Trading Up From a Local Duplex to an Out of State 14-Unit Building w/Jonathan Barr

Emil: Hey everyone. Welcome back for another episode of The Remote Real Estate Investor on today's episode, Michael and I are talking to Jonathan Barr, who is a friend of ours is also a local resident of Los Angeles like me. And in today's episode, he shares his journey as originally starting out as an investor in the Los Angeles area. And then over time realizing that he could get better returns in out of state markets. And we just talked to him about his journey, how he did it, and he shares a lot of the details so let's get into this episode.   Emil: Jonathan, welcome to the show, man. We're excited to have you.   Jonathan: Thanks guys. Happy to be here.   Emil: You are. You are another person that Michael and I have met on Twitter. You and I have had a couple calls and some stoked to have you on the podcast, man, to talk about.   Jonathan: Both LA Guys so.   Emil: That's right. That's right. LA shout out another LA guy investing out of state.   Michael: The tres LA Amigos on this one.   Emil: Yeah. Cool, man. Um, so before we get into what I really want to talk to you about, which is your out of state investing, just give our listeners a little background on you, where you're from, what you do and we'll take it from there.   Jonathan: Cool. I'm Jonathan bar, my company's JB2 investments born and raised in LA. Hablo espanol. So come from like immigrant parent background. I love LA for all the diversity and the different kinds of neighborhoods and the endless things to do here, even though we can't really enjoy it right now, obviously, and LA is so damn expensive, so it's hard to invest here as well. Right? I grew up in a real estate family and my parents been doing flips and involve in real estate. And my mom was a real estate agent showing houses with her being my daycare was basically her office.   So I've basically been around it all my life, but I started mainly my journey in high school. I got my real estate license when I turned 18. Didn't really use it at the time, but I'd go to like my parents' office after school every day and kind of learn a few things here. And there went to college, graduated 2008 after the great recession, not the best time to get a job. And so I couldn't find a job. My mom's like, come work for us. I was pretty reluctant to go because I wanted to do my own thing. Be independent, all that kind of stuff, but they also got hit pretty hard through the relapse recession.   So I kind of felt like a duty to my family to come help out, come rebuild. Folk came back, became an agent for a little bit, was working with buyers. I'm pretty terrible at it. Just wasn't confident, didn't know a lot. And I just didn't really like it, right? It's not really that fun. That part of the business is not fun. At least not for me. Right. And people just have crazy expectations. And so then we started getting into the trustee sales of foreclosure auction. So luckily my parents, you know, have some education there and they luckily had some connections to investors have capital. So we were able to raise some capital and go to the auctions.   And so at the beginning I was involved in everything. Like I was looking at the properties running title, I'm going to courthouse steps. And we were also a lot of times it was like breaking into vacant houses to try to get a look at the inside just because it made a huge difference. I mean, if you can get in doors and see like, Oh actually the kitchen is pretty nice. Oh, the bathroom's pretty nice. Oh, I can actually see that the electrical is done or like looking at old permits. And a lot of the times, like one of those properties were going to sale. They were bought in like, ‘04/05 So it was old, like MLS listings. I could kind of like, look at descriptions and look at old pictures and that kind of thing.   Emil: I was going to ask you to share one of your, when you're a crazy auction stories, hoping you would, uh, mentioned that. And that that's definitely a crazy auction story. I mean, yeah. It gives you a leg up because a lot of times you're going in blind and you don't even know what you're bidding on. Right?   Jonathan: Yeah. And, I remember the first house I bid on. I actually bid myself up cause I was so nervous, you know? Cause like, you know, you have, cause you have like the actual money orders, like in a envelope ready to pay for these properties. And I was like 24 at the time, my first time ever doing this and I was like, Whoa, this is insane. You know? Cause how they do it, they like, they're like, okay Jonathan, your bid. But when they say Jonathan, your bid, that means you're the highest bidder by thought he said, Jonathan, you bid. I was like, Oh yeah, I'll bid.   Michael: It's your turn to bid.   Emil: Oh man. I can't imagine how like adrenaline inducing an auction must be, especially the first time, like you said.   Jonathan: Yeah. We were bidding on like 10 different houses. On one point it was definitely like a rush like every morning was like a big rush analyzing all these deals. And you know, we were at a point where buying three, four homes a week at one point it was insane. One year we did 82 homes. Pretty crazy.   