Preston Landes: He Bought 40 Houses at Once… Without Even Seeing Them | DSH #1629

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Speaker 4 I'm satisfied right now. I'm making good money.
If I paid off my entire debt, obviously I would be clearing over six figures a month.

Speaker 4 But if I instead use money to go and redeploy, I could maybe make more money, but have more debt. So you kind of got to weigh out that risk to reward.
And I'm kind of in the process of doing so.

Speaker 4 Again, that 40 house portfolio, this is something big I'm on. It's just jumping in the pool.
You know how to swim a lot. It's the same level.
Truly just jumping in the pool.

Speaker 4 It's how you learn. And we're young enough to be able to, like if something bad happens, you have another chance.
And this just goes in general, right?

Speaker 4 Like you need to cut the stuff, the bad stuff out of your life, whether it be people, places, habits, whatever it is. If it doesn't build you, it's not helping you.

Speaker 4 Okay, guys, digital social hour. We got Preston Landis here today.
First in-person podcast for him. We're going to talk Section 8.
Yep. Let's do it, baby.
I've heard of it.

Speaker 4 I've seen a lot of posts about it, but I've never took a deep dive. So I'm excited to.
Yeah, yeah, yeah.

Speaker 4 It's something that I would say has become very popular lately.

Speaker 4 And especially with social media and all these people that are posting about it and how lucrative it can be, especially with times of uncertainty like we are, you know, like we have right now.

Speaker 4 You know, my payments are still arriving.

Speaker 4 So, you know, whenever the first was a few days ago, I still got paid.

Speaker 4 The government shut down. Housing subsidies are not affected.

Speaker 4 So again,

Speaker 4 Section 8 is great.

Speaker 4 For a lot of people and their strategies, it doesn't make sense, but for me and my strategy, it does. That's interesting.
So you mentioned the shutdown, so that's actually a good point.

Speaker 4 So you're still getting paid, even though the government's shutdown. Correct.
And I have heard of some, because there's different public housing authorities, right?

Speaker 4 And the HUD essentially distributes different funds, allocates different funds to different housing authorities.

Speaker 4 And I've heard of some housing authorities being 15 days late on the payments.

Speaker 4 I have not heard of, in my network of people, anyone not being paid at all. Interesting.
So, again,

Speaker 4 you know,

Speaker 4 I have traditional rentals. I have Section 8 rentals.

Speaker 4 If I could transition every single traditional rental over to a Section 8 rental, I would. Wow.
Even given all the uncertainty with the Section 8 space. Because it's been around since 1974.

Speaker 4 And, you know, government housing subsidies in general have been around since the 20s, the 1920s. but

Speaker 4 I don't see

Speaker 4 any president or anyone ever, you know, making seven or eight million, seven, eight million people homeless, right? Yeah.

Speaker 4 Because that's the number of people that are on Section 8, or just government housing subsidies in general. So, yeah,

Speaker 4 I find it fairly,

Speaker 4 you know,

Speaker 4 safe as far as an investment.

Speaker 4 If you're familiar with triple net leases at all, I'm not. It's essentially a

Speaker 4 more

Speaker 4 corporate thing. So, like a CVS would sign a lease with someone who owns the building, right? And they would, the triple net stands for

Speaker 4 insurance, taxes, and upkeep of the property, right? So, it's essentially just mailbox money, right? You don't have to do anything with these triple net properties, these commercial deals. Got it.

Speaker 4 And so, with Section 8,

Speaker 4 there was a low barrier to entry, which sort of interested me

Speaker 4 and intrigued me.

Speaker 4 And I started off my first deal.

Speaker 4 Well, let me rewind a little bit and start from the beginning. And I'll give you a very brief synopsis of kind of my story and

Speaker 4 how I scaled my portfolio from zero to a hundred houses.

Speaker 4 So basically what happened was

Speaker 4 about three and a half years ago, I started looking into the space.

Speaker 4 I

Speaker 4 was really intrigued by it. I loved the idea of owning real estate, tangible assets.

Speaker 4 And

Speaker 4 obviously, at that time in my life, I was working in commercial real estate and I was making decent money, but I couldn't go buy some 16, 30, two-unit apartment complex.

Speaker 4 So I started off with one house, as most people do.

Speaker 4 And I bought a course from Tom Cruise, who you may or may not have seen on Instagram. I have.
He's the guy I see all the time. Yeah, he's got all the crazy cars.
He's got thousands of houses.

Speaker 4 He has about 800. 800.
And they're all paid off. That's insane.

Speaker 4 He's insane. So back in 2022,

Speaker 4 I signed up with him.

Speaker 4 And

Speaker 4 I will say Tom provided immense value to me

Speaker 4 and

Speaker 4 helped me with a lot of things along the way.

Speaker 4 I

Speaker 4 don't have anything bad to say about him. Yeah, I know he's controversial.
Yeah, but

Speaker 4 that sort of getting into that course obviously was, you know, a lot of with the courses and stuff cost me and total around seven grand. Wow.

Speaker 4 And

Speaker 4 in essence, what my goal was

Speaker 4 to buy a house with $2,500 down because that was what he was advertising. That sounds really cheap.
Is that 20% down or? No, no, no, no, no, no, no. These are cheap seller financing deals, but

Speaker 4 the people that are selling these deals are targeting homeowners that don't have maybe the liquidity or the credit to buy it

Speaker 4 but

Speaker 4 when he said when he sent me this first deal it was that exact situation and i didn't know how that system worked at the time yeah but again tom's so busy he can't handle all these thousands of people that he has to deal with

Speaker 4 so i close on the property it somehow passes inspection

Speaker 4 45 days later i get a

Speaker 4 Call that my roof has collapsed. Jeez.
The back half of the roof collapsed. So obviously Section 8 orders an immediate move out, as you can imagine.
And

Speaker 4 I get a few quotes, and the lowest I got was 15 grand. Oh my gosh.

