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Flipping & Wholesaling 1000s of Homes to Land & Development With BJ Gremillion and Brad Young

Episode 543: Flipping & Wholesaling 1000s of Homes to Land & Development

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Real estate is a vast industry with a wide market and a lot of competition. But today’s guests garnered success in the space.  How?Flipping & Wholesaling 1000s of Homes to Land & Development

Join Mitch Stephen as he chats with BJ Gremillion and Brad Young, Co-Owners of Better Choice Homes, to tell you all about it. BJ and Brad share the ups and downs of their real estate journey and the lessons they learned along the way. Get expert investing advice and practical tips to guide you in your journey to business success!

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I’m here with BJ Gremillion and Brad Young, and they are over in Gilbert, Arizona. These guys have done thousands of houses since 2008. They are clipping on at a good pace. I am going to get into this episode. Let’s find out what makes them tick and how they were able to accomplish such numbers, and what strategies they are using. With no further ado, how are you doing, BJ?

I’m doing great. Thanks for having us on.

How are you doing, Brad?

I’m doing great. I appreciate it.

It is always nice to get a baseline like where you are both from. We will start with BJ. Give me the bullet point of how you grew up, where you are from and how you found your way to this business.

I come from a large family of eight and am originally from Colorado Springs. I have moved out to Arizona because my wife is from here. I had never been to Arizona and came to love it. This is home for us, and we plan on being here for a long time. I met my business partner, Brad, here. We moved into the same neighborhood.

It was our first home. We started talking and realized there are a lot of similarities going on here. We both come from families of eight. We both went and knocked on doors for security companies for several years and endured that torture for that period of time. I have learned a lot during that time. We started talking, and there was a lot that we could relate to. That is how we met each other and ended up going into the business about a year after we met each other.

What was your work history before that? Are you selling for the security companies? You get a degree in Engineering and go into the security business.

I went to the administrator, and I said, “What is the fastest way I can get out of here with a degree. What do I need to do? They said, “You can do Psychology or Sociology.” I said, “I will do Psychology.” I got my degree, so I could appease my father-in-law because I’m sure he was nervous about me taking his daughter’s hand and not having any type of idea of what I was going to do with my life.

The way I found my first job, I asked a buddy of mine, and this was a month before I graduated. I had no plan, and I said, “What are your plans?” He said, “I’m going to work for Edward Jones.” I’m like, “I don’t know what that is, and I don’t know what you do but are they hiring?” He was like, “I think so. Go down here, talk to this guy.”

I went over there, talked to him, and got the job. I came to find out that they would pretty much take anyone with the pulse. You had to have a degree and a pulse. I got that job not out of any merit of my own. I ended up working for Edward Jones, a financial advisor. In their training, they give you a phone book. They will tell you to start with A, and you start calling. You are selling bonds on the phone to random people. There is no list. There is no secret. You are just calling.

It was a great job. Who would not want that? Every year he tells me he wants to go back. He was like, “If I could be a bond sales to get back into that business.” They would tell you to go knocking door to door and do the same thing with a suit and tie. I did that for a year and learned a lot. For some reason, I keep getting on back to knocking on doors.

You don't know what you make until you know what you make. Click To Tweet

It was 2008. We all know what happened there at the housing market. I was watching Brad, and I did a ride-along with him one time. He should have had three cell phones because he was talking to people nonstop, people that were losing their homes, and he was going helping people that were in foreclosure.

He also speaks Spanish. He was helping a lot of the Hispanic families that there was a need there and buying homes, selling homes, going to the auction. It was the Wild West in Arizona. I watched him that one day and was like, “He was having a lot more fun than I am.” He was out there hustling and I was like, “I think I want to try my hand at it.” I got my license, and the rest is history. I won’t tell you all the in-between there but we ended up working together.

Brad, how did you come to find the real estate business?

I was doing the same thing as BJ was knocking on doors, and my brother-in-law called me. He was an REO agent or broker. He, at the time, was closing about two deals a day for a bunch of the larger asset management groups and things like that. He had a BPO division, and all that stuff was going on. He was humming along, and he said, “Will you move out here? I will match your pay. I will get you. I need someone I can trust.” We agreed.

I came out, bought my first house, and a week later, the stock market crashed. I was like, “Crap.” I started working with him, and he was great. He taught me a ton and probably had a difference in vision, where we would want to go with things, which is why we parted ways after a few years. He was there for several years.

