Joseph is an active duty service member, and active investor. He found someone who was having success house flipping, and use him as a mentor to help him get his feet off the ground. Now Joseph is on his own and still doing a great job with his investing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Joseph England Background:
– Active Real Estate Investor
– He is the property manager for all his properties and accomplished all of this while maintaining a full time position with the US Military and deploying overseas.
– Purchased first investment property in Baltimore in June of 2015
– Now, he’s done over 20 deals, 16 buy and hold properties and four rehabs in various stages
– Specialize in rehabbing very distressed properties (rentals and flips).
– Based in Baltimore, Maryland
– Say hi to him at email@example.com
– Best Ever Book: 10x Rule
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.
With us today, Joe England. How are you doing, Joe?
Joe England: I’m doing great. Great to be here.
Joe Fairless: Yeah, nice to have you on the show. First off, thank you for your service; I know you are active in the army, so I appreciate everything that you and your colleagues do for our country.
Joe England: I appreciate that.
Joe Fairless: And then in addition, and more relevant to our podcast, you are an active real estate investor, and he has been a property manager for all of his properties, and accomplished this while maintaining his full-time position in the army and deploying overseas. He purchased his first investment property in Baltimore in June 2015, and now he’s done over 20 deals – 16 buy and hold properties, four rehabs in various stages. He specializes in rehabbing very distressed properties – I’m looking forward to hearing some of this stories – and he’s based in Baltimore.
With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Joe England: So I started out buying three rental properties. One needed about 15k worth of work, but I did it myself… I’ve had a little bit of background as a carpenter as an apprentice when I was in college, and a whole lot of YouTube videos went into that project.
The second house was actually a turnkey that we got for a pretty decent of a price; I think I bought it for 100k, and then it rents for $1,500.
Joe Fairless: Wow.
Joe England: And then the third one I actually found on Craigslist, and it was my first venture into the lower income neighborhoods in Baltimore, and it was already rehabbed, so this is technically a turnkey… At $35,000. That one rents for one thousand a month.
Joe Fairless: My eyeballs just went out of their socket with that… Holy cow!
Joe England: Yeah. That specific area actually, I sort of lucked out because some of these areas — it’s really block to block… So we found this really diamond in the rough, if you will. I found this house [unintelligible [00:04:29].09] but the whole area, probably a good five or six-block radius, just really quiet, really nice, in kind of one of not the greatest parts of town… So when other houses started coming up in that area, I started buying more of them; I bought a couple of them for 90k. Between purchase and rehab, I was averaging between 30k and 40k with these houses, and almost all of them rent for anywhere between $900 to — we actually have one that rents for $1,250 just one block away.
Joe Fairless: Those are incredible cash-on-cash returns, on the all-in 30k, renting between $900 and $1,250… I wanna talk about that, but first I wanna take a step back. You said you started out buying three properties – was that at once?
Joe England: They were within a two-month process. So me with the partner that I had, who I actually initially started with, I had recently re-enlisted, I had a bunch of money, and I knew what I wanted to do with it, so we did conventional loans on the first two, the typical 20%, they were in my name, and then what we had left was enough to buy the $35,000 house just pretty much I had the cash… Minus some emergency reserves that I set aside, I was pretty much out of cash at that point.
Then that was the summer of 2015, and then right around January – or probably the month before – I decided that I wanted to get into rehabs… One house I did do the rehab, but I did it myself; obviously, I didn’t wanna do that anymore. I wanted to hire contractors, and then I had a mentor who was a big house flipper, and kind of used him as my mentor, and then he helped me along. At this point he was living here, but he was also in the army and he had to move out of state… So he helped me in a lot of different ways, helping me out with some of his private investors, but I purchased my first rental rehab in January of 2016.
From there, I went on to do over 20 properties in 2016. That very first house was sort of the catalyst that has turned into what my business is now, which is I specialize in rental rehabs, with of course the occasional flip sprinkled in there.
Joe Fairless: And when you do the rehabs on these rentals, are they for your own portfolio, or are you looking to sell some and then use that money to buy stuff for your own portfolio?
Joe England: The rental rehabs – the goal is for my own portfolio. I have actually recently started looking into selling a few of them, sort of doing a little bit of a turnkey business, because I know that there are investors out there who are looking for a rental that’s already done, it’s got a tenant in and it’s already got property management in it… I’m setting up kind of like — that is sort of like a new wing of my operations, but for the most part they are all for my own portfolio.
Joe Fairless: Okay. The mentor who is in the army and was a house flipper and helped you learn the ropes on the rehabs… I’m assuming – but I wanna verify this – that you met him by just being in the army and you just came across him that way?
