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Cash Flow Endorsement

Meet Justin W., a law enforcer who does cash flow endorsement! Find out how a police officer got interested in making a passive income, what software Justin is using for his business, and what advice he would give to a new investor who is considering turnkey operations.

Cash Flow Endorsement

What You Will Learn About Law Enforcement to Cash Flow Endorsement: 

  • How a police officer got interested in making a passive income
  • How Justin discovered Cash Flow Savvy and Epic Real Estate
  • The specifics of Justin’s first property
  • The problem that occurred with that property
  • What made Justin confident to jump into Property #2
  • What software Justin is using for his business
  • How Justin is getting his rents
  • The biggest lesson that Justin has learned from his REI experience
  • What advice Justin would give to a new investor who is considering turnkey operations
  • Something that Justin knows now that he wishes he knew when he started doing real estate

Whenever you’re ready, here are a few ways we can help:

Work with me One-on-One

If you’d like to work directly with me on your business… go to REIAce.com, share a little about your business and what you’d like to work on, and I’ll get you all the details!

  • Would you like to meet in person? Our next live event is right around the corner! Go to EpicIntensive.com for the details.
  • Become an Epic community member at The Epic Real Estate Investing Show 
    One of my favorite things to do is share with investors the latest and greatest tactics and strategic friends I make. I do it every week and you can listen in by subscribing to The Epic Real Estate Investing Show podcast on iTunes – Click Here.
  • Grab my book, Epic Freedom ($1) 
    I frequently hear from people looking into investing in real estate for the first time, “How long is it going to take?” So much so, I wrote a short book about the 2 easiest and fastest strategies to a paycheck in real estate. You can grab a copy for $1 and I’ll pay the shipping – Click Here.
  • Join our Badass Investor Program and be a Case Study 
    I’m putting together a new Badass Investor case study group at Epic Real Estate this month… stay tuned for details. If you’d like to work with me on your real estate investing, go to FreeRealEstateInvestingCourse.com to get started.
  • Also, check these out:

Thanks!

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Transcript:

Speaker 1: This is Theriault Media.

So you wanna be a real estate investor, but you don’t wanna do the work. If there were only a way where someone else could do it for you. Now there is. Tune in here each and every Saturday on The Epic Real Estate Investing Show for Turnkey Saturdays, with your host, Mercedes Torres.

Mercedes Torres: Ladies and gentlemen, without further ado, let me introduce to you an awesome individual, the young gentleman that happens to serve the county of Los Angeles as a police officer. Welcome to the show, Mr. Justin W. Welcome.

Justin W.: Hello.

Mercedes: Awesome, Justin. Thank you so much for joining us. And you know, we’re going to cut to the chase. Why don’t you introduce yourself and tell us a little bit about who you are?

Justin: My name is Justin. I grew up in the county of Riverside, lived in Los Angeles probably about the last 12 years. I became interested in passive income in college, with a business professor who suggested to the class that we read Rich Dad, Poor Dad. And then I started doing a little more research after college. A buddy and I kind of looked into it together, and started listening to the podcast and reading books, et cetera. I’ve worked as a police officer for the last seven years, seven going on eight years. That’s pretty much it. On my off time, I’m working on trying to build or retire early.

Mercedes: Awesome, awesome. You know Justin, I’ve said for a very, very long time, you, by far, were the youngest Cash Flow Savvy real estate investor. I know you have acquired three properties. You are now working on number four. But up until last year, you were our youngest client. So that, I don’t know if you knew, but kudos to you. Very good. You know what, interesting you said that you were kind of forced to read Rich Dad, Poor Dad. I often wonder, what if we substituted in our school system a classic like The Catcher in the Rye for Rich Dad, Poor Dad? What kind of an impact would that have on our young society?

Justin: There’s a lot of things in our school system that we could substitute. I love the memes that talk about how they teach about parallelograms, and they teach you about math and all this other stuff that, most of it you don’t use in your real life. But yet things like taxes or balancing your checkbook, they don’t even talk about.

Mercedes: I know. I absolutely agree with that. And that’s a whole other podcast. I’m sure we could discuss that a while. As Matt and I always say, we are so grateful that we found that book. So to those who have not read it, it’s an absolute read.

