comps are in an area because a lot of our buyers are pricing. It's the alternative choice. In rent comps.

[00:33:01] So I've got a few metrics that I pay attention to in rent comps. You know, you start getting into it. I do have one. I have a contract sale in Georgia that I sold. That one went for 330. The PITI payment on that is 2750. And I'm, I forget for that area. I think we're, we're just a shade above max. What a rentometer report would say is max rent. That's incredible because if you could be a that or close to it, I would think. Yeah. You are the better alternative.

[00:33:31] Ownership versus renting. Yeah. So in this game, from my experience personally, in this game, 75th percentile rent is, is the sweet spot. You can land between 75th percentile and max for your, for PITI. You have to include that, include that tax insurance escrow in there. Your buyers aren't thinking of it when they first call. But they'll think of it when they got two, three, 400 bucks. So, so that's, that's one way of, that's one way of doing it. Yep. What are you most excited about this year? 2025?

[00:33:59] I'm most excited about coming to, um, coming to this business with, with the tools that I've, that I've learned, like the skills and the tools that I've learned in the last year, because I've only been doing this for, you know, 15 months and really only been doing it for just over 12. Like this is relatively new for me. You know, I ran, I ran pay-per-click for three months in the beginning without getting a deal, you know, just learning the ropes. It's primary methodology for marketing. PPC. Paper-click.

[00:34:30] Paper-click. Yeah. So I'm excited about just taking more, more tools and skill sets that we've learned last year into this year, primarily just looking for different opportunities to not just create notes, but do whole tales, wholesales. You know, if we, you know, something presents itself as a flip. If I, if I was, if I was narrow in my focus in the first year was like only focusing on the notes. Um, and second thing is you just touched on it, the marketing. I would love to, I would love to try a couple of different marketing methods this year that I haven't done before.

[00:34:58] Paper-click is easy, you know, husband, father of three, uh, still do the consulting on the side, you know, still travel back and forth to Canada to see family life is busy. Uh, paper-click was just kind of the easy button. I had a budget for it and we've just kept on with that. Um, but there's changes coming in that, in that as well. You know, Google is a whole other conversation, but Google is changing the, um, changing the keyword frameworks. They're changing the way accounts are set up and how, you know, how they show that the algorithm is changing.

[00:35:24] Keeping up with that is, it can be challenging at times as well and resisting the urge to mess with it because the only thing that will mess you up more than Google changing their algorithm is you changing it by throwing your track off and having to relearn it. So yeah, just excited to put new skills to work and excited to try new marketing methods and, and see if we can keep turning this up. It's going to be interesting to see what Google does, you know, AI and specifically ChaiCVT has put their core business under serious additional pressure.

[00:35:52] So it's going to be interesting to see how they devolves over a period of time. Well, and Google further complicated by the fact that Google is one of the players in that game. Yeah. It's going to be, uh, it's, it's going to be a, it's going to be interesting one. Yeah. All right, Brian, you ready for the final three questions? Yes, please. If you had one piece of advice for your 20 year old self, what would it be? If I had one piece of advice for my 20 year old self, what would it be? Pick something and stay consistent and put massive action behind it. Yeah. Consistency is, consistency is key. Yeah. Two bucks that changed your life.

[00:36:21] There's more than two, but I'll pick two. Never split the difference by Chris Voss. I didn't read that until after my roofing career. And gosh, I wish I had that earlier on. I was in sales, but I wasn't in sales till I read that book. And next is easier than two X by Dan Sullivan. Oh, by Dan Sullivan. Yes, sir. Fantastic book. Yeah. Um, can I throw a third in there? Let's do it. Um, break the habit of being yourself by Joe Dispenza. Okay. Um, he's, he's quite a thinker.

[00:36:46] I sat on him for too long and yeah, that, that book, like how to, how to get from conscious to subconscious and, and analyze from the outside and, and get outside of your own head so you can get back inside and do what you need to do is, uh, that's been, that's been powerful the last years. Great book. Nobody has, but I can recall nobody's mentioned that one. So I appreciate that. If you were cast away on an Island for a year, you can only get three pieces of data about your business each and every month.

[00:37:13] What three things must you know every month to know how your business is running? We must know, uh, what we have in cash reserves. That's key because that gives us our runway to operate forward. Um, we need to know, we need to know for me as per lead, like what we're, what we're spending to acquire a customer per, sorry, contract. Sorry, not cost per lead. Cost per contract, cashflow, and where our note income is. Current time. Brian, I've asked lots of questions. It's been a fantastic conversation. What's one question I did not ask? I thought I should have asked.

[00:37:43] I had to think about that one too. Sorry. We covered a lot of ground here today. Yeah, I, I don't think so. This has been, yeah, this has been, this has been fantastic. I don't, I honestly can't think of one, Neil. I'm not going to make one up on the spot. This has been really engaging and it's been fun spending time. So I appreciate you taking the time to connect. For people who want to find you, follow you, connect with you, where can they go? What should they do? Just find me on Facebook. Brian with an I. A-U-D-I-A is my last name. I, I don't have a, I have a business page, but it's not active. Just, uh, connect with me there. That's where I am.

[00:38:13] I'm, I don't do many of the other social platforms that I probably should. So just find me on Facebook. We'll put a link below in the show notes for everybody to, to connect. Sounds great. I really appreciate you reading. Thanks. You bet. Thanks, Neil. It's been great. Fantastic. Awesome. Thanks for listening. If you're enjoying the show, may I ask a favor of you? Naturally, subscribe so you never miss an episode. But would you rate and leave an honest written review on Apple Podcasts? Does a lot for us here at the show. And I appreciate reading your thoughts.

[00:38:42] Great guests make for a great show. If you know of another Island who would be a great guest, or you yourself have interest in being a guest, well, get on our radar. Visit Investing in Iowa to fill out an application or recommend a guest. And if you want to connect with me one-on-one, go LegacyImpactInvestors.com. Click on the invest with us button in the top right corner. And there you can pick a time for the two of us to get on the calendar and connect.

[00:39:11] Until next time, keep investing in Iowa.