He was in the listing and selling business.

He also introduced me to flipping houses. I was doing labor on the houses in the beginning. I go there, trash them out, paint, strip carpet, repaint, lay tile, that of stuff. Mainly he had me doing Cash for Keys because I’m bilingual, and there was a need for it. I go sit at houses on the weekends because the banks require them to be open on Sundays. You get $50 to go sit a house on a Sunday. At the time, I was like, “I will do whatever for a $1 at this point.” We are doing it. He was great. I learned a lot about flipping houses with him, and eventually, I grew into a different space.

Tell me about the first deal you all did together? Start with your first deal. Was it wholesale or retail? Did you make any money?

The first deal I did was a flip, and it was one of those things where it was like you are putting all the chips in at this point. I can remember we moved out here with a little bit of money in the bank because we had done well with sales. We are 23 years old to have $50,000 was cool. Quickly, with 18% hard money loans, you can burn through that real fast. That is all that existed for the first several years of flipping houses. It was 18% REITs. That is all we knew. We did it.

I burned through that real quick. I remember looking at my wife. Catherine and I were like, “What are we going to do?” We have burned through everything in savings. It was an answer to prayer call whatever you want to call it. I got an offer. I ended up being cash closed. I have closed in ten days type of deal. We made $10,000 or $15,000. It was not like we made a killing but we got all our money back and made some money. We rolled into two, and from there, it snowballed.

My first private money is under a different strategy. It was 18% also but it was churn and burn. It is buying the house, creating the note, selling the note. I was paying 18% interest plus a $2,000 kicker because I would not have these houses for 30 days. The lesson was when you are paying 18%, I said, “I’m paying one month of 18% plus $2,000. My house is making $15,000 or $20,000. I get to keep $17,000 or $18,000. Somebody screw me every day like that, please.” What about your first deal?

I wanted to have a piece of the pie when it came to flips, and I did not have enough funds. I went to my parents and said, “There is this deal. I got up the auction.” I have done enough of them. I have helped enough investors to do this. I have watched them make money. That was the beauty of it. It was being able to start off with investors and play with their money for a minute and see how they did it, learn from their mistakes and learn from their successes and hopefully, replicate their success.

REIS 543 Bj | 400 Houses Per Year

The beauty of it was starting off with investors and playing with their money for a minute and just seeing how they did it, learning from their mistakes and successes, and then hopefully replicating their success.

 

 

 

I started with a small condo in Mason. We bought it for $30,000, and we put $15,000 into it. I have got it under contract quickly. We were set to make $12,000. I was ecstatic and could not be happier. The appraiser came and appraised it for $12,000 less. I ended up making $300 on my first split. It was a learning lesson but I went ahead and rolled all $300 of that right back into the next flip. I put it all back in. Thankfully, that one ended up making $15,000. It was a single-family home flip. There were some things I learned. Condos are great, and all but they are a little bit riskier. The single-family stuff is where I stuck with.

I was headed with this. That first check is the one that opened your eyes. Maybe not yours. You woke up slow, and you had to do another one. The first one, I only made $3,000 on my first deal but it did not matter. That is all I needed. It was proof of concept. I knew I was dumb and did a lot of things wrong. I said, “That is as bad as it gets. I will be okay.”

I bought my first 100 houses on credit cards because that is the skyline of San Antonio behind me. In 1996, you could buy houses in the lesser parts of town, 1.7 million people for $8,000, $10,000, $12,000, $15,000. A $25,000 was a nice big house to me at the time. There were much nicer neighborhoods, and maybe the median house price time was $100,000 or $150,000 at the time. We had the cheapest houses on the planet.

In San Antonio, I have come to learn. We had the cheapest houses in the United States for quality of living. It is a great town, the smallest big town in the world. We are always behind everybody but we are big. It was 65% Hispanic. I was going around, “Give me $10,000 on this card, and that will buy the house. Give me $5,000 on this card, and that will fix the house. I will be $15,000 in it, and I will seller finance for $35,000. I will sell the note for $32,000, and I will make some money.” I was selling the houses 5% down with the 5% throw away second, which I never threw away.

I collected my $25 a month forever on those things. Especially the $25 a month ones where they quit paying me. I would send my notice every year to keep it alive. Several years later, they would call for a payoff on the house and find my lien. Now I’m owed $7,000 to $8,000. I never threw them away. I had hundreds of little $2,500 seconds, $3,500 seconds, $2,000 seconds. I would put them on twenty-year notes, whatever. I did not care. Give me my money over time.

