50 Properties in 6 Months Using the BRRRR Strategy

David:
This is the BiggerPockets podcast, show 644.

Chad:
The key is people, having the right people around. So what we did figure out is we’ve got to hire a rockstar team. It will make the difference hiring people that have that owner mentality that really truly care. Once we figured out that we have to bring on the right people, it really solved the majority of our issues because we had a lot of bad stories in between. And to hire those key people and people that do genuinely care, it makes all the difference in the world.

David:
What’s going on, everyone. This is David Greene, your host of the BiggerPockets Real Estate podcast joined today by my lovely co-host, Rob Abasolo, where we get into a fantastic interview with today’s guest, Chad Beeman, who has bought over 50 properties over six months using the BRRRR method in Nebraska.
We get into some really cool stuff, like how to scale, how to build systems, how he’s using a mentorship program to both teach people real estate, as well as find him deals. And then how he manages the chaos of that many properties. You also want to listen all the way to the end because there is a hilarious and scary story about rehabbing the wrong house. It’s definitely something I haven’t heard before. You’re not going to want to miss that. Rob, what did you think about today’s show?

Rob:
Yeah, I think it’s a really interesting journey because he talked about scaling quite a bit and yeah man. Dude, this guy, he’s already done 50 deals this year. And I think the majority of them, if not all of them were BRRRR deals and he says he wants to get up to 125 by Christmas. So another 75.
So it’s like, okay, I’ve got six months, I’m going to do 50 deals. That’s already like, man, you’re crazy. And then to say, I’m going to do another 75 in the next six months, I just don’t even know man. That’s goals. Let’s check in on me next year, see how many houses I flipped. I don’t think there’s going to be 125 though.

David:
This is how I picture Jocko Willink working out. He’s like, I just did 700 burpees, I’m going to do another 400 before midnight type of thing. And that’s how this guy’s buying houses.

Rob:
Yeah, man. I mean, we’re in escrow right now on a 20 unit hotel, or motel really, and we’re going to do a whole rehab on that and turn it into a little glamping area. The motel’s going to be rehabbed to be a boutique Airbnb. We’re hoping to build some A-frames and Airstream glamping units out there too. And that’s already a hard enough like project that’s probably going to be about four to six months. So to quintuple that, man, it’s pretty mind boggling.
But yeah, we really get into the team building because I think this is something that is really important for people to figure out who you need on your team and when do you need them to be able to really scale to that next level?

David:
Absolutely. Before we get into the interview, we’re going to get into today’s quick tip, which is get your tickets to BiggerPockets Conference 2022 in beautiful San Diego. You can head over to biggerpockets.com/events, and you can buy them before they sell out. They will sell out and you will be sad because I’ve never seen an unhappy person at BP Con. Rob’s going to be there. You guys are going to get to see him in person. He’s even better looking in person than he is on camera, as hard as that is to believe. And there may even be a Brandon Turner sighting. Not sure about that yet, but I will certainly be there and I’ll probably put on a fake beard or something, if Brandon doesn’t go, and see if I can trick everyone into thinking I’m him.

Rob:
I’ll grow it out. I’ll grow mine out just for the conference. I don’t know if I’m going to get to Brandon levels, but I can probably scruff up a bit.

David:
Yeah. Well, I definitely think everybody should get tickets because it’s a really good time. You’ll meet people there that you’ll know for the rest of your investing journey and you’ll leave with more confidence than you started.
All right, without any further ado, let’s get to our interview with Chad. And prepare yourselves, because this is awesome. Chad Beeman, welcome to the BiggerPockets podcast. How are you today?

Chad:
Good, guys. Thanks so much for having me.

David:
Yeah. So I mean your story’s pretty incredible. Before we get into how quickly you’ve scaled, can you give us a rough idea of the big picture? What does your portfolio look like right now?

Chad:
Yeah, you bet. So we have 91 single family homes. Majority of those are all in Omaha. We have a short term rental we just picked up in Destin Florida and we have one property in Lahaina, Maui that is just an old home. We lived there about five years ago and so we kept that and just long-term rent that one.

David:
Are you able to short term rent the one in Lahaina? Is it zoned for that?

Chad:
No. The neighborhood in Lahaina is brand new and that was one of the big deals, they just wouldn’t allow that because all the locals keep getting pushed out from all this money coming in from all over, buying up properties. And so it’s really there for locals. And I was living there at the time, so I was able to take advantage of that.

Rob:
So you walked into a pretty good season then in the Destin stuff because this is the hot season out there. So if you said you just picked it up.

Chad:
Yeah. My manager, the girl that helps manage all of our properties, it’s just been a dream for her. We were at lunch a few weeks ago and I just said, “What can I do to help you?” And she’s like, “Well, get me a house in Destin.” And I’m like, “Honestly? I mean, if the numbers work. Show me some stuff.” And so she brought me an eight cap and I was like, “You love it?” And she’s like, “I love it.” So we went ahead and went after it and ended up getting it.

David:
So how’s that one been performing for you?

Chad:
Well, we’re just literally closing. I think we just closed actually two days ago. So I will tell you in a few months.

David:
Yeah, I’m actually buying in Florida, myself. I just got back from a trip out there and was looking at some stuff. So anyone looking to get out of the Florida market message one of us three, we might be looking to buy your property. All right, so you’ve got 91 properties and tell me what you’ve been doing in the last six months.

Chad:
Yeah. So the last six months has been a little bit of a unique turn for us. I’ve been purchasing properties for about 15 years now and the first seven years were really the traditional way. We really had no idea what we were doing. We continued to just leave a … Every time we buy a property, we were dead broke. We had no money left over. And just rinse and repeat that.
I think we bought our first five properties in about seven years, and so we unintentionally after about year seven or eight, unintentionally ran into the BRRRR method. We had no idea what we were doing. We didn’t mean to, we just fell into the concepts around that. And ever since then, it was kind of a light bulb moment and we started accumulating properties quite a bit faster, especially the last six months through a different model. But we do have a goal to hit, 125 properties by Christmas and we’re just trying to cruise along with that.

David:
It is kind of amazing how BRRRR can supercharge the pace that you buy real estate without increasing the risk. I remember the same thing happened with me when I realized you get into this rhythm of I bought this group, they’re rehabbing, I buy the next group, they’re rehabbing. Then the first group is done and you’re refinancing it and buying more properties and then the second group is done. Is that what you found is a similar rhythm or has it just been pure chaos?

