People are often drawn to real estate after watching TV shows that focus on flipping houses to make money. Today, Toby Mathis of Anderson Business Advisors talks to Aaron Adams, CEO of Alpine Property Management and Alpine Capital Solutions. Also, Aaron’s working on writing another book, Tips Tricks Foreclosures & Flips: Secrets of a Millionaire Landlord.
Highlights/Topics:
- From Carleton Sheets to Robert Kiyosaki: Captivated by the concept of real estate education
- Pieces of Property: Aaron has 3,000 single family homes in five markets, a handful of apartment buildings, six mobile home parks, and 20 Airbnb’s
- Process of purchasing properties, inheriting tenants, and rehabbing/renovating
- Learn by doing and have a general understanding of construction to be in real estate;
- Rule of Thumb: For most construction jobs, a contractor’s costs for materials and labor should equal each other
- Active vs. Passive: Make no mistake, flipping is active income, but passive income can change your life
- Turnkey Investing Model: Buy properties that generate at least 7% net on rent
- Nation of Renters: 70% of Americans can’t afford to buy a home where they live
- Tool turned Crutch: Student loan debt has gone from millions to trillions; 300% increase
- Killing millennials’ ability to buy property; rents are going up, homeownership is falling
- Secret Sauce Ingredients: Follow light rail plans, focus on first-generation Hispanic neighborhoods, and find public/private partnerships
- Biggest mistake Aaron made was lack of financial control; he waited too long to hire an accountant/bookkeeper and trusted people who ended up stealing money from him
- Aaron’s Biggest Gamechanger: Don’t limit opportunities; disconnect your ego from staking a flag and saying, “This is what I do.”
- Investors typically buy houses via annuities, savings accounts, and retirement money
- Key to Real Estate: Follow the feds, builders, and trends; achieve an education with action
Resources
Alpine Capital Solutions on Facebook
Carleton Sheets’ No Down Payment Infomercial
Rich Dad Poor Dad by Robert Kiyosaki
Average Americans can’t afford a home in 70 percent of the country
Federal Housing Administration (FHA)
Anderson Advisors Tax and Asset Protection Event
Full Episode Transcript:
Toby: It’s Toby Mathis here with the Anderson Business Advisors Podcast. Today, I’m joined by Aaron Adams at Alpine. Welcome Aaron.
Aaron: Thank you. Good to be here.
Toby: Cool. Hey, this is actually going to be fun. I’ve known Aaron for a lot of years. Our companies have worked together and it’s one of those things where familiarity is a fun one when you’re doing these types of formats. So, I’m just going to jump right out the gate. Aaron give them just a thumbnail sketch of your background. I know you came out of Vegas, […] everybody get an idea of who you are.
Aaron: I did grew up in Las Vegas. My dad was a casino executive, went to high school in Jersey, came back out to the West Coast for college, undergrad in Utah. My wife and I moved to Southern California in 1999. She was pursuing grad school and I got accepted to a Masters Degree in Business Programme at Cal Poly. While I was working on my MBA, we decided to teach high school for a few years. End up teaching four years of high school. Loved it. I love teaching, love coaching, and while teaching. I caught an infomercial late one night. It was the old Carleton Sheets’ No Money Down Program.
Toby: Holy cow. That is a while ago.
Aaron: I actually found it on YouTube, the full 90 minute infomercial a few months ago. I was captivated by this concept because I’ve never been exposed to real estate education of any kind, and it just really pulled me in. I called the 800 number and there was no way at 3:00 AM that I was going to spend $4000 on his DVDs and videos.
Toby: It was $4000? I always thought it was $99 or something.
Aaron: No, it was a $4000. It was like $12, 12 DVDs, VHS, starter tape. It was the deluxe package. So I got on eBay and found the 1989 Carleton Sheets with cassettes for $400. So that’s what I buy. That came in the mail and it was worthless. He was missing cassette tapes and was outdated. I went to Barnes and Noble, I went to the business section and bought six books on flipping houses. First one I read was Rich Dad Poor Dad by Kiyosaki. Ironic I just got in the mail today a contract for my first real book. John Wiley and Sons sent me a book deal contract, we’ve been going back and forth for about eight months now, and it’s called Tips, Tricks, Foreclosures, and Flips: Secrets of a Millionaire Landlord.
Toby: Very cool. I like it. You’ve written books before. They say this is your first real one which means you’ve got a publisher on this on.