Michael: So Jonathan paint this picture for me, you know, listeners, right? I'm picturing a guy on a podium talking about, you know, property one, two, three, $5, $5. I hit $5. Right. And everybody's out there in the crowd, you know, bidding. Is that actually what it's like?   Jonathan: Yeah. But it's basically in front of the courthouse steps, super casual. And at that time there was only like 20 people going to the auction. So it wasn't a lot of people. And like we were so super focused in a certain neighborhood. So like we were the only ones that bought and these couple neighborhoods. And when you bid on those properties, people kind of knew to kind of back off. Cause we going to be the most competitive investors. And we were also doing like higher end kind of like trendy designs that a lot of people at that time weren't quite doing yet. So we were able to push the values on the properties that we're buying by, you know, 10, 15%. So we're able to kind of bid 10, 15% more than anyone else. So that's what allowed us to kind of buy these properties over other people. Knowing our pockets and knowing all that.   Michael: Knowing your market. Yeah.   Jonathan: Yeah. It makes a big difference.   Emil: These auction were around LA, right?   Jonathan: Yeah. They were mainly in Northeast LA. So if you're familiar with LA, Silverlake, echo park, Highland park, kind of like the hipster havens up that way, I guess you could call it, you know.   Michael: Now some of the most trendy neighborhoods in LA.   Jonathan: Yeah. Yeah, definitely. And you can't find too much under a million dollars in those neighborhoods now. When we're buying properties at like 250, 300, 350,000, it was like crazy. Like these are like Midwest prices, you know?   Michael: Wow.   Emil: And now the hottest part of LA. So that's a good segue into like your, your beginnings and how you picked up your first couple of investment properties that we were talking about.   Jonathan: Yeah. So I luckily during like the 2010, 2012 period was able to pick up a few duplexes in that area. And one of which I lived in and basically how SAC, cause I rented a room to a friend and, and rented the back house and I was kinda like, Holy crap, these people that I'm renting this house to in the back or paying my mortgage, this is insane. I need to continue to do more of this. And like, all I gotta do is like, they call me every few months to get fixed some minor thing. And I just got to pay a few bills and put it on auto pay and we're good. Right. So that was kind of my aha moment. We also like around that time started getting into some development. So we're doing like small outs, subdivision developments, entitlements, and doing like townhouse style construction because the REO is, and all that stuff was kind of drying up. So that was, don't really want to do that anymore. It was a learning experience. We have a lot of NIMBYs in LA and for your listeners that don't know what an NIMBY is, not in my backyard. So that's a big problem we have here. And that's part of the reason of getting out of California was just all the rules, regulations and problematic things like that. Right.   Michael: Makes sense. Yeah.   Emil: How did you find that that first duplex is that auction?   Jonathan Yeah. That's an interesting story actually. So my mom's first broker she ever had in LA when she was, I don't know, 22, 23, like barely speaking English at the time was this like older, like lady that had been doing real estate, like maybe 10, 15 years before she even started working for, and she was still doing real estate at the time. And she had this listing that she wasn't able to sell. And we looked at it as actually buying it as a flip, but it didn't quite make sense, but I was looking at it and I was like, you know what? I would live here. And then I saw at the time silver Lake was still kinda like getting better. So it wasn't quite there yet. So, and then I saw some girl walking with her dog. I was like, well, this lady is walking with her dog here. It must be all right.   You know, but the thing is, the back house was like on its side. So I had to build a whole new foundation, the front, like it was a total fixer and, and luckily the foundation guy was this Jewish guy and I have a Jewish background. My dad's from Israel. So we had like some connection way and he had a lot of funds as well. So he's like, how are you funding this? I was like, well, I'm going to try to do like a 203K loan with which, for your listeners is basically like a FHA loan where they give you money for construction as well. He's like, well, I'll lend you that money at that same rate. And I was like, what? Like amortized and everything. I went to my mom and I was like this like good.   Like, like, should I do this? And she's like, yes, that's amazing. Like do that. Cause I thought it was like, I was like, there's gotta be something shady about this. Why is this guy trying to throw money at you? Right. So I went through with it and I fix up the property. He gave me the money for the construction. I paid him and then I refinanced it a couple of years later. So it was like blessing.   Michael: That's awesome. Did the foundation issue, I mean, clearly it didn't scare you away, but what were you thinking going into it? I mean, that sounds like a pretty big lift.   