021 - Learn Your Financial Calculator

2 Wealth Show S3 Ep21 – Learn Your Financial Calculator

 Super E and Justin continue the interview with Dave Short on episode 21.

 Key Takeaways:  

1. Good Rentals in High Demand
2. Imbalance of Housing Today
3. Coworking Space

 Resources and links discussed  

• Videocast on BrightPath Notes YouTube Channel 
• Videocast on Elizabeth Maora YouTube Channel 
• BrightPath Notes Website - https://brightpathnotes.com 
• Elizabeth Maora LLC Website - https://elizabethmaorallc.com 
• Dave Short's 3 Day Bootcamp - https://CIREIA.club
• Dave Short's Coworking space - https://irvingtoncoworking.com

 Sponsored By: Integrated Health Solutions

We are passionate about your health and wellness and we know you want to enjoy a vibrant, pain-free, active lifestyle, but when you are in pain this seems almost impossible.

In order to be pain-free, move fluidly, and enjoy an optimal level of functionality, you need a personalized yet integrated, research based and clinically proven approach and that’s what we do.  

To learn more visit us at
ihsindy.com
cryotherapyindy.com 

 About the Hosts 

 Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!  

Super E – Real Estate Investor specializing in short-term rentals and the management of them. She connects investors with short-term tenants and manages everything in-between.  

  Connect with the Hosts: 

• @2wealthshow – Facebook/Instagram 
• @wealth_show - Twitter 

Transcript

Justin Bogard: 0:05

[inaudible] Welcome to the 2Wealth show, a show that shares how you can create real wealth for you and your family. I'm one of your hosts, Justin Bogard. And my co-host is Elizabeth Sickles, AKA super E. I am a real estate note investor specializing in performing residential real estate debt. I find the deals acquire them from my own portfolio, as well as educate investors while walking them through the process of owning a real estate note. My co-host super E, a real estate investor specializing in short-term rentals and the management of them. She connects investors with short-term tenants and manages everything in between. Our show was sponsored by bright path notes and Elizabeth May aura. You can find out more information by visiting our websites at brightpathnotes.com and elizabethmaora.com.

Elizabeth Maora: 1:08

All right, welcome back everybody. I'm Elizabeth with Elizabeth Maora and this is episode number 21.

Justin Bogard: 1:14

All right, Elizabeth, are you doing well? And are you excited to continue on a conversation with the legend Mr. Dave Short? I am.

Elizabeth Maora: 1:22

I love it when Dave talks cause it's a good idea to listen.

Justin Bogard: 1:25

I know I can just sit back and be like, Dave, just spill it all out there. Let me absorb it. I'm going to take some notes. I took some notes on the last episode as well. So he said some things that I haven't heard him say before that I'm going to remember the next time I get into a situation. So that further ado, Mr. Dave short, Hey Dave,

Dave Short: 1:41

It's great to be back

Justin Bogard: 1:44

A long time. No, see right. They, we kind of heard a little bit of your history in the last episode about kind of how your, your tenure in the business and real estate, what you like, what you didn't like, what your favorite parts are. He gave us some great information about flipping and kind of little details and the side hustle within those details. As far as what to look out for, how to maximize your profitability, uh, to be able to obviously generate more income, generate more cashflow. And so I think what Elizabeth and I w w are very curious to find out is kind of what's going on in the real estate market today, as far as let's talk about real estate investing, not real estate brokerage and what you see that works well today, and then carry forward kind of how you see stuff happening in the next year or the next couple of years, uh, with your experience in real estate.