A lot of people chose to blow me off. They would call me and say, “Can we get you to forgive this?” I said, “No, I will not forgive.” I helped them with half their down payment so they could get into this thing. They promised me they would pay me $20 a month. They stiffed me. “No, I want my money. I want them back.” The thing was, I had to give it to them at 0% interest for a year. After that, I go to the 10%. If they wanted to pay it off in a year, I would not even charge them interest. Get a side job and get it over with.

No one hardly ever did that. In the fine print, I said, “It goes to the maximum allowable by law if they ever get past due.” They were all at 18% if I wanted to force the issue. Sometimes, I give them a little break on the interest but normally they said, “No, pay me. These houses are worth way more money. Instead of you all making $100,000 off this house, you are going to make $92,000 because you are going to pay me my $8,000.”

It starts adding up.

You can give me the house. I will be happy to take the house. That was the other reason why I kept the seconds was, is because technically, I’m supposed to get notified if there is a foreclosure, and I had the right to buy out the first. Through the years, as these houses became worth more money when people were going into foreclosure, I would get notices that one of the people that owed me $2,500 was in foreclosure. What the house was worth now and what they owed were light-years apart. There are lots of room. I would say, “No, I’m going to buy out the first to protect my $25,000 interest. Now I had $50,000, $60,000, $80,000 equities.

What I would do is I would buy the house. I would seller finance it with 5% down and a 5% throwaway second. I would sell the note for 83% of the face value before the first payment was ever made. It was pristine. These are the old days. The 83% plus the 5% that I had was 87%. It is pretty much like regular closing. Pay the realtors and everything. It was not too far off. I had a $2,500 second to book that I got to keep. It worked out good.

I bought my first 100 houses on credit cards until my banker called me up and said, “What are you doing?” I said, “I’m buying houses.” They gave me my first $1 million lines of credit.” I kept sending them the HUDs when I bought and sold them. I did not put in there how much the rehab was but he thought he had figured that out. What are your strategies now? What are you all doing now? You said you have done, since 2008, thousands of houses. My instinct says that maybe you are wholesaling a lot because that’s a lot of numbers but what are you doing?

We were cranking a lot more on the flips back when a little more in the heyday when you could do well into the hundreds in a single year. 2011, 2012, 2013, those three years. If you look at the side of the flips, not including wholesale or any of that stuff, it is probably 350 to 450 range of homes flipped.

You get beat down enough times that the whole going deep idea makes a little bit more sense. Click To Tweet

That’s incredible. I can’t even imagine. I imagine the horsepower it took.

I would say that was a pretty wild time. Honestly, all of our flaws, wrinkles, and holes, you saw them. They were exposed at that time. What you had going for you was you were buying homes, worked for $40,000, and your spreads were $50,000 each or better. You had good spreads.

You could suffer some mistakes.

You could weather that because, occasionally, you have something you did not see upfront in due diligence. The next twenty homes made you better, more than the whole. At the same time, we were doing a lot of the auctions. We helped a handful of investors, build some pretty decent portfolios, and mainly buying smaller multifamily like twelve units and under. They picked up about 300 doors there. We would pick up a deal at auction and wholesale it to them every time. I had a handful of people in that same boat that we would service.

When you have a setup like that, you have to give a fair wholesale price.

No, we had a flat fee. We knew what they were buying and wanted. They told us what they were willing to pay for it. We had a fee for the service. It was not like, “We are making $50,000 a shot. It was, “We are making a few thousand but something is getting sold almost every day.” It was okay.

That helps when you are doing that volume because you probably could not handle all the houses if you had to rehab them and put them on.

None of that stuff. We did not touch any rehab.

Part of the wholesaling was to mitigate the load on your back.

We did not do property management or any of that stuff at that point. We ended up outsourcing management from other investors to that group because within twelve months, they had 300 units. They were ready to roll. They are from the Dallas area. They are pretty well versed in multifamily. They knew what they were doing, getting into it, and it worked out well.

I got 200 people on my wholesale list. I said, “If you are wholesaling houses, you only need three people. You only need 1 but you have 3 in case that 1 guy is on vacation. If you are wholesale on the house, it goes to any investor that is in the business. He will take it if you are wholesale on the house.” How many people did you have when you were doing that volume?