Jonathan: I mean, I think with the connections that I had, it wasn't a scary for me. I think for someone that's just starting, like, you probably don't want to get into something like that. Cause it was definitely more expensive, definitely more problems. And it was a headache, but that's like my focus, right. I know for your guys' listeners, they're buying, you know, like turnkey houses out of state and that's a good way to go and something that's already done that you just kind of plug and play and just make sure you manage the manager. Well, right.   Michael: Yeah. Yeah.   Emil: You had a background in real estate. So you'd been doing this for a while before. You're like, all right, I'm going to take something on like that, that is going to need a lot of work. It wasn't like the first, your first run with real estate. And you're like, I'm just going to take this massive project on.   Jonathan: Yeah. Usually the more work you need to do, the better deal you're going to get. But the more headaches you have to deal with.   Emil: Yeah, absolutely.   Jonathan: Yeah. If you have the time and expertise to do it, it works. But if you don't, then it could be a headache that ruins the deal.   Michael: Brain damage.   Jonathan: Or you just don't know what to do. And it ends up being a terrible deal. Right. Because you can get in the best deal in the world, but then if you're over construction by 200,000 and it takes you a year longer than you thought it could turn into a pretty bad situation, right?   Michael: Yes it can. So speaking from experience something, right. I talk a lot about the podcasts this vast development project. I'm working on it. It's like so over budget. And so over timeline, part of the issue is I had two fires in the building during construction, which halted everything.   Jonathan: What?   Michael: Yeah. And the ironic part is I used to work as a professional fire protection engineer. So the fact that I had to in a building that I owed is like, not only statistically impossible, but like the most embarrassing thing ever. So just dealing with the insurance headache is, has just been total joint..   Jonathan: Did you have tenants or was it just like a random combustion?   Michael: I have four tenants. And so one was started in a tenant space. We, the fire department wasn't able to put their finger on like, Hey you did it because they're pretty like blahzay about it. Oh the fire started. We're not willing to say who did it. And then the second was I was having a new roof put on and the fire started on the roof and I'm like, yeah, the roofer started the fire. But the, they weren't able to say conclusively, it was this, that or the other thing.   So which would have been so much easier for me. Cause then my insurance company could go subrogate. And if we're going to keep this in, but subrogation is basically someone's my insurance company going after a different person's insurance company to then recover their losses.   Jonathan: And they, they didn't want to accept that it was their fault?   Michael: Yeah, exactly. Of course. They're not going to be like, cause no, you can't prove it. It's, it wasn't our fault. This is our protocol and procedure for cigarette handling and butt butts and this and that. So they weren't able to, to pin it on anybody. So I had to deal with it.   Jonathan: Yeah. And that's why we have insurance, but that's why we have insurance.   Michael: Exactly. It could have been so much worse. Um, so I have to keep everyone posted on how the public adjustment process goes. Yeah. It's been over a year since the fires, but in any case. Yeah. So don't get into a project that's too, over your head. It can be a real, real pain in the butt.   Jonathan: Especially if you're out of state.   Michael: Especially if you'reout of state, it just makes it, it adds a layer of complication.   Jonathan: Yeah. Cause if you can't be there to be there, like at least once a week on a big project like that, it makes it difficult for sure.   Michael: It makes it tough for sure. Okay. So talk to us a little bit about what made you want to leave LA, what pushed you out of LA and where did you go from there?   Jonathan: Yeah. So like I said, I bought these few duplexes and like after the last recession and like 2018, 2019, I am, while the equity on these properties has grown like huge, like crazy. Right. And I started like, my cash on cash was good based on what I had actually invested in cash in these properties. I think a lot of people make that mistake. Sometimes they don't look at the full equity that's in their property. And so I started looking at what my return on the actual equity I have in those buildings. And it was like three or 4%. And I was like, I know I have to do better than this. Right. And so I started looking at LA because I know LA and I know all the vendors and you know, I feel comfortable there. I know it well. And the only thing I saw to do was buy a building that had tenants in it that I have to deal with rent control, relocations, all that stuff. And I've dealt with all of that stuff before, but it is a big headache.   You have to try to negotiate for them to move out and pay for them to move out. And it's like, I have a heart too, and it's hard for me to push people like that out. And I know they're going to leave and have to pay like $2,500 now and that's going to have a huge impact on their family. Right. And so I'd have to do that. And then also probably do a whole gut job just to get maybe like six or 7% return after that much brain damage, it's just not worth it. And so I think it was like Christmas 2017. I was in Kansas city with my wife and because she has family there and I was like bored one day. And I started looking at real estate in the area. Yeah. Real estate guy.   