Speaker 4 So now I'm thinking I just spent seven to learn, about three with closing costs to purchase my first property, and I have to pay 15 grand to fix this property.

Speaker 4 You know, I'm, I'm,

Speaker 4 this business is a not for me.

Speaker 4 And

Speaker 4 to give you a long story short, basically the same thing happened with the second house, right?

Speaker 4 And And at that point, I was in the process of offloading those two properties because I was in different ventures doing different things.

Speaker 4 And I was in my head going to go back and work in commercial real estate.

Speaker 4 And again, obviously real estate is,

Speaker 4 you know, residential real estate is semi-liquid.

Speaker 4 So as I was in the process of offloading them, a wholesaler who I had never spoken to somehow got my information and reached out about a deal in Macon, Georgia, Georgia, which is about an hour southeast of Atlanta.

Speaker 4 And the deal was, it just looked too good to be true. And so I, you know, spent a bit of time going back and forth with them, the seller, the whole, it was through a wholesaler.

Speaker 4 And eventually I decided to purchase the deal and

Speaker 4 place a tenant while I'm simultaneously kind of fixing things up with the first two properties.

Speaker 4 And

Speaker 4 that third house was sort of my first glimpse of hope, right? Maybe this can work, right? Was that a Section 8 house?

Speaker 4 That was. Yes.
And so what happened there was I, it was a seller finance deal as well. I had to put more down,

Speaker 4 but the lady, she was an older lady, and she financed it back to me at 3%.

Speaker 4 And this was in, I purchased this property in November of 2023. So rates were much, much higher.
They were like 10%. Yeah, well, you know, DSCR loans were quoting around, yeah, 9% to 10%.
Wow.

Speaker 4 It was insane at a point.

Speaker 4 And,

Speaker 4 you know, I guess back to

Speaker 4 the road. So I get to,

Speaker 4 I buy the fourth house, and

Speaker 4 I'm just addicted to the cash flow at this point, right? Even though I had that bad experience, I'm still addicted to that

Speaker 4 feeling I got when I got the check from the third house. So you weren't even profitable yet.
You were just

Speaker 4 like the cash flow. I was in the red.
Okay. I was using money that I had earned, had saved up, and I was in the red big time.

Speaker 4 However,

Speaker 4 after that fourth house, again, everything was good. I'm getting tenants in here, going through the process with the housing authorities.
They all move at different paces. So

Speaker 4 my favorite market, Montgomery, Alabama, which is my largest market that I'm exposed to,

Speaker 4 they move quickly. So I'll give you an example.
This morning, I sent an email and my property manager sent an email, CC'd me, and they responded within 10 minutes. Wow.
So

Speaker 4 that is a big factor of the Section 8 business and being able to scale, right? Because

Speaker 4 if you have a housing authority that takes days to respond to, say, an inspection or, hey, we need this from you,

Speaker 4 or they need to process this document, and they take four days for everything,

Speaker 4 whereas Montgomery, it takes a day for them to do this.

Speaker 4 You can imagine...

Speaker 4 It adds up, right? That cash flow that you're losing out on adds up. That's some really great advice because I'd imagine most people don't even think about that.
Yeah, yeah. And so, you know,

Speaker 4 that's a huge part of it. And so at that fourth house, I basically ran out of money.
I won't say basically,

Speaker 4 I ran out of money aside from money I needed for my personal life. Money to invest, I ran out of it.

Speaker 4 And

Speaker 4 I

Speaker 4 was basically just at this point where I had no other option but to go and find other people to raise money from.

Speaker 4 So I kind of go back to the drawing board and think how can I do this

Speaker 4 Ironically about

Speaker 4 a month after everything sort of stabilized. So this is probably

Speaker 4 late either late 2023 or early 2024.

Speaker 4 So you got the roofs fixed and everything was everything was everything was good We got everything stabilized with those four but again I had the problem of I have no liquidity so

Speaker 4 I'm trying to figure out how I'm gonna be able to raise the capital, right? Because I don't have a ton of experience.

Speaker 4 And from what I've had learned up until that point, I was going to charge absurd interest rates to borrow money from any lender.

Speaker 4 And it wasn't that my credit was bad, but it was I needed to close quick. This was, again, a seller-finance deal.
It was a 10-house portfolio.

Speaker 4 The guy that brought me that third deal that kept me in the business

Speaker 4 brought me this portfolio. It was 10 units, 10 houses.
Essentially what I did, and I don't mind sharing this, is

Speaker 4 I put the property under contract

Speaker 4 and not having a damn clue how I was going to close on it.

Speaker 4 But I knew that if I did not put it under contract, that someone else would snatch it up. This was the same day the wholesaler sent this to me.

Speaker 4 So

Speaker 4 I was in a bit of a time crunch. So I basically signed the contract.

Speaker 4 I have seven calendar days to submit the earnest money, which for those who don't know who earnest money is, it's basically just you put up a deposit as your good faith, so to speak.

Speaker 4 And after a certain period of time, it becomes non-refundable. So I put up the earnest money out of my personal funds that I had remaining.

Speaker 4 How much was the earnest? The earnest money was $10,000. Which was probably a lot fiery at the time.
Which, again, left me with little to nothing.

Speaker 4 And, you know, obviously I have credit cards and stuff. And I had money, you know, still coming in from these other houses.
Right. So,

Speaker 4 I mean, I live in LA, so not enough to cover, but money coming in. So I put the $10,000 up.

Speaker 4 I

Speaker 4 am basically just scrambling to figure out how I can raise this money. Because that deal, I believe, was I had 14 days before my earnest money went firm, which means non-refundable.

Speaker 4 And

Speaker 4 I was so confident in the fact that I could get the deal done that during those 14 days, obviously I was day and night hunting for lenders.

