Unlike 99.9% of real estate investors, Jennifer saw opportunity in 2007 and 2008. She was able to buy projects that builders were losing for pennies on the dollar, finish them, and sell them for huge profit. Inventory was everywhere, good labor was cheap, all she needed was the capital to get the ball rolling. Find out how she did it in this episode of The Best Real Estate Investing Advice Ever Show.. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Jennifer Beadles Real Estate Background:
- Real estate investor since 2007, builder and founder of Agents Invest
- Agents Invest is a referral service for real estate investors to connect with investment savvy real estate agents in markets across the country
- Also has a GC license, focuses on new construction, and owns a 17 unit rental portfolio
- Say hi to her at http://agentsinvest.com/
- Based in Snohomish, WA
- Best Ever Book: 4 Hour Work Week
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TRANSCRIPTION
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 of that fluffy stuff.
With us today, Jennifer Beadles. How are you doing, Jennifer?
Jennifer Beadles: I’m doing great, Joe.
Joe Fairless: Well, I’m glad to hear it, and welcome to the show. A little bit about Jennifer – she has been a real estate investor since 2007; also a builder and a founder of Agents Invest. In case you’re wondering, Agents Invest is a referral service for real estate investors to connect with investment-savvy real estate agents in markets across the country. She also has her GC license, focuses on new construction and owns a 17-unit rental portfolio. Based in Snohomish, WA. With that being said, Jennifer, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Jennifer Beadles: Absolutely. My background – when I was 21 years old I bought my first house, and that really kind of catapulted me into real estate investing. I got hired on as an admin for a local builder/developer, and really just became totally immersed in the building development. I did everything from bigger developments, we did [unintelligible [00:02:01].08] we did single-family houses, small multifamily… And then also on consulting projects for other builders.
I did that for two years. That was kind of the best and worst time to get in – that was 2007 to late 2009. When I got started, everything was booming, life was good, everything was great. By 2009, everything was not so great; the banks were literally coming to us saying, “Hey, we’re taking this 40 acres back. We don’t know what it is, we don’t know what we have.”
So kind of coming in at a really early age, I got a really good viewpoint of a great market and a bad market. I took that opportunity and started what I call the build-to-sell strategy. I quit that company the day after I bought a house-hack duplex… And I took friends and family and said “Hey guys, it looks like there’s blood on the streets, but I see a ton of opportunity out there.”
I kind of worked with some local builders that were losing their projects – what I mean by losing their projects is literally they had permits and had foundations in the ground and the banks took their loan… So I came in and helped them negotiate some short sales, and kind of pulled some friends and family together, we purchased those projects, finished them out, and just made a killing on the profit side. It was a great time to build, because the costs were down, there were a lot of available workers who were willing to get things done.
So yeah, I really kind of focused on that. That was my starting strategy with real estate. I had also gotten my real estate license about six months prior… So I was kind of doing a couple different things with that. I was taking the opportunity of some projects that we were able to hire for a really fantastic price, able to acquire some listings as a real estate agent and doing that, and then able to kind of help friends and family make some really great investment opportunities, and a great return on their investment while doing that.
I have had to pivot as the market changed, so I kind of took a lot of the profits that I was making on that side and turning that into passive income streams. So from build-to-sell we kind of went into house flipping, and then some buying rental properties… And we have had more units in the past; my husband and I have been kind of taking the properties that just aren’t cash-flowing as much and going into other properties that will just cashflow more.
Currently, my focus — kind of two things, really… Just getting into more new construction projects. We took about two years off from building, just because we were doing way too many things – we were doing building, and flipping, and I was helping other investors build and flip and buy rentals, and we were buying houses at the courthouse steps, and doing a lot of different things… We were doing house-hacking and live and flips as well, so I kind of said, “Okay, let’s put a pause on the build-to-sell” and now we’re getting more back and more focused personally on the build-to-rent, on that strategy, and then also doing some out of state investing.
Joe Fairless: How long have you been investing? 2007, so that’s about 11 years… There are a lot of professionals who want to do what you’re doing, and start as an admin or on the ground level of a company, but don’t make the transition from an admin for two years to then you’re working with local builders who are losing their projects, negotiating with banks on short sales and then finishing out the projects with your own crew and people that you hire, and then bringing in investors along the way… What things did you do that you think might be unique, if you were to look at it objectively, that other people might not do?