Aaron: I’ve gone from Pinocchio publishing now. Now I’m a real boy.
Toby: I’m made of wood. So you got into real estate. For those people don’t know Aaron, you manage well in excess, is it over 3000 properties or there about?
Aaron: Yeah. We have 3000 single family homes in 5 markets, a handful of apartment buildings, 6 mobile home parks, and 20 Airbnbs.
Toby: Okay, so just a couple of pieces of property.
Aaron: Yeah.
Toby: Aaron is very accomplished and when you’re acquiring your properties, I want to hear a little bit about the mobile homes too because I know that’s something you guys get into. But on the single families, did you rehab every single of one of those? Or are some of those typical landlord, they come over? Or are these ones that you actually did the rehab on as well?
Aaron: For years, sometimes I buy property foreclosure, auction, or off MLS, or from another investor and then inherit a tenant. Maybe 1% of the time it’s worked out well, it’s just different expectations and stuff. What one investor says is turn key is completely relative. So we’re at the point now where we rehab every house comprehensively, then we put our own tenants in.
You know that I have five construction companies now and five independent leasing companies. We just had to vertically integrate those businesses because it’s not something you can outsource. I used to think that, if I was doing $75 million a year in construction that I would own warehouses full of materials, and that’s actually not something that’s ever really made sense warehousing, but construction companies, brokerages, and management companies, we’ve had to bring in-house.
Toby: How many properties do you believe that you’ve personally or your companies have flipped, that actually done the rehab on?
Aaron: I bought my first deal in 2000. Nineteen years later, I’m well into the 7000 property range.
Toby: Seven thousand. You’ve learned a few things throughout that time every year. There’s folks out there that maybe they’ve never even flipped a house, but they’ve heard about flipping. What would you say to those folks?
Aaron: When I was teaching high school about my first duplex in 2000, I didn’t know anything about construction. To this day, I’ve only pounded nails on one property. I meet contractors all the time and we were like, “Yeah, I’ve always wanted to get into real estate.” Being a contractor is the worst thing for you. It’s going to make you over rehab your properties and obviously you have to be well-versed enough.
For example, a great rule of thumb for your clients. For most construction jobs, a contractor’s cost is materials and labor equal each other. They could go to home depot, if they can price out $5000 in materials, the contractor’s cost for that shoot about $5000 labor. It’s a great rule of thumb. Just knowing that.
I was meeting with a contractor this morning. He was doing slate steps on one of my houses. He quoted me $4000 and I said, “Well, How much for the materials?” He said, “$1200,” and I’m like, “It’s kind of heavy for labor,” because now he said double, he’s got labor double materials. He and I spent 20 minutes explaining to me why was really highly-skilled labor, I agreed with him, and I was cool with the price, but I know that his cost and his time is worth half of that.
So you have to understand the level of skill to manage construction. But it’s not as intimidating as I used to think. I don’t have to know how to install a furnace. I just have to know what it costs and what level of skill is required to put it in, and how long it takes. Once you know that, you can have an intelligent conversation with any contractor.
Toby: How long did it take you to really get up to speed on a flip?
Aaron: You only learn by doing. I’ve been a little bit screwed on every property I’ve ever bought.
Toby: That’s all right. You know what? I have a very good mentor and one of his buddies goes by the name of Gold, who owned the 99 Cents Only Stores. Gold said, “You have a shrinkage. There’s people that steal from you.” My mentor who was here, a guy named Jerry says, “I can’t stand it. I can’t have stores because I know they’re stealing.” It’s like one guy who ends up being the billionaire, of course, was the guy who could handle knowing that he’s getting a little bit screwed on every deal. Right? It’s like, “Hey, that’s just part of life.” It’s, “Don’t take it personally.”
Aaron: It’s not. It’s like I own a bar. I’ve owned a couple of bars and as a former bartender, every bartender steals, they either drink the profits, give the drinks away to their friends, or worst case scenario, sell the drinks and pocket the cash. They all do one of those three. I started thinking, “I’m just going to make them volunteer their theft.” So, I went to the bars and said, “Hey, you can have one drink per hour, because if you can’t bartend and drink one drink per hour, then you’re a non-functioning idiot. I want you to write that down and I’ll let you […] ten draft beers a night,” because that cost me three cents a piece, “but I want you write it down.” Easily, my margins went up 20% because […] closing the fast.
