BRRRR Expertise & Experience with Mark Owens

Buy, Rehab, Rent, Refinance, Repeat! Otherwise known as the BRRRR strategy is the topic today. Mark Owens, our guest, has a ton of experience with this strategy and is going to teach the why and how of BRRRR investing. We get into how Mark started and how you can start today as BRRRR investor. If you’re looking for a way to invest in real estate without a lot of money, BRRRR might be the method for you!

Get in touch:

Markowens.com

[email protected]

 

Other Similar Episodes:

Why Cash Flowing Real Estate is Better than Development, with Andrew Schena

How to Build a Money Moat with Brian Chou

Mark Owens' Bio:

Mark Owens began his investment career in 2002 in Baltimore, Maryland. At that time he was a Microsoft Certified Trainer teaching upper level computer classes in colleges all over Maryland. Within a few short years he was able to leave the job and focus on growing his rental portfolio.

Since then he has acquired over 100 rental units including some mid-size apartment buildings, wholesaled close to 200 deals and done a few retail flips. Mark has figured out a way to run his business around his life- not the other way around. He spends much of his free time coaching, speaking, hiking, scuba diving, flying planes and looking for something else to do!

Full Transcript

Taylor   0:02  

Welcome to the passive wealth strategies podcast. I'm your host Taylor Lowe. Thank you for tuning in. Today our guest is Mark Owens. Mark is a very experienced real estate investor guys, he's done this so much in his career. Today we're going to talk about the BRRRR strategy, the brrrr method, by rehab, rent, refinance, repeat. It's a great way to scale a real estate portfolio very quickly without a lot of money, but takes a lot of work. You got to have a lot of hustle, and a lot of know how and resourcefulness. So Mark's done many of these and today he's going to teach you about how he did it, how he scaled and lessons that he's learned along the way. For those of you who are new to the show, I'm your host Taylor load. I'm a real estate investor. I buy multifamily real estate with passive investors and split the return. I love talking about investing. I love talking about real estate and I love learning alongside you with all of our great expert guests, I learned a lot in this one.

I'm not a brrrr investor myself. But there's so much to be learned from the strategy, that process and like I said, the resourcefulness here. If you're thinking about getting into brrrr, Mark has a ton of knowledge in this space and he shares some of it today. So without any further ado, here we go with Mark Owens. Mark, thanks for joining us today. Hey, thank you, Taylor. appreciate you having me. Happy to be talking with you. You have a great story. Can you walk our listeners through where you were in the corporate world to where you stand today? Please sure you want the short version of the long version? Let's go to the short version: you have a lot of knowledge to tell us you know, let's get it your story and get to the knowledge. Yeah.

 

Mark Owens  1:44  

2001 I was in the IT field. I was a Microsoft certified trainer. I was making between 130-250 a year invested in the stock market, you know, before the.com bust and I was in the bubble and I thought I was skilled at it. Because I was making money, and then the market crashed and I realized that I wasn't skilled. I didn't have any idea what I was doing. But the good news is I didn't lose what I put in, I just lost all the money that I made. And I was sitting around for like a year and I'm just like, man, I, you know, I was living below my means I stayed in the townhouse, and my wife and I still live in. And I just kept saving money. And I thought, Man, what the hell am I going to invest in? And years earlier, I've had an interest in buying rental properties. I thought, you know what, I'm going to try to buy a rental property. And then I thought to myself, I'm not gonna buy one I'm gonna buy like, between 10 and 20. Because my goal at that time was I wanted to be an independent consultant, and my wife wasn't working, we had a job, and she was going back to school, so she wasn't going to work for four or five years. And that meant that if I lose my job, you know, say something stupid, I get hit, or I get sick and there's no money coming in. So I thought I want to buy enough rentals that throw off enough cash just to cover my basic living expenses. And above my first one, and the truth is like, I instantly got addicted to the cash flow. I just bought a car. I think it was a Nissan Xterra like two weeks before I bought this rental property, and I remember that my car payments were like 312 a month in the cash flow from this property was $325 a month. And I'm sitting there at the settlement table and I realize, like, man, my tenants are buying my house and they're buying my car. Like, this is awesome. And then I'm starting to do the math like man, like I get another property and that's gonna pay my gas and electric bill and my cable bill. And I'm starting to see this in my head like, man, each tenant is gonna knock off another chunk of one of my bills, like just one less thing that I have to worry about. And I think the first year I probably bought maybe eight properties and that was like 2000 march of 2002. I bought my first one by the end of that year. I think I've probably picked up like eight units and the next year Continued and what happened was, uh, and maybe we can talk about this later on. But, you know, after a couple of years, you know, like the cash is starting to dwindle, you know, I started I think at 120 to start, and that was running out back then you can put down 10% you could finance the rest. And I've discovered this brrrr method. I thought I actually invented it, I wish I'd given it that name and written a book on it, because then I wouldn't have to do anything. Right. And, you know, I just started buying bigger properties.