Speaker 4 I thought I had someone. They backed out.
So then I have to come to the decision, do I want to bail from this deal or do I want to roll the dice with my $10,000 that I really need

Speaker 4 and try and get this property? Or, you know, so I really was at a fork in the road and I decided that after that,

Speaker 4 when that 14-day mark hit, I was going to go and raise the funds.

Speaker 4 So I rolled the dice. And

Speaker 4 to make it a long story short, I found

Speaker 4 probably 200 to 300 wholesalers and copy paste, message them my buy box everything i wanted to buy down to the t

Speaker 4 and then

Speaker 4 emails just started coming in deals started coming in deal flow was crazy and i basically just took that model and replicated it a few times

Speaker 4 right and then i was like okay i want to get to a point where i'm not just buying nine ten houses at a time or six or eight or ten And so the last portfolio I closed was 40 houses, which was for about a month a complete nightmare because there was 11 vacancies.

Speaker 4 Whoa. Which was a curse and a blessing because we got to go in there and place section 8 tenants immediately, right? There was no, hey, get out, you know.

Speaker 4 But it was a bit of a headache at first because there's a lot that goes into that. Yeah.

Speaker 4 And there's also a lot that goes into transferring, you know, 40 different people over to 40 different like we have a portal that our tenants pay through and they pay pay their portion of their rent through

Speaker 4 and I have tenants that don't pay any rent at all they only have to pay like three percent right well it varies so I have some tenants that pay me twenty eight bucks

Speaker 4 I have some tenants that pay me zero dollars and I have some tenants that pay me you know I think the highest is five of five oh three yeah it depends on the state or no it depends on their income okay so it's all depends on their income and the rent amount is all depend on bedroom count so I could have a 2,000 square foot three three-bedroom house that would rent, that could rent for the same amount as a 800

Speaker 4 square foot three-bedroom house. So it's all based off of, you know, bedroom count.

Speaker 4 So

Speaker 4 basically, all that happened. I got to that point.
And

Speaker 4 now in my life, I have reached a point where I,

Speaker 4 in a way, have

Speaker 4 after I closed on those 40 properties, it was this dopamine hit that I've never

Speaker 4 encountered before.

Speaker 4 And now,

Speaker 4 and there was so much upside to the deal. And now I see that those deals are out there, and I'm just so hungry to go get more.
And I know the formula. I know how to raise the capital.

Speaker 4 I know how to set up the cap stack. I know how to do all the stuff.

Speaker 4 But one of the things I want to touch on, just for anyone that's watching that wants to learn, is

Speaker 4 the management aspect of, you know, Section 8 investing because I've never been to Georgia or Alabama. Wow.
And I own 62 in Alabama and the rest are in Georgia. That's in Browslov.
So

Speaker 4 the man and I've had nightmare situations happen with the management. Not imagined.
Yeah, I feel like it's inevitable in real estate, whether it's Section 8 or just

Speaker 4 in general. Yeah.
And so I've had multiple,

Speaker 4 you know cases where i should have probably gone out there um back in the day i had a house in birmingham it was the fourth house that i bought yeah that house ended up burning down holy crap to give you a long story short

Speaker 4 the tenant was

Speaker 4 again from my understanding i talked to the fire marshal was

Speaker 4 doing some sort of

Speaker 4 meth

Speaker 4 and I guess maybe something caught on fire and yeah, the house burned down. But we had replacement cost insurance, so we got to,

Speaker 4 you know,

Speaker 4 we got cut a check from State Farm, and the work that needed to be done costed less

Speaker 4 than what we

Speaker 4 the check was from State Farm. So we were able to kind of pocket some money there, and then we just have this burnt house that, you know, either we can

Speaker 4 use the money and fix, or we can just basically demo it and sell the land and keep the proceeds. What did you decide? We decided to fix it up.
Okay.

Speaker 4 And I've since offloaded it because we put, you know, it looks nice, right? We had $80,000 to put into it and

Speaker 4 it looks nice. And we just, I just decided to sell it because I believe in

Speaker 4 the power of

Speaker 4 at most two markets. being exposed to at most two markets.

Speaker 4 Ideally one, but I can't sit here and talk because I'm exposed to two.

Speaker 4 At one point, I was in seven different markets. Holy crap.
Yeah. Are you talking cities or? Well, I was in Toledo, Ohio.
I was in St. Louis.

Speaker 4 I was in Albany, Georgia, Macon, Georgia, Montgomery, Birmingham.

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Speaker 4 Hmm, there was one more.

Speaker 4 And you felt like you spread yourself too thin doing that? Well, it just, it didn't make sense from a management aspect, right? Because,

Speaker 4 you know, everyone wants to get paid,

Speaker 4 right, from the management standpoint. And if they're managing one or two houses, they don't have a huge incentive to,

Speaker 4 you know, when there's a call at your property to get out there ASAP, if they've got another guy that's got 50 properties and he has a call, right? So I have a team of three in Alabama.

Speaker 4 My property management fees are 6%, which the average fee is typically 10%. But with the high volume, we lowered it to 6%.
Got it. And

Speaker 4 it's been a ride. I've fired numerous property managers, and I'm not proud of saying that.
I'm just, for the people out there that are watching and want to be educated, you need to,

Speaker 4 I recommend learning the business before handing the business off, right?

Speaker 4 Because if you buy a house, let's say you wanted to buy your first Section 8 house and I said, hey, Sean, you know, let's go close on it in 30 days. We close on it in 30 days.
You get the keys,

Speaker 4 whatever.

Speaker 4 You don't want to,

Speaker 4 oh gosh, this might need to be one of those things we clip out.

Speaker 4 This might be one of those things we clip out because I totally lost my train of thought.

Speaker 4 You buy your first Section 8 house, and you don't want to. But before that.

Speaker 4 Oh, firing property managers?