Jennifer Beadles: That’s a really great question. I think for me – I get confidence in numbers, so I saw the opportunity in these projects. I think the numbers worked so well… I worked them sideways and backwards and said “Gosh, okay, if we can’t sell these things, what could they rent for?” So I think my ability to see all angles of these projects and then confidently say “Look, investors, I’ve worked the numbers sideways, backwards and these different ways. Here’s how I think this thing can work.” I think that’s one thing.
Then I think the other thing is I’m pretty good about putting teams together. I know my strengths and I’m very aware of my weaknesses… So when I was now doing these projects on my own, not through the company that I had worked for, I went to the superintendent that they had laid off six months ago, and called him out and said “Hey, what are you doing?” He said, “Well, look, I’m about to go get a job at Home Depot”, because no one was hiring; they weren’t’ looking for superintendents back in 2009… And I just said “Look, I can’t pay you as an employee, that’s not really the business model I’m going after, but if you’re willing to take a chance with me, get your GC license, you know how to build (he’d built hundreds of houses a year), and I have investor capital – we can finish out some projects.” He took a chance on me.
So I think it was just these two things – having the confidence in yourself that you can do it, and then assembling the right team to make those things happen.
Joe Fairless: What do you think are some characteristics that people look for in order to take a chance on someone?
Jennifer Beadles: Well, I think confidence is really important. For me, I want to deal with confident people… But confident people that also will explain the downsides. I think sometimes there’s arrogance and there’s confidence. I think sometimes arrogance comes in where you think that you won’t lose, there’s no downside or there’s no potential to lose, and that I tend to steer clear from. But confidence is someone that can accurately explain the numbers, explain the business models, and then say how they’ve kind of covered any potential losses, or where losses could be found, and kind of their plan for mitigating that. I think that that’s super-important.
I thought, okay, if I’m an investor in what I’m offering, what would be important to me? What would I need to know in order to take the next step? I just kind of covered all bases, really. That’s how it worked.
Joe Fairless: You had two years working as an admin, and then right after that, during the downturn, you were negotiating with banks and helping the local builders who were losing their projects negotiate with the banks on short sales… How did you learn how to do that?
Jennifer Beadles: I kind of learned as I was going through it, but I also had a lot of people to lean on. There were a lot of other agents that I had made contacts with… Short sales were very new in 2009. It was kind of like “How do we deal with this?” And prior to that, I also had some banking relationships. The banks would come to us and they truly didn’t know what they were foreclosing on or potentially doing deeds in lieu on; they just didn’t know what stage of construction or stage of short platting these projects were in… So I just kind of understood what the bankers were looking for.
And the banks were under a lot of scrutiny too, with the FDIC… So it wasn’t really that difficult of a conversation. Of course, I wanted to help the other builders out, trying to get them in a situation where they wouldn’t be left with a large note with the bank either… So I was kind of just really looking out for everyone, and to be honest, Joe, I didn’t really know what I was doing; I just asked the right questions and really kind of thought “Okay, how can I make this a win for everyone, not just me and my investors, or just the builder?” I think it was just really kind of trying to put everyone together that made sense for everyone.
Joe Fairless: You’ve got a 17-unit portfolio currently – what does that consist of?
Jennifer Beadles: Small multifamilies. Mostly two to four-unit properties, and then we’re building another one right now, so that will be 19 units with that one. But mostly I love bread and butter duplexes, triplexes, fourplexes.
Joe Fairless: And why are they bread and butter for you?
Jennifer Beadles: They’re easy. Most of our properties have decent yards, and they’re easy to rent. Our tenants stay a long time, because they’ve got a nice yard, they don’t have tenants above them or below them; a lot of times our duplexes — my probably favorite product is a duplex where the garages connect the units… So you’ve got [unintelligible [00:10:10].02] maybe 20 feet or more.
For us, that’s just easy. It’s easy to finance… I’m very familiar with the income ratios that we need, and things like that. For us it’s just easy. The tenants stay a long time. Half of our rentals are rented out through this program called Supported Living. I’m gonna keep saying easy — most tenants stay often times 10-15 years, their rents are guaranteed, they come every month… There’s a provider that provides care for these tenants, so we don’t get involved in anything on that end… So yeah, for us it’s just easy.
Everything we own, kind of oddly, is single-story, so we don’t have to deal with decks, and two-stories, things like that. We maybe get one call every 45 days. We self-manage everything but our out-of-state, and it’s just easy. Easy and profitable.
Joe Fairless: The Supported Living program – how did you hear about it and why would other landlords, if you’re looking at it objectively, not do that program?