Justin: It’s funny. It’s not even that the book is all that specific. It just is a paradigm shift. It teaches you a whole new outlook. It doesn’t really teach you, necessarily, too many specifics on what to do. You still really have to figure it out. But his book is great in that it motivates you and kind of just changes your viewpoints on things.

Mercedes: Yeah. Absolutely agree; absolutely agree. After you read the book, how did you discover Cash Flow Savvy and Epic Real Estate?

Justin: Actually, my college roommate was listening to the podcast, and he’s always kind of been … I don’t know how he came across it, but he’s always been kind of interested in real estate and investing, and businesses, and et cetera. He suggested the podcast to me, and so I started listening on my commute to work. A podcast here, a podcast there. That’s kind of how I was turned onto it by him.

Mercedes: Awesome, awesome. So if you don’t mind me asking, Justin, how old are you now?

Justin: I’m 32. I’ll be 33 next month.

Mercedes: And how old were you when you first got started in real estate investing?

Justin: I think I was … When I bought my first property with you guys I was 28 or 29. I think I was 29.

Mercedes: Awesome, awesome. Well very good. So to this point, how many properties have you acquired with Cash Flow Savvy?

Justin: I’ve acquired three, and I’m in escrow on my fourth.

Mercedes: [inaudible 00:04:38] you are actually in escrow, and I’ll have you talk a little bit about the process. But tell me about your first property. Do you remember… I’m sure you remember specifics, so do you mind sharing specifics about that property and what it’s done for you?

Justin: Yeah. My first property was a duplex in a suburb outside of Cleveland, Ohio. The economy was a little different back then, and the market was a little different back then. The property that I acquired there, I bought outright and paid about $50,000. It’s a duplex that each level has been … The rental income’s been a little over 500 each month. It’s been a great property. There’s been ups and downs, obviously, along the way. Problems, just like with everything, but it’s still cash flowing strong.

Mercedes: Awesome. So I would imagine that that’s one of the ups, that it’s been cash flowing strong. Do you mind sharing what that return is at the end of the year since you’ve had it for several years?

Justin: Yeah. I don’t know the exact percentage but after everything … The property taxes are a little bit higher on that property, but after everything I probably bring in, I would say at least 7,000 after paying everything. At least $7,000 a year on that, 7 to 8.

Mercedes: Well, Justin, that’s not a bad payday for your first rental. Awesome. So that’s part of the ups.

Justin: Yeah, definitely.

Mercedes: Yeah. So share with me part of the down. You said there had been ups and downs. I like to keep it very real with just, not only our listeners but just our clients. With real estate, there are ups and downs. So the ups [crosstalk 00:06:35] it has been an amazing run because I hear very little complaints about that. Share a down with me.

Justin: With investing, there’s always going to be downs. With real estate, there’s always going to downs. There’s always going to be problems that come up, whether it’s something needs … there’s a leak or a water pipe that breaks, or whatever. But a great example of a down for that property would be my interaction with the city. The city is a smaller suburb outside of Cleveland, and they have been pretty … They’re pretty strict. They have all kinds of … They’re not an HOA, but they have rules similar to an HOA. They’re very strict about the upkeep of your property, the upkeep of your house, et cetera.

I have gone back with them over several different things. And nothing has been awful, except for when my experience got a little … Right after the winter one year, there was a tree that was on my property that a couple of branches had broken and fallen off the tree. And the city sent a notice to … They sent it to me here in California, and I think they also sent it to the property, saying that the branches and … There were a couple of fallen branches on the property that needed to be cleared.

So I called my property manager and said, “Hey, I think we need to have a company come out and clear it, and take care of that.” So they did. They hired a company that came out, they cleared all of the branches that they felt were on the property. What the property manager didn’t realize was exactly where the property line was, and I guess from where they were was … They thought that part of my property was actually part of the neighbor’s property, so they missed one large branch.

The city sent another notice, and I called the inspector, and said, “Hey, I took care of this.” And they said, “Okay, if you took care of it, don’t worry about it, there won’t be a … it’ll go away.” And sure enough, I got another notice. And I called them, and I said, “Hey, I took care of this.” And they said, “Yeah if you took care of it, it’ll go away.” And then I got a notice saying that they were going to issue a warrant for my arrest for failing to follow up with this municipal code, or for violating this municipal code. So I called the inspector again. I said, “Look, I need to know specifically what’s going on because I’m in California. Plus, I’m a police officer. I can’t have a warrant out for my arrest.”