Speaker 4 Yes. Yes.
Okay. So you don't want to hand the business off before you know the business, right? So if I came to you, Sean, and I said, hey, in 30 days, let's have your property closed

Speaker 4 and we'll get you management set up, right?

Speaker 4 They'll start charging you all sorts of fees, setup fees, administration fees, extra management fees, all these sorts of fees on top. And

Speaker 4 you wouldn't really notice to say no to that because that's just kind of standard, right?

Speaker 4 But

Speaker 4 I do mentorships and I help people with my free time now because, again, I'm focused on buying big portfolios. And at the moment, I'm kind of at a standstill.

Speaker 4 But there are not many on the market. Well, I'm just kind of waiting to see where rates go

Speaker 4 and kind of build more equity in my personal portfolio, pay down some more debt, you know, kind of hyper-amortize that debt just to be safe and stay at kind of a healthy loan to value.

Speaker 4 But

Speaker 4 I guess my point is that you want to make sure that you're not getting screwed over by anyone that's managing your properties because they will try and charge you extra fees.

Speaker 4 They will try and cut corners. They will try and tell you, hey, this is this much, but it's really this much.

Speaker 4 So

Speaker 4 you need to be very, very cautious of who you're hiring. Make sure that you're getting references from other

Speaker 4 successful landlords and investors in that area

Speaker 4 before ever even considering a property manager. Because

Speaker 4 if you blindly do it, it's like going to a bar, drinking 15 beers, and trying to throw a dice or a dart and hit the bullseye.

Speaker 4 It's just not,

Speaker 4 it's just not going to happen. So,

Speaker 4 anyway, thanks for sharing

Speaker 4 the dark side of this business. There is a dark side.
You're very open about it. The management side

Speaker 4 can be dark, but

Speaker 4 the reason I am doing the mentorship is because my three guys

Speaker 4 handle everything from A to Z for me. Wow.

Speaker 4 We talk on the phone every single day. I will say that.

Speaker 4 I talk to my one lead property manager every single day. Sometimes a call is for literally two minutes, sometimes it's for an hour.
It just depends what's going on.

Speaker 4 And there are things that happen.

Speaker 4 For instance, this last weekend during Halloween, their Halloween weekend, there was a Friday night, it's Halloween, and I get a message that, you know, someone's heirs, or I'm sorry, their heating is out.

Speaker 4 So we can't leave them. It's cold in Alabama.
We can't leave them with no heat. So we have to go fix that.

Speaker 4 So he doesn't ask me to go do these things. He does them, right? I give him a budget.
He knows what he can spend. He knows what he can't spend.
He knows what he can do. He can't do.

Speaker 4 And again, he's the lead manager and he's got someone under him. Does that get reimbursed? How does that work when something like that happens? Well, so it comes out of the company card.
Okay.

Speaker 4 So we share expenses so that everything that you know he buys is i see

Speaker 4 right so again

Speaker 4 if

Speaker 4 there's a contractor that goes out i would like to speak to them directly um i would like to know a good scope of work

Speaker 4 breakdown of everything like myself i want to speak to them i don't want my property manager at this point i trust my property manager enough But sometimes just when you think you trust people, you get screwed up.

Speaker 4 Times are tough right now, too. Yeah, you got to stay stay on top of people.
And the management aspect is probably

Speaker 4 the most important aspect of the Section A business. Would you say that's the toughest part of the business?

Speaker 4 Like when it comes to finding the deal or managing it, would you say the managing is harder? You know, I found that finding deals

Speaker 4 right now is not hard. You know, and especially I'm walking through with some of my clients

Speaker 4 that are looking to buy their first deal, and I'm seeing seeing lots of inventory on the market.

Speaker 4 So I'm not

Speaker 4 super concerned with whether we're in a buyer's market or a seller's market personally, because my game plan is to buy and hold.

Speaker 4 I believe in that method, and that's what I've been taught. So I will continue to recycle equity that I have in my properties.

Speaker 4 So I will probably, you know, assuming rates drop within this next 12 to 18 months, I will probably refinance, pull some equity out, and go redeploy that capital tax-free into other assets.

Speaker 4 But

Speaker 4 again,

Speaker 4 I guess I would like to jump into the light things about the business, which is probably talk about that. Yeah, yeah, that'd probably be a good thing to talk about and let everyone know.
But

Speaker 4 in essence, Section 8 is something that, even if, let's say,

Speaker 4 worst, worst case scenario, Section 8 ends next year, the way I see it is,

Speaker 4 okay, first 8 million people are going to be homeless. So there's going to be a ton of people with a ton of problems on their hands.

Speaker 4 Do you foresee that happening?

Speaker 4 No, that's a lot of people, plus all their family, too, right? Right. So

Speaker 4 I can't imagine that happening. I've never heard of that being brought up.
Is that a conversation people are having?

Speaker 4 People on my Instagram have commented many, many, many different things about enjoy it while you can, it's coming to an end.

Speaker 4 And while I know I don't even look twice at those comments because I know that it's not true. And until I stop getting paid, then I'm not concerned.

Speaker 4 Yeah, I've never seen the administration talk about this, so I don't know. Right.
And

Speaker 4 another thing that I want to talk about, and I'm sure you plan to talk about at some point, was the difference between investing in single family versus multifamily.

Speaker 4 Because a lot of people do

Speaker 4 ask the question to me, why do you only invest in single family? That is a unique approach. It is, right? Because with multifamily, you can scale a bit easier.

Speaker 4 Not a bit easier, you can scale a lot easier with multifamily.

Speaker 4 But with Section 8, right? I'm going to give you an example.

Speaker 4 If you sat on a wait list for five years and you received a voucher for three bedrooms, which I only target properties with three bedrooms and up.