Jennifer Beadles: The way that I heard about it was I was looking at a property that was a triplex, and it was listen actually as a group home, which is a totally different category of what this property is. So it was listed as a triplex, as a group home, got it under contract because the price was just great, and learned that it actually was in a group home, which requires licensing and certifications and things like that.
So I just learned about the program, I asked a lot of questions… The tenants were all intellectually disables, so they were with disabilities there… And we loved it so much that we started acquiring more units specifically for them.
The potential downsides though are that there’s a little bit more wear and tear to the properties. Sometimes the tenants, if they’ve got walkers or things like that, you’ve got some walls [unintelligible [00:11:48].25] and things like that… Or on occasion, if they’re having a bad day, something will happen to a wall or a door, so we’ve gotta kind of deal with them on that…
I like the long-term… We kind of go for hassle-free rentals, and knowing that we’re not gonna have tenants turn over every year or things like that… No matter if rooms are vacant or whatever, we always get the rent. So there’s a lot of positives, but like I said, the downside is there’s a little bit more wear and tear.
Joe Fairless: And why not have 100% of your rentals instead of half be on the Supported Living program?
Jennifer Beadles: We’re actually working towards that. This new duplex that we’re building right now, it’s gonna be for the Supported Living program. Some of our rentals are in areas where they don’t have a need for that, because the providers also have to consider the staffing. In some of our areas they just don’t have staff coverage, so that’s really the only reason why we haven’t converted those.
My hope would be that they would find staff in that area and we can kind of convert those throughout the years.
Joe Fairless: Of the 17 that you’ve got, not including the duplex that’s being constructed, how many are out of state and where are they?
Jennifer Beadles: We just have the one duplex right now in Greenwood, Indiana, which is just outside of Indianapolis. So there’s two units there.
Joe Fairless: And you’re in Washington state, so how the heck did you end up buying a duplex over in Greenwood?
Jennifer Beadles: Prices got pretty expensive here in the Seattle Metro a couple years ago, they kind of skyrocketed, which is great when you own properties, not so good if you’re looking to acquire more… So I kind of went about this (I guess) journey of investing out of state. I had been very pro Seattle market for a lot of different reasons, and didn’t really have a reason or desire to invest out of state… And a year went by and we hadn’t bought anything yet. I said, “Okay, we really need to start looking…”
So yeah, we just started doing research. I was looking for areas that have population growth, low unemployment, low crime, good price-to-rent ratios… I had identified a couple cities, and then I went about building the team, because I realized you could find the best deal in the best market in the world, but if you don’t have the right team, then it could be a really terrible deal.
So I just happened to kind of line up a good team there in Indianapolis, and they found me the exact product that’s my favorite; they found me a rambler duplex, 3-bed 2-bath each side, 1,200 and some change square feet, units connected by the garage… So I went for it, and I got a really great deal, a really good property.
Joe Fairless: What was the all-in price and what’s it rent for?
Jennifer Beadles: The purchase price was $155,000. We did go ahead and renovate that, so we put about $19,000 into the renovation on that. It’s currently renting for $2,235, and it’s now valued I think at about $250,000.
Joe Fairless: You mentioned earlier that what attracts people to take a chance on someone is confidence, but also not only “100% confidence, let’s go full-steam ahead”, but also explaining the downside… So what’s a deal that you’ve done that didn’t work out?
Jennifer Beadles: I had one early on when I was doing a lot of flips… I was buying at the courthouse steps, and what had happened is I had had a lot of success really early on, and just to be honest, I started to get pretty confident in myself and my abilities. I had this discipline though, before every auction I would set a number, and I would say “If it sells for a dollar over this number, then that’s okay. I’m stopping at this number.”
So this particular Friday I actually had a couple of friends, agent friends, that were coming to the auction to see how it would go. And I’d set a number on a certain property, and because my friends were there, and I was kind of showing them how it goes, I found myself at a point where I had won a property (won the highest bid) and I ended up being about $30,000 higher than my stop number. Sure enough, that was the only property that I’ve ever lost money on. I ended up losing about $19,000 on that flip.
