October 23, 2018

JF1512: He Quit Teaching To Grow A Real Estate Investing Business with Scott Hollister

Scott watched his family lose their home, and that pushed him to learn more about real estate. Now as a full time investor and real estate agent, Scott wears a few different hats. He knows how to grow an investing business from scratch, and with a part time job. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

Scott Hollister Real Estate Background:

  • Full time real estate investor and agent
  • Investing in single family homes since 2012, transitioning into commercial investing in 2018
  • Strives to achieve financial freedom for his investors, family, and himself
  • Host of Book Club Interview Podcast
  • Based in Vernon Rockville, Connecticut
  • Say hi to him at http://www.davidwesleyrealestate.com/
  • Best Ever Book: The Banker’s Code

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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best ever 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, Scott Hollister. How are you doing, Scott?

Scott Hollister: I’m doing well, Joe. How about you?

Joe Fairless: I am doing well, and nice to have you on the show. A little bit about Scott. He is a full-time real estate investor and agent. He began investing in single-family homes in 2012. He has personally done five rehabs himself. He is also transitioning now into commercial real estate investing. He has a podcast called Book Club Interview Podcast, and he’s based in Vernon Rockville, Connecticut.

With that being said, Scott, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Scott Hollister: Yes sir, Joe. I started as a Connecticut teacher for our years. I graduated college in 2012, I mostly did health education and PE, and all the while — to rewind a little bit, my parents lost their house during the crash, so that was kind of my drive to get into real estate. With my first paycheck I purchased two single-family homes on one lot; I rented out one, lived in the other, so I knew if I ever lost my job, there was no way I could lose my home as well.

So that pushed me into real estate, and then as a teacher, I also started being a personal trainer, training in the summers and after school hours, and coaching as well, but all that led to really developing more jobs. So I took a reflective approach, and I was doing a fix and flip at the time, and it really changed my mind that when I turned it to a rental, that income was running around the clock no matter what… Whereas if I was being a personal trainer, I only got paid for the time I was there, and the same thing with being a teacher. It was active income.

Fast-forward to last year, I left teaching full-time to pursue real estate investing full-time, and I wear currently three hats – as an agent, moving more towards the commercial in Connecticut, and as an investor full-time, looking for passive income investments, buy and hold, and the third is a broker of private and hard money… So finding creative capital sources for people’s investments.

Joe Fairless: How do you make money on the third thing, finding creative capital for other people’s investments?

Scott Hollister: Typically, it’s points. My mother has been a lender for 30 years, mostly residential for the first 25, but the last seven in the hard money and private… So she had a broker she connected me with, we had dinner, and he kind of taught me – [unintelligible [00:05:26].21] secrets of the trade, but how to follow the path of money and how to add value to other people’s lives. Typically, a lender is gonna want points for their administration and office fees, and then as a broker, you would charge your points in addition to that, providing the capital, putting the deal together, and fitting the right lender with the right borrower.

Joe Fairless: Is there a license that you have to get in order to do that?

Scott Hollister: Not in the state of Connecticut, and that’s the great thing about it. As opposed to being an agent, you’re given splits, and as a broker, you get to keep 100% of that point. So I kind of like it a little bit more… A little bit more freedom. Again, it’s easier to work from home, as opposed to being out and showing properties, and things like that.

Joe Fairless: You did five rehab projects, personally. Can you talk about that?

Scott Hollister: Yeah, my father [unintelligible [00:06:15].01] worker. He dropped out of high school, so he’s pushed me to go to college, but he was always tinkering at home, so I kind of learned the trades through him… Whether that’s hanging drywall, refinishing floors, painting, trim crown, doing kitchens, tile work… My philosophy was always if I really messed up something, and as long as I could watch a YouTube video and kind of figure out how to do it, worst-case scenario I just had to hire someone on the back-side… But I knew if I gave it a shot, I could probably pull it off.

Joe Fairless: Let’s talk about the fifth one, so the last one that you did personally. Can you give some numbers and just the business plan?

Scott Hollister: We purchased that in town. This one was a partnership, my friends Ryan and Jake, and we used private financing for that; that was 110k purchase price, and ARV was 200k. We put about 20k of rehab work. We did all the work ourselves, from start to finish, so this was more of a job than an investment, because it was active income. We gave our lender 10% fixed, paid at closing, so no carrying costs during the project, and we were in and out within nine months.

It was another tough project, because I was working full-time as a teacher, so trying to be there on nights and weekends made it difficult.

Joe Fairless: The areas of focus that you have right now in real estate – which one makes you the most money?

Scott Hollister: I’d say the investor, because out of the other two, they’re still active income. So I try to allocate as much time as I can to take (again) a reflective approach… And this is what I’ve learned from reading books and going to events, and listening to great podcasts such as yours – really focus on those big dollar activities and what you can allocate the larger chunk of your day towards.

Joe Fairless: When you say the investor, because that’s more passive, can you give an example of the last deal that you bought?