Toby: It’s like you can steal little, just don’t steal a lot.
Aaron: Yeah, just take a taste and don’t drink my premium booze.
Toby: I’m sure somebody still did.
Aaron: No doubt.
Toby: Anyway, back to the rehab and stuff. Again, I’m personally not somebody who likes to flip houses. I like to buy-and-hold. Is that your typical person who comes to you?
Aaron: It’s interesting. Obviously, when I was teaching high school, I didn’t have any money. I started flipping and a lot of people are drawn to real estate because they’ve seen the flipping shows. But make no mistake. Flipping is active income.
I quit the high school, I finished my MBA, and I realized that I had just traded a job that I loved of teaching and coaching for a job that I didn’t really like, that I didn’t enjoy, which is flipping houses. It wasn’t until I plugged into the passive wealth development idea, where you’re flipping and making half a million bucks in a year, you live off $100,000 and then you put $400,000 into passive investments because passive income changes your life. You ain’t going on a trip to Europe and your passive rents all keep coming in, but if you’re going on a trip to Europe in the middle of ten flips, it’s a nightmare.
I didn’t understand active and passive income like I do today. I always say to people, “You want to flip so you can hold. Obsess about making more money because if you try to just buy one rental and let the rents buy the second property, in thirty years you’ll have more, four or five properties. You can’t let your passive build more passive. But if you let your active and you obsess about making more money so that you can buy passive assets,” I mean, I’m buying three or four houses a month right now that I just hold for in clear.
Toby: What does that do for you, by the way?
Aaron: It’s tough because to take $100,000 and buy one house that gives you $600 a month net cash flow, it’s not sexy. There’s no flipping show called Hold That Rental.
Toby: I think it’s sexy. It’ll be three of us watching.
Aaron: Yeah, right. But when you have 10, bring in $6000 a month, that’s a sexy number. So, 20 years into it, I have almost 250 assets that are free and clear now, and they throw up over $100,000 a month net.
Toby: Property management is almost the same thing as well, right?
Aaron: Yeah.
Toby: You have properties under management where you’re getting paid for every 10 properties you manage is probably like having one rental.
Aaron: And 10% of the properties managed by my management companies are mine. I’m the biggest client. The whole reason I built it was because I couldn’t find good management. So, when we sell a property to another investor, a passive investment, we manage it form him, too. When they want to get rid of it, we help them sell it. That, to me, is what turnkey investing with us is we have a really unique model. We have a couple of competitors, but not really, not of the scale that we operate on.
Toby: It’s interesting. So you’re saying something about turnkey. It’s interesting to hear you say that term because different markets where people go into, some are not turnkey markets. The big market, the United States, which I always look at Florida, Texas, and in California, you need to know you have these big, huge markets, the bay area. Horrific for buy-and-hold. Horrific. Maybe good for flip because it’s highly appreciated, expensive, big margins, and you see people going in there trying to make a turnkey portfolio on something that it’s just the wrong area. What kind of areas do you look for turnkey properties or not? I shouldn’t say turnkey, but for buying homes that are going to be nice return properties.
Aaron: I won’t even look at a market for rentals if I can’t make 7% net on the rents. You can’t make over 5% in California right now. You can’t make over 3% in Hawaii. Even in Vegas, which I grab them, I love Vegas, it’s tough to make over 6%. Vegas is so sexy, people over the world are buying Vegas. Markets right now like Ohio, we’re opening an operation in Columbus over the next couple of months, Charlotte, Kansas City, really you fly over the states, is the only place in the country right now where we can make 7% on the rents. After that I want to see a business-friendly state government.
You and I both know that, take a state like California which is one of the most unfriendly business states in the country, […] a year for an LLC, extra income tax if you make over a certain amount of money, getting permits for construction. I used to have to pull a permit to put a mailbox in a house. Things like that. You’re working as a general contractor is incredibly expensive. Insurance is crazy. When you buy a passive investment, you’re not buying a rental property. You’re buying a business. So we try to evaluate locations and to see how business-friendly they are.
Toby: What’s the typical price of a house in an area that you’re looking for? Like you’re never going to get this with a $500,000 house. You don’t get to get 7% and we’re not talking about gross rents here, guys. Were talking about […] actually take home and put in your pocket after your CapEx, after all the management fees, after paying everything else. What’s the typical price of the house?