It was a fantastic lesson. One, I was kind of showing off in a way to my friends… I really just wanted to win at the auction and kind of show them “Okay, this is how it’s done, this is how you do it.” And there was a couple other things… With every property there was a couple characteristics that I’d look for; I’d always look at the PUD meter (the power meter) and if the little tag was red, that meant that there was a safety issue and it would shut off due to that. If the tag was yellow, it was shut off due to non-payment; green means it’s on. And I don’t like basement properties, but of course this property was a basement… And I didn’t check the power meter that day, and when I went back after buying it, I realized it was yellow, which meant power was off… And it has a basement, which means that [unintelligible [00:16:30].15] and when there’s no power and it’s the rainy season… Anyway, I got into the house, and the basement had standing water, and mold… So anyway, this property taught me a lot of lessons, and I paid dearly for it and I was in some ways kind of happy to pay that money, because that was just a really good lesson, and… Hey, stick to your numbers, don’t try to show off, and stick to the checklist on these properties.
Joe Fairless: What are some daily habits that you have?
Jennifer Beadles: Daily habits… I’m a big believer in you have to kind of take care of yourself – your mind, your body – in order to perform at the highest level. For me it’s eating really healthy in the morning, kind of doing some morning routines… I’ve got a three-year-old, making sure that she has some attention early in the morning before she goes where she goes… Those are kind of personal habits.
Then I also — not so much daily, but every single week I review our investments and I look for opportunities to improve, I look for lessons to be learned… So kind of some of those things – a lot of review and reflection.
Joe Fairless: The “eat really healthy” – what do you eat?
Jennifer Beadles: I do a lot of greens. My morning smoothie, I’ve got this Udo’s Oil, which is Omega threes and Omega sixes… I do some protein powder… We have a little garden at our house, we live on an acre and a half in Snohomish, so I do my kale every morning in my smoothie, powder greens, things like that – just really starting the morning off with just a lot of nutrition… Because I talk on the phone a lot; I look at deals all day long, so I’ve gotta be really on it.
Joe Fairless: How much of a focus is Agents Invest of yours? We haven’t even talked about that.
Jennifer Beadles: Yeah, so that is actually a newer focus. About two years ago we had gotten to this place where our portfolio was paying out six figures every year, and we were really happy with where things were, but I felt like I was missing something. What I was missing was contributions.
Prior to that, my husband and I didn’t really openly share about our portfolio and what real estate investing had done for us; it was just kind of mostly with our investors. So I made the decision to be more focused on contribution, and really what turned into with that out-of-state deal that I bought – I said “Gosh, it was actually kind of difficult for me to put a team together out of state. I wonder how many other investors have experienced the same thing.” They’re wanting to invest outside of their local area, but maybe running into issues of putting teams together, or just not finding good people.
So I started teaching and sharing – I do a monthly meetup, and really kind of my goal for Agents Invest is to share strategies and help people learn about real estate investing… And then number two is connect them with vetted teams in different markets, where they’re gonna achieve a high cashflow, they’re gonna get equity, and they’re gonna have the ability to connect with really great people to help them execute on their strategy.
So I spend a good amount of time doing that as well; that’s just my passion project. The weekend before last I actually had done something totally new. We flew in about 21 investors into Oklahoma City, and I showed them around the city, met with the teams that I have there, and we just had a lot of fun. We did a lot of networking, different activities, and then also looked at a lot of properties, some small apartment complexes, and then a lot of 2-4 unit properties as well.
That’s really my passion project company that I’m super-focused on. I probably don’t acquire as many units as I could because I’m just really into helping other people get into deals.
There’s times where my husband is like “We should have bought that one”, but there’s just something about helping other people learn and grow and build their own portfolios as well that I just love.
Joe Fairless: How did you – or maybe you didn’t – monetize Agents Invest?
Jennifer Beadles: That was something — being a licensed real estate agent (I’ve been licensed since 2009) it’s very common for what we call referrals, right? Someone let’s say in Seattle is moving to Texas; I would call up an agent friend in Texas and said “Hey, I would like to refer you a client.” That’s super-common, it happens all the time within kind of the regular business. But when we’re talking about this investment side of things it’s a little different… So I took that same model and kind of my value-add really for both sides — again, I’m always looking for ways where everyone can win; with these agent teams – I go to them and really personally vet them. I spend a couple of months making sure that these teams really know what they’re doing and really can provide value and add good connections for these investor clients that I’m referring.
So we have a referral agreement, and I just say “Guys, if you can do the right thing for me and my clients, then I will make some referral connections for you guys.” So yeah, we have referral agreement [unintelligible [00:21:07].02] and I’m compensated by the percentage of the commission.
Joe Fairless: What questions do you ask to vet them?
