How To Target Hidden Bargain Houses
Mark’s Grandfather, Lloyd Walters, invested in his first “fixer-upper” property back in 1937 in San Jose, California. That was during the Great Depression and I can’t imagine the challenges he must have endured during that historic time of our country. It says a lot about him and the values he passed down to Mark and his father.
Since that time, Mark’s family has always been passionate about real estate.
His father, Lloyd Walters, was written up in a national publication in 1985 for some revolutionary marketing ideas he shared dealing with discounted mortgages.
The demand was so great to learn more of these techniques that they wrote the first book in the country on marketing for discounted mortgages titled, “How To Find All The Discounted Mortgages You Could Ever Hope To Buy”.
After that book release they were inundated with people asking what else they were doing. They then wrote another real estate investing book, which had people requesting more ideas and the big snow ball has never stopped rolling.
By the age of 25, Mark had his own real estate brokerage. After a few years, and being more interested in the investor side of the business, he closed up shop and has not been an active broker since.
In the late 1980’s he stumbled on to Judgment Investing. That was a revelation that continues to excite those that hear about it. After putting together a progressive judgment investing plan for their own business, they started to share the strategies in a training, “The Complete Guide To Judgment Investing”.
After the savings and loan crisis of the late 1980’s and early 1990’s, in 1992 everyone packed up all their California belongings and moved to Arizona and began buying properties with the intention of riding the market up.
Guess what? The old crystal ball must have been working because over the following years Phoenix became one of the top real estate investing areas in the country.
Mark continues to enjoy sharing unique and profitable investing ideas with good people like yourself here.
What you’ll learn about in this episode:
- Mark’s 85 ways to find hidden bargain houses
- Mark’s journey and how he got into real estate, and more specifically, how he got into affordable and bargain houses
- What an “affordable house” is
- How Mark recognizes when a bubble exists
- Why Mark focuses on single-family homes
- What Mark learned from having his father and grandfather in the real estate industry
- The best and worst deals Mark ever made
- The pros and cons of having a real estate license or not
- Why you need to listen — both to what people want/need — and — the numbers of a deal
- Mark’s book “How To Find All The Discounted Mortgages You Could Ever Hope To Buy”
- Why Mark tries to focus on nicer properties
- What’s next for Mark and why you always need irons in the fire
- What Mark automates and what he doesn’t
Mitch: This is Mitch and welcome to the Real Estate Investor Summit Podcast. I am your wonderful and all-knowing-host, as usual, as predictable. And just as you would have expect, I have a terrific guest on the show today. His name is Mark Walters. He is a third generation real estate investor. He has 30 years in creative real estate investing arena and he hails from Phoenix, Arizona. But, he is originally from San Francisco. We’ll gonna talk to him about how you target hidden bargains out there, all those hidden house deals that you are looking for and so challenging to find, but he’s gonna make it easier for us. But, right now, I have to make a little room for our beloved sponsors, we got Fund and Grow and Livecomm.com. So, let’s listen to what they have to say and we’ll be right back with Mark Walters.
I love my sponsors, they make the world go ’round. Thank you so much for taking time to hear about their incredible offers. And right now, let’s get back to Mark Walters. How you doin’ Mark?
Mark: Am doing great, Mitch, nice to be here with you and the listeners.
Mitch: Hey, this is gonna be an exciting segment. Everybody wants to know how you find those hidden bargains, so, you got a program called Targeting Hidden Bargain Houses, is that how you say it?
Mark: It is actually like, 85 Ways to Find Bargain Houses, and it is all about different kind of ways to be targeting properties, yes.
Mitch: Okay, great. So, just so the audience out there can get their pens and paper out, and get ready. I have a link for you if you wanna know more about this as we go but it is, reiventorsummit.com/target, all lower case, T-A-R-G-E-T. That’s 1000houses.com/target. So, tell us a little bit more about the beginnings of Mark Walters’ investing career.
Mark: You bet– we’ll I am very fortunate and blessed to be able to be say that am a third general real estate investor. My grandfather started investing in houses and he actually had apartments as well in San Jose’, California. He started in 1937 during the great depression, and that would be a challenging time to start any kind of business. But, certainly, a real estate business would really be hard when you are in uncertain times. Well, that really put the foundation in our family, one. Then two, during that time, a lot of people needed help, and my father was a big kind of helper, and of course, that was a welcome investing strategy back then. He talked those principles with my father, who then in return talked them to me.