And it turns out that there was a branch that was on my property line, exactly on, just barely on it, that had fallen, that my property manager didn’t understand was on my property line. So the city was trying to arrest me over a tree branch, and it was this huge ordeal. Finally, we got it taken care of, but it was a little bit of a headache.

Mercedes: I get it. I get it. In Cleveland, they do have something called a point of sale. That is exactly what it is. So basically, as you said, it’s an HOA but it’s run by the subsidiaries of the main city. So although it’s a [inaudible 00:09:56] of Cleveland, Cleveland has subsidiaries like Brooklyn Heights and Shaker Heights and Maple Heights, and different subsidiaries that way. And each one is run by their own municipality, so to speak. So one has nothing to do with the other, and sometimes they do get a little anal, so to speak.

A tree branch, one could argue that it can be potentially a hazard, but the reality is, issuing you a warrant for the arrest would be a little bit silly. They just want you to take care of it. So, so glad you got that taken care of.

In the interim, Justin, what was the interaction with the property manager? Was our property management team helping you? Were they collaborating with the city? What was that experience like?

Justin: Yeah, the property management team that I have for that property has been nothing but helpful. The actual property manager, not the owner of the company, but the property manager that I’ve been working with, has changed people a couple of different times. But they’ve all been … It’s been a great experience with that company. They’ve been nothing but helpful. And they were working as hard as they could to work with the city and figure out what was going on, especially the current property manager. She actually used to work in probation, their local probation department, so she kind of understood my problem, my plight, and was working to figure it out. We got it all resolved; it just was kind of a miscommunication that-

Mercedes: A pain in the ass? Yeah.

Justin: Yeah. The point of sale inspector that I was dealing with, obviously I’ve never met him, but I kind of just picture this old, crotchety, should be retired man in his 70s who’s got nothing better to do but enforce this little finite municipal rule the way he deems it should be.

Mercedes: I’m willing to bet, Justin, your description is probably 99% accurate. So I feel like I’m on the same page. Awesome. So that was property number one, and then we acquired property number two and three. So tell me, even after that experience, what made you confident to jump into property number two?

Justin: I don’t even know that I would say it’s confidence. It’s more just, in order to increase my passive income, the best way for me to do that is to diversify the properties I have. So the more properties I have, the less risk I’m going to have because that risk is spread across all those properties. So just, the more you acquire, the easier. I mean it’s going to be stressful, obviously, because it’s going to demand more of your time, and you’re going to have more things come up. But the less … Any of that cost and the risk will be spread across all those properties.

Mercedes: Right. You’re absolutely right. So that’s kind of what contributed to property, the acquisition of property number two and three. And now we’re working on number four. And you are actually actively in escrow during your due diligence period, am I correct?

Justin: Yes, ma’am.

Mercedes: Fantastic. Now when you go through the Cash Flow Savvy process, you get assigned a personal transaction coordinator to kind of walk you through the whole process, hold your hand, answer questions, and do all the fact work that is done, that is necessary to bring this investment to fruition for our investors. What’s that experience been like for you, Justin?

Justin: It’s gone really well. You and your team are definitely far more organized than I am, which is helpful because they can help facilitate the whole transaction, and make it go pretty well.

Mercedes: Yeah. Well, your job is to combat the bad guys. Our job is to make your life easier, so a little bit of a difference there, in what we do for a living here, Justin. So once you put the property under contract, what happened? You chose a property. After you’ve chosen a property through our queue, you said, “I want to move forward on this property.” You got a contract with your due diligence period, and then what happened?

Justin: With this property, there’s going to be a loan, so you start the load process with the bank, all the usual financial documents, and they’re going to want to know the background. If you don’t have a loan with them for that property, they’re going to want to know the background for that property, whether you own it outright or who you have a loan with, et cetera. Then also you’re going to start … During the due diligence period, you’re going to do any of your inspections. You’re going to get your photos. You can go do a walkthrough of the property if you want to, or if you’re like me and you’ve never been to that state, you can have somebody else do it.