Chad:
There actually has been a rhythm. It’s not that I’m slowing down, it just seems like everything comes in droves. All of a sudden I have eight properties that I’m getting approached by and then a month and a half goes by and I don’t get an email from any of my realtors. And so it is unique how there’s almost a heartbeat to it, a rhythm.

Rob:
So do you think you could just walk us through your trajectory on this a little bit? Because I know you’ve done the 50 deals in the last six months, which I don’t want to glaze over that. We’ll get to that in a second. That’s pretty nuts. And you said you want to have 125 by Christmas. Does that mean you want to have 75 more properties in the next six months? Is my math correct there?

Chad:
Yeah. So our goal, how we’re purchasing properties is quite a bit different and I can get into that if you’d like. More or less what we’re doing is we’re starting to bring in more partners. What we found is I used to be able to break even a lot on my BRRRRs. I would say some of them, I would actually put $20,000 in my pocket after we’d renovate and finance and some of them we’d leave 5 or 10 or even 20, whatever. Lately we’re leaving 10 and 20 into everything just with the rising home prices and the rates and everything.
So that got a little bit frustrating, and so we had to take an outside the box approach to that. And so I’d go to all these conferences like Abundance and the Guardians Alliance and all these entrepreneurs that they’re doing their own thing, they’re cruising, making good money doing their own thing. They always ask, how do I get into this? Can you help me?
And so the only way I really knew to make it a win-win is I’ve got this machine, I’ve got all these members of our team helping with the real estate, could I somehow bring them in as a 50-50 partner and what would that look like?
And so what I was able to do is basically as we’d renovate properties, we’ll realize we might be leaving 10 grand into it, I’ll go to one of my buddies, one of my partners and say, “Hey, for $15,000, I thought you can partner up with me on this thing.” And then that gives me about $5,000 buffer, and so more or less at closing, we’re about $5,000 ahead on that property, instead of being 10 grand down, which just alleviates that capital restriction down the road on other properties.

Rob:
Yeah, this is something that David talks talks about quite a bit, especially in the one and only book I’ve ever read, the BRRRR strategy by David Greene. I think you mention one time like, oh, so you might leave $6,000 in the deal, boohoo. That’s not really a loss. You still have that equity. It still exists.

Chad:
Right.

Rob:
You just don’t necessarily get to take it out. So I think if you get to acquire some equity here and add to your net worth, and it’s costing you 10, $20,000 that you’re going to leave it parked in the house, it’s just a waiting game. And honestly, it’s probably a good, healthy habit to practice waiting on when you can ever pull money out of your real estate.

Chad:
Right. Exactly. And that’s one thing I go through with my partners is, you might be giving me $15,000, but ultimately, if we go turn around and sell it, I mean, you’re almost paid back in full. It takes about a year and a half on average to be able to completely pay them back, if they got into a bind and needed to sell. And so once you present that concept.
For me, I’m in zero cash, and so I’m able to buy as quick as I need to, and for them, they’re basically handing over money and they don’t have the headaches, they don’t have the flooded basements, the calls in the middle of the night that everyone’s so scared of. So it calms their nerves to be able to just be an investor and not deal with the stress around managing properties.

David:
I want to jump in here and give a little context to the listeners on what this deal actually looks like compared to a different kind of real estate deal. So on this deal where you said you may leave 10 grand in, hypothetically, what do you think a property like that’s going to cash flow a month?

Chad:
So our typical deals, we’ll purchase a property. Again, this is in Omaha for the majority of our properties. Typically, we’ll purchase for 150, $150,000, and we might put 30 grand into them and they might appraise it, say 210 or whatever. Off of that, we might cash flow maybe 3 to 500. Lately, it’s been a little bit better. It keeps going up. I’m not totally sure why. I think just rents are going up and we’re able to capture a little bit of a higher rent per property.

David:
So let’s say the average of 400 a month, that’s about 4,800 a year, divide that by the 10,000 that you leave in the deal, that’s an ROI of 48%. So in just about two years, you’re getting all of your money back. That’s on a deal that you’re saying oh, it didn’t quite hit what I wanted to hit.

Chad:
Right.

David:
The consolation prize is a 48% return. And that’s one thing I just want to highlight about the BRRRR method, because people think if you don’t get a hundred percent of your money out, you did it wrong.

Chad:
Right.

David:
That’s like I didn’t hit a home run at this at bat, I suck, I only got a double, I only got a triple. I’m comparing BRRRR to a traditional method where you put in way more than 10 grand and your ROI was much lower than 48%. So from that perspective, you’re definitely winning.
Another thing that I think people should recognize about the BRRRR method is that as the market goes up, which it has been doing, it makes it harder to get into the deal because you got more competition for these fixer upper homes, but once you get it, it makes it that much sweeter because during the rehab, you’re getting some market appreciation that’s boosting you, some wind at your back. So then when you go to refinance, you’ve got some natural market appreciation that’s made your value go up higher in addition to the improvements that you made to the property, the forced appreciation. So it makes it easier to leave less money in the deal. And for a long time, that was good.
Well, now that the market’s turning around, there’s people that are worried, like I don’t want to use the BRRRR method because the property might lose value. Well, that could be true, but the same is going to be true of everyone else who’s buying traditionally. But the good side is it makes it easier to get the deals because theoretically you’ve got less people that are chasing them.
So I wanted to get your opinion on, you’ve been at a dead sprint. I mean buying 50 houses in six months is insanely, I don’t even know the right word to use for how busy that’s going to be. It’s almost impossible to get everything done that needs to get done on that many deals in that period of time. You’re going to miss some stuff.

Chad:
Yeah.

David:
Are you seeing that it’s like, I sprinted and now I’m stopped? Have you seen that it’s easier to get deals? Are you actually looking to buy more of them? What’s going on in your market?

Chad:
Yeah. So I have a group of high school and college kids that I mentor with the BRRRR and they’re saying the same thing, they’re always trying to figure out, are we going to slow way down? Is this going to come to a standstill? And my response to them is every bad review for interest rates or prices going up, all that’s just scaring off our competitors.
And so quite honestly, I love hearing all the negative just news out there because it just makes everyone just go hole up and not want to do anything, not want to purchase anything where this is our time to sprint in my opinion. I mean, you just got to look. You got to have the right people out there searching for you and have the right connections and the right real estate agents that understand your buy box.