My father is an investor as well, he help my grandfather do all kinds of different things. And of course, I was brought into the mindset of all of that. And then I gravitated towards this as well. And then in my early 20’s, I became a real estate agent. I got my broker’s license, but my real interest was in investing. And so, around 1990, we noticed that the City’s in saving and loan crisis back then, not the one [INAUDIBLE] one of the early 2000 family, it was just a little 10 years prior. Our country is on pretty much on the same thing, lessons were not learned, and 10 years later it happened again. But, the bad loans were out there, and then our economy went crazy, so in 1990, we noticed some of the areas in the country that not only have depressed real estate market, but an affordably depressed real estate market, because in the San Francisco Bay area, now that a trouble. Now, they’ve got a lot of very expensive properties. So, we wanted to be able to pick up bargain cash flowing properties, and remember this was before the Internet. So, why not we just hopped online and do some investing in different parts of the country in ways that we can do now. I remember it was a [INAUDIBLE] when people say, “It doesn’t work in my area”. Well, move to an area where it works. Now, of course, we were doing things where we’re as far as real estate but we were very interested in these more affordable places where we could be buying up houses. So, we started looking in 1990 in Phoenix, but it wasn’t until ’92, that we notice that things are starting bottom out, and started to come back up. There were beginning stages, so we just uprooted from California and moved to Arizona and then we started focusing in on that. And we got other business activities as well, but, one of which was buying houses. And so, we were buying houses that were cash flowing. Once we were backing a pot of cash flow, of course, the market was going up and up. And we all know what happened is, just before the next follow up was the market went sky high, and so that was a beautiful thing, and so from a real estate standing point, Mitch. That is your a little bit of a background.
Mitch: So, tell us what is an affordable house back then when you were saying you were looking houses? Describe affordable houses back then.
Mark: [LAUGHTER] haha, you bet. Well, in California that time of course, you had houses in areas that I like to invest in that were worth multiple of hundreds of thousands, multiple 6 figures. In Arizona, you have 5 figure house. Of course, that’s gonna help you’ll be able to, if you got a rental for that is, that’s gonna help to be able to cash these properties or rent this higher than mortgage payment of course.
Mitch: Okay. So, you know, hundred thousand dollars or less, and then how does the Phoenix are changed a lot since then. What’s the average pricing of the houses that you pick up now, is it still the same range or has it gone up?
Mark: It has definitely gone up, once it went up then of course, in early 2000’s after the bubble burst then they dropped back to those original prices, I’d say generally speaking, in some cases, even less. And then, the market has been going up and up again. You know that’s the beautiful thing as you know, Mitch, about real estate. It’s a cycle. The nice thing about real estate is, the cycle happens slowly, so you can hop on or hop off. It is like a slow moving escalator, it’s something that you see coming many times, not always, but usually it is slow mover.
So, now of course, those kind of properties end up in $100,000 price range, give or take, then of course, you’ll be looking for motivated home sellers and team with the numbers are on the financing and build from there.
Mitch: You know, in Texas we really don’t have, that huge up and down swing like they do in California, or Nevada or Phoenix or I don’t know, some other places around the country, maybe Florida. We pretty flat lined most of the time, and so, we never really had a collapse, because we never really had this exorbitant valley-peak-valley-peak graph. You know, especially in San Antonio where am at. We kind of you know, lucky to tell you about, 6 % appreciation per year. Maybe in that boom time, you talked about, there was one area of San Antonio, that might have went up 15 percent over the year. In other areas like where you at Phoenix, you have some pretty drastic swings. And it can be a double edged sword, that’s really great if you are astute and have the fortitude in control of your emotions to buy in the down time and– but then, you also have to learn to recognize when the good times about to run out. How–what’s the indicators of– what are you looking for, how do you smell when the appreciation is about to end?