Dave Short: 2:35

Well, from what I'm seeing is I think rentals, uh, good and rentals will be really high in demand and, and bring really high rants. Um, I don't know that we'll see close to the 1% rule, but we'll see much better and higher end product, uh, than, than we have previous two or three years. Uh, some of the situations that I'm seeing, even the high-end apartments and I didn't consider them. High-end, you know, three years ago they were renting at eight 50 to nine 50 a month. And now these same apartments are 11 50, 1200 a month. And when you go into an apartment project today, they'll quote your rent today. But if you call them tomorrow, it might be$12 higher might be$15 higher, you know, so they're just not locking in ramps or locking in demand on grants. And that that's a huge, you know, that's a huge thing to look at and that's why I think good high-end rentals. And like we talked about in the last episode, you know, the, the best tenant is one that could be an owner if they chose to be one. And that's the kind of tenant base that I think everybody should look out for and you'll have less vacancy, less damage in properties and probably have a longer term tenant because they're wanting a home instead of what I call a place to stay. And, uh, if they want a place to stay, it's probably not a good idea to rent them. Uh, I see longterm as really strong, you know, we have so many people that we coach and talk to, you know, well, I'm waiting till prices go down. Well, folks prices aren't going down. You know, they're not going to go down. We have, uh, our country has almost a five-year pin up demand for need for housing on it. So with that kind of demand, that's why you see all the builders buying subdivisions in tack, buying in the mall. So they have places to add inventory. And the builders in Indianapolis absolutely cannot keep up with demand for housing in Indianapolis. Some of the local builders that we see here and we've looked at is that they start a house. They're now giving the buyers no choices in the house, not even the colors, not even the carpet you go in, this is our house that we're selling. And if you don't buy it today, it's going to be$2,000 more in two weeks. Right. And they raised the house just consistently like that. My son just closed his house and he paid for, I mean, it was like four 50 for his house. And then he had a glitch with his financing, ended up getting it worked out, but the builder wanted to back out because they could put the house back on the market for a five, 10. Wow. They didn't want him to close on the house. So that's the kind of demand that we have out in the, in the marketplace. This is why you see, this is why flipping so good right now is that you can go into all areas of town and give somebody a really, really nice product. Even though you may have a crummy house sitting right next to it, that's going to be in, you know, that's going to be something that is really nice for them. That helps change these neighborhoods around, for instance, in$110,000 flip or$120,000 flip. If somebody puts 3% down, they're going to have a payment of$750 a month total on it. You know, then they go down the road and they'll live in a 700 square foot apartment, no basement, no garage, no yard. And they'll pay 900 for that. So this is why the entry-level flips are such a, such a backlog in such a good market. It's why they sell with multiple offers one or two days in the market, because it's so much easier to buy today because of interest rates. Right. You know, I see the interest rates staying consistent for the next next two to three years. I think for every month that we go and we get closer to an election cycle, then the kiss of death would be to raise interest rates during the election cycle because that party will be gone if that happens. So as we get closer and closer to an election cycle, then, um, uh, then there, then they'll, um, you know, not raise rates and keep them fairly consistent. So I think for the next two or three years that we'll, we'll have really good interest rates in the market will be really strong because they're just, it just, you don't understand how much demand there is for housing today on it. And housing is something that's safe, habitable in a decent neighborhood. To me, it's not the D neighborhoods in the, in the neighbors. You never going to change those. Those are always going to have the tenant that can never buy. And, and they're, they're not, uh, the real, estate's the vehicle, the management's the key and anytime the real estate's the vehicle and the management's the key. You probably got a problem child on your hands as far as trying to manage that property.

Justin Bogard: 8:14

Yeah. What you said about the interest rate kind of coincides. What, what I heard as well, the feds, I believe said the most, they would raise it up as maybe a quarter or a half percent the next couple of years. So that,

Dave Short: 8:25

And a half percent and a quarter and a half percent is, you know, that really is consumer debt is what they're dealing with because it's the people that's out in the public trying to try and to spend their money and do they want to pull money out of the system? And right now they can't afford to pull money out of the system. So that's why I think we'll keep fairly good interest rates for the foreseeable future.

Justin Bogard: 8:51

Do you see the inventory and real estate for the, uh, we'll call it housing shortage right now? What we talked about earlier, do you see that balancing out very soon or do you think it's going to take awhile?

Dave Short: 9:01

Oh, I mean, they're saying it's a minimum of five years on it and because of the imbalance of our housing today is all of our housing that's that's coming online is probably an average sale price of$300,000. So the economy has the way just have to keep up with the type of product that, that is, you know, satisfying the housing shortage so that people need to make it well. They either have to make more income or get lower interest rates to satisfy the demand and the desire. So there'll be a mix somewhere between that wages will be probably a little higher and interest rate. They stay consistent than now. We can keep up with, you know, start to eliminate some of the shortage we have with houses. I don't know if that makes sense or not, but

Justin Bogard: 9:56

Yeah, yeah, it does good Elizabeth.