You know, once I realized that I could use other people's money to do this whole thing, I started buying, you know, mid-sized apartment buildings like, I guess like 10. The biggest building that I own right now that I've ever bought was 18 units. And for a while, for a few years, I was looking for buildings that were 10 units and all that needed renovation. And it took about a year to find each one each one was about a year but I get a bunch of doors I get between 10 and 18 doors every time I did that, and it would cash flow well when I would get stead of you know 20 or $30,000 next Yeah, we get to three or four or $500,000 in equity. And I kept doing that for a while. And in the meantime, I'm watching my friends, like, continue to buy houses. And this was after the crash around 2007 2008. I see all my friends buying these houses, like they're really cheap. And unfortunately for me, I kind of still had a scarcity mentality, kind of like, Man that we hit the bottom yet and I don't know if anybody else is fine. And

 

And finally, I just got up off my butt and I said, you know what I mean, what's the, you know, I'm buying for cash flow, it doesn't matter what the property's worth if I buy it for 70 minutes worth 60 A year later, like, I don't care as long as it's cash flowing. And then I started buying houses again. And it was probably my third or fourth year somewhere in that range of buying rental properties that I realized that I could actually quit my job that I didn't have to like to work for other people anymore. And I partnered up with a wholesaler Or, and, you know, we started wholesaling, I guess, around 2005.

And for a few years, I actually made even more money doing that than I was making when I was an IT business. And I did the smart thing, in my opinion, I just took all the money I was making, and I just kept buying properties I didn't, I didn't raise my standard of living significantly, we went out to dinner more often and stuff like that. But like, I didn't go buy a $90,000 car or a $700,000 house or any of that stuff. I was really more interested in freedom and Financial Peace of Mind than I was trying to impress people. Because the truth is that most of the time, the only people that are impressed by your car are people that don't have any money. People have money, they don't care about your car, they care about your money, like how are you doing that? How much do you make, you know, is it reproducible? Is it scalable? You know, the people that my friends that I have that I grew up with don't have any money, they don't talk about your car, man, where'd you get that how much to pay for, you know? And not all of them, but some of them and so on. I just took kind of my own advice and just just kept my standard of living pretty much the same and just invested my money and into my business.

And eventually it got to the point where I'm at now broke up a little over 100 doors. My wife still works. She loves her job, but the income isn't 100% passive, but the truth is I make my own schedule, you know, if I want to sleep till 10 o'clock tomorrow I can. If I sleep till 10 o'clock tomorrow, I'm gonna wake up with a headache for the rest of the day. I usually get up at like, six 630 anyway, just because I like the mornings and that's kind of like the short version of the story. Sorry if it was too long.

 

Taylor   7:37  

Oh, no worries. And for those for reference, for those out there listening, it is 7:24pm on a Sunday. So Mark is out there doing that even though he doesn't, quote unquote necessarily have to. But something I've wanted to dive into you with today is the brrrr method. For those out there listening to this super basic they Don't know, buy rehab, rent, refinance, repeat, buy the property, fix it up, put a renter in it, refinance it, get a bigger loan on it.

So you get your money back out. And then you repeat by doing more just to have those basics on the table. Because you can go read about that. We have an expert here today. So Mark, I wanted to talk to you about some of the details of actually executing that strategy of specifically where we stand today, you know, in the market are people you've coaching clients, are they finding deals on the MLS? Where are they finding deals? How many are they looking at before they're doing a deal? I mean, let's let's, you know, get into the process here.

 

Mark Owens  8:41  

Sure. Let me talk about the brrrr real quick. For any of your listeners that like I've ever done rehabs read books about rehabs, right? That stuff, there's typically like there's a very basic formula that rehabbers use to help evaluate a deal. And I'm just going to keep the numbers very simple. Since we don't have a whiteboard or anything. It's going to keep the Numbers very simple. You start at the end, which is what is the after repair value of the property, like after we fix this house up and sell it, what's it going to be worth, and we're going to use in this example, we're going to say that the ARV, or the after repair value is $100,000. Then let's run that through the formula. 70% of $100,000 is $70,000. Then we subtract our repair costs. So we'll say for this example, we have to put $20,000 into the house to fix it up and paint the carpet kitchen. Dude, maybe do some landscaping, so we need to put $20,000 into it. So we subtract that from a 70,000. So 70% of 100,000 70,000 minus 20,000 for repair costs, gives us 50,000.