It was us and Mo at the time. We had one guy trying to run the books and it was atrocious because we were all young and shooting. We were like, “We were not aiming at anything. We were just shooting.”

REIS 543 Bj | 400 Houses Per Year

Entrepreneurs think they know their numbers really well like, “I bought the home for $100k, and I’m selling for $150k. I made $50k.” But all those ancillary expenses in between that aren’t accounted for usually get lost.

 

Flipping & Wholesaling 1000s of Homes to Land & Development

That is exactly what was going on, and it was not until years later that we got into some land and had another builder build some specs for us. People say we were crazy, “It is too early. You can’t build specs.” This was like 2014 and ‘15. We did it and sold them. It made money, and it worked. We started slowly acquiring land and preparing for some turn in the market. Now, BJ runs all the wholesale, all the flips, and anything in Phoenix or Tennessee or any of the other markets that we are in, and I run the land side.

I want you guys to talk to the audience here to the younger investors because one of the biggest mistakes I made, and it took me years to straighten it out. When I finally got serious about it, I finally hired the top bookkeeper I could get my hands on that would devote their time. They went back four years, and they tied everything back to the penny, transactions in and out, which was about a little over 400 transactions coming in. It was close to 1,000 because I sold some of those houses 2 or 3 times, unfortunately, some of them.

Having your books in order, I can’t tell you enough how you need to get that straight from the beginning because I lost not only the $240,000 that it took to straighten me out in two years but I lost opportunities with banks and with super-cheap money because I could not produce a financial that would tie back to anything.

That is the biggest piece because we were in the same boat. Even though we are still paying a firm out of Plano, Texas, they still help us manage tax strategy and preparation. It is not cheap but we realize that you do not know what you make until you know what you make. You think, as entrepreneurs and runners and gunners, anybody that is in the wholesale business is somewhat of an adrenaline junkie. They think they know the numbers well. They were like, “I bought the home for $100,000, and I’m selling it for $150,000. I made $50,000.”

All those little ancillary expenses in between that aren’t accounted for usually get lost in how many wire fees. At one time, when we were getting this caught up, we had $20,000 in wire fees that we needed to catch up on, get accounted for correctly, and apply them correctly. When it came time to buy multimillion-dollar pieces of land, we went to a bank, and the bank said, “Here is 4% interest, no problem. Interest-only loan. Your books look fantastic.” They would give us those but prior to any of that organization, no. They would laugh at us.

At one point, when I tried to do it, in the middle of my career, we were moving fast. It was a year that we did 150 houses. It was me, my partner, and a couple of office people that probably should not have been office people. We figured out that we had lost $800 per transaction by not reviewing our HUDs right.

When you start thinking, “These people, this bookkeeper or office administrator are expensive,” it is not because they are doing their job. Ron LeGrand told me one day, I stood up, they go through the crowd, and I was in the crowd. There were 300 people there. I finished interviewing Ron LeGrand before you all.

Ron said, “How many of you all are looking to do your first house?” A whole bunch of hands went up, “How many of you all have done at least one house?” 3, 4, and 5. It happened to be one of my better years, and I was doing 150 houses. He says, “How many people do more than ten houses a month? I raised my hand, and I was the only one in there. He says, “Stand up. What are you doing?” I said, “I’m on pace to do 150 houses. I only got two months left this year. I’m going to hit it.” He says, “You are a d******. You need to do half as many, take twice as much, and have a freaking life.”

I took that home with me and thought. It is embarrassing. He called me d****** in front of 300 people but he let me off the hook at the end. It seemed like 30 seconds worth of silence. I know it was not that long. He said, “A lot of you all could only wish that you are as d*** this guy but may I suggest that you do have as much, make twice as much money, have life, and get under control.”

He was right. I was making much money through the front but it was going out in the back. People were screwing me. My partners were patting contractor bids, and all kinds of stuff were happening to me but like you said, “It was enough to still be a big winner.” If it does not kill you, it will make you better. There were some days I thought maybe it would kill me.

He said, “You were always on the phone the first time he met you.” I was using 6,700 minutes a month on my cell phone. My cell phone was $1,800 back in the day when you could not buy any plans. We thought we were all cool. We had it going on. We were the d****** guys on the planet. It is like, “It is some help, you d*******. I’m like, “What are you doing?” I had many hats in my truck. Sometimes, I have three hats on it at one time. I’m like, “Foreclose. Take the loan. Evict that guy.”