Mark: Well, I wish I could say– well, first of all, Mitch. [LAUGHTER]
Mark: But, really it’s a number of different sources. You know I really like to subscribe to different analysts and get some opinion, of course, I can see what’s going on the market price, market place’s number wise, as well. And a really good example, I remember back when the market was peaking and not selling properties, that I had ridden the market up, where there’s a lot of people buying, buy, buy,buy. And when you know, when everybody’s been buying, you should be selling, right? And generally speaking of terms, you want to get in front of the herd, whatever they want, see if we can supply them with it. In this case, we are talking about real estate, so I can remember my next door neighbor who knew that I bought houses and then, [INAUDIBLE] the news, the television and newspapers, and everybody’s buying houses. Things are going up in value, so they jumped on the bandwagon, so he was interested and he was and, maybe starting a little bit, “Hey, you are buying houses”. “No”. He looked at me like I was crazy. And he said, “What, I thought you are doing this kind”. I said, “Am selling. Am selling houses”. And I still remember, I had a relative from California call me up during that peak season. “Hey, I have an uncle who tell me I should be buying houses in Phoenix”. And you know, we started hearing things like that. You know, the thing up– sometimes, it is really getting to close. Unless, it is a Californian market, what the demand is just a natural income and demand of houses, there’s so much supply and you know, there’s a lot of them. You know, there’s a lot of people that wanna be on that one time. But, you got a bubble of what was happening, and you’ve been following the economics of it, and you start to see what the masses are doing, you know then it becomes, who’s gonna be left holding the high priced house before the market drops. And so, you can start looking for those kind of things. Like, what I said before, the nice thing about real estate that often times slower than say sucks, where– people are day trading went up and it went down and there’s news, there’s bad, some thing’s dropped overnight, that doesn’t usually happen with real estate, not to say those kind of things can happen, but usually its source, so I am getting your affluent, you are doing your due diligence, then you can start making some educated decisions.
Mitch: Yeah. One of the leading indicators around my part of the country, and I don’t know if it’s the same for yours, but I start watching the more expensive house sales slowdown, and that’s like the first indicator. This one always means that it’s gonna go all the way to the recession point, but am always watching the–based on the market of these expensive houses and how many houses– how many expensive houses are selling. I can– I tend to pay attention to it when they starts slowing down. Do you find that true in Phoenix?
Mark: Most definitely, yeah. When you start– in certain areas like you just said, not to be redundant, but yeah, I do agree with that. Because, you start to see what is happening, ’cause that’s of course a leading indicator of what’s going on economically. The haves start to not have much as much [INAUDIBLE] of course, that’s gonna affect the demand. The prices gonna go down, yeah, I think that’s really a good one.
Mitch: And yeah, you know, I kind of want to [INAUDIBLE] you said your uncle was telling somebody that they need to buy houses in a really hot time. During the recession, I bloom in the recessions, am not afraid to buy when there’s bad news, when the prices are dropping, I learn to get over that emotional thing a long time ago, and then I owner financed houses, and one of the reasons why it works so well is I do good in good times and I bloom in bad times, is that I don’t need a bank to buy that houses, because am using other people’s money, O.P.M to buy those houses and because am owner financing the sale, I don’t need a bank to sell my houses and so I eliminated the bank on both ends with buying in and selling in. My model moves along no matter what the banks do, usually in the recessions, the banks clumped up money that gets tight, probably, you know that’s the cause or effect of recession. But, I have people, this is my point. I have people in the very worst of times, they say, “What you do for a living”, and I’ll get my card and they’ll see I buy houses, they go “OH, this must be horrible for you these times”. And people just don’t get it, because that is my time.
Mark: Right. You know, I think it’s one of those things, Mitch. That, inherently as human beings, we go a lot, we hear about sales, things that we buy, things like that and we just don’t get the opposite side of it. And it is like if you are a business, and you can be supplying a product, and if you can get that product for cheap, like Walmart does say oversees with the products they get that they could sell for higher price, if you essentially have the same kind of mindset, but from the investor’s standpoint, oftentimes, we don’t get it, much as like stocks or you are selling short and then you buy it back, you know it’s just not something we inherently learn or experience growing up so, a lot of people don’t get it which can be very good for investors because if we do get it, and those few who get it, you recognized opportunities and it can be scary when there are those challenging times like you said, there is no doubt about that but when you recognize,”Hey, there’s oftentimes a cycle, let’s look back in time and see what has house values then”. And when you start seeing things on sale that can be exciting it’s like the person just, “Oh, I could have bought a house in this neighborhood for X amount in price years ago”. Why you didn’t do that, you know? [LAUGHTER] It’s an opportunity to do that. And one nice thing I should say, one beneficial thing about recent economic booms, spikes and crashes not saying much where you are, but certainly in other parts of the country is, people have been alive to see go up and go down and go up and go down, depending on how old they are, maybe a couple of times, so they can see rebounds and what happens to those values, and that is not enough to say that the future’s going to be a mirror of the past, but you could at least start to get an idea on how things flow and of course, we have governmental input on these kind of things trying to help things along so it’s really bad the governmental input trying to do things to make it better and then of course like what we are seeing now in my area, where houses are oftentimes are selling pretty quickly, rentals– I rent a house the other day, I had about 30 people wanting to rent it or at least look at it, they are really anxious, right about 30 people not more than 24 hours, you know. And that tells you something.