David:
So have you seen properties sitting on the market longer, less buyers competing with you in your market? Have you seen a slow down?

Chad:
For sure. It’s gotten to the point where we’re starting to get texts quite often. I mean, we were getting texts once a week, now we’re starting to get maybe a text a day just about a property to evaluate. My son is highly involved. He’s a high school junior. And so I’m spoiled because I can just forward that off to my son, Alex, and he’ll go plug it into the pro calculator on your website, on the BiggerPocket website and tell me if, whether or not it’s a good deal or not. So I’ve trained him to handle that for me. And so he comes back and he’ll look at the neighborhood and he knows what we’re looking for. So he guides me a little bit on what we’re purchasing.

David:
So that’s a good question. Why don’t we … This will be my last question before I hand it off to Rob. Give me an idea of what your workflow looks like. I can see he’s chomping at the bit. There’s brilliance brewing behind that coif. Give me an idea of what your workflow looks like right now, Chad. Who’s looking at properties? Who’s analyzing them? Who’s writing the offers? Once they’re accepted, what’s your process look like?

Chad:
Yeah. So it’s pretty simple, honestly. We meet with different agents all the time and we really help them understand our buy box and if we can get pocket listings, great. We’ll definitely look at those. Those are always the most fun because we never actually know what we’re getting until you plug it in. But then we started to look 15 to 20 days out. That’s something we were never doing before. Just waiting for that initial frenzy, which I don’t even know if it’s a frenzy anymore. It doesn’t seem like it is. It seems like that frenzy’s slowing down. But 15, 20 days out, it seems like people are starting to get nervous again. Again with all the negative reports going on, people are starting to wonder if their property is going to sit forever. And so that’s when people are starting to wheel and deal a little bit more and be willing to cut a deal for us.
So once we see a property, we will low ball. We say we fight with grenades instead of sniper guns. And so we just throw out a ton of different offers and it doesn’t matter if they don’t like us. There’s people that get super upset at us. And we’re good guys, we’re not trying to offend you or upset you, but at the same time it has to fit into … Buying properties is all a big math equation. Is it going to fit into our math equation? Is it going to work for us? And so once we find that property that does work for us, we’ll try to talk them down as best we can and go after it pretty hard.

Rob:
Yeah. So I mean, it seems for sure, if you’re trying to lock down 125 properties, you got to put out a lot of offers out there for sure. And I’m curious, I mean, going back to something that David mentioned earlier about the 48%, if you’re getting paid back in two years, that’s a really good deal. And if you really even double that and you got paid back in four years, I believe, math me out here, but I think it’s about a 25% return. That’s still a really, really good return. That’s still usually going to be about two times what you’re going to get just acquiring a long term rental the old fashioned way.
So I’m curious with the amount of effort that you’re putting into scaling up … Now actually, David, you too because I know you’re putting a lot of offers out there as well. How do you evaluate your return on something? Chad, are you looking at your deals like, oh, it’s got to be a minimum of a $10,000 profit or are you going in and looking at it as a cash on cash return on your BRRRR deal?

Chad:
We don’t care about cash on cash at this point. I think there’s a certain point where I will, but at this point we’re in the appreciation game. We want to accumulate as many properties as we can. If you think about having 15, $20 million in property and that’s appreciating at 3% a year that’s what gets me excited, to be able to suck that out tax free every three to five years. I mean, that’s crazy. And so that’s something I didn’t-

Rob:
It’s amazing. Yeah.

Chad:
Yeah. I didn’t even think about that actually. I went the first 10 years without even thinking about the appreciation side until a buddy of mine, who he has twice as many properties as I do, he’s like, “Dude, you should get in there and refinance. Those rates are down.” I’m like, “Well, why? I’m getting it paid down and everything seems fine.” And he’s like, “Just do it. Go get them appraised and see what kind of money you can suck out.”
And it’s funny, I mean, I just went property by property and by the end of that, I was able to suck out … I think I had, at that point about 30 properties. I was able to suck out about just over a million dollars. I had no idea that was even sitting there and just in appreciation. So it was like, okay, let’s go, it’s time to run now. I had no idea that cash was just sitting there dead on me.

Rob:
Ah, yes, the old accidental millionaire blunder.

Chad:
Yeah. Yeah. I mean, not to sound arrogant or anything. Actually, probably that’s how embarrassing how dumb I was. I literally wasn’t even considering that aspect or that part about what we were doing.

David:
It’s like when you reach in your coat pocket and pull out a million dollars and you’re like, “Oh, I forgot I had this in there. Didn’t know.”

Chad:
Oh, that one. Oh yeah, I forgot about that one.

David:
Yeah, my story was similar. I bought property and I wanted it to cash flow and then I was really mad that California property didn’t cash flow. And I was having a hard time. I had to go buy out of state and I was just in a bad mood. I didn’t buy real estate for a year because it wasn’t cash flowing and I was like a lot of other people, just bitter.
And then I got into GoBundance and they said, “Hey, got to track your net worth.” And I didn’t know what net worth was. And when I did, I was like, “I’m worth $1.35 million?” And it hit me that I was a millionaire. I had no idea. I had been walking around a millionaire and had zero clue.
And it was a life changing moment, not in the sense of the money made me a different person, but it was that I had no idea I was this successful at what I was doing. It was more meaningful than what I thought. And I think a lot of us can get into this, you’re grinding, you’re grinding, you’re grinding and you don’t know if it’s going to go anywhere, and then all at once it hits you like, oh man, I made it. I did get there and I should double down.
So that’s a very cool story, when you realize I’ve got over a million dollars in equity in these properties, and then that can supercharge the next round of investing. Did you have a plan for what you were going to do with that money?

Chad:
None. I had zero plan. I had no idea, but I will tell you that I had to have that. Not even two to three months later, COVID hit and I have a championship ring company. We sell championship rings. It’s a company I started like 18 years ago. And guess what industry you don’t want to be in when they cancel sports? You don’t want to be in the industry of selling championship rings, because there’s no championship for a year and a half. So I had a choice to make at that point, do I keep my company floating and just feed that machine. If I let these skilled people and these incredible people walk out of the door of that company, I’ll probably never get them back.
And that was a point where, literally, it took me weeks to figure out what I wanted to do there, because honestly, to keep that company floating through COVID cost me about a half a million dollars. So had my friend not mentioned, hey, you should get these things appraised and suck out money and then buy faster, had he not mentioned that, I’m not sure that company would exist.
And that company is, I mean, we have incredible people. I’m not trying to say I did anything great. My people are incredible, but it shot up to be the second largest championship ring manufacturer in the world really. So to have that thing just go flat and lose all those trained people and skilled people, it would’ve crushed me. That was my baby.