It's not about what you make. It's about what you keep. Click To Tweet

We have been in masterminds for several years. In the beginning, I distinctly remember it being all about the numbers. We would go there, and it would be to your story. Everyone is comparing, “How many deals did you do this year? How many deals did you do?” They were asking the wrong question because you could be doing 150 to 200 deals, and everyone is admiring you for the amount of work that you are doing but then you start asking them the important questions, “How much are you keeping of that? What do you make per deal?”

To your point, when it comes to real estate, most people, the old saying, “The energy is wasted on the youth.” It is true but what that does is as we get older, age, make mistakes, do things and learn the lessons enough times, you start to realize that out a necessity, you need to slow down, and you need to start to think about what you are doing.

You can’t keep that pace.

As you start to do bigger deals and work smarter and not so hard, where you watch these old-timers that you hang around with at these events that are sitting in the back of the room and not saying much, it is usually the quiet ones in the back that have been there for a while. They are not getting up there and bragging to everyone. Usually, those guys are the ones you want to hang out with and listen to because they got a lot of life lessons that you can learn from them.

What we have learned over the past several years, we started to realize, “We could continue down this path of whole selling homes, flipping and going that direction. It is a nice business. It is great to have but we are starting to do land deals, and we are doing the development side of it. We are making one land deal on what we have made in the past several years in flipping homes. You start to do that a couple of times. You are like, “I missed the boat. I was working hard.”

The young guy at the front of the room said, “I did 450 deals this year. I do not need to take time off.” The old guy in the back of the room said, “I did three deals. I have made four times as much as you. I have been on vacation for six months this year.” Let’s start sitting in the back of the room with these guys. It is much more appealing. How many people do you have in your operation?

It is about 35 in total. We have the machinery running on some of the development projects. That includes guys out in the field, not running on the investment side necessarily.

Entrepreneurs always are morphing but I always thought, “Try to morph into a business that runs off the exhaust of your other business or the waste of your other business.” If you are making trees into lumber, you have a stack of sawdust that you end up with. You could pay to have it hauled off or you can get in partners with somebody that knows how to make that sawdust into pencils and go into business with them. Whatever the hell they make with the sawdust. Put some poison in it, put it in a bag and call it ant poison, I don’t know.

It was hard for me to learn this but I had to go find the right partner. He already knew that business back and forth. I was going to supply the sawdust. I was not even going to look at that business anymore but I was going to be partners with him. It was everything I could do to run this business right. If I started another business, I would make sure that he was the one that was in the office.

He is the one that hired the personnel. I was the supply sawdust for whatever percentage that was worth. That is all I wanted to do because I was going to have to deal with that sawdust one way or the other. It took me a little while to figure that out. I would go try to learn how to make pencils out of sawdust. This other business would be going under while I was trying to figure that out.

We can empathize with that a lot.

Ken D’Angelo, the Founder of HomeVestors, lived here, and his first franchise was in San Antonio. At one Christmas party, everyone was having a good time. He and I were in the back parlor with the fireplace, going with the cigar, and we talked for hours. He said one time, “Entrepreneurs rarely end up with the business that they start. They morph to the path of least resistance to the most money. It is usually not even close to the business they started with.” I find that to be true. Do you guys find that to be true?

We have slowly learned our lesson. We tried to create this ecosystem. You have these specific divisions within your building organization, home flipping organization or whatever. Some of them do not do well, and some of them you are like, “We can monetize the credit out of this. Let’s do it.” Yes, 100%. We line up with that pretty closely.

Our original plan to your point in 2008, and as we started our company together about several years later, we wanted to be the one-stop realty solution. You have probably heard this story before. We wanted to do it all. We went as wide as you could possibly go. We were like, “Let’s have a property management company. We are going to have a construction company. We have our house-flipping business. We will have a plumbing business. We will do an accounting business.”

We are saying, “Let’s take on the world because we are young and we can do it all. We are entrepreneurs.” It takes a while. Unfortunately, we are not the fastest learners. It takes us a minute to figure things out. You get beat down enough times where you are like, “That whole going deep idea makes a little bit more sense now. Now, I understand why people would laugh at us when we would tell them we wanted to be this one-stop realty solution because you can’t do it.”