Aaron: I say somewhere about $110,000–$120,000 is the wheel house. If you look at median home prices now, $250,000 across the country. There’s a massive housing shortage for entry-level homes. The homes that were selling to our clients are not war zone properties. They’re blue collar, middle class neighborhoods, predominantly home ownership. The narrative for our client is buy this house, collect rent for three, five, seven years, and then sell it to a homeowner, maybe to the bank, maybe seller finance it.
I just read an article yesterday that I posted online. It said that 70% of Americans now live in an area that they can’t afford to buy a home. The reality is we’re becoming a nation of renters. Home price appreciation has been 30% quicker than wage appreciation. More and more people are falling out of range to afford to buy a home. There’s never been a better time to be a landlord because we’ve never had a lower homeownership rate since Fannie-Freddie were created. Obviously, prior to Fannie-Freddie, banks didn’t like the loan on homes and we had about a 40% home ownership rate, pre-World War II, but since that time, our home ownership rate is dropping to its lowest level, and it’s because of affordability.
Toby: What about the amount of debt that these millennials have from leaving these big college institutions? The college debt right now is $1.5 trillion?
Aaron: If you look at the early 90s, student loan debt was around $600–$700 million. It was a tool that some people used. Now it’s a crutch and we’re at over almost $2 trillion in student loan debt. If you look at that based on how many people are going to college, that rate has increased by over 300%, and we have this cultural norm, ‘just get that degree,’ irrespective.
Toby: It’s done the hockey stick.
Aaron: It’s nuts. What else has gone up? It’s college tuition […] what universities, just because they can and because no one looks at tuition as a value proposition. If you look at the scandal that just came out of the news about parents paying these universities to get their kids in, and I hear parents, nothing about money, say to their kids, “Just get that degree.” If they aren’t getting a loser […] communications, so what, they only make $26,000 a year with that degree, and now they get $200,000 in student loan, that’s killing millennial’s ability to buy property.
Toby: That’s exactly right. The rents are going up, home ownership been falling. I think it went up a little bit last year but was falling for years because they can’t afford it. They can’t get the loans. It’s funny. I always say that the English majors are subsidizing the engineering degrees because they’re the same price. You should be inviting in all the English majors and political science and all these things where it’s not really going to get you ready for a trade, and all these guys that are doing the engineering degrees and the medical stuff, and they’re like, “Can we get four of those, please?”
It’s horrible, but you and I are seeing the exact same thing. Anybody who’s in real estate sees this. People need a place to live. The jobless market mean that we have really ridiculously low unemployment. Anybody who hires right now is really feeling that pain, and universally, people still need a place to stay.
What happened here in Vegas before the last recession in 2008, as people were buying these $500,000–$600,000 houses, expecting to rent them to somebody. You can’t cash flow. You’re going to get buried. Other people were flocking to the Indianapolises of the world where they could buy houses at $50,000, and you had lots and lots of renters that needed those properties that we’re working. Is that the philosophy that you use as you’re looking to find the house? You said working class neighborhood but its places where there’s commerce.
Aaron: We kind of focus on two little secret sauces for our neighborhood. For example, in Charlotte, we’ve been religious about following light rail plans. We’ve been trying to buy and sell property, five years in front of where the light rail has already been approved and is going in. That’s been a good strategy, because those speculators don’t start coming in until six months before it’s done.
That’s been good because for example, out on the west side of Charlotte, you had some what used to be really rough neighborhoods. Kind of war zoney, that we were buying them and we just said to our clients, “Hey, look. Here’s the light rail, it’s coming through and as soon as it comes through, it’s going to be yuppieville around here.” Sure enough these old, low income, kind of dead neighborhoods are now trendy and hot because if you can make seventy $75,000 a year, you can’t afford to live in downtown Charlotte, but if you go one rail stop out and you can buy a house, that’s a great thing. That’s one thing we done.
The other thing is pushing markets like Dallas, Kansas City, Indianapolis. We’ve really focused on the first generation Hispanic neighborhoods. Wherever there’s piñata stores, taco food trucks, and signs in Spanish, we’ve been trying to buy those neighborhoods.
Toby: That’s interesting. You’re the second person I’ve heard that from this week, actually.