Rob:
That’s amazing. I think honestly all three of us probably accidentally realized … It sounds like we all realized we were accidental millionaires. I think that’s a mindset that’s really important in real estate because a lot of people get into real estate and they want to just figure out how to become a millionaire, how to quit their job, how to quit their 9:00 to 5:00 and they’re just so focused on how much money they can pull from the business, when what you should really be doing is never touching your money for the first set of years because you really need that to keep investing in it.

Chad:
Right.

Rob:
So that’s really cool. Shifting gears a bit. I understand a little bit about how you’re evaluating your deals and what you’re looking for. David, I know you’re putting out deals all the time. You’re putting out multiple offers. You just went and looked at stuff in Tennessee and in Florida and you’re expanding pretty quickly on your end. I’m curious, what’s your theory on writing multiple offers? Is that something you like to do? Do you like to have a lot of irons in the fire and then you just go for whatever happens first?

Chad:
So for me, I drive my people crazy around around me with offers. So I don’t know how you are, David, but if I can keep as many irons in the fire as possible, it’s exciting and fun for me and I get super addicted. When there’s nothing happening, I get down and I start looking and I start going outside my buy box and then I start getting into trouble.

David:
So here’s what my thoughts are with that. When BiggerPockets was a new fledgling podcast, the market was very different. It was just like 2010, 2011, 2012, where there was massive motivation and you were just throwing out offers and a percentage of them would stick, you’d just catch a seller that was like, “I’ll take it. I just need to get rid of the house.” Or maybe you’re dealing with a bank and REO.
So multiple offers would get you multiple results and that was the advice that was given on the podcast. Brandon would do that. He would just shotgun offers and say, “I’m going to hit something, if I get enough out there.” And then the market shifted and it got much more competitive and you could shotgun an offer when they’re getting 12 other offers that are way better than yours with better terms. All these strategies that we were teaching on the podcast, there’s not really a lot of room for you to use them. The only strategy that was working is pay more than the next person.
Now we are getting back into a softening of the market and I just think it’s beautiful. All the stuff I’ve learned that helps me to get a better deal, I’m able to use it again because it’s just me versus the seller, not me versus the other 12 buyers that are trying to get this house.
So I’m writing a lot of offers, but it’s not from a perspective of, let me just shoot it out, see if they say yes and then move on. I’m actually throwing it like a jab in a fight. I’m more interested with how they respond to my offer than I am just, are you going to accept it or not, and then move on to the next one.
So I’ll throw out a bunch of offers, but the conversation with my agent isn’t, did they say yes or no? What did they say? What was their tone? How did they counter? How did they sound? And I’ve had some really good luck in the last couple months getting stuff under contract I didn’t even think I had a chance with, by looking at the offers that came back and saying, “Oh, this seller is definitely in a place where they need to unload this thing. That’s the one I want.”
And I want to open that up to you. I know Omaha’s a little different of a market. I’ve been looking at higher end stuff where you definitely have more wiggle room. Those markets are more sensitive to rate hikes and there’s less buyers, but in your market Chad, are you following up on the offers that are sent? Are you looking for them to counter or is it mostly just like yes or no and move on to the next one?

Chad:
Typically we do go back and forth two or three times and if it doesn’t fit, then it doesn’t fit and we don’t cry over it. But there’s just so many opportunities that are now starting to surface. Back in 2008, when I started, I had no idea how spoiled we were. There was a house for sale on every corner and I’m sure everyone’s jealous that is when I got started, although I had no capital. I had no money, but there was houses everywhere. And so you’re starting to feel that come back to life.
And so this is kind of, it’s getting my attention. It always has my attention, but it’s starting to become fun and exciting again, because you’re not overpaying for things and you’re not fighting so many people and you’re not insulting people because you’re not going over asking. It’s just been so different than it used to be. And so now I feel like it’s starting to normalize again, which is great.

Rob:
Yeah. So Chad, let me ask you something, because let’s say that there’s a house that’s $200,000 and you come in with an offer of 150, right? You’re saying you don’t want to offend them, submit that offer. Most times the realtor, the other realtor’s going to come back and say that’s a no.
And at that point, how do you come back to them in that moment? Do you say, okay, well, I’d be willing to come up to 155,000 or do you give them a substantial increase? What is that back and forth? Because if you’re going back three or four times, I got to imagine it’s a little tedious and probably I’d imagine frustrating for the other side, if you’re like, all right, 155. No? 160. 161.

Chad:
Right. Right.

Rob:
So how does that process work on your end?

Chad:
Not all realtors are the same and so you do have to coach them a little bit and that’s been … You think, well, you’re a pro, this is what you do all day, why would I even think about coaching you? But in reality you do, you do have to. And so I will ask them what their strategy is and typically we’ll give 48 hours. If we shoot too low and they just say no versus countering, we’ll give it 48 hours and run the numbers again and see if it’s still for sale.
And typically within about a week or two, if you keep coming at them, obviously the level of interest is there on both sides and so they will start to finally focus on you. They see you for who you are, you’re just trying to get a deal, which, hey, we’re an investor, of course we are.

Rob:
Right. And so I guess the other thing here is, once you’ve negotiated this deal at this scale, if you’ve locked it down … I have an understanding a little bit about your workflow and how you work with your son and he runs it through the calculator and everything like that. What kind of tech stack is involved with this? I know obviously we’ve got the calculator on BiggerPockets and just a small shout out there. You can use that for free five times, and then after that, if you become a BiggerPockets Pro member, you can use that as many times as you want, which is a real game changer for a lot of people that are running deals over and over again.
But outside of that, what kind of tech are you using, especially when you’re working with investors? As you scale up, what property management systems or CRMs? Can you give us an idea of what the tech side of scaling up looks like?