Elizabeth Maora: 10:01

Well, one of the things kind of, I wanted to touch on too, just for our listeners is that, you know, Dave has been in this business almost 50 years and he's done so many different aspects of real estate. And one of the things that you ventured into a couple of years ago was Irvington event center. Can you talk with our listeners about how you made a decision to do something totally new with this event center, because it was a huge rehab that you undertook totally new space. Um, so can you just talk to us about that?

Dave Short: 10:35

Well, uh, I can talk good and bad about that. Um, I can talk about the reason we did it is, um, the reason we did it, this, this was going to be, you know, I don't want it. Legacy is not really the right word. Uh, but I wanted to bring something to the marketplace that was needed in the Irvington community, which, which is direly needed. Uh, I also wanted to have something that I could create, um, uh, checkbook money, you know, passive, passive income. It's not a passive business, but we can hire the aspects to make it passive for me where, you know, my event manager, um, uh, and she's the executive director of Syrah. Now, Jillian Rodman is, you know, she understands my situation is that, Hey, I want to have this space. I want it operating. And I just need her to call me every couple of weeks and let me know how things are going. So this is the first business that I've tried to develop and it's been a, it, you know, it's not, it's not all roses because of COVID, it really set us back here. Um, but it's the first business in 47 years that, that I can consider it. You know, at some point life, I can consider this passive, passive income for me. And it's the business that lets me, if I choose not to flip houses anymore, I can do that and have reoccurring revenue that, that can be counted on every month. It's a unbelievable facility. And, and we're, you know, we're getting there and, and it's, you know, and like you said, being transparent, it's kind of like, you know, we didn't get done quite as fast as we want. Uh, we ended up redeveloping it slower because I didn't want to give up quality in the business. I would, you know, because knowing we had COVID, we couldn't lease spaces anyway. So we just took the rehab down a notch and still doing the same quality rehab that we would do in any of our flip houses. But the event business is a good business. The coworking is a long time. Uh, it's a long-term benefit. It's like working. You go, if you have three employees and you're, if you're at a bricks and sticks location in Indianapolis, you're going to be paying$2,500 for that space for three or four people to have. And you can come to our space and lease something for$900 a month and have your own private office. And you can have five conference rooms that you can acquire. Use. You have a podcast room, you can use, the copies are free. The janitorial is free. The wifi is free. You have a kitchen where you can get all your drinks. So it's like, it's just, you know, we, it's totally turnkey for somebody that wants to, they, they really don't want to downsize their business, but they have to because they have no space to go to. And they can't afford, you know, 2,500, you know, if you have a 2,500 lease space, your, you know, the cost to keep in that space is probably 30 to 3,300, because you got janitorial, you've got wifi, you've got everything that goes with on and off. So the coworking space is, is a thing of the future. And we'd like to think we're, you know, maybe a half a step ahead. And we have a, certainly a great location and we have a, um, an event center. We can have corporate retreats and corporate events up to 300 people. We can have weddings up to 200 people and our venue space as big as, you know, our cost is, uh, you know, I would say no more than two thirds of whatever every other venue town is. I mean, we're interested in booking events because, you know, we want cashflow on it. I mean, will not, will not hide that. I mean, we need it. We need to make a profit on this, on this, but our, our real estate coworking space, we have 15, uh, we have 11 private offices. We have room for 50 to 60 members and may have mailboxes. So you can have a total turnkey business in here for as little as$130 a month.

Justin Bogard: 15:23

That's incredible. Well, Elizabeth and I have all seen it when the building was, when he first acquired it, versus what it is today. And it's, it's amazing what you guys have done in there to make it very, uh, I would say high tech and very like a new, uh, kind of fresh feel to it. So

Dave Short: 15:39

It's kinda like a new age. I mean, there's a lot of cool stuff in our building and, you know, we can have a concert. Um, um, you know, we're, we're trying to book some, maybe some big name guys to come in for concerts in our space. So, and we have plenty of parking too. So there's a lot, we've got a lot going on with, with a pretty good location

Justin Bogard: 16:02

Right off the interstate. Yup,

Elizabeth Maora: 16:04

Absolutely. And Dave, is this your first commercial renovation or have you done commercial in the past?