Aaron: When I was 19, I did my Mormon mission to Venezuela and I speak fluent Spanish. I’ve had an insider’s understanding of the Latino community. They are savers. They have a cultural value on saving. They hate renting. They see it as a waste of money. For example, I’ll have a rental that I’ll rent to a Hispanic client for a year or two. Once they see they’re good, then I’ll offer to sell in the home and they’ll give me $20,000–$30,000 down. I have no more maintenance, I have no more taxes, I have no more insurance, and just getting a check every month at the bank. We love working with those communities because they’re coming in buying homes, buying businesses, and turning neighborhoods.
The part of the third thing that do is we look for what are called public-private partnerships. Every month, I scour the city council minutes in the cities that I’m in and it’s like a roadmap. For example, in Indianapolis speedway, the 8500 track is owned by a private family. The city of Indianapolis just gave them $50 million to put lights on the tracks so they can do some night races and they’ve spent about $500 million of the city’s money revitalizing the neighborhood around the track. I’ve seen that in a city council meeting four years ago. We started buying in front of […]. Public-private partnerships where the cities taking out a bond to revitalize an area, that’s like a massive opportunity for appreciation and growth.
Toby: That’s pretty cool. What’s your biggest mistake, Aaron? What’s the biggest mistake you’ve ever made in picking an area? You’ve been pre-disastered and so you can tell everybody else they don’t do what I did.
Aaron: My biggest mistake, number one I’ve waited too long to hire a bookkeeper and a CPA. I did my own taxes which is so stupid, I did my own books which is idiocy, and as my company grew, it was still my blind spot because there were people that I trusted who stole money from me. You and I’ve talked about that because I came to you in tears after an employee that I loved on a personal level ripped me off.
Not having good financial controls. Saying they’re a good person, I trust them, and they have access to your checkbook. It’s just the most stupid thing and they steal my money. My company’s money, the rents and the security, that’s all locked down, double controls. It’s my personal money that I have this blind spot about, whether it’s with contractors.
Trust shouldn’t be part of your business. Trust can be a nice frosting as part of dessert, but it’s not the entree. Tony Ramos says it best. He says making money is a science. It’s not an art. Once you learn the science of how to build a printing press, you don’t decide, “I don’t need those bolts, I don’t need those screws.” You just build it and then it prints money for you. Trust is not part of a business printing press. Trust has no place in that.
Trust is something that, when you find out you can trust, someone you know like your assistant, she’s amazing, you trust her, but it’s not part of how you do business. It’s just a fringe benefit. Now you have someone in your life you can trust, but you don’t have business systems that depend on finding trustworthy people.
It’s a huge mistake that I’ve made with contractors over the years, that I’ve made with employees, that I’ve made with partners. So, I’ve eliminated all systems that incorporate trust, whether it’s how we work, there’s always checks and balances, there’s always dual signature, there’s always two sets of eyes on everything.
Toby: It’s interesting you’re saying this as opposed to, “Oh man, I bought this really crappy house, I thought I could make it into something, and I sunk a whole bunch of money into it.” So you’re saying it’s not even the properties themselves. It’s a systems issue.
Aaron: Yeah. For example, in Indianapolis, we’re managing 1500 homes and I have one person that all he does all day is drive to check on the work that contractors are doing before I give him a check, because I don’t trust him anymore when they say, “Yeah, it’s done. I just say, “Okay, cool. I’ll pay you when we’ve put our eyes and independently verified the work.” I got too many contractors will do 95% of the job and wanted 100% of the pay.
Screening tenants. I have two sets of eyes that look at every application, because one person who’s getting that $500 leasing bonus is going to be more inclined to slide someone through the door. So, trust is a horrible principle. It’s a fringe benefit. It shouldn’t be part of any of the business that you do. It doesn’t mean that you’re jaded. It just means that you recognize that given the opportunity, most people will take a shortcut.
It’s like when I taught high school. There’s a reason why the teacher sits there during tests. It’s not because they’re accusing everyone of being honest, but you want to minimize the opportunity. You don’t even give them the choice.
Toby: What about your biggest success? It sounds like you have a bunch, so let’s just know it down, just like the 10,000 foot view. If somebody’s just getting started out or just say somebody’s been doing this for 10 years and they’re just not getting anywhere, what’s the biggest game changer that you ran into?