Michael: It's what we all do. It's like, well, what's your favorite pastime golfing now looking at deals, man.   Jonathan: And I just started like doing some math and I'm like, could be something here, you know? And, and then I just started reaching out to brokers and making some connections and doing some touring. And you know, there was kind of like these trendy areas, just like silver Lake echo park and all that.   Emil: Nice. All right. So you're looking around Kansas city. You said your wife's family's from there. So what made you finally pull the trigger?   Jonathan: Last summer? I finally decided to sell one of those duplexes and January of 2019, I'd been in Kansas city and I had toured a couple of properties. And so I called some of the brokers I had met with and toured properties with earlier that year. And one of the properties that I toured was like halfway done. And by the time I put my place on the market, they had finished that project and leased it up and they sent me the numbers. I did my numbers, I was already familiar with the building. So I was able to secure that off market. So put my duplex in escrow. And then probably two, three weeks later, I put that property in escrow before I even closed the other one because I was doing the 1031 exchange. So for me, it was kind of important to secure something because of time constraints and for your listeners to a 1031 allows you to, you know, move the gains from one property to another property without paying taxes.   But there's a 45 day window to select the property in 180 day deadline to close on that property. So a lot of people aren't successful because of those time constraints. But because I did a lot of work on the front end, I was able to secure something and kinda getting into it that way. And because I was in a 1031, they're motivated to work with me and not really push it to other people and kind of make it happen. And so far that property is doing about 10 to 15% better. And it kind of was just like that proof of concept for me that I could actually go out of state and do this successfully.   Micheal: I got to ask a quick question before the Lamarck is back on, why did you opt to do a 10 31 as opposed to a cash out refi and tap into that equity?   Jonathan: Because a cash out refi would limit the amount of cash that you can get. And I think I would have been more powerful that way and that I just kind of wanted it not be in that investment anymore. It was a small duplex and just made sense to kind of move into something bigger. Yeah.   Michael: Right on   Emil: With the cash out would have potentially made that duplex, like cashflow negative.   Jonathan: I think so that too. Yeah. Cause I was like making me be like 12, 1300 bucks a month before, and then I, I basically more than tripled that going into the new property.   Emil: Wow.   Michael: Awesome.   Emil: There you go. Proof of concept. How many units did you buy into by the way? So you sold the duplex?   Jonathan: 14.   Emil: Okay.   Michael: Holy crap. So a duplex in LA gets you a 14 unit anywhere else. Oh, that's fantastic.   Jonathan: I mean, I had a lot of cash to move over and that was part of it, but still yeah, for that. And I sold that duplex for around a million and bought the 14 unit for 1.6. I think. But I'd bought it for like 400. I think I bought it for that.   Michael: Good for you, man. That's awesome.   Emil: That is so awesome. Serious appreciation.   Jonathan: So like I'm not against investing in LA, but right now it's not the time. If you buy something right now, if anything, you might get the appreciation. Cause I think LA might take a hit with everything going on down the line.   Michael: Yeah. Jonathan circling back to a metric that you mentioned previously. It's not one that I think is talked about super regularly. So can you share with everybody what a return on equity is a measurement of?   Jonathan: Yeah, so like I bought this property for 400 and I probably put like a hundred K into it. So my cash was actually a hundred, but then the equity in it was the gain. So like it was worth a million dollars. Now, now I have in it, like let's say after closing costs and commissions and everything, my equity is like five, five 50. So it's the cashflow on the property divided by that equity gives you the percent return on that equity.   Michael: It's basically a measure of how hard your dollars the equity is working for you in that property. You could almost look at it.   Jonathan: Yeah. This is my actual cash in the property. And what's my return on that actual cash, even though it's not actual cash, but you could turn it into cash, which I did and moved it over.   Michael: It's lazy cash. Right? The equity is often lazy cash and it's not doing anything for you.   