Mercedes: So tell me about-

Justin: You can hire a contractor or-

Mercedes: Awesome. So tell me about that. You are in Los Angeles; this property that you’re buying is in Ohio. Tell me, how are you doing your due diligence from the comfort of your own home in California?

Justin: Well, I could definitely book a flight, fly out there, drive out there, go look at the house, go look at the property, go do all of that. And if it was California, and I was buying a house, I would … like the house I live in, obviously, I did all that. But with these houses, I really … To me, they don’t really matter specifically what they look like, because I’m not living there. It’s just an investment. And I’m not a construction guy. I’m not a general contractor. I’m not an inspector. I don’t have that background. So I really would only be looking at it aesthetically; I wouldn’t know exactly what I’m looking at compared to having a contractor or an inspector or somebody with that experience and knowledge base to go walk through the property.

So really I lean heavily on those people and have to trust the recommendations that I get from people, and usually, the escrow companies are going to have, or the people that you guys work with are going to have recommendations. But I have to trust their knowledge base and use that, really rely on them to look at the property and determine whether or not there’s anything that … or it’s going to be a good investment or not.

Mercedes: Yeah. After all, you do hire a professional that gives you a full-on inspection report that’s anywhere from 30 to 50 pages. So you do get a very detailed report, despite the fact that you don’t fly out to Cleveland to walk the property yourself. Awesome.

Justin: Oh, yeah. If I were to have to walk through the property and write my own report, it would be a page. Half a page [crosstalk 00:17:00].

Mercedes: And this is why you hire experts to do it for you. Awesome.

Justin: Yeah. Even when I bought my house in California, I was … because the house I live in, I actually rent out the other rooms that … I bought a four-bedroom house so that I could rent out the other three rooms, and that, for the most part, covers my mortgage. And when I was looking at houses, I really didn’t care what the house looked like. Obviously, I wanted it to be in an okay condition so that I didn’t have to remodel it; I didn’t want it to have termites or holes in the walls or things like that. But I didn’t care what it looked like. I didn’t care about the layout. I didn’t care … I cared where it was because I care about the resell value. I care about it having decent schools nearby, and access to the freeway, and things like that, because … it applied to the resale value or my commute.

But really, the actual specifics of the house, I don’t plan on living in it forever, so I didn’t care. And it’s the same with all my investment properties.

Mercedes: Yeah. You strictly just run the numbers and make sure the property is up to code, safe, and that the amount of work that needs to be done to the property in the next couple years, you kind of mitigate that with the inspection report, so that you know that’s not going to be an extra expense for you in the future. That’s smart. You’re just looking at-

Justin: Yeah, exactly.

Mercedes: Yeah, you’re just looking at the numbers, and you’re evaluating it as strictly an investment property. And I think that’s really a smart way to look at it. I don’t think you’re going to go bad … I don’t think that that is going to go bad for you any time, simply because people are always going to need a roof over their head. So you’ve got the right idea. Awesome.

So what would you say, Justin, has been the biggest challenge through this whole process?

Justin: Probably for me, that would be organization skills. I am not an organized person, so keeping track of bills that don’t directly affect me, because I’m not living in the house … In my duplex in Ohio, the sewer bill, I have to cover, because it’s not something that’s split. So it’s something that I cover out of the rent. And keeping track … It’s just a whole new set of things that, it’s kind of forcing me to become … to set up systems and use programs, reminders, and things to really make sure that I don’t miss things.

Because I’ve had, once or twice, a couple of late fees because I missed things. It’s just kind of out of sight, out of mind. It’s easy to walk into your house and you’ve got a utility bill sitting on the counter, and you see the lights on in the house, and it reminds you that you have to pay it. But something’s that out of state, if the bill doesn’t come, I just don’t think about it. So it’s really forced me to become more organized and set up ways to avoid problems.

Mercedes: That’s interesting, Justin, because our typical investor is a busy professional. So they implement programs. Some people do it on just a standard Excel spreadsheet. Others just piggyback off the property management software system that their property management is using. What are you specifically using, if you don’t mind sharing?

Justin: I like … There’s a Quicken version for small business/home … for small business investors that I like. And then I just use … I set up alerts and reminders on my phone. But I try to do all my paperwork on that. It makes it easier for tax season, too.