That's the most a rehabber should pay for that property. So they buy it for 50. They put 20 in it, they sell it for 100. You don't make 30,000 off of it, because we're having Your transaction costs when you buy it, your transaction costs when you sell it, your holding costs for the six months, nine months that you're holding it, you know, and, but maybe you're gonna make 15,000 on it. That's the typical formula that a rehabber will use. And when I realized I'd done a few rehabs and then I thought to myself like, Man, what if, what if instead of selling the house, I go to a bank, and refinance the house, and in back then banks were doing like 80% LTV.

So if the house is worth 100 in the bank will give me 80. Then I get all my money back, I get my purchase of 50 my 20 for the money that I put into it and 10,000 for the transaction costs, I'm gonna get all my money back. Now, here's the question that people have is like, well, then I got $70,000 Well, that's what hard money lenders are for. You know, use a hard money lender for the whole thing. You know, for the purchase for the renovation. You know, you probably need some money in the bank, or you can ever have a really good reputation or like a rich aunt or something like that.

 

But a bit hard money lenders are the key to really scaling your business. And when I first heard of hard money lenders, I was like, Man, you know, people are telling me it's like, 12% in three points. And I thought, Man, that is really some hard money. You know, that's, like, you know, I was almost offended by it. And then, you know, it was explained to me, it's like, Look, man, these people are like your partners, you know, they're putting up all the money, you know, so you're going to do the work, they're going to do the money do you want to give them half the profit in the end, or just give them 12%? A couple points. And I did the math, and I thought out what percent a couple points is I'll actually make more doing that. And, and so that's the method that I use. So let's just go through it again.

The B is the you know, for the brrrr method, the B's by the how you buy it, you can either use your money or hard money or Atlantic credit. You know, wherever you're going to get the money. You're going to buy it, then you're gonna renovate it. property, you're going to fix it up, then you're going to rent the property out, then you're going to refinance to pay your hard money lender back or to get your money back from wherever you got it from. And then you can repeat. And the good news about this is like, let's just say that you have $100,000 it, most people probably don't, but let's just say you do, you have a couple of choices. One is you can go buy a turnkey house, and then you're out of money, and you gotta wait to save another hundred thousand to buy something.

The second option is, you buy one for 50, you put 20 in it, by the time you're done, your closing costs and all that other stuff, maybe you're in a fraidy when you only got $20,000 left. Now you gotta save up another 60 before you do it again. If you use hard money, let's say that stuff doesn't work just perfect. And at the end of the day, you're out of pocket five to $10,000 you can still get between 10 and 20 houses. Plus you can get a bunch of equity. If you get a turnkey house for $100,000. You have zero equity, you're actually a negative equity. In a sense, because if you get to sell the property by the time you're done paying the realtor, and you know, maybe if you have to pay any type of transfer tax or recreation or anything like that, if it cost you 678 $9,000, just to sell your house, so you're gonna have to get six or 7% appreciation just to break even. So when you look at it like that, and you run all the numbers, it really makes sense to do the brrrr method.

And I'm not our personal hard money lender, I have no interest in lending people money, it's like I'm just saying this is the way it works if you want to scale yourself. And that's how I was able to buy a seven unit building, a 10 unit building to 10 unit buildings, a 13 unit building, a 14 unit building, an 18 unit building and a whole bunch of houses with very little out of my pocket. I can't remember though I probably have used any money out of my pocket for the last 10 years of owning properties. And I did all through the brrrr method. And for people that want more, you know, I mean I gave all the details pretty much but if you want to read more about it bigger pockets has some great articles on it. So just you know do the search bar and type Be might be or how many R's it is, and you'll find some really good information about it.

 

Taylor   14:05  

Nice. So I think as far as the nuts and bolts of this whole process goes, probably my biggest questions about it are, okay, I'm not a rehabbing expert. How do I know if I've identified these things as property needs? How do I know what that's gonna cost? I mean, I'm not, you know, a general contractor or whatever. How do you start figuring that out?