Joe England: Yes. His name is actually Ben Smith; he came to the same unit that works in the Baltimore, DC area. We instantly got along, and I just knew that he was a guy who, as he moved around from station to station, he would buy a new house in every area, and then once he moved, he would rent it out. I think by the time that I met him, he had like seven houses.
A few years later he decided to leave and head off to the next assignment, and when he did that, he decided that he was going to start flipping, and it turned out he was really good at it. After three years, he was probably one of the most well-known flippers in Baltimore, in just such a short time. His advice influenced and has been instrumental into my business, and it’s honestly a success. I wouldn’t be where I am without him.
Joe Fairless: What are some principles or tactical things (however you wanna approach this) that you learned from him that you applied towards your business, that has helped you be successful in your rehabs?
Joe England: I remember one of the first quotes he ever kind of gave to me was in regards to making offers. I remember when I was making my first offer and he asked me, “So how do you feel about your offer?” I was like, “Oh, I feel pretty good.” He was like, “Do you feel embarrassed by it?” I was like, “No.” He was like, “Well, it’s too low. If you’re not embarrassed by your offer, it’s too high.” So always go lower.
I started out adopting this principle of putting out these embarrassingly low offers, and most of them would get rejected, but occasionally – and it would happen – someone would come back and say yes, and then I suddenly got a property that was anywhere from 20% to 30% under market value, for whatever reason. You just never know… That’s my strategy when it comes to finding properties that are listed. I just see a property I have online, I look at it, I do the numbers real quick, and then I just send out these pretty embarrassing low offers. That’s how I found the majority of my houses.
Joe Fairless: Just online listings, sending embarrassing low offers, and it’s a volume game, right?
Joe England: Yeah. I know that other places this isn’t really much of a viable option, but one of the things that helps me is the fact that it is Baltimore city, and people are generally (for lack of a better word) afraid to do business in the city, for a number of reasons; we have its reputation for crime, the tenant-friendly laws, the high utility bills… You’re just dealing with the city and any type of its public work is pretty much a nightmare. But because of that, we have less competition, and then I know all the majority of the areas in Baltimore, because I drive through them; actually, I walk all of them, so I can spot areas that other people wouldn’t to find these diamonds in these roughs.
Joe Fairless: Talk to us about where the areas are in Baltimore that you see as good investment opportunities.
Joe England: This has actually changed, I would say, in the year, year-and-a-half since I started. So when I first started the actual rehabbing portion of the business, my main focus was an area known as Loch Raven. It’s sort of like a middle-income, blue-collar, working community just South of [unintelligible [00:11:27].18] University. And what was really nice about this area – the houses with the ARVs were around 150k, but we were able to get distressed homes between 50k and 65k, and they usually needed anywhere from 30k to 40k to put into it.
The margins were there, but one of the great things about this community is there were houses on Zillow that weren’t being purchased. Unfortunately, that neighborhood is now completely saturated as far as investors go, and I can’t find a distressed property there that doesn’t get swooped up by another investor… And a lot of them are new investors who are just trying to make the numbers work, and I’m getting outbid on properties; I’ll put in an offer — usually I don’t go any higher than 70k in this area, and then I’ll get outbid, and then I’ll find out that the house got purchased for $87,000. It’s ridiculous.
I think this has a lot to do with the market. As the height of the real estate market continues to raise, you get these people who are really excited about investing, and everybody wants to get into it and you have a lot of competition. But most people will go to what could be considered safe areas. Loch Raven, as far as Baltimore goes, is considered a safe area.
It got really hard to find distressed properties and not get outbid by them, so I started looking in sort of what I kind of like to think are some more of the fringe areas. For example, there’s an area in Baltimore that’s called Pigtown.
Joe Fairless: Pick or Tick?
Joe England: No, pig, as in like bacon…
Joe Fairless: Pig, got it. Pigtown, okay.
Joe England: Yeah, Pigtown, yeah.
Joe Fairless: [unintelligible [00:13:17].14]
Joe England: It’s actually just next to all the stadiums in Baltimore, just West of it, and it’s been an up-and-coming town for the last ten years, or that’s what they’ve been saying… And when I first got into it, one of the things that you always hear in Baltimore is “Oh, you should invest in Pigtown. It’s up-and-coming.” I remember first going over there in the summer of 2015 and I saw Pigtown myself, I was like “Well, this is not up-and-coming.”
Well, I just happened to go by there last year as I noticed that it was getting harder and harder to find properties in Loch Raven, and then I noticed that there had been a lot more rehabs and a lot more revitalization of that area, so I was like “Okay, well things are starting to pick up here”, so I started purchasing houses in that area. If you imagine a line of houses that are getting flipped, after a year that line moves a few blocks over… Well, I’ve essentially bought houses in preparation a few blocks down from where the houses are being rehabbed. But because people [unintelligible [00:14:19].25] block-to-block analysis, a lot of people won’t go that extra few blocks… But I first make sure that they work as a rental, so just in case that those property values don’t necessarily go up in five years, but they work as rentals, but at the chance that they do, these properties have the potential in 5-10 years to be worth $100,000 more than they are now. So that’s another strategy I’ve adopted as a rental rehab.