Mercedes: Awesome.

Justin: I know how to use Excel, but I’m not a huge fan of it. I prefer something that’s a little more user-friendly.

Mercedes: Cool. So being that you’re in California, and now you’re working on property number four, how do you get your rents? How do you receive them?

Justin: Actually, it kind of depends on the property. What I’ve actually been working on right now is, I’m setting up a separate account. Because I have been, up until now I’ve been kind of intermingling all the funds into my personal bank account. But I just set out, am working on setting up a business account for all my properties to be deposited in. But anyway, most of them are, they’re direct deposit into my account. One of them, they still send me checks. I kind of like when they send me the checks, just because it forces me to sit down and take a look at how much rent I got, and what was taken out, and any additional expenses I had or things that had to be repaired in the property.

If it’s just directly deposited in my account, it’s kind of out of sight, out of mind, and I don’t look at it as closely. Or not necessarily as closely, but just as often.

Mercedes: Awesome. That’s interesting that you say that, Justin. Most of my investors are technologically savvy. Not that you’re not, but they prefer to have everything automatic, or automated. Then I have those investors that actually still prefer a paper check because they can’t see their property, they can’t drive to it, but they can certainly hold a check, known as mailbox money. So believe it or not, I still do have those old-school investors that still want to get that paper check that they have to still deposit, going to the bank. A lot of them probably take a picture of it.

But you’re absolutely right, Justin. You have to figure out what’s going to be the easiest way for you. And you’re now starting to get to the point where four properties, that’s a lot to keep track of now. So the fact that you’re finally segregating it, that’s awesome. That is absolutely awesome. And you’re going to find that once it’s segregated, it’s going to be a little bit easier for you to keep tabs on. So kudos to you.

Justin: Yeah, four properties are the point where I can decide, I’ve got to get more organized. I think I’m even going to go the extra step and go and buy a laptop that I only use for my investment properties, and just almost treat it like it’s a … I mean it is its own business, its own … just as separate entities. Separate it from the rest, but my personal laptop that I use all the time. Just kind of keep it separate and that’ll keep the mindset that it is separate, and force me to be a little more organized with it.

Mercedes: Got it. Got it. So tell me this. What is the biggest lesson that you’ve taken from this entire experience as you work on property number four?

Justin: Besides don’t mess with the point of sale inspectors because you’ll get arrested? I would say it’s definitely that being at least somewhat organized is important. Or if you’re not organized, like me, just finding a way to help with that. Because we have so much technology available, and there are computer programs and virtual assistants, and all kinds of different things that you can use to really help you stay on top of stuff. Because if you don’t, it’s literally just going to cost you extra money.

You miss deadlines, and you’ll be charged late fees. Or you’ll be issued warrants, or you’re just going to have more problems if you don’t stay on top of it. Not that it’s a full-time job. It’s not like every day I’m sitting here slaving away over a computer. But it literally takes an extra couple of hours every month. It’s not a huge time investment. It really depends on if things are going well, or things are going poorly. I’ve spent my day … I’ve been in a court building waiting to testify, and I’m off in a corner talking to either a property manager or a city inspector, or whoever it may be, trying to fix whatever problem that I have going on with that property.

You just adapt. And most of the time, when things are going well, it doesn’t take very much time. If you set up systems in place to keep things going well, it’s just going to take less time.

Mercedes: Well said, sir. Very well said. So what advice, Justin, would you give a new investor who’s considering buying and holding properties, or just considering a turnkey operation? What would you tell them?

Justin: If it’s advice for the turnkey, it’s definitely a lot easier. I’ve got a buddy at work who actually bought … It’s funny. I pretty well … There are 350 people that I work with at my station, and obviously, I don’t know all of them. But on my shift, there’s like 40 of them, 40 people, 40 officers. I’m pretty well known for having my own properties that I invest with, and a lot of people are interested. People are always asking me about it, and when they find out about it, usually I’ll get new people that ask me about it. People are always interested, but very, very … pretty much nobody ever goes through and actually takes the next step.