Speaker 4 If you had a voucher for three bedrooms, would you go to an apartment and say, I want to live here where you have to share

Speaker 4 the building with someone? Or would you go to a house that's on a 0.3 acre lot

Speaker 4 and

Speaker 4 either way, the voucher covers three bedrooms. The house.
Obviously, you're going to pick the house, right? And so

Speaker 4 when there is turnover, which there's very few of, with the Section 8 space, and that's another big misconception, is the average tenant stays anywhere from six to eight years,

Speaker 4 which is a lot less than a traditional tenant. A lot longer, right?

Speaker 4 A lot longer. Yeah.
Yeah.

Speaker 4 Than the traditional tenant.

Speaker 4 And sorry if I said something else, but

Speaker 4 they stay a lot longer. They

Speaker 4 keep the place clean because, like I said, you know, you can file judgments against them if

Speaker 4 they don't keep the place clean, right? And if they don't keep the place clean and you file judgments, they get their voucher removed, which they can never get back. How common is that?

Speaker 4 I haven't had it happen. Oh, wow.
Fuck off. So

Speaker 4 I've had a few evictions, unfortunately,

Speaker 4 and I'm very giving. You know, last Christmas, I gave one of my tenants,

Speaker 4 you know, their portion was a bit bigger than the average person's portion. I just said, you know, use that and go help your kids.
And next month, for that matter. So I do do things like that.

Speaker 4 And

Speaker 4 I am very

Speaker 4 friendly as a investor. When my property manager says, Hey, I think we should evict this person, I said, Give them one more week to cover their portion.

Speaker 4 Again, we're not talking a big portion, but that just shows that they're not

Speaker 4 reliable and that they might be damaging the house. So at that point, we have to take action.

Speaker 4 But I've never personally had that happen to me where my house is completely just damaged and I have to go in there and spend 10, 15 grand on just, you know, drywall and flooring and appliances because

Speaker 4 They messed it up. Yeah, that's never happened.
That's good because you got a hundred units now, right? Yeah, wow, so I mean basically

Speaker 4 The only difficult and another difficult part

Speaker 4 and this sort of ties into the management aspect is the inspections, right?

Speaker 4 So obviously section eight has annual inspections and The reason I'm saying this is because we were just talking about keeping the property clean, right?

Speaker 4 So

Speaker 4 some people look at these inspections as a curse. They think, oh, I've got to go and look and see how my property looks before the inspector comes out, etc., etc.

Speaker 4 But it's actually a blessing because it's once a year. It's one day out of 365 days

Speaker 4 that you have to worry about how your house, how your asset that you invested money into, looks from the interior.

Speaker 4 And if you pass, you get another 12 months of guaranteed... rental income.

Speaker 4 So

Speaker 4 they're ensuring your house looks good. And if it doesn't, you get to fix it up and you get another 12 months of guaranteed rental income.
Or it still looks good and you go about your day.

Speaker 4 But if you fail the inspection and you have multiple, you can fail a couple times before they put you in what's called abatement.

Speaker 4 All abatement means is that they will pause all payments until

Speaker 4 a re-inspection has occurred and it is fully passed. Got it.

Speaker 4 And they will prorate whatever, you know, however many days or weeks or months was in between the time of abatement was filed and the time that the inspector passed the unit.

Speaker 4 So

Speaker 4 that's one thing about it, it keeps you, I look at it as a good thing, quite frankly. Some people look at it as a bad thing, I look at it as a good thing.
I mean, it would give me peace of mind.

Speaker 4 It gives me peace of mind. Exactly.
So

Speaker 4 I have the peace of mind knowing that my units are safe and then that and clean, and that

Speaker 4 also for the next 12 months, I get guaranteed rent. So I look at it as a win-win.
Yeah.

Speaker 4 Are you profitable yet? Like at what point was the cash flow really

Speaker 4 solid? Yeah, so

Speaker 4 about

Speaker 4 midway through

Speaker 4 2024 is when I really started

Speaker 4 breaking off.

Speaker 4 I bought a portfolio of 18 houses.

Speaker 4 That was big for me. I did have a partner

Speaker 4 with that property, with those properties, but I only am paying them 9% on their money.

Speaker 4 So

Speaker 4 when you look at these section 8 returns, right?

Speaker 4 And And Tom always told me to look for 35% to 45% cash on cash returns, which is an absurd number. What does that mean exactly? So if you invested $10,000,

Speaker 4 you would get anywhere between $3,500 and $4,500 back on that year. Oh, per year, okay.
Per year. So you'd make it back in three years, technically.
Essentially, three years. Okay.

Speaker 4 And up to two and a half is what he's saying.

Speaker 4 I like to target more conservatively, 30%.

Speaker 4 And

Speaker 4 with that and those high returns, it allows me to cover that investor's pref, the preferred return,

Speaker 4 with no problem. Wow.

Speaker 4 So

Speaker 4 my plan, and this is no secret to them,

Speaker 4 is to kind of groom them for a little bit, keep paying them their 9%.

Speaker 4 You know, they're a very wealthy person. Yeah, they're older.
They're probably happy with that. Yeah, they just want, you know, they invested $750,000.

Speaker 4 They just want to make their 9% on their money, and they're happy with that.

Speaker 4 And then eventually I will refinance and pull all the equity out when hopefully, again, rates are lower.

Speaker 4 And

Speaker 4 I'll

Speaker 4 pay them out and rent and repeat. Yeah.
Yeah. So three and a third year, you're aiming to get your money back.
That's pretty quick. So I am looking to

Speaker 4 by the end of 2026, I want to be at 250 houses. That's my goal.

Speaker 4 And at the beginning of this year,

Speaker 4 I've hit my goal for this year.

Speaker 4 But I'm not.

Speaker 4 Was your goal 100 at this year? It was. Okay.
But I have 102. So I'm still going.

Speaker 4 I don't want to stop. I'm addicted to the feeling of receiving that money.