Joe Fairless: Let’s dig into that part a little bit, because it’s really relevant for most of the Best Ever listeners… Because when we have a submarket that we really like, and then all of a sudden it gets real hot and now we can’t find any deals, we’ve got to pivot and find the next submarket that we like. So I wanna dig in here a little bit into Pigtown, and I want to learn more and understand more about how you identify this as an area… And let me know if there’s additional things. First, I heard that you had heard for a little while that that was up and coming area, and when you first saw it, it was not, at least according to you, and now it is.
Secondly, you saw that there were already rehabs and revitalization happening in the area… Are there any more granular details or metrics or something that you can talk to us about for how you decided that this is the new submarket that you’re in?
Joe England: This is just one of the submarkets, but I think this is probably the best example of this strategy (Pigtown), but when I went and first looked at it back in December 2016 – this would be easier if I could show it on a map, but just East there’s this large road that goes down this part of Baltimore where all the stadiums are, and it’s known as Martin Luther King Boulevard… And everything West of Martin Luther King Boulevard is known as West Baltimore, and of all the parts of Baltimore, West Baltimore is known to have the worst reputation. Pigtown sits right there on the edge of Martin Luther King Boulevard, but the thing that Pigtown has in its favor is it’s right to the University of Maryland Medical Center. And one of the things that Baltimore is known for – and this actually goes back to how I pick areas – is there are hospitals everywhere in Baltimore… You know, John Hopkins and all these different satellite campuses… Well, Pigtown is one of those that’s right next to the University, so if you were to revitalize these areas, these houses, then these doctors, nurses, people who work at these hospitals would like to stay there, because it’s a good location, near the hospital, you’re right next to the stadiums, you’re a short little ride from any of the nicer parts in Baltimore…
So when we first looked, there was maybe like one or two getting flipped, and they were not that far from this particular road. But when I came back a year later, there had been maybe 30-40 rehabs in that area, and it was slowly moving West-ward, away from the road, to sort of revitalize the rest of Pigtown, and it’s been slowly moving farther West… South-West, if you will; that’s the shape of Pigtown as it leaves Martin Luther King Drive. So when I looked at it, it was hard to find properties that were right around where everybody was flipping, for there was a lot of competition. So I started looking a few blocks down, and there were a lot of houses that were either in decent condition, or they were distressed but they didn’t necessarily need a full gut… But based on the rents, I could get a house, buy it, rehab it between 60k and 70k, and they would rent for $1,200 or $1,100. Not as good as some of the profit margins that I get in some of the lower income areas, but the houses in lower income areas — and just to label one of the areas, it’s known as Biddle Street (that’s where I have a bunch of those houses).
So Pigtown has the potential of appreciating. These houses have the potential to appreciate, but the Biddle Street houses don’t. I even had them appraised last year when I was doing a portfolio loan, and the houses in Biddle Street would come out to about $35,000. But it didn’t really matter, because I owned them outright, and each one makes $1,100 to $1,200 in rent.
So going back to Pigtown, these houses made sense as far as rent goes, but with also the potential to appreciate as this line of flipping and rehabs – the whole area is getting revitalized… It may take a number of years, but I think in 5-10 years that it’s possible that this houses will be worth $50,000-$100,000 or more, because of how you looked at the history of how Baltimore revitalized some of its areas, and that’s usually what happens. The property values will definitely go up. But in case it just doesn’t — I don’t bet on that as a strategy. I don’t put all my eggs in one basket. It first has to work as a rental, so if it never appreciated and stayed at the exact value, that it still makes a good investment property. But for me that’s just kind of like the icing on the cake, the fact that it could possibly be worth $50,000 to $100,000 in a number of years.
Joe Fairless: That’s great. Thank you for walking us through that. That’s relevant for a lot of the Best Ever listeners, myself included, as we find the submarket we like, and then it gets too hot and we’ve got to identify another submarket or submarkets. Based on your experience as a real estate investor, what is your best real estate investing advice ever?
Joe England: It was kind of like a combination between my mentor Ben Smith, and I would say reading Grant Cardone’s 10X Rule. I remember going to visit my buddy Ben for the first time, and we were sitting down to talk about real estate mentor for the very first time; I went down to his basement, and that’s where his office was. I sat down there with him; he had a multi-monitor set up, and he’s multi-tasking, going through all this stuff, and he just kind of mentioned “You know, when I get off work, this is what I do. I just come down here. I love it.” He even mentioned that it’s like a borderline obsession.