Mitch: Wow. That’s a huge finance. So, what is your real estate niche? What is your strategy of your choice?
Mark: Well, I tell you.
Mitch: Right now. Right now. I know probably it has changed over the years, but, what are you doing right now?
Mark: [LAUGHTER] Am really a single family house guy. I am not going after the expensive stuff, I– for the most part have just been a bread and butter single family house guy and I look for numbers that work, and that’s good with me. You know there are people that you lose different things, and I think that is wonderful, there are lots of different things that one can do, but for most part, am a single family homes guy, cookie cutter straight and simple.
Mitch: So, you’re buy and hold, a landlord strategy or you owner financing, or a little of both, or what?
Mark: Am more of a buy and hold, but I will let the market dictate. Because, I don’t fall in love with properties usually. I like some more than others, but my father always told me,”Hey, don’t get emotional over this, this is just a house”. And that certainly helps. And so, if you got houses that really gone up in value, you know, it’s considering [INAUDIBLE] on my mind to get rid of, then recognizing that, “Hey, then the values go back down”. And some like would say,”Hey, what if the values will go back down”? Well, at least you made a profit, but, am not saying sell everything. But, am also not saying that you gotta keep everything. Some people like to keep much equity as they can, am all for that, but sometimes you might just like to dip your toe in the fun money and say, “Okay, let’s pull some of this out, it’s been a nice ride, it gives me opportunity to put in another places, or in another good situations”.
Mitch: I mean, yeah. I guess, the perfect scenario would be, you buy rents down, you rentals goes all the way go back up again, some of it all, then wait for it to crash again, and go back again and build your money again, I suppose, that would be the perfect you know, if you had a crystal ball, tell me this. How big an advantage, it has to be a blessing in your mind that your grandfather and your father grew up in this business.
Mark: Most definitely. You know, it’s like the child always told, “No, you can’t do that, you can’t do that”. And then they grew up they think they can do a lot of things, sadly, that’s kind of human nature. I was told that or was just really shown different mind sets and opportunities and looking at a bigger bolder picture, and am not going micro view of different things, and anything is possible if other people can do it, we can do it, too. And then of course, targeting it down to the specifics subject, it’s just gonna be about lots of subjects, but certainly real estate is being one of them. That yeah, you can do this yourself, other people are doing it, it can be done, it is being done. And you start doing, okay, you’ll build the confidence a little bit more with everything that you do. And yes, Mitch, am completely blessed and I am grateful for it and am aware of it for sure.
Mitch: So, around what time did you go from being just a stable guy with job to– of being financially independent to real estate. What year was that ago?
Mark: That was around 2004 and just to give you an idea, even though I had the foundation that I deal with my family. They let me do this on my own. I was given no gifts other than, moral support and if I needed some money, I could certainly get it. But, I really didn’t do that so much. I do things on my own. I was a guy who wanted to be on a rock band in high school, thrilled to get out of high school and actually being able to get out of high school, I don’t have a college degree. And so, I really taken a more entrepreneurial road in life, and that’s great. That’s been terrific, especially with our new economy, you need that entrepreneurial spirit. And so, to go from being somebody who might not be as hire-able to the next guy to be not needing to be hired at all, is a tremendous view looking back. And thinking, “Wow, that’s fantastic”. But, it’s really the choices along the way, and we are talking about some of them here, that can make the big differences. You know, when you are making hopeful good decisions on things that had couple of extra zeroes on them, and you do that handful of times, it can make dramatic impact on your life, which is–
Mitch: Let us talk about that for a second. I like to ask 2 questions. What’s the best deal that you ever did on your life? And what’s the worst deal that you ever did on your life? You wanna start with the good news or the bad news, Mark?