Speaker 4 And I don't mean that in a lustful way. Yeah.
I don't lust for money, but it's just that time freedom that it gives me.

Speaker 4 But again, it got to a point where there was too much time freedom and I had to start doing something else to fill my days.

Speaker 4 I mean, it is very hard to find any business where you have money guaranteed coming in every month. It is.
I can't think of that many. It is.
It is very hard.

Speaker 4 Like subscription, maybe, but like when it comes to real estate,

Speaker 4 it's tough. It is.
It is.

Speaker 4 And that's kind of why I'm in the process of transitioning all the remaining traditional rentals I have over to Section 8 rentals so that I can kind of have everything stabilized.

Speaker 4 Yeah, because there's a lot of people defaulting on their cars right now, their houses. There's a lot of default.
You know, Section 8, that's not really a possibility, right?

Speaker 4 It's not. I mean,

Speaker 4 look, they're covering from 70 to 100% of the rent. If your

Speaker 4 expenses are even close to 70%,

Speaker 4 you're not looking at the right deals. Right.
What percent do you aim for for expenses? I don't look at it from that metric. I try, and I look at it from a per-house net profit.

Speaker 4 So I aim for $600 per house. Profit.
Profit. Is that per month or?

Speaker 4 Per month. Per month per house.
Okay. And that's after I put away 10% of my gross rents for maintenance and repairs.
Okay.

Speaker 4 I put that away for in a separate account just in case the worst thing happens. Got it.
That's smart. To put myself in a good position.
I put and that is also including management, which is 6%.

Speaker 4 And then that's including my debt service, my taxes, and my insurance.

Speaker 4 So

Speaker 4 I'd like to think that $600

Speaker 4 per house is a fairly

Speaker 4 reasonable goal to have for anyone out there looking to buy

Speaker 4 Section 8 real estate. And it can go up.
It honestly, I've seen people cash flow. Tom, Tom, again, his stuff's paid off, but

Speaker 4 he's literally cash flowing $1,300 per house. Yeah.
What do you think of that strategy, fully paying off the house versus what you're doing?

Speaker 4 You know, I've spent probably

Speaker 4 three days in total thinking about that. Yeah.
Like I've spent numerous, numerous hours thinking about that.

Speaker 4 that question.

Speaker 4 And to answer your question, I

Speaker 4 don't have, I don't have the answer to that question yet. I don't know if

Speaker 4 paying them off makes more sense. And again, this, this,

Speaker 4 it's kind of at this point a

Speaker 4 I'm looking at it from a risk versus reward, right? So I'm satisfied right now. I'm making good money.
If I paid off my entire debt, obviously I would be, you know, clearing over six figures a month.

Speaker 4 But

Speaker 4 if I instead used money to go and redeploy, I could maybe make more money, but have more debt. So you kind of got to weigh out that risk to reward.
And I'm kind of in the process of doing so.

Speaker 4 Again, that 40-house portfolio,

Speaker 4 and this is something big I'm on, is just

Speaker 4 jumping in the pool, whether you know how to swim or not.

Speaker 4 On the same level, it's truly just

Speaker 4 the fastest. It's how you learn.

Speaker 4 And we're young enough to be able to

Speaker 4 like if something bad happens, you have another chance. Yeah.

Speaker 4 And, you know, I think for anyone,

Speaker 4 and this just goes in general, right? Like, you need to cut the stuff, the bad stuff out of your life, right? Whether it be people, places, habits, whatever it is,

Speaker 4 if it doesn't build you,

Speaker 4 it's not helping you, right?

Speaker 4 So you need to just jump in. That is my, I literally think I post something once a day on my story that basically,

Speaker 4 in a way, says, just get going. Yeah.
Learn, educate yourself, and get going. I mean, that's what you did with that first 10-unit deal.
Exactly. You didn't have the money.
Exactly. I didn't.

Speaker 4 And let me go back to that real quick because I missed a super funny part. Now that it's all said and done, and, you know, I kind of get to look back and laugh at it.
But

Speaker 4 I paid 30%

Speaker 4 on that loan. Holy crap.
Yeah.

Speaker 4 That's insane. I bought 100 grand and I paid a flat 30% rate, paid him back in eight months.
Yeah. Oh, so it was a private lender? It was a private money lender.
You were super desperate.

Speaker 4 So you did 30%. Holy fuck.
Well, because at that point I was going to lose the 10 grand. Yeah.

Speaker 4 So there was two guys that I was kind of waiting on and one was being stagnant and this guy, the clock was ticking and the seller was no bullshit. He was straight to the point.

Speaker 4 That got made out huge. But look, I sold one of the houses

Speaker 4 for $150,000 and paid back the private money lender in full. Loss, you made it work.
With closing costs, I just about broke even. Okay.
And those nine houses I owned just by myself.

Speaker 4 There were no investors, $0 out of my pocket. Those were my houses.
Well done. And so that was, you know, about $4,000 a month in cash flow, just zero.

Speaker 4 And that completely, completely changed my mindset. Also, once you raise that first capital, it's much easier to continue raising.

Speaker 4 A thousand percent. So my second deal,

Speaker 4 I actually also used a private money lender, but I paid about half of what I paid. 15%.
Yeah.

Speaker 4 Which is still a lot, but. Which is still a lot.
But with these deals where

Speaker 4 you know

Speaker 4 there's meat on the bone, some extra meat on the bone. You could afford it, yeah.
You can afford to, you know, do that.

Speaker 4 But yeah, so that

Speaker 4 deal changed my entire mindset, perspective, everything of the real estate space. Use other people's money.
OPM. OPM.
It's the key. It really is.

Speaker 4 And I know, you know, I probably sound like a broken record because everyone says it, but it's the truth. And

Speaker 4 what I would recommend is to learn how to find the good deals. Yep.

Speaker 4 If you have no money and you're out there right now, learn how to find the good deals because if you have the good deal, you can access the capital. There's so much money out there, man.
Yeah.