Dave Short: 16:13

They did a commercial renovation years ago and it was, it was awful. I could talk once about it. We ended up selling that a couple of years later and, um, but yeah, it was a, uh, it was not a good venture there again, it was, um, you know, it was a great building and we made a really nice, but we ha we had a location issue and, uh, vocation is everything in, in the commercial industry.

Elizabeth Maora: 16:47

Have you ever ventured outside of the indy market day for any of your flips or excuse me, or real estate ventures?

Dave Short: 16:56

Um, yeah, we've, um, uh, we've bought several years ago. I had a partner in, we bought several non-performing loans in the Midwest and, uh, did, you know, we did very well with those. And so we were, you know, what I was, what I considered myself doing when I bought, uh, uh, a non-performing loan was, um, I was creating future flips if we didn't get them turned around. So we were willing to go to different communities to do that. Cause it might be a year or two years before they got turned into a flip or they maybe didn't get turned into a flip at all because there's a couple of guys that Justin's one and a couple other guys that, that sold me non-performance and, but they, you know, Justin would sell me a non-performing loan because he knew I could, I could, you know, get through it or a new client. He just, he would be very hesitant to sell that because he knows of all the downsize and all the risks. And it's like, you know, like I said, with my flipping is, is like, you know, Justin wouldn't sell a note to somebody unless he would be, you know, would probably on that note also with the exception of, of uh non-performing but he knows that's what I'm after. And that's what I do. You know, we bought nonperforming in Illinois, Ohio, um, um, several in Ohio, a few in Kentucky and, um, you know, they were, they were, you know, it was a fun part of the business and some of my, uh, best profits in deals have been non-performing notes, but I was able to, uh, turn them around. We made'em in a non-performing note, we bought up in Auburn, Indiana. We, we bought this non-performing, uh, it was a$280,000 balance payments hadn't been made for four years. And we ended up buying it from the hedge fund for$95,000. And, uh, so it was a good property. And so I just drove up there on the guy wouldn't return my call. So I just drove up there on a Sunday, knocked on his door and say, Hey, I'm the bank. And I know you've got some situations and you haven't made the payments here for four years. And you know what he told me, he said, well, nobody's called Ben. He said, I'm a doctor. And he said, I can pay, I can afford the payments, but nobody's called me. And I said, well, you know, do you want to stay here? Or do you want to move on? And he said, no, I want to stay. And I said, how's your credit score? He said, I'm fine. I said, I'm an emergency room doctor. He said, I made a great living. And, um, uh, so I said, well, what if I would lower your mortgage down since you haven't made payments for several years, I'm going to have a hard time getting you a conventional mortgage, but I'll lower you down to the FHA requirement. I think I can get you an FHA mortgage. And, uh, he said, yeah, we'll do that. So we lowered his mortgage balance to 210,000 and he went and got a mortgage and paid me off in five weeks. So when the property, uh, and made a hundred and we netted$110,000 on the property in five weeks. Wow. And for him to get a great deal, I did really well. He got a$70,000 reduction on his mortgage from what he owed and the hedge fund got out of it, what they, what they wanted out of it. So, and we've done that in a, not, not to that extreme, but we've probably had three other deals that we made in an excess of$50,000 on buying non-performing and what we call modifying them or creating something for them to stay in the house. And, and then just resold the mortgages once we got them performing. So it's, uh, I mean, I could talk days on that. I mean, it's, it's a lot of fun, but you know, it's like when you do my non-performing in our world is some of the things that performing people don't have to do is that they maybe don't physically drive and look at the property because the mortgage is the mortgage is what you're buying. And everybody that I've known, that's bought nonperforming that didn't drive the, the space. Uh, didn't do well. It's just like, we never drove a non-performing in less, we drove to Columbus or unless we drove to Cleveland, unless we drove to, um, Joliet, Illinois on it. So we would drive it, put her eyes on these, these houses to say, okay, if I had to own this at this number, I'm okay. And it might take me a year to get that number, but I'm okay owning it, you know, at this number of if I have to foreclose, but you go, if you put your eyes on these properties, and if you go by in the grasses cut and the yards need, they're driving nice cars, then you've probably got circumstances there that doesn't tip fit the typical, uh, delinquency type situation. And I would drive to Columbus. And if I had two properties in Columbus, I would go to the nearest century 21 office and say, who wants lunch? And I'd drive him by this house and ask him, what if I paid you a 7% commission? What could you sell this house for in 30 days? So then I knew what I could buy. I knew what my top end was on the hands. Uh, but it was putting eyes on them. Anybody that I know that's bought a non-performing and didn't drive it, uh, that, you know, that's, that's the big criteria. We're a performing, you don't necessarily have to do that.