Then going back to it and listening to Grant Cardone’s book, The 10X Rule – massive action, you get those massive results, but really it comes down to having an obsession for this, because if you’re not obsessed with it… It’s hard to explain, but…
Joe Fairless: You get burned out.
Joe England: Yeah, you get burned out, but if you are obsessed with it, you just go at it; I come home every single day, and there’s a lot of other things that I could be doing, but I come back, I sit down at the computer and I start going through the listings, and I start sending out e-mails, and I start sending out offers, and much to the dismay of my real estate agent, I do this on a daily basis. Sometimes she’ll get hit with 5-10 offers that she has to do every single day.
Joe Fairless: Are you single?
Joe England: I am.
Joe Fairless: I was gonna ask how your significant other appreciated your obsession and how you navigated that, but it’s a non-factor…
Joe England: Well, I would say before that I would be – call it different things – a socialite, somebody who would always go out, go to the bars, go to the clubs; I definitely had a very robust social life. Then once I started real estate, that all went out the window. Looking back at it, I could care less, because I look at what I’m doing as I’m building a future for myself, and hopefully a future family, but also for the things that I wanna accomplish in life to help other people.
One of the dreams that I have is to take a group of people over to Africa, where I’ve deployed a lot, and help with a lot of situations over there; that could definitely help more areas that have been affected by poverty and food shortage, because of warlords taking food and using [unintelligible [00:22:22].19] and stuff like that.
When I was going out in the town and drinking and all that stuff like that, I wasn’t taking a single step forward to any of that – nothing future in my life, dreams or anything like that… So that was the biggest change in my life, once I started this venture.
Joe Fairless: Yeah, what you’re doing now has staying power for now and for your future and everyone else’s around you with a ripple effect. Are you ready for the Best Ever Lightning Round?
Joe England: Yeah.
Joe Fairless: Alright. First, a quick word from our Best Ever partners.
Break: [00:22:56].03] to [00:23:48].02]
Joe Fairless: Best ever book you’ve read?
Joe England: This is really hard. I would have to say it’s between Grant Cardone’s 10X Rule and actually Elon Musk’s autobiography.
Joe Fairless: Alright, I’ll check out Elon’s. I haven’t read Grant’s, but I get the gist of it just through me studying him, and I’ve interviewed him on the show, and some things… But I really love studying Elon, so I’ll check that out. What’s the best ever deal you’ve done?
Joe England: The best ever deal I’ve ever done… That could be like a [unintelligible [00:24:16].12] answer.
Joe Fairless: Just give me one.
Joe England: I would say the easiest – a wholesale deal where I made 12k and I feel like I put an hour and a half work into it.
Joe Fairless: That’s a very good return… Even better than lawyers and doctors. What’s a mistake you’ve made on a transaction?
Joe England: I would say I always try to keep obviously emotion out of it, but sometimes there has been one or two deals where I felt like — one specifically that I raised up in price to get the deal, and I definitely regretted it later on. I still made money, but I cut it close. It ended up being a flip. After that, I just stick to the numbers; it sucks, but at the end of the day there’s always gonna be another house. That’s one of the great things about real estate. Houses are constantly depreciating; whatever rehab has been done, whatever HVAC system you put in, it’s on its way out every single day. Even new rehabs will need to be rehabbed in 10-20 years.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Joe England: You can reach me by my e-mail. I’m actually currently setting up my website right now, but for right now the best way to reach me is through e-mail, which is firstname.lastname@example.org.
Joe Fairless: Well, thank you for being on the show. Thanks for talking about how you’ve been able to grow your real estate business from when you first got started, right out of the gate really quickly on those first three deals, to now rehabbing properties and perhaps eventually developing a turnkey model as well along the way, but then really growing your own portfolio.
The macro lesson for all of our listeners is how to find a new submarket when your gets too hot. Yours initially was Loch Raven – or at least one of them you had a lot of properties in… And then you had to find a new one, so you looked at — path of progress, you looked to see where are rehabs happening, and an area that’s being revitalized, plus has some consistent job presence in the Maryland Medical Center… So the takeaway would be look for hospitals, look for other medical offices, and then also having a lot of convenience factor, in this case close to the stadiums.
Then lastly, just buying for cashflow and making sure that the property works as a rental… Although I said lastly, that’s really the top priority – buying for cashflow, making sure it works as a rental, and then if you get appreciation on top of that, as you said, that’s icing on the cake.
Joe England: Exactly.
Joe Fairless: Well, thanks for being on the show. I hope you have a best ever day, thank you for your service again, and we’ll talk to you soon.
Joe England: Thank you so much.