The ones that do, to your point, partner with people, and they find the people that are already doing it at a high level. They say, “You can take your piece, and I’m not interested in doing the whole thing myself. Let’s partner together, and start something great.” It has taken time. We are still working through it but I think that we have realized, “There is a couple of money sources that make a lot of sense and let’s stop worrying so much about this stuff over here. Let’s start going in deep into these areas.” It has made a big difference for us. That little mind shift.

I, at one time, had so much private money I could not find enough deals at my underwriting criteria to get it all out. I knew if I did not get it out, I was going to lose the private lenders because they were not going to wait for me forever to get their money out. I started a whole hard money loan business with a guy that was a managing partner of Coopers and Lybrand in Austin for several years. He had taken companies public and was way smarter than I was.

If I have anything going for me, it is I have a s*** load of common sense. I can take a blow, get back up, dust myself off, and keep coming. It is not the smartest plan but that is how I did it. I had to start this hard money company, so I could loan it to my competitors for several months on the quick flips and everything and keep it occupied until I needed it. I needed it for the long-term if I got it out because I do that seller financing strategy.

I did that private lending business for a long time, occupying the money I could not get to now. I’m sure you believe the same thing. Just because you got access to a lot of money does not mean you start to run out and make stupid deals. My underwriting guidelines to buy houses and sell houses have not changed since the day I figured out what worked. For me, it’s $0.65 cents on the dollar. That ends up being about the volume that I’m comfortable at. I could do a lot more volume if I wanted to go to $0.70 or $0.75 but I’m working a lot harder, and there are more pieces with less margin. It does not make any sense.

I wrote this book, The Art of Private Lending, and used it as a marketing piece. I teach people how to loan out the money and make 12%, 14%, 16% or whatever up to users is in your state but about halfway through, it is like, “If you want to get paid 8% and I will do all this stuff, you can be heavy passive.” One of the businesses I have is private lending for my competitors. When I can’t find enough houses, I got to keep this money out working. I talked to my partner on the phone. I never went to that office ever. I don’t even have a desk in my own office. I don’t have a desk, and I did it on purpose.

In my situation, I have a partner that runs that side. My job is to make sure that they never run out of money. If they want to buy something, I got to go, “Where are we getting $450,000? Where are we getting $600,000?” That is my job. A lot of basketball games back before they started kneeling. Now it is a lot of dinners. When you do these developments, and you did the flips and everything, this is one-time cash or temporary cash but where is your forever cash play? Are you buying apartments? What are you doing?

We started acquiring rentals, mainly single-family. We sprinkled in with some smaller multifamily. We had a complex identified in an area that we were in already. There were some details in the trailing twelve that did not line up with the previous one. Some did not make sense. We backed out and probably should have kept that deal. In hindsight, 2020 that would have been a decent one to be owning now.

Speaking nowaday’s terms, everybody could have been a hero if they knew what was going to happen.

We would have kept everything. Mainly single-family holdings now with some smaller fourplexes, duplexes, and things like that are mixed in. We are at the point now where we are looking for that stuff. We have not been proactive in it.

Instead of trusting your gut, you should probably go look at the numbers and what the numbers tell you. Then that will tell the story of what you need to fix. Click To Tweet

I was telling BJ before you showed up that I use the money from the wholesale, the retails, and the seller financing, which is a temporary cashflow stream because it is going to expire. I use all that to focus on a forever strategy, which is something that you buy that you collect on, and it ends when you say it ends it. It could go on for 10 to 100 years. It depends on when you want out. I call that my forever strategy.

My forever strategy is mini storage, boat storage, semi-truck parking, and open-air parking. I live my whole life keeping the money coming in from those other strategies. The end goal is how much of this forever stuff can I buy because if I buy enough of it. I do not need to flip any more houses. You need to keep up with the rents, keep up with the tenants in those places, and keep raising the rents and reducing the debt. The gaps get bigger every year. It has been a good business for me. Since I do seller financing, I do not get the appreciation or the depreciation. I have to go out and buy $500,000, $1 million, or $2 million facilities, so I finally get depreciation.

We try to capture a fair bit of appreciation. If you buy 25 homes a year. You get some good ones and keep them. You are going to be all right there. We are looking now at an RV storage. It is smaller, a couple of acres. We love something like that. You are a smart man to get into that, where you do not have to deal with all the home maintenance repairs and all that stuff. You are dealing with pads, dirt, sometimes utilities, whatever the case may be. That is the dream, honestly. I can see why you are going in that direction. It is smart on your part.

