December 22, 2018

JF1572: From Selling Cars To 86 Units Before The Age Of 21 with Tyler Hassman

Tyler always knew he was an entrepreneur, wasn’t interested in college, so he took a car salesman job. As he was doing well there, he still wasn’t doing something to utilize his entrepreneurial skills. Enter real estate. He took a REI course and never looked back, purchasing a $1.5 million multifamily property right off the jump. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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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 of that fluffy stuff. With us today, Tyler Hassman. How are you doing, Tyler?

Tyler Hassman: I’m doing great, Joe. Thanks for having me.

Joe Fairless: Yeah, my pleasure. Nice to have you on the show. A little bit about Tyler – he is a co-founder and president of M&H Real Estate Investments Inc. He built a 12 million dollar real estate portfolio with over 86 units by the age of 21 years old. Based in Regina, Saskatchewan. With that being said, Tyler, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Tyler Hassman: Yeah, absolutely. Thank you for the intro, Joe. Right now I’m still 21, turning 22 in a week here, so… Obviously, super-exciting. But yeah, I’ve always been an entrepreneur, I’ve always wanted more to life, ever since I was young, I’ve always wanted that. I was super-smart growing up, skipped grade six, and then high school hit, grade nine, and I just couldn’t focus in school. I was like “I don’t wanna learn any of this. I just wanna make money, I wanna run businesses.” I don’t know, this stuff I was learning just felt like it didn’t apply to what I wanted to do.

In the high schools in a small town like Saskatchewan there was no entrepreneurship or business classes; it was just the typical math, science, all this and that, so I started up a couple T-shirt businesses in high school, little side hustles, meanwhile I just let my grades slip, didn’t at all pay attention, barely graduated high school.

So I went from being the role model student, skipping a grade in elementary, and then in high school I was the story of “Wow, this kid threw everything away.” But in my mind, I knew I was gonna hit success, because I’m at home reading “Think and Grow Rich”, reading “Rich dad, poor dad”, studying all this entrepreneurship and business stuff, but I wasn’t focusing on school. It was a tough time around people understanding what I was doing, but shortly after high school I didn’t get into university, I didn’t wanna go either, or college, and I went into selling cars, because I just wanted to have a job selling stuff, because I love selling stuff. I’m a people person.

I got hired at Mercedes Benz here in Regina, three months out of high school, and I was a lot boy, so I ran cars around, got them washed up for the sales guys, but I always knew I wanted to sell cars. I wanted to be the car salesman at the time.

So I studied the cars, and then they fired one sales guy two months in when I was working there, and I was like “Put me in, please.” Super-ambitious. I had this entrepreneurial burning desire in front of me, so I didn’t care about my age, or anything. I just said, “Guys, put me in.”

So they put me in, and two years went by and I was learning so much in car sales. So much about dealing with people, presenting myself right, and really getting past that age barrier. We had a lot of clients that came in spending a lot of money, and they would see me and be like “I don’t wanna deal with this little teenager.”

The reason why I’m telling this is because then I really got mature very quick when I worked there. Then when I was sitting in on one night and I was like — I always wanted to do business, right? So even though I was selling cars, doing good, I’m like “I’m an entrepreneur. I need to do business.” I was sick and tired of me starting up these little companies, like a T-shirt company here and there, little stuff like that; I’m like “I wanna do a big boy business.”

I was on Google and I was just googling ways to get rich, and sure enough, there’s a lot of funny things that popped up, but sure enough the biggest one was real estate. Because you know, you’d find these guys that create apps, and internet stuff, and they’re billionaires, and this and that, but then real estate – you see that all over. All the big, wealthy, big guys, and all the rich people I know own real estate. So I was like “You know what, I’m gonna do real estate.” So that’s actually how I decided to get into real estate. It was just from a Google search and me wanting to get rich.