Chad:
Absolutely. So that’s a great question. We have a bit of an advantage because I have a bunch of tech guys that work for me with my championship ring company. I’m able to moonlight those guys, if they’re not busy, certain seasons, and I’ll bring them over for different projects. And so with partners that I bring on, as I mentioned earlier, I might bring on a partner to help that cash flow situation. My ultimate fear is, is they look at me and they say, you’re not stealing from me, but you’re hiding profit or I’m not doing it right, or maybe they’re calling me every other day trying to figure out what’s going on with the property and so on.
And so that’s the last thing I want to do and that’s the last thing my team wants to handle with the partners. And so we were able to load up a dashboard and it works right out of QuickBooks. And so if we have a $200 charge for a screen door that broke or whatever, all that gets loaded straight into our dashboard. And so they can go into that dashboard and type in say 30 days ago till today, or 60 days ago until 30 days ago and see okay, we got paid this amount from the tenant, these expenses came out.
And so it really alleviates the question marks because we all want to be on the up and up. We all want to show our investors that we care enough to show them their return at their fingertips. And so that’s really been something that’s been crucial for us, and it really helps our investors understand how passionate we are about making sure everything gets dialed in and their investment’s coming back to them at the right timeline.

Rob:
Yeah, that’s really cool. So you actually keep it pretty transparent with the dashboard so that you don’t have to go through 17 calls a day, answering every little question.

Chad:
Exactly. People get concerned, you look at the stock market and crypto and all that stuff. I mean, people are used to checking all the time on stuff and real estate just doesn’t quite move that fast, but sometimes they forget that. And so to provide a dashboard and they can check every day, quite honestly, not much is going to change, it’s not like crypto, but at the same time, if they want to, they can, and that keeps the calls away from our office.

David:
You just inspired an analogy, Chad.

Rob:
Ooh, let’s hear it.

Chad:
Uh-oh, here we go.

Rob:
Uh-oh.

David:
Weeds grow fast, but you can’t see the progress of a tree growing.

Chad:
That’s good.

David:
Right? Real estate’s like that. It’s this tree that you planted, you can’t look at it and see that it’s growing, but you go back to it a couple years later and you’re like, holy cow, that’s worth a million bucks. Whereas the investments where you’re just getting addicted to checking and like, oh my God, it went up. And you get this dopamine hit like you just made money, and then it goes down and your soul is crushed, like you’re an idiot.
It’s not a healthy way to live going back and forth and that tends to be how weeds grow. They sprout really quick and they die really fast, but the best investments are something that you have to be patient, delayed gratification, and it sounds like that’s what you’re doing over there. So most of your effort, it almost seems like is going into the system you’re trying to build so that you can plant a lot of trees.

Chad:
Right. Right. And the key is people, having the right people around. We used to work with a management company and I hired one manager and that didn’t work. And so what we did figure out is we’ve got to hire a rockstar team. It will make the difference hiring people that have that owner mentality that really truly care. And so once we figured out that we have to bring on the right people, it really solved the majority of our issues, because we had a lot of bad stories in between. And to hire those key people and people that do genuinely care, it makes all the difference in the world.

Rob:
So as you’re building that team, because I think this is something that we don’t get into the nitty gritty of this a lot. We talk about hiring people, but it’s very intangible for a lot of people in the throes of the beginning of their journey. So do you think you could just maybe even talk about, a little bit, when it’s necessary to hire somebody? Let’s give it a scale.
In your first one to five deals, I’m sure you can probably do a lot of that yourself. Then there’s 5 to 10 deals and then 10 to 15. Can you help us understand when you’re scaling up when one might need to hire somebody and what kind of role they would hire to help them scale?

Chad:
Right. I could speak for myself. You know, I was pretty busy with my W2 and so I immediately needed to hire somebody, to give my properties away to a management company. What I found was that just honestly wasn’t working. It was killing our cash flow. They would put in bad tenants, a bad screening process. Anyone with a heartbeat could get loaded into the house. They’d overcharge us for easy fixes. I can think of a thousand dollar screen door I once replaced, a thousand dollars. And I ended up calling and checking on how in the world a screen door costs a thousand dollars. And they had sent out two people to measure, and then sent them off to Home Depot and they bought the wrong door and-

David:
Charged you for every one of those. Yep.

Chad:
Yeah. 60 bucks an hour per person, times two. So it didn’t take long to get up to a thousand dollars. And so I realized, okay, this is just not working. So that’s when I hired my own private … I actually collaborated with one of my buddies who had a bunch of properties by that time. And we don’t co-own the properties, but we put them together and hired this team.
But our first shot was by far the most embarrassing shot. We hired one gentleman and he was a huge failure and we just thought, he’d be the savior of our real estate, getting away from the thousand dollar screen door type situations, and it was anything but that.
So for us, we immediately went into management with a big management company and then got out of that as soon as we could. I would say numbers wise, I think I was at probably 10 properties before I realized I just wasn’t making anything and I had to do this a different way.

Rob:
That makes sense. I think management is also, it can make or break you, especially if you’re holding on to these things. A good manager can make you a lot of money, a bad one can just cost you so much more outside of what they charge, just from the actual, like you talked about, the tenant experience.

Chad:
Rob, can I tell you my most embarrassing story? Is that okay?

Rob:
Please. Yeah, it absolutely is.

Chad:
I do not tell this story very often just because everyone laughs at me so hard, but I’m going to go ahead and let it out. So I was purchasing properties pretty fast. I was obviously working with my other company quite a bit and I had a punch list put together for a property. We had just broken away from our management company. I hired this gentleman and he was in the industry and he was going to be the savior of our real estate.
And so anyway, I gave him the punch list. I said, “Hey, go knock all these things out.” It was about a $30,000 renovation on a new property that we needed to fix a lot of stuff on. And I remember I never checked on it. I checked on him quite a bit, but just on how he was doing with the project, but I never actually drove up to … I live in Lincoln, but I never drove up to Omaha to check on this property.
So two months later he gives me a call and he he’s like, “Hey, this thing’s good to go. We can get this rented next week.” And so I say, “Okay, cool, let me just run up. I’m going to double check all the punch list items and make sure everything’s good.”
And so I went up there and I’m waiting in front of the house and I think I was supposed to meet him at 10:30 and 10:45 rolls along and he’s not there yet. And so I shoot him a text and he’s like, “Man, I’m here.” So I look around, I don’t see him anywhere. And so I give him a call and he’s like, “I’m standing on the porch.” And I look up at our porch, he’s not there. So I said, “Hey, I think I think you’re at one of our other properties. Will, you send me a pin.”
So he sent me a pin and he was literally one block over, identical spot, one block over. And so I drove over there and I said, “Hey, what’s going on? What are you here for?” And he’s like, “Well, this is your house, right?” And I go, “No, this is not our house.” I said, “What happened?”
And so lo and behold, what ended up happening was he got to the property initially. He couldn’t get in. He thought the keys were bad. He rekeyed the house. Got a locksmith over there, rekeyed the house, went in to a house that was not ours and we spent $30,000 rehabbing a house that we have no idea whose house it is.
And what ended up happening was the guy that had purchased that house was saving up for the rehab and we ended up having to call him and let him know that hey, something happened. You know that house you had purchased on South 18th Street? We actually broke into your property and we completely fixed it up on accident. We thought it was our house.
And so anyway, I asked him, I said, “Hey, can I buy this house from you, make this blood bath maybe go away a little bit.” And so he’s like, “Hey, give me 24 hours and I’ll give you a shout back.” So I texted him a few times that next morning, no response. And about three o’clock the next day, I’ll never forget this text. I think I sent him a text, I said, “Hey, what are you thinking?” And his response back to me was, “I’m good.” And I was like-