I started buying storage in 1991. Now there are close to 1,300 people that owe me $100 a month. If I may share a victory, and this is the biggest smile you will ever see me smile. I paid all those b**** off in 2021 too. How old are you, BJ? May I ask?

I will be 39 in 2022.

Brad?

I will be 37.

You guys are light years ahead of me. I’m 61. I could have done it a lot better, a lot faster but I had to learn all those things. I had to learn all those lessons that we are talking about now. They slow you down and set you back. They wear you out. I almost walked away from the house flipping business because I could not do it anymore. I was exhausted. I could not make myself put $1 million a year in a box and throw it away. I said, “I’m going to live off my storages and let the house thing go away.” I couldn’t do it.

I thought, “You are going to throw away $1 million a year. I know you are tired but could you at least pay someone $500,000 a year, and you could keep the other $500,000. How do you do that?” I went to CG to learn how to get my a** out of business and keep some of it. As it turned out, I did not have to give up half my income.

I made so much more with other people helping me that I made more than I ever made. I pay those people $500,000 to $600,000 a year in salaries combined. We read that theory in the book, do less, make more delegate. I read it 1,000 times but I’m like you said, “I got to get hit in the head with a hammer with an idea before I get onto it.” I love that you guys are in your mid to late 30s and that you have a handle on everything.

We do a good job faking it and far from it.

You are well on your way. You are in CG or you get in these masterminds that listen to those old-timers and get straightened out now because you have been hitting the nose enough times to pay attention. When we first start out, that is not how we do it. How do you protect from that left hook from that tenant? They keep on knocking me out. I did start doing some land development too, and maybe Gilbert is a good place for that mobile home lots.

REIS 543 Bj | 400 Houses Per Year

It’s all about debt and taxes. When it really comes down to it, if you can understand those two principles really well, you’re going to do great.

 

We love to get into that.

I was seller financing the mobile home on top of it. I was making it pay on the bottom and the top.

There are some mobile home parks a little bit further out from where we are at but it is pretty tough now to get.

I’m not talking about parks. I’m talking about taking 100 acres, making it into 150 half-acre lots that you can put a mobile home on. Your sales department is the mobile home dealerships. They are your sales department. They do not even charge. I went to the factory and tried to become a dealer. The problem is they can’t give you any product now. We ordered twenty homes that took 1 year and 2 months to get them. On the surface, it was a good idea. Hopefully, it comes back. We were paying $0.60 on the dollar. We had a 40% profit built in the minute they drove out and set the home upon our land that we were owner financing.

We did this exact same thing, and now we can’t get units. We have all these lots, and we are like, “You are telling me it is going to be almost eighteen months before we can even get something out here to set.” We were like, “Cool.”

You are right. The business model makes a ton of sense. It is just we can’t get the product.”

I had this other idea and never did it because I did not have time. I’m trying to stay in my lane hard. What if you had a virtual mobile home park where it was this lot and that lot over there. You rented the lots, but they are half acres to an acre. If you go to a mobile home park, they are like this. You reach out your window and put your hand through the other person’s window. Rent those lots but you would have a virtual mobile home park that has no limit.

If you buy a mobile home park and it has 100 units, that is all it will ever be. If you did virtual like non-contiguous lots, you could grow that thing to 1,000 units. You don’t get any depreciation from renting the land but there is also no real maintenance on it, septic tank, and the land. It is hard to mess up. What advice do you have to the young guys out there maybe before we wrap it up?

For me personally, on my journey, the thing that I have learned more than anything is it is not about what you make. It is about what you keep. The focus has been so much more on taxes. I know it is all about debt and taxes. When it comes down to it, if you can understand those two principles well, you are going to do great.

It took me a minute to think about the other side of it. You got money coming in the front door but you have got this back door that is as wide as your front door. It is going out as quickly as it is coming in. It is important to take some time, have a structure around that, have a team around that, and pay well the experts in the accounting world to take care of that issue for you.

Do not try and do it yourself. Do not think that you are smarter than everyone else. Find some awesome accountants, they are going to be expensive, and that is okay. As long as they know what they are doing, they are going to save you more money in the long run than you ever spent on them. We are at a point now where we spent about $250,000 on our entire accounting team. That is for several businesses.

I get it but the point is you can see the holes, and you can start to work on plugging them. Where is this money draining out? Look at this expense. That is my biggest expense. How do I cut that expense? I do not know how to read these things to the degree but the one thing I did learn is you find your top 5 or 6 expenses. Start with the first one, and how can you cut that?