Mark: [LAUGHTER] some of the good news are the simple ones. I will tell you. Am a pretty simple investor. One of the great things was, recognizing some of these expanding areas in Phoenix area, where there were just dirt. And I recognized that, interestingly enough, Mitch. I was walking my dog, Jake. And we were just– let me just say this, when I lived here, my roommate was a stage manager for the rock band, Anthrax. And his girlfriend at that time, they would be on tour on a lot of time, because she did their hair, and he was the stage manager, and they traveled the world. And so, I was in an apartment here in the Phoenix area and when they came back, they’re like,”Hey, Mark we want to live on our own because we wanted to get married”. So, I went a mobile home for fifty five hundred bucks, and at $203 a lot month rent that was great. And then, I started buying houses. So my tenants lived a lifestyle a lot better than mine. But, at the same time, I was in area where there are mobile homes and things like that, and I was walking my dog and it was an apartment complex near it, and there was a door hanger that was offering these brand new homes that were pretty big, that were a $100,000 more or less. And man, I gonna go out there. So, I went out there. My parents talked about this area but, am like” Why don’t I go out there and to see what it is all about”. It’s like a boonies in that point of time, it’s not now. And yeah, I was blown away by these nice houses that I can get. So, I started buying houses about that in that area. And it was the outskirts of a metropolitan area, right before things were really starting. At that point, Mitch, when things really started blooming in the later 90’s. And the past can be such a wonderful source of information and history, as we predict things in the future. I wanna share this, back then, there were building about 30,000 houses a year here. And up to the point, I heard it was about 60,000 homes. And either way, it is a lot of houses. A lot of gross and a lot of people coming in, and as we know, housing pricing went up. That was really really great. That’s a number of houses in area that the prices were really well, you can get a brand new house for under a hundred grand, and that was wonderful. And then, people were buying houses out there, some of those people weren’t able to continue living in those houses and I would be able to buy those from them. It was really great. As far as a deal that wasn’t good, I remember being an agent years ago, and in San Francisco bay area, and I had a listing that I was getting a call from somebody and said,”Hey, this is my house”. This was a pre-foreclosure situation and I still bought that house. I listed and sold it and [INAUDIBLE] I could have bought that house and over the years, I don’t know, probably made a least a million dollars on them, but hey, that’s how we learned.
Mitch: Yeah. Yeah.
Mark: I just wipe my chitters and—
Mitch: You have a real estate license?
Mark: I used to, over 20 years ago. I had an agent’s license and a broker’s license. But, I left that lapsed when I came out here to Phoenix and I just put on the investor’s hat.
Mitch: I know investors that have real estate license. And I know a lot of investors that don’t. I don’t have a real estate license. And by the way, I don’t have a college degree either, like yourself. And you know, there’s pros and cons to both sides of that. I mean, sometimes if you have a real estate license, you can do some things you can’t do when you’re an investor, but there are also put some limitations on you, you wanna talk towards the pros and cons of having a license or not having a license?
Mark: Well, sure. As far as the pros, of course, you can beat on uncovering on some deals using a multiple listing services or things like that. That can be one of them. You can be picking up deals that way along with just listing house you don’t want yourself, and work it from different angles, which I think can really be fantastic. The opposite side is, of course, you got seduce your responsibility with that license to disclosure things to, do certain things and so, of course that can limit an investor who doesn’t want those kind of to do share of responsibilities to buyers, sellers [INAUDIBLE] you know, the dealings in that particular case, just to put a quick bow on it right there.
Mitch: Okay. If you ask me, should I have a license? Well, I say– if you got a license there are some things that you can do, especially the new guys starting out, they wanna go into investing but they had their license, so they got their license. I say, they can help you make some money. I mean, for one, if it’s all right in your state or wherever, you use your listing used to be a flat fee listing agent listing, but it doesn’t take any of your time. You can hire an assistant to put in all the data, and you just start 3-4 hundred bucks just to list their properties on MLS, but you don’t put your phone number on it. You put, you know, their phone number on it. Then, I only have to pay the selling agent fee, plus that flat fee deal. So, I have people do that. And I suggested that to some of my students who have licenses, because they’re only careful, it is hard to wear both hats. When you are listing houses and trying to sell houses and making commissions, it can take an exorbitant amount of time and it can rob you of your time for the investing, which can be where the real money is. But, there are in between slots. Being a flat fee listing agent is one of them. Because, I have a lot of students call me, and say, “You know, that was really a great idea because in the lean months when I was starting out, I was still able to make a couple of thousands of dollars just listing people houses for flat fee”. And that would make all the difference while I keep going until they hit investor part of goals, you know. So, do you use flat fee listings yourself these days?
Mark: Well, certainly I’ve used them, without a doubt, a lot of times you know, I’ve used to own rent to own scenario, depending on what makes that strategy is. Yeah, I really like the flat fee because it is getting on the MLS, depending on the market, of course, if it’s a super-hot market, you can decided, “Well, can I get it off there are lot of people now who are more inclined to look online for deals, be it on Craig’s list, whatever. Put it on Zillow for things, you know all kind of these people looking online now. So, if the market is hot, you can certainly consider not. But, if you feel like you need to spend that extra money to be able to pay buyer’s side, the buyer’s agent coming to you with the prop up–probably buyers, of course, that might make sense too. So, you know, I’ve done different ways.