Scott Hollister: The last deal that I bought was still a single-family rental. I love the B+/A- class rentals, tenants that really care about the property, have good credit scores, good income… And moving forward, the commercial aspects were underwriting smaller multifamily deals in the 10 to 25-unit range currently.

Joe Fairless: Alright, well let’s talk about that single-family that you bought. How much did you buy it for and what does it rent for?

Scott Hollister: This one was purchased for 100k, I did the rehab myself for about 16k worth of material; it appraised at 185k, and then went to the bank, refinanced out 80% of that, so I was able to pull out some tax-free cash on the refinance, and was able to pay off a hard money lender, and then also the HELOC I used for the down payment.

Joe Fairless: Wow, that’s incredible. You bought it for 100k, you put in 16k, so all-in 116k, and it appraises for 185k. That’s quite the find. How did you find it?

Scott Hollister: That was an MLS REO. It’s really tough right now, I’m sure, in most areas; anything that’s listed on the MLS has a lot of eyes on it, there’s gonna be multiple bids, banks like to use a certain period (10 days) before any offers are even looked at… So that was about a year ago, and my philosophy then was being the first person in the door as fast as possible, with a very good offer.

Joe Fairless: You used a hard money lender and a line of credit, so that leads me to believe it was an all-cash offer that you were able to close really quickly.

Scott Hollister: Yes.

Joe Fairless: What were the terms of closing?

Scott Hollister: That was 12%, three points, and back then I was doing a ten-day window inspection. That was the only contingency I wanted, just because I wasn’t comfortable taking things cash as is. Now I’m a little bit more comfortable, but it’s still that unknown of — we have a huge thing in the North-East right now with failing foundations, where there’s bad concrete poured, with a certain [unintelligible [00:10:02].17] of Connecticut… The foundation costs about $150,000 to remedy that.

Joe Fairless: That would be a problem.

Scott Hollister: Yes. [laughter]

Joe Fairless: That’d be a big problem.

Scott Hollister: Quick way to go in the negative.

Joe Fairless: Yes, yes. You’ve got a podcast called The Book Club Interview Podcast. Why did you start it?

Scott Hollister: Well, thanks to you, Joe. I have the best returns on investment this last year. It’s been tough being a full-time entrepreneur. It’s a total mind shift. You’re in control of your own day and your own schedule… That led to me starting a goal of reading a  book a week, and as a former teacher, I love that education, and just reading and reading… And I came across your best ever advice volumes one and two, and I love it; it was great, because you can get in the minds of professional real estate investors and learn from them. And in the back of the book I think you said “When you read something, like an article or something, reach out to that author.”

So what did I do? I reached out to you, and we had a great conversation, and you said along the lines of building some credibility and combining a couple of your passions, and at first I was thinking about a YouTube channel, but then the podcast had better hits, and I read a book a week, and now I’m lucky enough to talk with that author for about an hour. I owe a lot to you.

Joe Fairless: Well, you approach it in such a smart way… You didn’t just reach out to me, because I personally can’t have conversations with everyone who reaches out to me. My investors and my apartment communities would fail, because I would be just on the phone all day long. What you did is you reached out to me and you said “I wanna pay you for your time”, and you paid me for my time for us to talk 30 minutes or an hour (I don’t remember how long it was), and then we had a conversation. That stood out to me, and that’s the type of mindset that sets someone like you apart from other people, because you recognized that an investment of however much it was to have our conversation was likely – although not guaranteed – to have a good return, both on your time and also your money.

And who cares if it’s with me or with someone else? I’m not saying “Reach out to me and ask me to work with you and pay me for it.” I don’t care about that. The point of this is that you did something different from what the masses do. One, you read the book, and then you actually followed up on the advice, but then two, you did something above and beyond that. It’s similar advice that I give when you’re wanting to reach out to brokers and you don’t have that experience that other investors might have in the commercial space. Offer to pay them for their time, and I can almost guarantee, unless they’re a listener of this show, they’ve never been offered that, to be compensated for their time, and that will set you apart from other investors. Props to you on that.

What are some takeaways that you’ve learned from the author conversations?

Scott Hollister: Being surrounded by some of the top authors of even all time. Thanks to you I’ve got about 17 episodes out right now, and if it wasn’t for that and putting them in the spotlight a little bit, there’d really be no incentive for them to sit down with me for an hour. It’s a great and unique way to just sit down with such a knowledgeable person such as yourself. I’ve got to interview  Jay Papasan with The One Thing, and David Allen, Getting Things Done. Having that conversation, and ever before and after the podcast – there’s small talk that goes into it, and just being able to pick the brains of someone that’s been ahead of you or where you wanna go, you can kind of shorten that gap and see what’s a reflective approach… “Okay, I’m here. I wanna be there. What steps do I have to do in-between?”

Joe Fairless: Any particular interview – and you can’t name mine; not that you would, but just so we’re being objective… Any particular interview that really stands out as one that you got a lot from?