Aaron: Disconnecting myself from the ego of staking my flag and saying this is what I do. When I was working my MBA, people were myopic about how they wanted to use that degree. To take for example, in 2011. Prior to 2011 Wall Street didn’t buy any houses. They were out of the single family home game. In 2012, $8 billion was raised. Now, fast forward Wall Street owns 3% of the homes in America right now. But prior to that, they weren’t at the auction. So, imagine 2012 Wall Street comes in the auction and they started bidding against me for deals. Of course they’ll pay 40% more than what I would pay.
I watched investors just go, “Oh great. I’m a home flipper. How am I going to keep flipping homes? I can’t compete with these guys,” and maybe it would devastate their business, whereas I went, “Okay, well, I can’t compete against them, but maybe I can buy in front of them and flip houses back to them. I can’t compete against them, but they need somebody to do construction, they need somebody to do leasing, they need somebody to make…”
So, not saying I’m a flipper and I buy the auction and steak my flag on that. I say, “Money is in motion and maybe that means that I switched to an Airbnb model,” that now I’m obsessed about mobile home parks and I just do dealerships now too, manufactured home dealerships. I’m in that business because I could say, “Well, I’m a single family home guy. I don’t care. I’m a money guy and if it’s under the umbrella of real estate…” I just think people wanted to like I’m a commercial guy. I only want to do multi family.
Toby: You’re just limiting your opportunities.
Aaron: Yeah, to a fault. They hang our hat on that.
Toby: Tell me about the mobile home. You’re actually a manufactured home dealership because you own the parks and you’re putting the houses in the parks or what do you do?
Aaron: Yeah and then literally, we just bought some commercial land. You’re driving around town and you see the three modular homes on wheels dealership, we actually have one of those now. I just put a modular home on a lot in a permanent foundation. I bought the lot in Idaho for $15,000, I put the home in there for about $80,000. So, I’m into it $95,000. I’m going to throw out on on MLS for $140,000. There are no homes. I’m doing permanent foundations so it’s FHAs, it appraises as they’re built, there are no homes under $200,000.
We see this as the way to hear the affordability crisis that’s happening in housing right now. Then the other areas, I just bought another park, we have several parks, but we’re doing this park 55 and older. Your average 65 year olds here right now, has $170,000 net worth. That’s average and 20% of our 65 year olds are living only on social security. I just sold it to a grandma from New York living in Florida. I sold this to her $30,000 at 7% interest for 15 years, and she’s like $600 month from the park for the space rent, $200 a months to me for the mortgage, her social security check’s $1200. That’s what she’s living.
We have this retirement crisis with our bombers, that’s just as severe as the home buying crisis the millennials are seeing but for different reasons. Basically, since 1972 and they got away from pensions, we haven’t done a good job of saving enough and investing enough.
Toby: You are really putting yourself and into that area. Is that when you’re focusing right now? It’s kind a more affordable, good quality housing for seniors?
Aaron: Yeah. Here’s my flaws right now. I hate rehabbing old mobile homes. I’ll just put a new one then. I never buy new houses. I rehab the houses. I think you’ve see how they’re kind of like the opposite strategy. So we’re buying parks, getting rid of all the old trailers, and putting brand new ones in, but I’ve built 15 homes over the last couple years and I’ll never be of builder again. It’s the worst thing ever if you want to make 6% building houses.
Toby: You get to make at once, too.
Aaron: Exactly. Being a builder sucks because trying to get a new construction project approved, and they’re like, “Well, we want a park, then we want a community pool, you can use vinyl sidings, you have to use all stone.” They basically start loading all this criteria on and just makes it not feasible.
Toby: They want you way up here. They’re like, “Hey, as long as you’re building. Can I give you my wish list?”
Aaron: Yeah, “Put this trail in on half of your land, so there’s a running trail for the neighbors.”
Toby: But about those guys? What about the guys down the street? There are already built.
Aaron: Yeah. I’ll never build another brand new home but I’ll probably never rehab an old trailer again. This is stuff you could never figure out if you were in the game.
Toby: You’re not going to high-end and you don’t want to deal the low-end. You’re going to right the middle.
Aaron: Yeah. I don’t want the junkyard dogs, single wide, 1965 trailer. Forget that.
Toby: They’re awesome, beautiful. You work with investors all over the country. Give me a thumbnail sketch of what it would look like when somebody comes and works with you guys over at Alpine.
Aaron: We’re really good at helping investors passively invest their money. Right now, I’ve got Japanese investors that are buying 10 houses a month from us. They want their money in US dollars and they just want the passive investment. That’s one type of client who just has money in a savings account or a lot of people that cash out annuities. The annuities sucks. I thought it was a guarantee at 4%. That was before expenses, I’m making 2%.