 

Mark Owens  14:32  

Yeah, that's an excellent question. What I would suggest to people is like if you're new to the business and you really don't know that stuff, I cannot under emphasize the importance of networking, this business going to local meetups, going to local real estate investor association meetings, you know, taking a guy like me out to lunch, you know, it's like you can you can spend 20 bucks by somebody's lunch and have practically a seminar, an hour and a half, on, you know, like the ins and outs of the business. Those are some of the places to start. There are some basic things like very basic stuff, like, you know, and I'm just speaking about my market in the Baltimore area. If you want to rewire a whole house, it's about $7,000. If you want to reform a whole house, it's about $7,000. If you want to put in new artwork in a furnace, it's about $7,000. windows are about $250 each.

So some of the stuff is very basic. And when I go like when I walk a property, if, you know, one of my clients says, Hey, Mark, you know, I saw this property I'm interested in buying, would you look at it with me, we start in Baltimore, we have basements. And there's some parts of the country that are close to the water, you know, southern Florida and they don't have basements. But we start in the basement, because that's where the money is that that's where you're gonna see the plumbing, that you're gonna see the electric that you're going to see the back that you're gonna get to see the joists, if there's any termite damage, or if there's any flooding in the basement. So I started the basement and I worked my way up when I went up to the second floor. You know, I'm looking at the ceilings.

I'm looking for any evidence of any kind of office Water penetration, you know, in Baltimore, and again, it's just my market, a flat roof. That's the roll rubber that they you know, the torch down rubber, typical Baltimore row house the roofs about $2,000 I think at a terrible if it's going to double, but if they're just going to go right over top of it, it's about $2,000 keep it six months over code, it's gonna last you 20 years. So some of the numbers, the big numbers are very basic, I would suggest that if somebody doesn't know the numbers, then they want to, you know, find somebody else that does and go spend, you know, a couple hours with him a couple of different properties and ask them to just give them some ideas of what they would the things cost. Don't get your information off of YouTube. Don't watch any of these videos on YouTube and just assume that because you know, it costs $15,000 to get the vac system in Nevada in or like San Francisco that's going to cost the same thing in Memphis because it's not so you really want to get your information from local guys that are doing it.

 

Taylor   16:58  

Yeah, yeah, these pool of HGTV you is probably not where you want to

 

Mark Owens  17:02  

learn and that is the last thing you want to watch. Man, that is the last thing I can't stand. I never watched it and never watched it.

 

Taylor   17:10  

No way guys like you are too busy out doing things in

 

Mark Owens  17:14  

the real world is and that is not the real world. Yeah,

 

yeah. It's like watching any of the other reality shows, you know, it's just it's not real.

 

Taylor   17:22  

Yeah. So as far as finding these deals, I mean, are you right now? Are you your clients, finding these types of deals on the MLS or through wholesalers? And you know, as far as scale how many you looking at 240 start making offers and closing on and stuff.

 

Mark Owens  17:42  

You know, for me, it's different for me because I've been in the business a while so I can pretty much look at a deal and evaluate pretty quickly. But as far as where we find the deals, they have been asked by them in MLS. We do find them through wholesalers. I do go to auctions or regular basis either the courthouse auctions for foreclosures, which can be tricky, because a lot of times you can't get into those. So you really don't know what because you have to assume the worst case, even if it looks great on the outside, the inside could be trashed. And then also on site auctions, and we're fortunate in Baltimore, where we have auctions just about every single day. But those are some of the places it's also known, I mean, if you want to send out mailers, you know, yellow letters, postcards, you can do that or hang signs on the poles, the bandit signs.

I mean, there's a lot of different ways. If you want to shortcut on wholesalers, you can just do the kind of marketing that they do. Fortunately for me, because I've been in the business for so long, and so many people know who I am, when a deal pops up, that fits my criteria. A lot of times my phone will ring and say, you know, Hey Mark, I got this property over this neighborhood. I know you're buying over there. And I can a lot of times figure it out a good deal or not without even just because I knew the blocks in the streets. I could have some kind of idea whether that's a good deal or not. But one of the things I would say Just people that are newer. If what you want to do is pick an area like find that area where other investors are in the Baltimore area, like one of the popular neighborhoods is called Valley or Addison.

And what I would tell a new investor to do is like, Look, you want to find a real estate agent that is very familiar with rental properties, because most of them are, you know, most of them. They're really good to get a first time home buyer, the big downpayment and great credit. That's who they like, go show him houses and make a fat commission. With investors, we are a tough crowd. Man, we are really tough because we're going to be looking at stuff and running numbers. And a lot of times real estate agents are gonna have no idea what we're even talking about. And so what you want to do is you want to pick your neighborhood. And then you want to find an investor friendly agent that's familiar with what you're doing, and ask them to set you up with an auto search. And what they're going to do takes some five minutes we're going to draw an outline on the map, run a route you like. And then every day or every week, or how often the listings pop up, you're gonna get an email telling you what listings have come up in the last day or two, you don't want to just see the ones that are listed. You also want to see the ones that are under contract and the ones that have sold.