David:
He wanted to check and be like [inaudible 00:38:25]-

Rob:
Oh no.

David:
He needed 24 hours to check out the shower and see if he liked it.

Rob:
He walked in, he’s like, “Oh, this is actually pretty good.”

Chad:
Yeah. Yeah. I hope he liked it. So anyway, he cut me off communication from there and I had literally nothing I could say. I mean, I literally broke into his house. I mean, what am I going to do about it? And so then we had to turn around and fix up the other house. That actually cost 40 to renovate, and so we were out 70 between the two different properties. So yeah, it was quite the mess. That was a tough one.

Rob:
Oh man, my heartbeat is barely just slowing down right now on the conclusion of that story. Man, I am so sorry. That is-

Chad:
Yeah, that’s embarrassing.

Rob:
You say you don’t tell this story much. You’ve chosen an interesting opportunity to tell this story, given how big the audience is.

Chad:
I’m sure this happens all the time, right? If I can save someone else from doing it.

Rob:
Yeah. I do appreciate that. Yeah.

David:
Well, I don’t think that happens all the time because I think most contractors or handymen would say, hey, the key didn’t work.

Chad:
Yeah.

David:
What’s going on? And you’d say, show me a picture of the front door.

Chad:
Right.

David:
But sometimes in business you do get these people that take such … You like to see initiative, but you’re like, there wasn’t one point where you thought maybe I should call and check in and see am I at the right house, or why doesn’t the key work, or hey, this floor plan is completely different than what you told me that you were going to want, or where’s the third bathroom? There are so many things that should have popped up.

Chad:
Yeah. No, it didn’t.

David:
Yeah, that’s funny. Well, it’s also horrific, but that’s a really funny story.

Rob:
That is. Hopefully … Okay, I guess let me ask you this, in retrospect, do you wish that hadn’t happened or are you glad that it did?

Chad:
Yeah, no. I appreciate you asking that. That was a catalyst that pushed us forward. And so that’s what forced us to hire that rockstar team. At that point we were thinking, okay, we’ve got a bunch of properties, we can either continue and screw them up or we can go and really hire quality people that are sitting in the right seat for each of their skill sets and really put some gas on this thing.
And so that’s where we really dialed in our process and over the next year, we’ve really added a bunch of key components to be able to succeed. And I can think of a few of those. These have been instrumental for us. We require a 650 credit score to even look at them. 50% or less debt to income ratio. We verify their income. We call the last two landlords. We care about the last landlord, but we really care about the landlord before that because they don’t have any skin in the game. We check for bankruptcies, evictions. We do allow co-signers if they don’t qualify for one of those things, but if there’s an eviction, we definitely toss that one out. It’s a hard no.
But yeah, basically we look for patterns of responsibility. When we fix these up, we really put nice finishes on them. I mean, it’s not like it’s the Taj Mahal, but at the same time a lot of our tenants have never had brand new carpet, LVT flooring, granite in the kitchen and those things. And so there really is that pride of rentership that you see, and so we are able to capture a tenant that really does care about the property.

Rob:
There’s probably a really good chance that those systems that you put together have saved you more than the $30,000 that you spent on that house, honestly.

Chad:
Right.

Rob:
I don’t think enough people embrace the mistakes that are going to come with real estate and it’s just going to happen. It’s the name of the game. You are going to make mistakes that will cost you 5, 10, 15, 20, $30,000. And it obviously hurts in the moment, but you always have to look at it from the bird’s eye view of what you learn and the experiences that come from that.
And if you lose $30,000 in this scenario, you’re going to make it back. You’re going to make it back by strengthening your systems and just never making that type of mistake again. I appreciate the story. I appreciate that you tell it because I know that’s probably not super easy to come on to [inaudible 00:42:37]-

Chad:
No, we call it tuition. We call it our tuition.

Rob:
Tuition. Yep.

Chad:
We learned something on it.

David:
So Chad, what advice do you have for somebody who likes your partnership model and they think that they want to get started buying real estate that way?

Chad:
For one, you have to get yourself together. If I had tried to do this back in the day, I would’ve just pissed everyone off. It wasn’t until we really smoothed out our machine, and honestly there was years of smoothing that out and finding the right people to do the right processes. Without that, I would be really timid unless you’re doing it on your own. If you can stay somewhat small and nimble that would absolutely be an option.
But for us trying to scale fast and trying to reach 125 homes by this Christmas and bring on partners that like the process and like the experience, we’ve got to have the right people and the right processes in place or else we’re just going to implode.

David:
So for someone that hasn’t built a process before, they’ve just done the onesey-twosey, it’s always easier when you’re going slow because your systems are terrible, but you don’t know it because you can just respond. When you get high volume, what you’re doing breaks and you really have to rebuild it. What advice would you give to someone who’s never had a system?
They know that when someone calls them and says I need this done, they respond, but they’re not anticipating what’s going to happen and maybe delegating it to somebody else. Do you have a spreadsheet? Do you have a checklist? How did you structure what goes into these deals, so you could buy 50 of them in six months and not miss a ton of stuff?

Chad:
Yeah. I mean, our software saves our bacon. We rely on that hard. But at the same time, to answer your question, having people with capacity, having our team be able to go out to the properties and evaluate things and not trying to do everything on our own, that’s been … I’m a guy that wants to do it all, and so once I had learned that I have to be able to outsource to people that are quite honestly better at it than I am, that’s allowed us to scale and move the needle there.