Mitch: If you can help our audience avoid one major expensive mistake in the past, what would that mistake be and how they avoid it?
Mark: You bet, well– I told you that one and what I really get out of that was, always be open to opportunities always listen. Give yourself a chance to think about things and to interpret what’s somebody’s challenges are, so you can provide a solution. Obviously, as investors, that is really important, it also takes a lot of heat off you, sometimes people feel like they need to do a lot of talking and do a lot of convincing and really I think, that might not always be the first choice. I think, listening so, somebody realized, “Hey, you care, one”. And also, if you don’t get the real reason why somebody’s having challenge you may not be able to get them the perfect solution so you could make that deal closed. Listening, finding out the real issue is, one. The other is, listen to the numbers, ’cause a lot of times particularly younger investors you’ll hear, “I’ll get into real estate, you can make money, there’s a [INAUDIBLE], which of course is true but there’s a lot deals that don’t wanna be a part of it for many different reasons. And so, be it a bad neighborhood, bad properties, the numbers don’t work, but the numbers are the big thing. Listen to the numbers as well, I always tell people, because the numbers will talk to us. You know, the numbers keep us at night, and life in general, people have bills or debts or you know, something is coming up, that they have to spend money on, you know, we consider them our debts. Definitely the numbers talk to us. And housing is no different, if they– now in this scenario when you are doing carry back, you start creating some of these scenarios, if somebody’s buying subject to of course, underlying financing taking over payments that is something that I’d like to do as well. And so, what are those numbers? What kind of loans are on these properties? Is there more than one, is it six? Is it adjustable? What are the payments? Is the homeowner’s association fee along with it, we’ve got a lot of those? And so, of course, what are the rents, is this something that you’ll feel good having, once you got it, can you get somebody [INAUDIBLE] if you wanna rent it can you get somebody to buy it, if you are trying to close it. The numbers are really important.
Mitch: Yeah. Yeah. I couldn’t agree more. And if you don’t like the numbers, make an offer with the kind of numbers which you like it, at least get answer. My general rule of the thumb is, never let a deal buy your own side of the debts. If they push over some numbers which you don’t like, change the numbers and put it back. Let it die in somebody else’s hands, if they push it back and you are still out there, keep writing down the number that you want and keep push it back. Let it die on their side of the table, not your side of the table.
Mark: Great advice.
Mitch: You’ve written a book, right? Tell me about your book.
Mark: You want me to tell you about my book?
Mark: Oh, well. We’ve got, gosh I think, we are pushing about 30 different trainings now because, back in 1985, my father as we work together doing things, he wrote /the first book in the country that am aware of on marketing for this kind of mortgages, and from there people get those before the internet, of course there’s newsletters and things like that, people more know of their country, “Hey, we love this. We want more”. So, we put something else together that we know about, and love it, we want more. And so, 30 flash years later, we are still offering people trainings and things like that. So, we get peripheral from having finding subject to probate investing, hood investing, like what we were talking earlier, judgment investing, and pre-foreclosures. You know, you name it, we got so many different trainings on it. And it’s just been a lot of fun to be able to share these things to people, that really like it. Because, how– the prequels to that, my father he had send some marketing things that he was doing to a national newsletter writer at that time, ‘because as investors that was a big way that we get inside information on investing real estate was through newsletters, that people that were out there doing great things, and so, he send some marketing to this guy, “Hey, what we’re doing is working”. And he said– so, he wrote up my father in these things,”Hey, if you want more information, here’s some marketing that this guys is doing, write to him”. And we’ve got [INAUDIBLE] with people all over the country that lead us to the first book, ‘because if you just send flyers out there, here’s what we are doing, hey this is great, what else you got”? You know, it’s just this kind of this hard on his own dime. He was sending these out to people. And then, it became a book. Because, it’s like, “Okay, let’s have at least be able to cover our cost share, certain make our own money on it”.
Mitch: What’s the name of the book?
Mitch: So, what are the challenges right now because the real estate market is so hot? Is trying to find the deal, what do you have in the genre? What are you doing about that?