Then we get a whole group of investors who didn’t know that they can take their IRA and buy a house or their qualified retirement plan. They thought it had to be invested in the market. So, we work with a lot of investors who are taking retirement money 401K IRA money and then having the IRA buy a home that we sell to them and then we managed it for them. It’s a passive way to really increase the returns over what they’ve been making having their money with Merrill-Lynch or Fidelity.
Toby: They’re taking it away from the broker, actually putting it into something that they can jump on, spit on, stomp on, it’s actually physical. It’s not […] stock out there that’s the soup du jour. How do people actually work with you, Aaron?
Aaron: We have a website irarental.com that they can reach out to us. We do a monthly event that’s free in Indianapolis and if they were to reach out to us at the irarental.com. I also have a Facebook page Alpine Capital Solutions that I use to post research about markets. I don’t sell anything on it. It’s just empirical research. I spend a couple hours a day doing market research. That’s Alpine Capital Solutions Facebook page. They can like that, they can message me directly if they have questions on that. We’re pretty easy to get a hold of.
Toby: When you do an event, you said you had properties all over the place. It sounds like Kansas City. You’re mentioning cities that we hear about all the time, just because I worked with the end clients and where people tend to flock together when going into a marketplace, where they’re improving it. People buying their houses and rehabbing it. Usually don’t buy house and just rent it. You buy a house, rehab it, rent it. Or you’re buying it from a rehabber. With Alpine, is there something where they come in they buy it, you fix it up, they don’t have to do anything, they just buy it and put it immediately in their rental portfolio?
Aaron: Yes. We have an event in Indianapolis weekend. I have 70 homes that I already bought. I fixed them and then have them rented. We have 50 people coming. In fact, we capped the event at 50. But behind with those 70 deals I have another 150 that are getting rented right now or getting rehabbed or that we just bought them.
Toby: Are their tenants in all of these or these just rehabs that are just sitting there vacant?
Aaron: Rented the day that somebody buys it. In fact, we won’t close on the deal. Someone is trying to pick a deal out that were just finishing construction on, will delay the closing until the tenant goes in.
Toby: Until there’s a tenant?
Aaron: […] a completely brand new rehabbed home with the brand new tenant.
Toby: Sounds cool. They found out more at irarental.com?
Aaron: Yup. irarental.com or just message me on our Alpine Capital Solutions Facebook page.
Toby: Cool. I want to say thank you for hanging out with me. If there’s one thing that you would tell people right now keep your eyes open. Sounds like you’re getting into the elder groups and taking care of some serious needs in society, but if there is one thing that you would tell somebody really pay attention to right now, what it would be?
Aaron: I track the the Feds, what they’re doing with the interest rate because obviously that triples back to what the mortgage rate is. Now that the Fed announcement in 2019 they’re not going to raise the rate, I think there’s going to be a lot more, the 30 year fixers back on the floor. So, I track that. I track new starts for construction because I want to see builders who usually are a finicky crowd and if they’re not building, that’s a bad sign. I really look at trends like Airbnb which is hot right now. If are looking for a way to make some extra money on the side in real estate, an Airbnb is a great way to do that.
We are just committing to education, but not just education because I meet people that are addicted to seminars. Education married to action. It’s like I meet people that come to one of your trainings and then they leave and they haven’t set up their trust.
Toby: You can lead a horse to water.
Aaron: Yeah, I know. It’s got to be the educated with the action. I won’t take another training until I’ve try to make money.That’s how I know I don’t want to be a builder anymore. Done with that.
Toby: A lot of business owners, they just like going in and picking up the nuggets. They always say, “Hey, I’ll spend the time to learn there’s one thing that might get me a little bit of an advantage. One piece of information that maybe gives me a little bit of an advantage or some better insight so I can make better decisions.” It’s always that one little thing.
Aaron: Absolutely.
Toby: Cool buddy. Thanks for hanging out. Again, this is a podcast, so go back and listen to it yourself. You didn’t make any predictions so I can’t make fun of you in some point in the future.
Aaron: I will predict in 2019, the stock market will lose 10% of its value and […] housing won’t dropped. That’s my prediction.
Toby: Now your recorded. All right, Aaron. Thanks for hanging out with us.
Aaron: All right, man.
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