Rob:
How big is your team currently, just out of curiosity, for at your size? 50 houses so far, another 75 in the pipeline, what kind of team does that take?

Chad:
We have five core people that are in the office and then we have six crews that are running around and doing all the renovations, and then we have one person that manages those six crews.

Rob:
And do those six crews work exclusively for you or do they work for other investors as well?

Chad:
Right. So three of them do and then three of them do not. And so the three that do, it’s funny with construction crews, you find contractors that these three guys just want to work for us because it’s safe, they don’t have to go look for jobs, they don’t have to knock on doors, they don’t have to worry about getting paid. They get paid at the end of the month, every month. Just all those stresses that come in from being a contractor is completely alleviated, and so they really enjoy that.
Then we have three of our crews that they probably do juggle and they’re fixing our stuff, but they’re also fixing someone else down the street. So we really make sure we get the timelines lined up with them before we’re willing to let them take on a project for us.

David:
Last question, before we go to the deal deep dive, would you say that your experience in property management companies has given you confidence to scale at the degree you are now?

Chad:
Yes, but even six months ago I’m not sure I would say that. And the reason why is every day we’re finding out something we can do better. And I think that when you are passionate about growing, I think as investors we can get into that, the education loop or whatever, where we’re just constantly trying to learn before we jump into something. The problem with doing that is, is you’re never actually hands on doing it and it wasn’t until I’d run into these problems where I really take them serious.
And so once you start running into these problems, eventually you’ve almost ran into all the problems you’re going to run into. There’s always outliers, but we can solve everything a whole lot faster than we could 2, 3, 4, 5 years ago just because we’ve been there and done that and seen the problem and now we know what to do and act.

David:
That’s awesome. All right. Well, thank you for that chat. We’re going to move on to the next segment of the show, the deal deep dive. In this segment of the show, we are going to fire questions at you that dive deep in a particular deal that you’ve done in the past. So question number one, what kind of property is it?

Chad:
It is a single family home in Omaha, Nebraska.

Rob:
Question number two, how’d you find it?

Chad:
Okay. So we have realtors that are always searching for us, but it’s no question the realtors are feeding me and they’re feeding other people. And so that’s one of the things that I do with the group of kids that I meet with every week is I make them analyze properties. And then if they happen to find a property that didn’t ever come my way, the realtor didn’t pass my way, I actually write them a check for a thousand dollars on the spot, if we’re able to capture that property. And once we close, I write them a thousand dollar check because again realtors are feeding us and they’re feeding other other investors at the same time. And so that particular property, this particular property, my son found, and he analyzed it and sent it off to the realtor and we ended up capturing it.

David:
Okay. How much did you pay for it?

Chad:
135,000.

Rob:
And how’d you negotiate? It?

Chad:
It was listed at 140 and we went back and forth and we ended up capturing it for 135.

David:
Okay. And how did you fund this deal?

Chad:
So our funding is a little bit unique too, in a way I guess. So we get a five year term am’d over 20 years, but we also get 90% of our renovation covered by a small local bank. And so that’s really been nice for us because if we say the renovation’s going to cost 50 grand, they’ll give us 90% of that up front. And so at closing, we really have all the cash we need to cruise forward.

Rob:
What did you do with it?

Chad:
Yeah. So this one needed about $30,000 in work between the kitchen, the floors, new master bath, and just some odd ends. It was your typical renovation on a three bedroom house, two bath property.

David:
Nice. And what was the outcome?

Chad:
So the outcome on that one, we just got the appraisal back not too long ago. It came back at, I believe it was 191,500. We get 80% loan to value back from the bank. So the loan itself was 153,200 and I had just over about $160,000 into it. So I was going to leave $9,000 into that particular house. I did end up bringing in a partner on that one and I asked him for 14,000, if he’d be interested in coming in and he did accept. And so at closing, we ended up putting about five grand in our pocket, which it’s not really five grand in our pocket. We’ll just use it towards things that come up as tenants move in on that property and the buffer there.

Rob:
That is the correct answer. No, I’m just kidding. What lessons did you learn from this deal?

Chad:
Yeah, so like I said before, the real carrot is the appreciation. So bringing in partners is something that my wife didn’t really want me to do, more people, more problems kind of thing, but by bringing in partners, we’re able to scale. And I’d rather have half the pie than no pie at all, and at this point I wouldn’t be buying any. And so, I guess what I learned was it’s okay to bring on partners, you just have to be able to handle them right and accumulate the assets as you’re able to. And yeah, I think that by being profitable from day one is extremely helpful in the process.

David:
All right, last question. Who was the hero on your team for this deal?

Chad:
Yeah. Probably my son. I was pretty proud of him for finding this, anytime they do capture property. It’s really fun to see him celebrate. With this particular property, just with my son, I tell him, hey, over time I’ll split it with you. So anything that he captures that a real estate agent never sends to me, I will write him a thousand dollar check and then we end up splitting the house down the road. So he’s going to be pretty … if he keeps finding me properties. He’s found me four or five at this point. So if he keeps finding me properties, he should be set here in about 5 or 10 years.

David:
Awesome. All right, well that was our deal deep dive. Remember you too can do more deals with the help of BiggerPockets tools and resources. Go to biggerpockets.com and look for the tab that says tools. Pretty easy to find.

Speaker 4:
Famous four.

David:
All right. We’re going to head onto the last segment of the show, it is the world famous, famous four. I’m so glad I don’t have to sing that anymore. I used to have to sing it every time Brandon would do it in this really-

Rob:
Famous four.

David:
Yeah.

Rob:
You can harmonize with me. We’ll try it. You can harmonize-

David:
That’s my PTSD from having to do that with Brandon and sing in that falsetto voice every single week. What is your favorite real estate related book?