Now my morals have changed, obviously, but at the time that’s what that was. Then I was like “Hey, well, I’m broke. I don’t even have a credit card, I’ve never had a loan in my name, and I don’t know what I’m doing.” I was driving around, looking for a hood house, or like a ghetto house, like a really bad house in a bad area, because all I could try and afford, like a couple thousand dollar down payment.

Then what happened was I was like you know what, I’m wasting my time. I was getting nowhere, because I really didn’t know what I was doing. Six months went by, a year went by, still selling cars, and I’m like “I’m not getting any traction. When am I gonna buy my first property?”

I started going to networking events, putting myself out there, and then found out about real estate investing courses. I took a real estate investing course about purchasing multifamily buildings, and I just learned how to do it. Once I learned how to do it, I was like “This isn’t so difficult.”

So then I went out, found a deal, and I had a business partner as well, on M&H, too. So I had a business partner (Bailey) as well, and we went out, we found a deal, and then we ended up raising the money, closing it, and then we got our first building. Then I was just turning eighteen when that happened, still selling cars… So that’s the thing – we were looking at hood houses, then we got educated, and then went and bought a 1.5 million dollar brand new 12-unit apartment building within six months. From there, it was a big ripple effect. People saw what we were doing, and then there was three more buildings that came for sale, we closed on them, then two more, and it was just a ripple effect. That ripple effect is continuing to go to this day.

That was kind of an extended story, but [unintelligible [00:07:22].14] more insights of my start, too. Currently, actually — gotta end it off on currently… Currently we’re always growing our portfolio and raising capital here in Saskatchewan, Canada. I also partnered with another business partner, I have another company, AHDC International. Our focus there is on boutique hotel resorts down in Costa Rica, and we’re also looking at — at the end of this month I’ll be going down to Phoenix, as we’re gonna get into some short-term rentals down there, and move down South and just do some stuff down there… Tax deeds, tax liens, wholesaling, all sorts of things. I’m really branching out now.

Joe Fairless: Whose course did you take?

Tyler Hassman: There’s a local lady up here in Canada. It’s “90 days to 5k” is what it’s called. It’s a local one up here. It was a great experience to learn it… Because I’ve taken big course by big names, and the issue was with me — I was attracted to wholesaling at the start, because it’s always, like, quick money.

Joe Fairless: Was that the “90 days to 5k” course, the wholesaling?

Tyler Hassman: No, that’s apartment courses. And then I was looking at wholesaling courses, and they were all down in Texas. One was by Cody Sperber and Josh Altman, “Clever Investor”, but then what I realized is I spent the money on the course, I took the course, and then what happened was I then realized in Canada wholesaling is not a  big thing, because the banks don’t foreclose so quick. There’s no auctions where you can go pick up houses for dirt cheap.

So I was like, “No…! I wasted $2,000”, which was a lot of money for me at the time, and I just realized I couldn’t do that at the time… So it was really good learning from a local group, and I also learned a lot from being with local, you know what I mean, Joe? You can learn as much as you can from these courses, but the most you’ll learn is from people in your network, and people that are doing it in your area, because there’s certain things here in Saskatchewan that are going on that are way different than, say, down in California.

Joe Fairless: For example?

Tyler Hassman: For multifamily I would say it’s pretty generic. For multifamily and what I do when it comes down to joint venture partnerships, I would say it’s similar all around North America, at least; I haven’t looked into worldwide, let’s put it that way. But for North America, the system I use for joint venture partnership, that’s common everywhere.

But certain things when it comes down to — whether it’s the laws of the province up here, or down in the States… I do know that there has been times where down in the States the prices — you can’t even justify some of the prices on some of these places, depending on the area… So really when it comes down to it, my biggest thing is wholesaling here in Canada is much different than down in the States, for that reason – the banks don’t just foreclose real quick. But as for multifamily, I would say it’s very similar, but there’s certain little things about knowing the right people in a certain area, to get the best deals and make stuff happen… Because if you’re dealing with — the system I do for multifamily, like I was saying, to sum it up, it’s universal, but I really stress people to get really tight with their own network in their own area, because there’s certain things in the course that you’re not gonna learn, such as finding the right people and getting off-market deals. You need to be a part of your local community, and you can’t get that in any courses.