I’ve been here, I’ve been a police officer seven years, and I’ve been working with a lot of these people for most of that, and I’d say two people have actually taken that next step. One of them was already investing. He was investing at a pretty slow pace, and he and I, we were working together one day, and we sat down and we looked at the numbers. I showed him that if you diversify, and if you keep buying properties, that there’s a level you really have to get to where it’ll start taking off. And the numbers really made sense for him, and he took off and ran with it, way … I think he was already a little further ahead than me. But it really gave him that motivation to buy the next several properties, and he’s gone pretty far with that.

Then the next person was actually the guy that I wouldn’t have really expected, but he was looking for some investments, and he started talking to me about this. And he’s actually contacted you recently. I think he’s starting the process, from what I understand.

Mercedes: Actually, he’s already been approved, and he’s already looking at properties. So thank you so much, Justin, for sending your clients, or your partner, our way.

Justin: Yeah. There’s some really intelligent people that I … some of my friends that are really intelligent people, that they really understand it, but they just don’t take that step. And it’s kind of hard to break the status quo, take that step in life and start something new. It’s really just, it takes a lot of effort to break out of your rut and do it. But once you … You just have to do it. Once you do it, it’ll get [inaudible 00:28:23].

Mercedes: Yeah. I hear that all too often. I hear that more times than not in a day. I hear that often. So that’s some great words of wisdom, Justin, considering that you started in your 20s, you’re now in your early 30s, you’re working on property number four. And the fact that you’re saying it takes a few hours out of your month, you need to be organized, and you’re working on your fourth property, I’d have to say that less than one percent of America actually does that. So you think outside the box, you’ve been thinking outside the box, and it’s going to certainly set you apart.

You’re already set apart at the station. So that just goes to say, I think you’re doing something right, Justin.

Justin: I hope so.

Mercedes: Awesome. Awesome. So Justin, last words of wisdom. What’s something that you know now that you wish you would have known before you got started?

Justin: I know where my property line is, and I wish I had known that a couple of years ago. But as far as advice before I got started, I would say that I think it’s just like I was saying for the last question. It just takes that first step. Because I was looking at this for a while before … I read Rich Dad, Poor Dad when I was probably 21. I think I read it my senior year at college, and I didn’t start buying properties until 27, 28. And I think what was holding me back was, I was … California’s kind of a difficult place to, not only invest in but even just buy a property.

I was waiting for my career to start, and I was waiting to buy my first, the house that I live in now. I was kind of waiting for all my ducks to be in a row. And it took me four years to find a job as a police officer. Not because I wasn’t a good candidate, but just because I would get through the process, and then they wouldn’t hire me. They wouldn’t be hiring anyone, and I would just time out on the list.

There’s never going to be the perfect time to do something. You literally just have to do it. And there’s absolutely no reason that I couldn’t have been buying properties when I was 21, 22. Even if that meant I was still renting a room from someone somewhere, I still would likely be in a better spot than I am now. Not that I’m in a bad spot, but I’d be further along had I started earlier.

Mercedes: Right, right. Yeah. I hear you.

Justin: I knew the information; I just didn’t act on it.

Mercedes: You know, it’s fear, and it’s very, very common. And let’s just say, it’s never too late to get started. So I think your words of wisdom are going to touch somebody out there, and hopefully, are going to make a difference for at least one person.

Justin, thank you so much for taking time out of your crazy schedule because I know you do work crazy hours, as most police officers do. So thank you for serving our community. Thank you for your time, sir. And for our audience, thank you for tuning in. I truly hope that Justin’s story was insightful for you.

Whenever you’re ready, here I am, and here’s a way that I can help. Got to cashflowsavvy.com, and that is savvy with two Vs. Download The Frustrated Investor’s Guide to Passive Income. Book a call with me, and I’ll be more than happy to see how I can help you get out of the rat race.

This is Mercedes Torres for Cash Flow Savvy, brought to you by Epic Real Estate and Theriault Media. See you next week.

Speaker 1: Does your money work for you as hard as you do for it? If not, no worries. You do not have a money problem. You merely have an idea problem. We’re cashflowsavvy.com, and we’d like to share a new idea with you around income real estate that can transform your financial future and accelerate its arrival. Go to cashflowsavvy.com, and download a free investor’s package. Cashflowsavvy.com.

You do not have a money problem, merely an idea problem. Cashflowsavvy.com. More ideas; less worries. Cashflowsavvy.com.