So let's say by Friday, you've gotten 15 houses emailed to you that I've got listed that week, which you want to do spend Saturday or Sunday, driving around looking at those houses from the outside, don't go knocking on the doors gonna look don't go looking into Windows, or anything like that. You want to sit out for a look at the house, maybe jot down a couple notes and say, okay, they're asking 70,000 for this, or 50 or whatever it is. And you do that for a few weeks and you're going to start to learn that market. You're going to learn the street, you're gonna learn the blocks, you're gonna learn what people are asking for the houses. So if you drive around for a few weeks, and you see the houses are selling for 80,000 a year 80 to 9078 94 8060 or 60. What's that? That looks like that could be a good deal. The rest of them are probably retail.

You just got one that's, you know, 20-30% of their retail that could be a good deal for you. That's the one that you want to call your agent to say, Hey, listen, I'd like to get in and see this house. That's the way that you learn your market. As soon as other wholesalers and stuff like that, know that you're interested in that area, then and when you get deals from those wholesalers, you're going to be able to evaluate whether or not it's a good deal or now more than likely before you even leave your house because you've already been driving that neighborhood you already know the prices and I wouldn't say pick a big area if you live in Richmond don't pick Richmond pick like a half of a zip code and that's like you can't learn any man if you got a city with a half million people.

There are too many streets, too many blocks. And in some cities like Baltimore for blocks can mean a half million dollars in difference in values. You know, we've got some neighborhoods where the houses are 678 hundred thousand dollars and four blocks away the houses are $20,000 so you know, don't let the wholesaler give you the $600,000 comps for a house that might be worth 70,000 And after it's fixed up. So you really want roads.

 

Taylor   22:03  

That's a good point. I mean, you mentioned picking a half a zip code and the zip code that I live in and you mentioned a Richmond or I live. It's split by a fairly main thoroughfare and north of the thoroughfare is the higher end nicer area. South of that it, the values go down quickly, as you get further,

 

Mark Owens  22:23  

that that's where the money's at Reynolds,

 

Taylor   22:26  

in that downward trending region.

 

Mark Owens  22:29  

So you see, like the D plus two b minus areas, solid seas, you know, seas are where most people are working, you know, we got decent jobs, but it's not, you know, it's more blue collar areas. I can tell you how I evaluate the neighborhoods, but that's maybe a different

 

Taylor   22:44  

show. Maybe a different show. All right. So you mentioned doing your own mailers. I like the idea of taking control in your own hand, especially if you've got a laser focus and maybe a handful of square blocks that you're interested in. You're going to laser focus target that area and send mailers. What do you think about doing that yourself? Should you put your own phone number on the letter and say, Hey, give me a call. I'm interested in buying your house. What do you think about that?

 

Mark Owens  23:13  

Alright, man, I've sent out thousands and thousands of letters. There's two big websites, yellow letters, and yellow letters complete. Those are the ones that most of the wholesalers are using. And they actually have templates that are put together and all that.

As far as where you're going to get your you know, we're going to get the names and addresses of the people you can buy mailing lists, figures now as we're talking, I can't think of the name of the company list source. com is a big one, this source that's it. This source and there are other ones in Baltimore, you can get a CD that's got all the names and addresses like the entire database for the city, you can actually buy it. Most of the people in Baltimore don't know that. So big. It's like 400 bucks and you get the entire like 600,000 properties.

 

And it's on an Excel spreadsheet. Can you imagine?

 

Taylor   24:00  

I can tell you Richmond city at least used to, and I think they still do used to give away the master file in a CSV comma, comma separated file

 

Mark Owens  24:10  

website for free just now. I mean, I'm gonna start buying stuff in Richmond Now,

 

Unknown Speaker  24:15  

let me know

 

Mark Owens  24:16  

is that what you do is you know, you just get your yellow letters together, you get that list of addresses and names, you send that to yellow letters, complete, yellow letters, and then they'll send the letters out for you. But what you want to do is you want to screen your list, like you don't want to buy, you don't want to send letters to houses that people live in. Because you know, it's probably not going to be a birth deal for you, if they're gonna have an emotional attachment, they're probably going to want to get a real estate agent involved and stuff like that.