Justin Bogard: 23:15

The, uh, the Auburn Indiana story that you just shared with us, Dave, uh, Elizabeth, this is, this is for you here. Uh, that was actually the first meeting that I went to one of your subgroup meetings, Dave, and you explained that story. And I was just like, oh, okay, this guy, this guy knows what he's talking about, the non-performing world. I like this guy.

Dave Short: 23:34

Well, and then nobody would not near as many people want those. Right. Um, and you have to be just, you know, you have to have some discretion on what you buy and all that kind of thing. And, you know, one of the other things that, um, that we do is create mortgages and, you know, I've got a little case study that we do in our, um, uh, in our flipping, in our bootcamp. And it's, uh, it's a house that I bought for$22,000. I put$10,000 in it and sold it for nine$80,000 on a 10% mortgage with 10,000 down. Well, I kept that property. I mean, it's, it's silly. I kept that property for three years. And my total income on that property was almost$60,000 on that one property that we paid 22, 4 and put 10,000 in it. So it's, it's mind boggling what performing and created mortgages can, um, can bring to an investor in, in regards to long-term cashflow and wealth

Justin Bogard: 24:53

Learn your financial calculator.

Dave Short: 24:56

Yep. For sure.

Justin Bogard: 24:58

That's exactly right. Right. So, uh, Elizabeth, thank you. We're going to jump in there with a question. Oh,

Elizabeth Maora: 25:05

I, you know, I really appreciate you sharing all this with our listeners, Dave, because there's just, there's so many ways to skin the cat with real estate and especially just, you know, to your point, knowing your numbers, that's such a huge advantage to folks.

Dave Short: 25:18

Well, it is. And, and, you know, we struggle on, you know, we get into a big flip, we struggle on getting, getting the numbers. Right. You know, so that's why we go in with, you know, what we think are good margins on our properties to, to keep that from happening. And, um, uh, so, you know, so if we go in thinking we're going to make 80 or$90,000, if we get down to 60, because of errors that we made, then, you know, sixties, okay. You know, sixties, okay. The deal, uh, or 30, you know, and then there's deals you get in the middle of that. God, I just need to get out of this house. Uh, but it happened, you know, that happens to all of us.

Justin Bogard: 26:03

Dave I have a question here, one of our last questions that we have time for today. And so, um, what I always tell people with flips, like, cause I, I'm not the expert in flipping houses. So I always say I didn't have a lot of success in it that some people do because they have a great system and a great, uh, process that they work with. But do any of your flips and your history ever go on time or on budget?