Jennifer Beadles: A lot of things related to just the basics. How do you calculate the cap rate? Tell me about how you calculate cash-on-cash return… A lot of times on the residential side we’re not talking IRR, so that’s something that I don’t typically get into with them… And then I just tell them to send me their deals, tell me the best deal that they’ve seen recently…
Again, this is all kind of focused on buy and holds. We’re not necessarily focused on flips in these different areas. But if they really know what they’re talking about, and a lot of them also own their own rental properties, then I just kind of go through the motions with them of looking at their deals, making sure that they’ve answered all the proper questions… And then also, if they can tell me what their areas of weakness are.
A lot of times I’ll kind of coach with these agents too, and they’ll say “Hey, I’m really good at finding deals, but I’ll be honest – the number crunching side is not my strength.” Then I’ll send them my spreadsheet and we’ll kind of go through the numbers with them until they can accurately provide proformas to these investors.
So it’s a lot of different things. It’s questions, but then also having them show me actual deals.
Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?
Jennifer Beadles: Best real estate investing advice ever… I think just getting started. A lot of people get analysis paralysis, and there’s people that I’ve talked to that they’re like “You know, I’ve been looking into real estate investing for two years and I just haven’t found the right deal yet.”
A lot of times to those people I just say “You’ve just gotta do a deal.” And that might sound like kind of silly advice, because of course, we all want to do the best deal ever, but I think you learn so much even from that first deal.
The first three deals that I did were not very good, but I had to get through those three to learn the investing strategy and criteria that I have now. So had I not just kind of failed forward in the beginning, I might not be where I am today… So really to do a deal.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Jennifer Beadles: Yup.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:23:17].16] to [00:24:22].05]
Joe Fairless: Best ever most recent book you’ve read?
Jennifer Beadles: Best ever most recent…
Joe Fairless: Or something you’ve read recently.
Jennifer Beadles: Gosh, I’ve probably read the 4-Hour Workweek like seven times. I just re-read it and re-read it, because I’m just always at a different place when I read it, and I always kind of get something new every time I read it.
Joe Fairless: Best ever deal you’ve done that we have not discussed?
Jennifer Beadles: The live and flips… So probably the last one that we did – we purchased it in 2011 at the courthouse steps, sight unseen, and then sold it four years later and all we had to do is paint… We netted about $275,000. Then of course we got the capital gains exemption on that, so it was great.
Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about already?
Jennifer Beadles: I had a deal that I got under contract for $25,000. It was a commercial zone with a single-family residence with a billboard in the front yard. I’d gone out of town and the bank had needed one more signature for me to fully execute the contract, and I didn’t see the e-mail, so they gave it to someone else. Every time I drive by that, I get very disappointed that I wasn’t paying attention.
Joe Fairless: Oh, man… And you said there was a billboard in front?
Jennifer Beadles: Yeah, commercial zoned, and a billboard, and a single-family house, for $25,000.
Joe Fairless: [laughs] Okay, we won’t talk about that anymore. I can tell it still stings a little bit.
Jennifer Beadles: It hurts, it hurts.
Joe Fairless: Best ever way you like to give back?
Jennifer Beadles: Just sharing my story and just meeting different people. I love it. I love sharing what’s gone really well and I love sharing my mistakes.
Joe Fairless: And best way the Best Ever listeners can get in touch with you?
Jennifer Beadles: They can find me at AgentsInvest.com. I also have a blog, reimillionaire.com. It’s kind of just some fun, funky stories about things that are going right and things that are going wrong; it’s got some fun stories about my current new construction project that is a great read… So yeah, either way.
Joe Fairless: Jennifer, thank you so much for being on the show. I learned a whole lot, and you truly are inspirational with how you entered into the industry and were able to hit the ground running so quickly at a very challenging time, in 2009, whenever you left. You got that house-hack duplex, then you quit your job the next day… That’s a tough period in the economy, and instead of trying to swim upstream, you went with the current and you started helping local builders who were losing their projects, and you negotiated short sales and then finished out those projects.
Then also with that type of mindset – that’s why I asked you how you can have others take a chance on you, and not for you, because you’re past that point, but for the Best Ever listeners who are looking for somebody to take a chance on them… And you said having the confidence, but also with that confidence, explain the downside, so have the full 360 picture in mind when you’re talking to people.
Thank you so much or sharing your story, your advice and the projects that you’re working on. I hope you have a best ever day, and we’ll talk to you soon.
Jennifer Beadles: Thanks, Joe.