So you really, and you don't want to get a house, you don't want to send letters to people that just bought the house two years ago, you know, because we're probably not going to sell it. It's something that's going to be a deal for you today. So you really want to look for stuff where they've owned it for longer than 10 years, and that they're not owner occupied. And that's, you know, those are going to be the deals that you're going to want to farm.

 

Taylor   25:01  

So are you generally targeting investors, people who are renting these properties? And maybe people who have inherited them? are you targeting like out of state owners, or just generally? Absolutely

 

Unknown Speaker  25:11  

you

 

Mark Owens  25:12  

you can screen it down further like that, like out of state owners, you might want to screen out the ones that are owned by the LLC, because a lot of times those investors may be a little bit more sophisticated and they want to get top power. It could be it could be, I mean, there are just so many different variables with it. So, you know, the big ones I would start with would be, you know, non owner occupied, which is going to either mean, it's like other investors are people, you know, grandma passed away 10 years ago in the family store as the house can be stuff like that. So non owner occupied out of state owners are good.

A lot of times I don't like LLCs. And I want people that have been in the properties for at least 10 years. I mean, there are other methods people use probate lists, you know, for people that have recently passed away that family has to sell one or more properties that they on how to deal with that specifically I've had friends that Do you know that have friends that do like specialize in a tax liens, stuff like this for me they're just too much work.

And and I don't I don't want to deal with a I mean, this is just my personal thing like a family just lost somebody that they care about. I don't want to be trying to like beat them down and price for you knowing that person's house. I just prefer not to do that kind of business that says anything wrong with it. I just don't feel comfortable with it.

 

Taylor   26:25  

Yeah, yeah, I can appreciate that. And it seems to me that that's such a popular strategy that people who are on those probate lists or tax lists, whatever, they're getting so many letters that how are you going to make your letter stick out so that

 

Mark Owens  26:41  

Do you have a good position? Right? Yeah.

 

Taylor   26:46  

Okay. So Mark, is there anything else you wanted to share with us before we take a break and get into my three favorite questions for all

 

Mark Owens  26:54  

hands? You know what this is if someone's listening to this, and they've never Bought a rental and they're thinking about it, you know, I don't care if they're gonna, you know, buy a rental or they want to do a syndication or something like that. The one thing that I can say is there are two things that you need to be successful in this business. You need guts, and you need knowledge. If you got guts, and no knowledge, you're probably gonna go out and buy something stupid. If you have knowledge and have guts, you're gonna have that analysis paralysis thing, and you're just gonna sit there trying to look for the perfect deal, which doesn't exist.

So it takes both. And if you're thinking, well, man, I don't have anything to work. I don't have any knowledge. I don't have any thoughts. I don't know what to do. The first thing you do is you start to get knowledge. You go to these meetups, you get a raise, you listen to podcasts, you start to get the knowledge. And as your knowledge level increases, your Gods should naturally come up with them because you know, it's hard to have guts when you really don't have any idea what you're doing. And you know, I always use this analogy with like, you know, kissing your girlfriend or your boyfriend or your best friend the first time you do it.

It's really hard and scary. And then the second time a little bit easier, and by the time it's the fifth time, it's much easier. And it's the same thing with buying properties or doing syndications or anything else. The first time is the scariest, it's natural, it's normal. If you're just going to go out and buy something, you're not nervous about it, then you need to talk to somebody taking medication. It's, it's normal to feel like that.

But you know, just arm yourself with a knowledge man, just learn your neighborhoods, talk to other investors that are doing it, nothing beats that you meet other people that are actually successfully doing it. Nothing's gonna give you more confidence than that. So that that's one of the things that I just wanted to make sure that I was able to nail down was just, you know that right there.

 

Taylor   28:43  

Nice. I like that a lot. I think it's very important. You know that exposure and experience can really help us get used to doing well, you know, whatever the thing might be, in this case, investing in real estate. One thing I still hate doing, despite having done it a bunch of times is wiring Money we need to come up with.

 

Mark Owens  29:03  

Well, you know what the attorneys do that most of the time. It's a little weird but you know what I mean? It is just about every time I wire money, it's always going through the attorney's offices. So I feel a little bit safer like that. And I'm usually dealing with local people. You know, if I'm gonna wire I'd be a little hesitant to wire like $60,000 to my Nigerian uncle or something like that.

 

Unknown Speaker  29:25  

Oh, hesitant about that.

 

Taylor   29:27  

Yeah, yeah. Now there are definitely things we can do to mitigate that risk. But still, it's still It feels like throwing a ball over a fence and making it hoping to hit a sorry place. But anyway, we're gonna take a quick break for our sponsor. All right, Mark, I got three questions. I asked every guest at the end of this show.