Speaker 4 And you know that.

Speaker 4 But you need to know where to find a good deal if you want to raise the money.

Speaker 4 I just finished Eric Trump's book and there was a whole chapter on real estate, how they scaled their real estate, and they used OPM.

Speaker 4 You know, even the Trump family. They were using other people's money.
They're using that, you know, multi-billion dollar, obviously. Yeah, they were using a lot of banks, I believe.
Yeah, yeah, yeah.

Speaker 4 Sounds like you're more using private lenders. Yeah, and

Speaker 4 we've

Speaker 4 sort of established ourselves with a specific bank.

Speaker 4 back down in the south because that's where these properties are in the southeast and we're going to again when the time is right, refinance through the bank.

Speaker 4 And at that point, we'll be using a regional bank, and it'll be good. We'll have the relationship with them.

Speaker 4 And

Speaker 4 yeah, we'll start leveraging our relationship with the bank to go and just kind of rinse and repeat, copy-paste what we've been doing. Yeah.
So,

Speaker 4 yeah, that's kind of my

Speaker 4 two cents on that whole aspect. Yeah, you've definitely inspired me.
I might have to buy a couple every year and just compound. I mean, look, man, if you

Speaker 4 it's easy math. Let's just say $600

Speaker 4 per house per month. So if you bought two a year, that's $1,200 per month, that's $14,400 per year.

Speaker 4 And if you kept compounding that, so you're making $14,000

Speaker 4 $400 your first year. Now, if you take that cash flow and you just keep rolling it over, and then you also buy an extra additional two units that next year and you keep buying two.

Speaker 4 And Sean, we're talking $1,200,015,000, maybe at the max

Speaker 4 $20,000 down to close. Two, that's nothing for closing.
And then you're making that much money. Is that on like a $50,000 house? Like, what's the value of the house? Well,

Speaker 4 80 to 120K. A lot of these deals are seller financed or creative financed and subject to is a whole different world with pace more being those guys.

Speaker 4 And the Morby method even is a different way you could go about. Yeah.
When I bought my house out here, I tried doing that method. Did you? Yeah.
Where'd you buy? I bought in Summerlin.

Speaker 4 okay yeah cool but at the price range i wanted it was a bit harder i think to do that method but i'd imagine at the lower price ranges it works it makes sense and especially with you know obviously these cash flowing properties they it makes sense and you know obviously your credit needs to be good and people with bad credit that's kind of when you have to transition to the seller financing subject to right if you have bad credit and you have not a lot of money

Speaker 4 you have two options seller financing subject two that's really it and i'm and i'm being honest with you yeah because you can't get a loan i mean mean, you can't get a loan from a bank, you can't get a loan from a credit union, you can't get a loan from probably even a private money lender.

Speaker 4 Because I didn't have bad credit when I raised from

Speaker 4 that initial deal. Did he check your credit at the private lender? He wanted to know what it was, and I wasn't gonna lie to him because of my first deal, obviously, reputations, everything.

Speaker 4 I told him the truth, and it wasn't bad, but it wasn't great. Like 680 or whatever.
Yeah, yeah, it was right around 680.

Speaker 4 And

Speaker 4 he wasn't too concerned with that. He was more concerned with having collateral on the properties and making sure that the properties are performing.

Speaker 4 So I just had to get him copies of the leases, et cetera. And

Speaker 4 yeah, that was kind of my,

Speaker 4 that was kind of the way things played out with that. So

Speaker 4 I don't know if there's anything else you wanted to go over.

Speaker 4 I guess you mentioned earlier you're like helping people now.

Speaker 4 I am helping people now. Yeah.
And again, I don't want to come off as someone who's just selling courses and just you pay me and I'm running off into the sunset because that's not what happens.

Speaker 4 And currently I have about eight people on board. Nice.
And we're only looking to take on about 10 at a time so that I can truly dedicate my time to each person. Respect.
I'm still making money.

Speaker 4 You know, they're getting the knowledge they need and I'm personally, they're calling my personal phone number and I am walking them through on Zooms.

Speaker 4 phone calls, whatever they need to get their first property. I'm even working with guys that have 19 units,

Speaker 4 nine duplexes, and one single-family home in Milwaukee. So, and I'm working with everything in between.
So, the way I see it is

Speaker 4 Tom inspired me to get into this business in a way of

Speaker 4 after watching his videos, after seeing what he can do, he gave me the confidence. He gave me that, I want to jump in the deep end, and I want to do it now.

Speaker 4 So, with that,

Speaker 4 I sort of

Speaker 4 never be in competition with Tom. He's

Speaker 4 he's the OG. He's the OG.
He is the Section 8 king.

Speaker 4 And I have immense respect for him. But with my program, I would like to think of it more as a one-on-one mentorship.
That's a different type of teaching. Right.
His is more a mass market.

Speaker 4 Right, right.

Speaker 4 You're giving one-on-one advice. Right.
It's very personal. I, you know, we literally interview people before we take them on and onboard them because we want someone also that's committed, right?

Speaker 4 And we want someone that has the money to be able to buy properties because we don't want a situation where we make them pay a certain amount of money and then we teach them all this knowledge.

Speaker 4 We show them how to do everything. We give them all the templates, all the leases, all the

Speaker 4 rental property calculators, everything you need,

Speaker 4 all the videos, and they don't have enough money to buy the cash.

Speaker 4 They don't have cash. Would you say you would need at least 50K to start? No, no.
I recommend 15 to 20. Okay.

Speaker 4 And, you know, I literally could make one phone call right now and have someone

Speaker 4 actually,

Speaker 4 it's an investor. It's for an investor.

Speaker 4 You could put

Speaker 4 $6,000 down plus closing costs. You're probably in it for $72,000 to $7,500.