Joe Fairless: Let’s talk about the second deal that you did, and we’ll get into details there just to bring this to life a little bit. So the first deal, you said, it was a 1.5 million dollar apartment building, and you raised the money for it… What was the second deal?

Tyler Hassman: The second deal was the exact same building, but there was two of them, two 12-units. That deal there – it was interesting, because a lot of people saw what me and my business partner did, and we put a lot of work into putting that deal together, because it was a brand new building and it didn’t have any tenants in it. So we had to really get tenants in there, and it was a struggle at the start… But a lot of people saw what we did, and it turned really great profits and returns for our investors… So immediately when there was another two buildings from the same builder that came up in that area, there was actually people in our network locally that actually hopped on those ones first, the next two.

Joe Fairless: And when you bought the first one, for 1.5, how long until you bought the second one, which was two 12-units?

Tyler Hassman: Four months.

Joe Fairless: Okay, got it.

Tyler Hassman: We closed on the mortgage, we were getting people into that building, and it was really busy; that’s why we weren’t really looking at those other 12-units that were for sale… Because we were super time-consumed. But in the meantime, another person in our group went and got those ones under contract, and then they started raising money on it, and then they realized, “Holy cow, we need Tyler and Bailey to come and do the work, so that they can bring it up to where it should be and bring it up to the standards, because they’ve done it before…”

Joe Fairless: What work were you doing exactly?

Tyler Hassman: It was the management. The whole deal management and property management as well.

Joe Fairless: Okay.

Tyler Hassman: Because here in Saskatchewan these buildings are in small communities, but in the area there’s one of the world’s largest underground potash mine.

Joe Fairless: World’s largest underground what?

Tyler Hassman: Mine.

Joe Fairless: Mine, got it.

Tyler Hassman: Yeah, they mine potash, so there’s thousands of workers in that area… But you need to be in that area, you need to get some furnished units, you need to really be on top of it, and the thing is there’s no property management companies in these areas. You can hire a local maintenance guy, and that’s what we do – we have a local maintenance guy that goes in and out, but he’s not the type of guy that’s gonna be doing good viewings, or taking calls, assigning leases… So that was why they needed us to come on, because they needed somebody out there, feet on the ground.

Joe Fairless: So you took a general partnership ownership in the deal, in exchange for property management, or were you a third-party property management company.

Tyler Hassman: No, we got direct shares. We got direct shares, because we were also the deal management. We dealt with setting up the bank accounts, the corporation, getting the mortgage… We ended up doing all that, and then the other partners were the money partners. They went and found investors.

So that’s the thing, because that was part of our deal – we were like “You know what, we don’t want to just property-manage it, we want ownership, so what else do you want us to do?” and they were like “Well, since you want ownership, you guys will have to manage the whole deal, and of course, the property.”

Joe Fairless: Okay. And then the first deal, did you do all of it, or did you two break it up and have other partners on that one?

Tyler Hassman: We did all of it. We had, of course, our capital partners where we raised the money; other than that, it was just us, and then we actually — if there’s any other young viewers out there thinking that it’s because you don’t have any credit, it’s your first deal, you can’t get a mortgage, this and that… That’s total lies, because on that deal – it was very interesting, Joe… We got the investors’ money, and we go to get the mortgage; and the mortgage company comes back and they’re like “Yeah, the net worth is there from your investors, everything is good, but we’re not gonna lend you any money because there’s no experience. You’re asking for a mortgage on a 1.5 million dollar property, but you guys have never done real estate before, and your investors haven’t, either. We don’t care that they have money; the big thing is that there’s no experience.”

So we actually then dug into our network and called somebody up that owned a bunch of real estate, and we were like “Hey, we’ll give you 10%. Sign on for the mortgage and sign onto the deal.” So we ended up doing that, cutting some shares, and then ended up getting the mortgage. Sometimes you’ve gotta be very creative to make deals happen.