Chad:
Yeah. So I think it’s going to seem like I’m kissing up a little bit, but I’ll tell you why. So right now it is the BRRRR book by you, David. And the reason why is I’m working through the book with my son and his friends and this little group of entrepreneurs and it’s just amazing to watch their eyes open up about these concepts, the low to no money in and just literally showing them.
I call them my grom group. Are you guys familiar with the word grom at all? So a grom is a young surfer. And so you go to Maui or maybe California, you hear the word grom all the time. You even see kids with tattoos on their body with it. So what it is, is we call it a grom group because we really take them and we surf them around to the different jobs that we have up in Omaha.
And so they’re able to read the book, but then go up and walk through a real life setting of like, okay, this is what a renovation looks like. I take them to meet with my bankers and so on. And so it’s really fun to watch their eyes open up. And so I’m not a big reader. Like what you said, Rob, I’m not a huge reader, I’m a huge podcast guy. And so to see their eyes come alive with some of these concepts has just been super fun. So by far that’s been my favorite book to read.

Rob:
Hey, you read that thing once, you’re going to be quoting it for the next three years source, me.

Chad:
That’s right.

David:
Especially if it’s the only book you’ve ever read, you don’t have a lot of options.

Rob:
That’s true. It’s the only, there’s no other book. Question number two, favorite business book, and then maybe I’ll read this one.

Chad:
Yeah. So like I said earlier, it’s Who Not How is the name of the book. And the reason why I really like that is, I was always a guy that just pounded through everything and wore a hundred hats and didn’t do any of them well. And so just the concept of getting people in the right seat and figuring out who can help me accomplish these things. And instead of how am I going to get this done, it’s basically who’s going to get this done. And so just continuing to hand off my weaknesses has just really rewarded me.

David:
And if you’d like to learn more about the principles in that book, check out BiggerPockets podcast, episode 423, where we interviewed the co-author, Dan Sullivan, along with Ben Hardy. So thank you for mentioning that, Chad. That’s a very important concept that all entrepreneurs have to learn.

Rob:
So Chad, when you’re not out acquiring 125 properties in a year, what are some of your hobbies?

Chad:
I love to golf. My two sons … I think I mentioned earlier, my daughter’s headed off to college on me and she’s going to be totally rubbing in and she’s going to be a huge jerk in sending pictures of pools and palm trees next year. But while it’s nice, my sons, we’ll all go play golf. When I’m in Maui, we do have a property in Maui and when we’re there, I do love to surf, even though I am horrendous at it. My wife actually calls me Bambi on ice when she sees me on a paddle board or any kind of board. So anyway, they do like to make fun of me, but if I can be out there with my boys, I’ll give it a shot and look really bad doing it.

David:
All right. In your opinion, what sets apart successful investors from those that give up, fail or never get started?

Chad:
Yeah. So I love the term jump in before you’re ready. When I look at kind of how I started this path into real estate, I had no reason to go ahead and jump in. I knew nothing. And so by jumping in and just basically forcing yourself to learn a lot of the things to survive in real estate, that’s really what I credit a lot of our success to.
And so what I see a lot of my friends doing who ask me about how do I get into it is they listen to all the podcasts, they read all the books, they watch all the YouTube videos, but ultimately they just get paralyzed by just, I don’t know anything about this and so I’m not going to do it, or I need to learn more about that before I jump in, and I just feel like we go into these education loops.
I’m completely guilty of it myself. I’m the guy that bought into Bitcoin at 65,000. So I’m not somebody that wants to point fingers or anything, but just be willing to fail. I always tell my kids, don’t be afraid to start over because this time you’re not starting from scratch, you’re starting with experience. And so always be willing to fail. I guess ultimately just don’t over complicate things. Just jump in before you’re ready and have some fun with it, and truly, just believe in yourself.

Rob:
Really great words of wisdom, man. Last thing here, Chad, can you tell us where people can find out more about you?

Chad:
Absolutely. So my Instagram handle is chadbeeman, Beeman is B as in boy, E-E-M-A-N, 512. So chadbeeman512. LinkedIn is chadbeemanrei. Again, two Es in Beeman.

David:
Right on. Rob, where can people find you?

Rob:
You can find me on YouTube over at Robuilt, R-O-B-U-I-T.

David:
You trying to be Notorious B.I.G over here? R-O-B-U-I-L-T.

Rob:
No, I think that’s more of a Hamilton, R-O-B-U-I-L-T. All right, that is a very niche joke for all the Hamilton fans out there. Anyways, you can find me over on YouTube at Robuilt, and then you can find me on Instagram, @robuilt as well. And then you can find me on TikTok, @robuilto. It’s the only handle I have where there’s an O. So don’t fall for the Robuilt on Instagram, he’s a scammer. What about you, David?

David:
I’m davidgreene24, pretty much everywhere. I’ve actually invested in my social media recently, so I’m going to be making a page for the one brokerage and the David Greene Team page is going to be improved, and then my regular davidgreene24 page, too. So I’d like to know what people think. Do they like it? Do they not like it? Curious there.
I did have a old cop buddy of mine that got scammed by one of these crypto people making fake pages. He just called me out of the blue and he’s like, “Hey, have we been talking for the last week?” And I was like, “No, please tell me you weren’t talking to me on Instagram.” And he was, and he didn’t tell me how much money, but he said it was a lot that he sent. So again, we’re just banging this drum, look incredibly close at the screen name. They will make fake accounts that look like us. Maybe they change the I in David to an L or at a david.greene24 and then they take all the same pictures and everything looks the same. It’s very easy to fall for this.
So don’t send any money to anybody online and if you get a follow request, just check very close to make sure that the spelling is Robuilt and davidgreene24. If it doesn’t have an E at the end, then that’s not me. It sucks, man. It hits you in your gut. You feel responsible that this kind of stuff is happening, but until Instagram fixes that this is the way that it is.

Rob:
Dude, you know what? It’s gone one level deep now. They’ve now recreated my Facebook profile and they’re messaging all my friends and family. It’s a thing, man. It’s it’s a bummer. So yeah, be safe people.

David:
All right, Chad, any last words before we let you get out of here? I just want to highlight your journey’s pretty incredible to take this much action this fast and to move from Hawaii to Nebraska on top of that, you are an incredible human being to do all that. And the work you’re doing with kids to teach them real estate investing, that’s very admirable. Is there anything you want to leave us with before we let you get out of here?

Chad:
No, I just appreciate everything you guys are doing there. You guys really provide the tools for us to be able to teach other people and not only other people, but ourselves and you have through this. Had I had this tool 15 years ago, I would’ve been much more successful, in a much better spot and much less embarrassing stories. So I just appreciate you guys and all the content you guys put out, just helping us to be better at what we do.

David:
Thank you for that, Chad. I’ll get everybody out of here. This is David Greene for Rob finally read a book Abasolo signing off.