Scott Hollister: Yeah, I’d say the first one, Dave Van Horn. I had this [unintelligible [00:14:12].12] I messaged him and I said “Hey, I’m thinking about starting this idea… Would you be interested?” We jumped on a call, and he said “Yes, absolutely.” And he said, “You know what, this guy, about — I don’t know how many years ago, Joe Fairless, who called me and asked me to be on his show… That reminds me of the same thing.” So I’d have to say just the first one. I was still nervous about it, but great experience.

Joe Fairless: And then how have you applied those lessons to what you’re currently focused on, which is finding a commercial property?

Scott Hollister: Just the networking aspect of it I think works the best, and being surrounded by other people that, even though they might not be in my region, once you have that network of investors… You might be looking at a region, “Oh, I have so-and-so to call, or I can connect to”, because there’s a few e-mails going back and forth, a few phone calls… So once you have that person on the show, it makes it really easy to establish a relationship and keep that going forward.

Joe Fairless: What type of properties are you looking at?

Scott Hollister: Buy and hold multifamily, B class, working class… Buy and hold long-term.

Joe Fairless: And what team members do you need in order to find that first deal? I’m sorry, poorly worded question. What team members do you have in place so far? I meant to ask that question.

Scott Hollister: There’s been books out there that go through the whole process, of setting up the brokers, finding the property management team, getting a good lender or broker that’s going to set up the terms so you can underwrite your deals to them… And I think the last piece to the puzzle is getting in those few small circles that as you move up in the commercial world, those brokers do the bulk of the multifamily deals. It’s a little bit different than residential. They have a list of x amount of buyers that they can call first, and typically work the transaction that way.

Joe Fairless: What’s your best real estate investing advice ever?

Scott Hollister: Invest in yourself. I’d say the best returns on investment the last year have been buying every book someone’s recommended me, two, going to live events, and three, conversations with investors like you and authors like you.

Joe Fairless: What’s the best live event you’ve been to?

Scott Hollister: Jake & Gino’s.

Joe Fairless: What did you learn?

Scott Hollister: Don’t be afraid to ask. I think we are surrounded by such an amazing group… As a teacher, you’re put int this — “What kind of area do you teach? Oh, you’re a health teacher. Okay, that’s great.” But as an investor, it’s different. And that aspect – I know that’s kind of vague, but you’re never really judged; you’re thought of as an equal, you’re an investor, and anybody I’ve ever asked something of has been more than happy to give time. I think it’s just asking. All you’ve gotta do is just ask and provide value.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Scott Hollister: Yes, sir.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:17:20].23] to [00:18:10].13]

Joe Fairless: Best ever book — how relevant is this question for you… Best ever book you’ve recently read?

Scott Hollister: Recently read… That would have to be The Banker’s Code by George Antone.

Joe Fairless: Best ever deal you’ve done?

Scott Hollister: Probably that BRRRR strategy I did – purchased for 100k, it appraised for 185k, with a 16k rehab.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Scott Hollister: Due diligence wise… Trusting but not verifying.

Joe Fairless: Can you tell us the example? What happened?

Scott Hollister: Making sure that what is listed on the MLS is the same that’s listed in the town records, for instance. If it’s a well, make sure it’s hooked up to a well. If it’s not city sewer or city water… Big ticket items like that scare me. We have a lot of septic systems and wells up here, and foundations. Those are the three that can get you.

Joe Fairless: Did you get burned on one?

Scott Hollister: Not necessarily. Caught at the last second. Asbestos was another thing. But my agent I was working with at the time – that was three years ago – did his due diligence. I think partnering with a very strong person that has that resource and that education is key.

Joe Fairless: Best ever way you like to give back?

Scott Hollister: Two favorite charities. One is Jamie’s Run, which is a non-profit here in Connecticut for children’s cancer. The other is The Whole in the Wall Gang Camp, which is Paul Newman’s. It’s in Ashford, Connecticut. Those are my two favorite charities.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on and listen to the Book Club Interview Podcast?

Scott Hollister: On the podcast, and the Facebook page Book Club Interview. I’m starting to build the Instagram page for more of quotes and photos for motivation, and my website, DavidWesleyRealEstate.com.

Joe Fairless: Well, Scott, thank you so much for being on the show, talking about one of the rehabs that you’ve done; an incredible deal, buying it for 100k, putting in 16k, and then it appraising for 185k and doing a cash-out refinance on it, getting all your money back… As well as how you’ve gotten to this point and where you’re headed… It’s clear that you’re someone I would bet on to continue to achieve your goals because of the way you approach it. Robert Kiyosaki says “The richest people in the world build a network. Everyone else looks for work.” You are adhering to that, you are building a network the right way, and best of success to you and looking forward to continuing to hear how things go.

I really enjoyed our conversation, and thanks again for being on the show.

Scott Hollister: Thank you so much, Joe, for everything you put out, and everything you’ve done for me. I really appreciate it.

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