Joe Fairless: How many units is the 1.5 million dollar property?

Tyler Hassman: 12 units.

Joe Fairless: 12 units, okay. Usually, when it’s a brand new building – did I hear that correctly, that it’s brand new?

Tyler Hassman: Yeah.

Joe Fairless: Okay. Usually, those aren’t value-add opportunities, unless a developer is in trouble and needs to get out… So what was the story for how this was a value-add deal?

Tyler Hassman: Yes… So the builders built these to sell as condos, and in this market, Joe, everybody was like “You can’t sell condos in this market”, in this certain region, because it’s a rental region. You’ve got all the mine workers – they’re not buying, they’re renting, because they only work there for two weeks, and they go home for a week, and they come back for two weeks…

They tried to build them and sell them as condos, had no luck at that, and then they were on the verge of bankruptcy, so they really needed to get rid of these buildings. Then our value-add was simply getting the tenants in there and turning these condos – what they were branded as – into rentals.

Joe Fairless: How did you hear about it?

Tyler Hassman: We heard about it from a networking event. At these networking events we would tell everybody we’re looking for a building, because we were hungry for a building… And then there was somebody at the event that said “You know what, I actually found out about a guy that has access to these buildings, but his company is about to go bankrupt.” I’m like, “What?” So we got in contact with that guy, who actually was helping out this company – he was gonna list the building actually, and then we called him ahead of time and said “We’re looking, you don’t have to list them”, and yeah, we ended up getting connected that way. So it was through networking.

Joe Fairless: How much equity did you need to bring to the deal?

Tyler Hassman: We needed to bring $400,000. Or are you asking for the cash we needed to invest in there?

Joe Fairless: Yes, exactly.

Tyler Hassman: Yeah, it was about $240,000 or something like that, and then of course we had extra money for closing costs, reserve funds, and all that… But the investment capital we brought was $400,000.

Joe Fairless: Okay, perfect. And how many investors does that make up?

Tyler Hassman: That one was just one investor.

Joe Fairless: One investor. And how did you know that investor?

Tyler Hassman: That investor – it was a connection from my business partner Bailey. It was a connection from him, and it was really tough on that particular deal, because at the time when we  first met, the guy that had access to these buildings – the first building – we somewhat knew what we were doing, but then all of a sudden we’re like “Yeah, we wanna go take a look, we’re super-interested, we wanna get it under contract”, and he said “Okay, well how much money have you guys got for deposit?” [unintelligible [00:16:56].22] and then we looked at each other, and then in the back of my mind I’m like — I had no money at this time. I spent my money stupidly with the money I made from car sales, so I was like “You know, we’ve got like 10k…”, and to me, I’m like “Ten thousand dollars…!”

Joe Fairless: That’s a lot, right…

Tyler Hassman: And all of a sudden, he’s like, “Yeah, I need at least $100,000 to start the process from you guys”, and we’re like “Oh, no…” So then we’re like, “Oh, my god…”, so we kept on doing networking, getting it going, and then Bailey, my business partner, he actually had a close connection that actually was interested in real estate, and they ended up just putting the $100,000 in.

Then we had some breathing room, we had another three months to come up with the rest, even though we’re telling the seller “Yeah, we’ve got it, we’ve got it… We’re good, we’re good”, but we had some conditions to be met, so we were doing our inspections in the three months… And then that investor actually ended up just putting in the full amount.

Joe Fairless: And what’s the structure of that arrangement? Just to educate the listeners…

Tyler Hassman: Absolutely. What we do on that particular project – it’s a joint venture partnership, so they’re actually providing a shareholder loan. Those investors got 40% of the deal, and then we got 60%, and then of course we gave 10% up for George, one of our partners, to sign on the mortgage… So essentially they’ve got 40%, and how we structure it is that we pay them back 100% of cashflow. All the cashflow goes directly to them until they get all their money back, and then once they get their $400,000 back, then we’ll split it, where we’ll get 50% and they’ll get 50% of cashflow.