Mark: You bet. Well, am a basics investor guy? We know a lot of different ways to be able to market. But, one of my favorite,Mitch,’cause my experience like I said, marketing in some of the areas that I knew were growth areas, that was really a good experience for me personally. And I got the feeling of having houses in areas that I feel good about, and houses that I like. Nice houses in nicer areas that were priced as nice. So, all of those things work really well. So, what I like to do, is to I like to target areas, because I like to buy in bulk. I like to target areas that I feel good about, that I know there’s demand, I feel there’s gonna be a future demand because I live in a larger area, I’d rather be in rather in areas that I think are gonna be good for long time, ’cause I’ve seen neighborhoods that have started to decline for lots of different reasons. Some of them just the way it goes, things get old and then new shinier things pop up, because in some areas– I mean, Phoenix is out in the desert, and it just spreading ever since so, in the outskirts it just continues to grow and grow. So, it’s nice to be able to invest in areas in uncovered homes in areas that am gonna be happy to own, that I know tenants gonna be happy to live in and buyers gonna be thrilled if I am gonna be offering a house for sale.
Mitch: Yes. So, you are looking for places that like probably be in the growth pattern, or just a little bit and growth’s coming to it, and it’s gonna be bigger for a lot of years.
Mark: Yeah. And it depends on the pricing. Because, certainly, as home builders recognized that some areas are gonna attracts hire and buyers, you know that the numbers are gonna be out good. So, am gonna be looking for somewhere that is more of a lower price product, but people nowadays they expect certain amenities, you can have nice kitchens, you’ll gonna have nice bathrooms, and master bathrooms, and like the option of a 3 car garage, there may be a tiled roof, there’s gonna be a park nearby, or something like that, interesting nice neighborhood. And so, even though, some of these neighborhoods are lower priced, they are still nice. And the nice thing is too, is that there are areas that were that a while ago, and they still are that, even though the price may gone up a bit. There are still nice fertile place to be able to invest in. So, I like all of that, and I recognized all of that as potential.
Mitch: So, let’s go with my hunches. And my hunches tells me I need to do a little networking with you right now. So, am gonna tell you something. Am looking to build another storage facility or buy one. It doesn’t have to be in my own state in Texas. So, would you please, clue me in if you find some junk piece of property in the growth pattern that your think I might be able to buy or maybe able to partner or on something or do some storages.
Mark: Most definitely. I think it will be wonderful. I hear them popping up all over in place, and it is amazing how you bring that up. People– so we all do. We have all that stuff, to the point where you got storages inside. It is wonderful.
Mitch: Yeah. I have 14 locations, 1,100 doors. I started in 1991, with 13 boat storages with third floors, right outside the entrance to a park on a lake that I [INAUDIBLE]. And I was intrigued by it, because people paid me rent. There was no plumbing, there was no carpet, and they could turn anything up, hardly. And so, I just kept on adding, so over the last, what– twenty six or 27 years or whatever it is since 1991. I accumulated 1,100 doors. I averaged $92 per door per month, you can do the math real quick. It is a great business, because it is forever money, just like your rent houses, except I don’t have to deal with carpet and hot water here, and peripheral of things that a landlord has or an apartment complex that have to deal with. I choose toward this as my forever money of choice, of my favorite choice, you know, that’s my favorite choice for forever cash, rental cash– is storages. So, I’d like to plant the seed with you, and keep your eyes open if you see something that looks perfect affordable [INAUDIBLE] complex that you know, it’s hard to buy existing complex right now, they are all in demand, they all wanna sell them like 5% cap rates. So, I have to figure out some other ways to increase my units, because everyone’s selling this stuff right now for top dollar. So, I think the play right now, is to find odd odd typical worthless pieces of land, for whatever size, shape, reason, back in the back, and pick up some land for nothing. And that’s where you have your advantage to go ahead and build from scratch, that’s what i’m thinking right now.
Mark: All right. Your seed is planted. If I see, some of them, but you know– Mitch.
Mitch: [LAUGHTER]. All right. So, hey when you talk about the proverbial next level, what next level are you trying to get to?