Speaker 4 And that's a real deal.

Speaker 4 You're not overpaying. It's not marketed to sort some household.
It's an off-market deal. And

Speaker 4 the same guy that's selling it is the same guy that that I bought 58 properties from in Montgomery. And he's a stand-up guy, he's 78 years old, he's blind,

Speaker 4 and

Speaker 4 he essentially is just a distressed landlord. Savage.
You can own a Section 8 house tomorrow for $7,200. Yep.
Wow. Yep.
I mean, you

Speaker 4 put it under contract and get the title work back and whatnot, go through the closing process, but you could put a property.

Speaker 4 And finding a tenant. I mean, you know the process.
You just went through it with your house. Finding a tenant, would that take a good amount of time too on average?

Speaker 4 If you're picking in the right markets, it should not take you.

Speaker 4 What's the process? Is there a government website you just list your property on?

Speaker 4 Yeah, so

Speaker 4 obviously Zillow, believe it or not, there's a lot of voucher holders on Zillow. Okay.
The main one is affordablehousing.com. There's go section8.com.
There's even Facebook. People look on Facebook.

Speaker 4 There's voucher holders everywhere. I would recommend, obviously, the more places you have it, the more eyeballs you'll get on it, the quicker you'll get at least.

Speaker 4 So we typically list on all four and more, actually.

Speaker 4 But as far as the process, you will get, say, let's say five tenants that apply. They will

Speaker 4 give you their vouchers.

Speaker 4 You'll confirm they have vouchers for how many bedrooms. Let's say this house is three bedrooms.

Speaker 4 You will then,

Speaker 4 with the tenant, you will select a tenant, obviously. You have to pick one of the five.
And you will then with the tenants with the tenant you will kind of

Speaker 4 as a team submit this form called the RAFTA it's RFTA stands for request for tenancy approval

Speaker 4 you submit that to the housing authority along some other documentation that doesn't take long

Speaker 4 they let's say you had that three-bedroom house listed at you wanted $1,400 a month in rent they will probably come back especially right now

Speaker 4 and say we'll do $1,200 because again there's some pushback right now.

Speaker 4 And immediately, right off the bat, I would say, meet them in the middle. Most times they'll do it.

Speaker 4 Most times they'll do it. So if they come back at $1,000 and you're at $1,400, say, $1,200.
Just meet them in the middle. And they'll typically say yes.

Speaker 4 And again, as you acquire more properties and get,

Speaker 4 you know, more,

Speaker 4 start to work more with the housing authority, you become closer and closer with them. They start to get to know you.
They start to recognize your phone number when it pops up. They trust you.

Speaker 4 They trust you.

Speaker 4 And it makes your life seamless, especially when they have good relationships with your property managers as well. Right.

Speaker 4 So I make sure that my property managers are bringing those inspectors, donuts, coffee, smart, cupcakes, whatever it is, to make them happy.

Speaker 4 Not just so they'll pass to, you know, bribe them to pass the house. Bribe them with a donut.
Yeah, but I'm not bribing people with donuts out here,

Speaker 4 but to establish credibility with the housing authority.

Speaker 4 You know, they go back and report to, you know, each individual caseworker and, you know, we treat them well.

Speaker 4 And, you know, you want to make sure you have a good, established relationship with the housing authority. It'll make your life a lot easier and more profitable.

Speaker 4 Well, man, I'm impressed. You scaled 100 units in, what, four or five years? No, it was actually,

Speaker 4 so I bought my first house all cash in 2022.

Speaker 4 Sold it. This was the craziest thing ever.
Sold it within, I think it was three or four weeks. This was the Section 8 house? No, no, no.
This was before that.

Speaker 4 This was before

Speaker 4 Tom, I got into Tom's program. And I sold it within three, four weeks.
That's crazy. You didn't even fix it at all?

Speaker 4 No, I didn't fix it. I just decided I didn't want to, I was like, this is too much money for me to have invested into one property, and it was in Dayton, Ohio.
And I basically was like,

Speaker 4 what's going on? Why did I do this? Kind of panicked, felt like I made a, was having a midlife crisis, made a wrong decision.

Speaker 4 Anyway, I sold it off, kind of went back, again, went back to the drawing board, did some more research, came across Tom's program and said, you know what, I'm just going to do it.

Speaker 4 Jumped right in, watched his entire

Speaker 4 program that night,

Speaker 4 got my first property locked up in

Speaker 4 like

Speaker 4 within two weeks. Oh, so it's only been three years.
Yeah, over

Speaker 4 a little over three years. Okay.
100 units in three years. That's crazy.
Yeah.

Speaker 4 It's been a ride, man. I mean, Tom scaled quick, too, I feel like.
Tom scaled quick. He's He's been doing this for, I don't want to speak for him.
I think 10 to 12 years, and he's got 800 homes.

Speaker 4 800 all paid off.

Speaker 4 He's, I mean, again, like we said earlier, he's a Section 8 king. Yeah, he's the OG, man.
And I've shouted him out on my Instagram a few times. He's, he's, he is the OG and he's a great guy.

Speaker 4 And nothing but respect for him. Giving you your flowers, Tom, if you're watching this.
Yep, Tom. Shout out if you're watching this.
Yeah.

Speaker 4 Where can people find you if they want to learn more from you? Can they DM you? Yeah, so you can find me on all social media platforms, you know, TikTok, Instagram, YouTube, the whole nine at PJ j l

Speaker 4 invests a lot of people do miss the l in there they type in pj put away

Speaker 4 yeah so it's pjl which is

Speaker 4 preston james landis but i also say sometimes peace joy and love i love it invests cool so that's kind of my story man yeah check them out guys if you're interested in section eight shooting with dm yeah see you next time all right man peace

Speaker 4 i hope you guys are enjoying the show please don't forget to like and subscribe it helps the show a lot with the algorithm. Thank you.