Our whole analogy on these is that we get a closing fee of 1%-3% at the beginning of the deal – acquisition fee, closing fee, whatever you wanna call it, so that our company can stay afloat, and then usually between I would say year five and six they’ll have their full capital back by cashflow, or if we take out [unintelligible [00:18:44].09] equity that we have in the building at that time, depending on how the market is, and then they’ll have continued ownership for the years to come until we either sell, or somebody sells shares. So we’re a long-term investment for them.

Joe Fairless: Yup. And on the long-term investment front, what type of financing do you have on the deal?

Tyler Hassman: We get mortgage financing on there.

Joe Fairless: When does the loan expire?

Tyler Hassman: The loan expires in 30 years.

Joe Fairless: 30 years.

Tyler Hassman: Yeah, exactly. But we’ve got a five-year term on it.

Joe Fairless: Okay, so it’s amortized over 30, but there’s a balloon payment in five years?

Tyler Hassman: No, so in five years we’re able to actually renegotiate the mortgage, but the amortization is the 30 years. We have the CMEC mortgages up here in Canada, so we don’t have no balloon payment or anything at the end of that five years. It’ll just continue on. [unintelligible [00:19:32].27]

The analogy with this and how our mortgage is – if we were to plan to own it all… Oh, sorry, the amortization — it’s not a 30-year amortization; basically, in 30 years we’ll have it paid off. That’s what I’m trying to get at. I know what you’re saying, because if it was bridge financing, amortization would be 30 years, then we’ll have a balloon payment at year five, and then we own it cash and they’re paid out… I get what you’re saying there, but no, this will be the standard mortgage on it, for 30 years. If we don’t remortgage or anything at the end of that 30 years, then we’ll have it paid off.

Joe Fairless: Okay, I’m with you. So there’s no balloon payment at all over those 30 years.

Tyler Hassman: Correct.

Joe Fairless: Different types of terms you all got up there, than us, in the U.S., that’s for sure. It’s possible to do something like that with our deals, but it’s not typical. Usually, there’s a 3, 5, 7, 10, 12, 15-year balloon payment on the loan for commercial loans.

Tyler Hassman: Yeah, that’s interesting, because I know up here if it’s private financing, then absolutely. Or if it’s seller financing, or vendor financing, or whatever you wanna call it… But up here it’s a standard mortgage; that’s how everybody gets their deals done here, unless they’re using, like I said, private money.

Joe Fairless: So you’ve basically made $15,000 at closing, because you got that 1%, and that’s split between you and your partner, and you got 50% ownership in the deal, which is zero until the money person receives all of their money back, which is $400,000, and then profits are split 50/50 thereafter, is that correct?

Tyler Hassman: Correct.

Joe Fairless: And are they making any interest on their 400k over the period of time that it’s needed to be paid back?

Tyler Hassman: No. The way it’s structured is that these are a certain type of clients that we work with. They’re the type of clients that are fine with having that money tied up… Even though we’re paying them back in quarterly payments, that’s still just going to the principal. But here’s where the huge returns are coming in – at year five, when they have all their capital back; then they own 50% of that asset, so they’re gonna get 50% of cashflow for the next 10, 20, 30 years, of that building. So then it’s gonna compound and make a lot more than if we were just doing a 10% interest over five years. Do you get what I’m saying?

Joe Fairless: I get what you’re saying.

Tyler Hassman: There’s other stuff we’re working on now – our boutique hotels, and also the short-term rentals we’re gonna be doing down South. Those we’re working on just doing interest-only. So we have investors, at least for the short-term, quick returns, a year or two-year agreements, and that’s what we’re gonna do. But these types of clients we’re working with on our multifamily properties, they’re the types that they’re looking to build that long-term wealth; 5, 10, 15 years from now is what they’re worried about, because right now they’re sitting very comfortable.