Mark: Well, I tell you. I am a simple guy. I would like to be able to do grow the net income that’s coming in of course, and I would like to be able to grow what am doing, but also, on different levels, you know. As I get older, Mitch. I enjoy having fun, so it’s also the next level of what I wanna do in my life. What things can I be doing in a way that I can put in some effort now but they can also be cash. Like what– you are talking with your storages, I think that is wonderful. But, for me it is really kind of growing the equity and looking opportunities, I am a guy that like to– when I think about things, I think of them as far– I think them in three’s. The reason for that is, you can always be starting back at one, and here’s what I mean. If– let’s say, “Okay, let us reach another level”. It doesn’t have to be the top level, because, every– gets to the top level by taking steps. Okay, that first step means, that I wanna get another three houses, let’s just say, hypothetically making up the scenario. Let’s say, okay, I wanna get another three houses. So, you start your first house, and you get your first house, you got something in the market, you shoot the neighborhood, “Hey, I got this house. [INAUDIBLE] another family”. Let me help you. Let me know. If somebody you know”. Blah blah blah. So, that can grow into maybe another house, another house, and boom. Then you hit your three. Then, what you do, you start back at one. So, you always got something turning and the goal that is one that is not so high, that it is astronomical. ‘Cause as you know, once you get some momentum, things just start happening. And you know, that the universe starts bringing things your way, as you could have putting it out there, “That, hey this is something that I do”. That’s not magic, you have to work for, and you got to put in effort and get over the road bumps and keep your determination, things like that. But, for me, it’s really keep it going, keep getting those singles, those doubles, if you could be hitting some more, that’s cool. But, it’s things like that. And it is not overwhelming. It is simple, its simple approach, and am a simple guy and that works for me.
Mitch: Man. Good advice. Good advice. Activity breeds activity. I know it to be tune in my life. Sometimes, when I get stuck, doing all those marketing and everything I just get out and start riding the neighborhood and start knocking on doors, and Lo and behold, just because i’m out there live in person, instead of hiding behind the computer. I just start finding stuff. People start talking to me. I start finding stuff. There is no substitution for being out there. Have you automated most of your management problems?
Mark: Well, here’s how I have. And am sure a lot of people can say they have automated what they do a lot more. To the point where they got property management companies and things like that. And I don’t have that, which is either way can be fine, what am trying to do and one of the things that which is instilled in me by my father and then by the things that I’ve been doing and learning myself, is that, I can buy nice houses that have demand that people gonna feel good in, in areas that they feel good in. So, am trying to attract a tenant that am gonna feel good about. Now, obviously you’re not gonna always get good tenants, but you can certainly have a type of house in certain type of areas that’s going to attract people that are going to be able to afford that, that might have more reason in their heart to value it, appreciate it, and take care of it. And so, of course, the screening is very important to, and I learned years ago, it is probably through either Jack Miller or John [INAUDIBLE] about having people say, “Hey, this is the rent, but am giving you this time each month if you pay before the first and you take care of any minor maintenance up to about fifty bucks in a month. You know, i’m gonna leave you alone, you gonna have a nice house”. That has been tremendous. You know, I didn’t come up with that. But, I certainly used it for years. And so, I usually get paid before the first and people usually take good care of the properties, and it is a good situation, so as far as automating it. That’s one way. I also like to have people pay their rents directly to the bank, so I’ll give them receipts, give them check numbers that is specific for the rental accounts and they got to pay the money order or cashier’s check, I just check online if it’s been paid or not, see if there’s gonna be an issue or not, and it is a good way for them to be able to do it, then I don’t have to worry about, is the check coming, is it gonna clear, it didn’t clear– you know I don’t worry about that. So, there’s a couple– again, simple ways, am a simple guy, those are simple ways and if I screen well, and evaluating the people that you got, good. Getting those credit checks with it. With all the different things now that we can really zero in on this people, is there any criminal record, lots of different things, so you are getting the best possible person in there, that could be a very good thing. And you can still feel good about this, you know good business, you know they got a family, they feel proud just have a family moved into a property and I– you just couldn’t believe it, they were somebody who needed a break, and it was such a blessing to be able to give them a break like you said, they were one of a lot of people that wanted that house and they need– fiancé’s put the insides of the house–you know, they are posting pictures that their family is in the house. Like, “OH, wow that was really nice”. So, anyway it’s all good. You know, obviously there could be challenges at times, but when you do things like that, it can help a lot. It certainly helped me all over the years.
Mitch: Folks, you are talking to Mark Walters. He is on the Phoenix- Arizona area, he’s a buy and hold guy, basically but he has done a lot of different things. He has got a lot to offer, you can go to 1000houses.com/target, T-A-R-G-E-T, and all lower case. Learn more about Mark there. Mark, it has been really great conversation. I appreciate you being on a–the show, and we’ll let you know, maybe we can talk about some other aspects of real estate investing next in the next year to come. But, it’s been a pleasure my friend. And thank you for being on.
Mark: It is my pleasure, Mitch. I appreciate you taking the time to talk with me. I love talking about these kind of things, to all the listeners, if there’s anything I can do to help someday, I hope that I can, and I wish you all very well.
Mitch: All right. That’s 1000houses.com/target. This is Mitch and we are out of here. Have a great day, guys.