 

Unknown Speaker  29:47  

Are you ready? Bring it all man.

 

Taylor   29:49  

All right. Number one, what is the best investment you've ever made, other than your education

 

Mark Owens  29:58  

the best investment ever made. I shouldn't say my wife. But I know we're talking about real estate. So she's the best. But as far as rentals, I would say the first one was the best investment I've ever made, because it might have not been financially the best investment for me. But it was the first one that got me over the hurdle over the fear. And I've learned so much from it. So then again, it was the hardest one. So I would say that the first investment was the best investment I ever made.

 

Taylor   30:27  

Absolutely, going back to exactly what you said before we went to the break, is putting your foot out there getting started and then you ultimately get used to it in the first one. First step is very important. Now on the other side of that, sometimes it's hard to admit our failures or our hardest lessons learned. So what is the worst investment you've ever made? You know,

 

Mark Owens  30:53  

this is going to be really kind of, it's true, what I'm going to tell you is true. I've never made a bad investment. And I know, you're gonna say that, okay, here's the deal, every investment I ever made, I made it with the information that I had available at the time. And sometimes you get additional information later on, that didn't factor into your decision making. And then maybe it turns into a deal that wasn't as good as you thought it was going to be.

But that wasn't a mistake that I made. I made my decision based on the information I had. And the one thing that I would caution people on is, you know, partnerships are really tough. So I've had partners with a few different ventures, and two or three of them did not go well. And I'm in one right now, we're a friend that I ended like 14 units together, known the guy for years, you know, he does his part of the business. I do my part. He did what he naturally gravitates to and I did the part that I naturally gravitate to. And I trust the guys like a very, I mean, you could trust him as much as I do. He's just such a very decent, honest heart. Working guy.

So like, I don't have anything to worry about, we do have a very strong operating agreement. In the event that something happens to him awry, like it's all stalled out what's going to happen? So he's protected, I'm protected. But back to your original question about like, you know, the worst deal or anything like that I haven't had any bad deals, you know, based on my numbers on cash flow. And it's the most important thing to me. And all my properties have done very well.

 

Taylor   32:26  

So you know, if we would want to take a quick diversion in that way, because before we started recording, he said something very similar to that. So cash flow versus appreciation. I mean, you've been in the market long enough that you've certainly had the benefit of appreciation. Did you plan on that? How do you advise your clients to think about appreciation versus cash flow? What's your stance on you know, comparing the two and planning on

 

Mark Owens  32:50  

the cash flow is king, if you buy 10 properties with no cash flow and to go vacant, well, who's going to pay the mortgages on those and the repairs and you know, All that stuff, cash flow is king appreciation is I don't ever count on appreciation ever.

If I get it, that's the cherry on top, I buy my properties based on whether I was looking for that first start or 30% cash on cash return. And if my numbers hit that if I buy a house for 70 I make 30% off of it and 30 years later I sell it for 70 it's fine with me perfect money back and I made 30% on that money for 30 years that works for me. If it goes down in value $10,000 I'm not really gonna care because in 30 years, I'm going to be free anyway. So most of my properties, you know, it's a I don't even have 30 year notes on most of them. They're much shorter than that. But cash flow is king. I would argue with people about appreciation in 2005 2006 2007 and most of them are out of business now.

Because when the market tanked and the rents were going down because they were buying in nicer neighborhoods and the rents were going down, then, you know they didn't have enough money to cover their costs. You know, appreciation looked great again. It was like me investing in the stock market during the.com bubble. I thought I was skilled. Well, the whole market was going up. I didn't have any skill. I was just stupid. It's the same thing. Now. It's like if you buy for appreciation today, and good luck, you know, you're we're gonna be interviewing you in 10 years asking about the biggest mistake you ever made in real

 

estate.

 

Unknown Speaker  34:22  

Cash Flow, is it? Cash Flow? Is it

 

Taylor   34:25  

cash flow? Is it nice? So my favorite question out of these three and we might have hit on it already, but we'll see. What is the most important lesson that you've learned in investing?

 

Mark Owens  34:37  

The most important lesson I've learned in investing, trust the numbers, trust the spreadsheet and go with your gut man your gut, is there's no books written about this. It's not sexy. It's not talking about how rich Are you going to be a millionaire with the yachts and all this crap? Go with your gut.