Dave Short: 26:26

You know, the, obviously the smaller, uh, the smaller, the flip, the more likely you can get time and budget on it. And, um, I would say our hundred and 20 to 140, excuse me, a thousand dollar flips. They're typically pretty close to budget, pretty close to time. If we go to Bates Hendricks or go to bigger houses, then, uh, w we, we struggle with it. You know, we've had houses that, that we bought in we've, you know, we had one in Westfield is probably two years ago, and I was committed to get this house and on time and budget and we rehabbed it, we painted it, we carpet it, put new kitchen in, put a new bathroom in, put it on the market. But we had bought that house, rehabbed it, put it on the market and sold it and closed it within six weeks. So we can, you know, you can make budget, but the more you, the more houses, and this is one of the problems you have been in 40 flips versus 20 flips. You know, the, I think we're trying to figure out what the numbers really are, but we think for every flip that you add to your inventory, that you're doing at a time, you probably are giving away profit on one of your other flips from just a time standpoint, one of the calculators that I want to get, and we're, we're actually trying to develop it. And I think it would be pretty cool is have a, have a flip clock. And it's a clock that we can put in the house. And it calculate, we plug in the numbers on this hat, on this clock, and we've broken in interest costs per day, utility cost per day, tax costs per day and everything. So every time my contractor and I walk into the house, I know what my holding costs are in that house. I think it will motivate you to, you know, and then you look at the, the contractor who didn't show up Tuesday. Like he said, he was there and he's with Friday. And I said, look, this is what you you've cost me$300 in the three days for you not being here because of my taxes, my insurance, my interest, my utilities, that's on this specific house. So, you know, these things are, you know, this is how you hire contractors. This number one, this is a higher, why are you hire better contractors? So like, you got the best tile guy in the world doing three bathrooms. And he charges you$3,000 for the bathroom, but the tile company is going to charge you St.$5,000 for that same work. Well, you know, that guy gets it done in a week and the other guy is six weeks. So that one guy has cost. You properly costs you a thousand dollars versus hiring the quote, the expensive guy going into the house. So this is why you have to judge these things. I mean, if I've got a one-off tile guy, I'm putting him on one bathroom, I'm not letting him do three bathrooms in my house. So you just, you know, you're going to lose 30 days of work with, with that 30 days of interest, having that guy in that house. And that's, if he stays on the job. Yeah.

Justin Bogard: 29:58

A whole nother, well, Dave, thank you so much for being on our show and our previous show as well. We really appreciate the wealth and the knowledge that you bring to our industry, uh, to, to myself personally, I appreciate all the advice you've given me a little mentorship that you've given me as well.

Dave Short: 30:18

Thanks.

Justin Bogard: 30:19

So one last question I have, uh, quickly, um, is there any books or any, uh, thing you're looking at or learning right now that that could be of interest to our listeners?

Dave Short: 30:33

You know, I'm doing a lot of, um, you know, soul searching is the wrong word, but I'm doing, uh, I'm reading a lot of books on time management and some other stuff I'm going back. And, you know, I'm just going back and studying the, um, uh, the book think and grow rich again. Uh, I'm going back and, and, uh, with Tony Robbins, I'm a big Tony Robbins fan dealing with the, um, um, uh, w with his, his information, because his is, is, you know, the, the, the more people that you can get to know, like, and trust you, the more likely you're going to be able to get jobs done on time, get jobs done here. And it's like, you know, a perfect that I, people that know likes and trusts me, and she helped her out the next that evening on it. And you can't get anybody that evening on it, but, but we have people because of the know, like, and trust and respect that you give, you know, all your clients. And if you're arguing with your subs every day, then you know, you're not going to be successful with that set right on it. And if you see the same brief, I see the same reoccurring problems with flippers in our business that, you know, it's all about this. It's all about them. Well, it's boiling down to, it's just all about them. And if it's all about you, you're probably not going to be very successful in the real estate business, because you have so many different types of personalities that you got to cuddle and keep happy and keep on your side on it.

Justin Bogard: 32:27

So that's awesome. So, uh, for our listener here, uh, the best ways that you can have Dave help you out is he has the a three-day bootcamp and you can contact our local CIREIA, CIREIA.club To get into his bootcamp. He also has a co-working space. If you're in the Indianapolis kind of area, and you need a place for hosting event, or you need a place to, uh, basically do your business. If you're tired of working out of your home, it's a great place to go to Irvington coworking space, it's Irvingtoncoworking.com. And that is in, uh, on the, on the east side of Indianapolis, kind of unfortunate 35 and 40 it's in the Irvington area. Okay, awesome. Hence the word Irvington, right? I'm a genius. All, thank you so much for being on our show. Truly appreciate that. So I'm Justin Bogard with BrightPath notes.

Elizabeth Maora: 33:20

I'm Elizabeth with Elizabeth Maora and Dave, thank you again for sharing all of your knowledge and your time

Justin Bogard: 33:27

Until next time Guys, see ya. The 2wealth show is produced by Justin Bogard and super E sponsored by BrightPath notes and Elizabeth Maora. Thanks for listening and watching for our show.