Joe Fairless: You mentioned some project(s) in Costa Rica that you’re working on with more boutique hotels; you’ve got some multifamily deals where you live, and then I think you mentioned something else, which if you didn’t, you probably have something else going on, right?

Tyler Hassman: Yeah, I’ve got lots going on. The vacation rentals down in Phoenix.

Joe Fairless: Alright, there we go, vacation rentals… So some people say there’s a lot of power in focusing on one thing and doing that well; what are your thoughts on that?

Tyler Hassman: I would say to a point, but then again, I work 14-hour days, seven days a week, so I’ve got lots of time. Because here’s the thing – I have so many people that are like “Dude, you need to stay focused on one thing. You’re focused on way too many things.” And then those same people that tell me that are working eight hours on their business, five days a week. So I’ve got a lot of time.

What I do is — especially with Gary Keller, The One Thing, his book… I love that book, it changed my life. What I do is I basically hyper-focus on each project at certain times during the day. Because when it comes down to my multifamily, it doesn’t require me to work 14 hours, seven days a week, non-stop, on that. Maybe it only requires four hours of intensive work each day, and then the short-term rentals maybe three, and then the Costa Rica maybe more…

So I manage my time really well, but I’m also at a point where I’m able to do that. At the start it was full-force only multifamily, but now I’ve got systems in place, and I also have people in place, so now I can diversify my time to grow my portfolio and also grow my company. So I’m not anymore dealing with the tenants or property management at any of these buildings; I’m just overseeing the deals, talking to my bookkeeper/accountant, sending out the quarterly reports, and payments to investors… So I’m able to now focus my time and shift my attention to different projects.

But for people that are just starting out, 100% you need to focus on one thing, for sure. One thing, and go until you master it. Now, here’s the thing – I don’t master anything; I believe I can always be growing. But I’m at a point where I am able to focus on other projects now, and I love what I do, and that’s why I’m working basically 14-hour days, seven days a week. I’m never that type of person that just work first; all the exercising, focus on my health, travel, friends and relationships as well, but I love what I do, so that’s why I’m putting in long shifts and doing all this crazy stuff.

Joe Fairless: Real quick, what’s your best real estate investing advice ever?

Tyler Hassman: My best real estate investing advice ever is to invest in yourself first before you ever invest in a property.

Joe Fairless: What’s the best way you’ve invested in yourself? What’s something tactical that others can do, that you’ve done?

Tyler Hassman: Hire a coach and mentor, or get into a course specifically on what you want to learn in real estate.

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

Tyler Hassman: Yes, sir.

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

Break: [00:25:09].23] to [00:26:25].29]

Joe Fairless: Okay Tyler, best ever book you’ve recently read?

Tyler Hassman: The One Thing, Gary Keller.

Joe Fairless: Best ever deal you’ve done that we haven’t talked about in detail already?

Tyler Hassman: An eight-unit apartment building that we’re actually gonna be wholesaling. Just on the verge of closing.

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

Tyler Hassman: Not being with the right partners.

Joe Fairless: Will you elaborate?

Tyler Hassman: Yeah, managing partners – making sure you truly do know your partners. And I would say — not ask for referrals, but ask other people that have done deals with them their opinion on them and what their experience was.

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

Tyler Hassman: Speaking, podcast interviews, and hosting live training events.

Joe Fairless: And how can the Best Ever listeners learn more about what you’ve got going on?

Tyler Hassman: They can hit me up on Facebook at The Young Guns of Real Estate, or Instagram Tyler Hassman.

Joe Fairless: Tyler, thank you so much for being on the show, talking about how you got going and how you have acquired the properties that you’ve acquired, how you’ve structured it with your investors, especially on the deal that we talked about in detail – actually, we talked about two transactions in detail – and the challenges that you came across, and what you did to overcome them.

Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Tyler Hassman: I’ll talk to you soon, thank you.

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