 

That is probably

 

one of the things that saved me money. More often than not, you know, it's easy to get the numbers in your head and the spreadsheets are very important. But for instance with a tenant, if a tenant shows up and in their application looks great, you know, the credits good, you know, haven't been any trouble. And incomes are good. And all you may do is a home visit and the house we're living in, it looks good, everything looks good. But your guts telling you like, man, something just doesn't feel right.

 

And you don't know what it is?

 

And then six months later, you're evicting. Yeah. Because you know, stuff happens and you're done with your head didn't. And how many times have we said that in our life, man, I should have gone with my gut. Happens all the time. And I could have had a whole nother podcast on me explaining that and the way that that whole mechanism works. I'm just telling you right now, man, your gut knows more than your head does. So go with your gut.

 

Taylor   35:52  

I like that. I like that. So, Mark, thank you for joining us today and telling us about the birth strategy. It's a strategy that people are using very successfully and have been for a number of years as you mentioned, you thought you invented it, but people had known about it before that

 

Mark Owens  36:09  

I was like Christopher Columbus, I thought I discovered it. I didn't know there were already people there.

 

Taylor   36:13  

Yes. Already people there. Leif Erikson had already shown up as well. So you weren't even the first year

 

Mark Owens  36:19  

it was new to Chris, you know, so you gotta give him credit.

 

Taylor   36:22  

Yeah, that's right. And and we are tomorrow as we're recording this tomorrow is Columbus Day or peoples day. So I like

 

Mark Owens  36:28  

the intention to speak today.

 

Because that's a whole different story. Hey, listen, there's another thing and we're going to talk about this Taylor, if we ever, you know, Devin on the podcast, the seller financing thing, man, I've done a lot of deals with seller financing. And one of my clients a couple days ago, we went to look at a house.

And it was kind of a weird deal. And I looked at there was an agent there and I said, you know, ask the other agent if the owner we consider owner financing. And my client called me back a couple hours later and said yes, he'll finance it. So man, you got it. Ask you have to ask. And so this could turn out to be a really good deal for the guy. I've done a whole lot of owner financing and it's one of my favorite things so we'll talk about that later.

 

Taylor   37:11  

Nice well everybody out there Stay tuned for appearance number two we're going to talk about seller financing but for now, Mark if people want to get in touch Where can they contact you to learn more about you like his stuff? Okay,

 

Mark Owens  37:23  

I then my website is Markowens.com My email is [email protected]. I gotta keep it simple, man. I got too much other stuff to remember. I don't wanna have to remember my email address. A Facebook Mark Owens REI, Instagram, Mark Owens Rei. I think that's it. LinkedIn same thing. I don't even know why I'm on LinkedIn. I don't have a job.

 

Taylor   37:46  

The least fun of this social network. It's definitely

 

Mark Owens  37:49  

  1. Yeah, so that's it. That's that's where you find me.

 

Taylor   37:53  

All right, great. And to everybody listening, the links to all of those will be in the show notes as well in case you missed anything or you can certainly rewind and listen again But Mark pronounces thank you for joining us once again and sharing some of your knowledge.

 

Mark Owens  38:07  

Thank you so much Taylor. Hope you have a nice evening.

 

Taylor   38:09  

Hey to everybody out there. Thank you for tuning in. If you're enjoying the show, please leave us a rating and review on iTunes a very big help. If you know anyone out there that could use a little bit more passive wealth in their lives. Please share the show with them and bring them into the fold for now. I hope you have a great rest of your day and a great week and we will talk to you on the next one. Bye bye

 

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About the Host

Taylor on stage

Hi, I’m Taylor. To date I’ve acquired or partnered on over $250 Million in Commercial Real Estate Investments. I help busy professionals invest in multifamily and self storage real estate through my company NT Capital

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Real Listener Reviews

Extremely useful podcast
Extremely useful podcast
@thehappyrexan
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Short, impactful with excellent guests. If you have a full time W-2 job or business and are looking for ways to get involved in real estate on the side, this is for you.
Simple & effective information!
Simple & effective information!
@jjff0987
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This podcast is worth listening to for investors at all levels. The information is simplified for the high level investors but detailed enough to educate seasoned investors about nuances of the business. I recommend!
Awesome Podcast!!!
Awesome Podcast!!!
@Clarisse Gomez
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The host of Passive Wealth Strategies for Busy Professionals podcast highlights all aspects of real estate investing and more in this can’t miss podcast! The host and expert guests offer insightful advice and information that is helpful to anyone that listens!
Great podcast!
Great podcast!
@Owchy
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Love all the information and insights from Taylor and his guest. Fun and entertaining. Highly recommend.
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