For me, it was always trusting my gut. Instead of trusting your gut, you should probably go look at the numbers. What are the numbers tell you? That will tell the story of what you need to fix. It took me a long time to figure that out.

I have run my business by the hair on the back of my neck for many years. How I did it was, I assumed I was broke all the time. When they finally gave me a financial report I said, “I could have quit several years ago.” I did not have any idea what I was worth. I had no idea what was going on. If anybody is out there wants to learn how I d*** figured out how to flip 100 houses a year, you can go to My Life & 1,000 Houses: Failing Forward to Financial Freedom. It is a story about how I d**** kept getting knocked down, got back up, and said, “How do you stop that from happening because that hurts and keep morphing?”

A lot of people asked me, and he said, “Are you sure you want to put this book out?” I said, “Why would you ask me that?” This is before I put it out, and people were reading it. I said, “Why would you say that?” He goes, “You are not looking smart on a lot of these pages.” I said, “It is the truth. I’m not going to go here and blow smoke up everybody’s a**.” Maybe some other people can short-cut their way by reading the story but this is how I learned the lessons. I had to learn every one of them the hard way. I’m like BJ. I had to touch the burner twice. It burns on the right hand. I wonder if it burns on the left.

I got a couple of kids that like that too.

I appreciate you. Maybe we will meet down the road and talk again about the new development you have or something coming up.

Thanks for having us.

My pleasure.

 

Important Links

 

About BJ Gremillion

REIS 543 Bj | 400 Houses Per YearBrad Young and BJ Gremillion have been business partners since 2008. Together we have purchased and sold thousands of homes, purchased, developed, and sold multiple residential, SFH subdivisions, etc.

BJ has worked in the Real Estate industry since 2008, and has enjoyed the variety and fast pace change that each year brings. Some might say 2008 was a rough year to get started, but he’ll tell you it was the time of his life! He absolutely enjoys the process and work that goes into building a brand and positive culture.

BJ is a HUGE football and basketball fan. Don’t hold it against him, but his teams are the Denver Broncos, UCLA Bruins and Denver Nuggets. If you couldn’t tell, he’s originally from the great state of Colorado! Don’t worry, he’s adopted all of the Phoenix sports teams even if they’ve failed to give him much to root for.

At the end of the day, the sports teams and even the business take a back seat to what’s most important in his life, his wife Alexis and their 5 kids. Nothing brings BJ more joy than those 6 people, and he feels incredibly blessed

Brad Young is a licensed real estate broker in the states of Arizona & Michigan. As the designated broker for Better Choice Homes, Brad uses his 12 years of real estate experience to work through contract and sales related issues that come up within the firm. He has a degree in business from the University of Phoenix and is glad he is no longer in school. Brad has a wife and 5 children that occupy any other time that exist in his life and he’s quite alright with that. He loves to camp, fish and exercise but doesn’t usually have time for that. Dang those 5 children.

 

About Brad Young

REIS 543 Bj | 400 Houses Per YearBrad Young and BJ Gremillion have been business partners since 2008. Together we have purchased and sold thousands of homes, purchased, developed, and sold multiple residential, SFH subdivisions, etc.

BJ has worked in the Real Estate industry since 2008, and has enjoyed the variety and fast pace change that each year brings. Some might say 2008 was a rough year to get started, but he’ll tell you it was the time of his life! He absolutely enjoys the process and work that goes into building a brand and positive culture.

BJ is a HUGE football and basketball fan. Don’t hold it against him, but his teams are the Denver Broncos, UCLA Bruins and Denver Nuggets. If you couldn’t tell, he’s originally from the great state of Colorado! Don’t worry, he’s adopted all of the Phoenix sports teams even if they’ve failed to give him much to root for.

At the end of the day, the sports teams and even the business take a back seat to what’s most important in his life, his wife Alexis and their 5 kids. Nothing brings BJ more joy than those 6 people, and he feels incredibly blessed

Brad Young is a licensed real estate broker in the states of Arizona & Michigan. As the designated broker for Better Choice Homes, Brad uses his 12 years of real estate experience to work through contract and sales related issues that come up within the firm. He has a degree in business from the University of Phoenix and is glad he is no longer in school. Brad has a wife and 5 children that occupy any other time that exist in his life and he’s quite alright with that. He loves to camp, fish and exercise but doesn’t usually have time for that. Dang those 5 children.

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