Jonathan: Yeah. And that's a thing like some people say I want to hold my property forever and I think that's good depending on the property, but a small duplex like that. Once you get to a certain point where you build up enough equity, it makes sense to kind of move it along at that point or do like a cash out refi, but sometimes depends on the bank and where things are at it'll depend how much, like maybe I only got 500 out, but if I did a cash out refi, maybe I would have when he got $300 and then I would have had to buy a different property.   Michael: Sure, sure. And when you sold your property, where you, your own agent,   Jonathan: I was so that   Michael: Perfect!   Jonathan: Now the 3% that saved me, like 30 grand.   Michael: Yeah. Yeah. That's fantastic. Okay. So the 14 unit was your first deal in KC, right. And where are you now? What's your next deal? What do you have your sights on for going forward?   Jonathan: So I could kind of explain like what we're doing now and where I'm at. So I bought that November, 2019 in January. I left the family business to just kind of that proof of concept just gave me the confidence that I could do stuff on my own. I also, with that cash flow on, I had another property. I was gaining cashflow from it. My wife has a full time job and we have benefits through that. So I was able to kind of leave that business and not get the salary I was getting there and surviving and all that. And so my brother and I both left at the same time to start our own business. And so I sold another duplex that I had that I lived in. So, and then my brother sold, just sold his duplex. And so we're looking for a larger deal, like 50 plus units either in KC or we open it up a few hundred miles from KC. So it was like Omaha st. Louis, Tulsa, Oklahoma city, Wichita, some of those kind of Midwest cities. And my brother connected with a property manager in Oklahoma city had a deal on. And then he connected separately with a broker that had that deal. And so that property manager kind of gave us credibility and kind of vouched for us, even though he didn't even know us, but he's still vouched for us.   He's like our age. And like, we kinda like sold them our story. And like, we were like, we want to keep on doing this. So he felt good with us. I guess you could say. So we put 72 unit deal under contract and we just closed two weeks ago.   Michael: Oh mazel tov   Jonathan: Yeah. Thank you.   Michael: That's awesome.   Jonathan: Thank you. Yeah. And it's not a traditional value add where we're doing a lot of work cause it's in pretty good shape. We're just kind of giving it our touch and doing some rebranding and we are changing management and reducing expenses by 25%. So that's our big value add right there. And it's actually, I think for COVID right now, it's the ideal value add where you're not like disturbing the tenants much. You're not pushing rents much. You're just like getting the operations to work better and be more efficient and less costly. Right.   Michael: So cool. A couple of questions. Did you and your brother do 10 30 ones for, for the duplexes that you sold best go around?   Jonathan: So the duplex that I sold since I lived there, half of it, I was able to keep tax-free and the other half I turned 10 31 and until the deal, then my brother, cause he lived in the other property, he was actually just able to move his tax free money over into the deal. And then we raised money from one other investor to raise the rest of the funds. And that's another thing we're working on is raising capital and talking to investors. And that's been tough because of COVID and also because it was our first larger multifamily deal. So everyone was kinda like, well invest in that. We want to see how you do on this one. I know that's the next one.   Michael: Nobody wants to be the pioneer.   Jonathan: We were able to kind of put it together, you know? Got it. And so that's what we're doing now. We're focusing on larger value, add 50 plus units in Oklahoma city or Kansas city. And we're looking to do three or four deals a year and we don't really have like a unit target. We have more like a cashflow target, but it'll end up being probably over a thousand units that we want to get to initially and then kind of see where it goes from there.   Michael: Right on. And so with the raising, the rest of the funds from the investor was a finance deal or it was all cash?   Jontahan: Financed. So we got a bank loan two and a half percent interest rate, which is insane. No reserves.   Michael: Who is this bank?   Jonathan: Bank of the West. Yeah. California bank.   Michael: That's fantastic.   Jonathan: But they're all they're nationwide. Like my banker was actually in Kansas city and that's how I got introduced to him through a broker that I know in Kansas city.   Emil: Okay. We always talk about that too like use the people, you know, to ask if they know other people in that area. Super good point.   Jonathan: Yeah. Yeah. That's a thing. And you start getting active in certain areas and with certain people and you're doing business with them, they'll refer you to people and it's just, everyone's like, it's kind of a small world and everyone's of interconnected. Right.   Michael: So you mentioned reducing the expenses on that building by 25%. And it's a question that I get all the time and I'm a multifamily guy too. So I talk about all the different levers you can pull, which is one of the reasons I love multifamily so much. So talk to us a little bit about what you're doing to reduce the expenses by 25% because that's huge.   Jonathan: Yeah. It's a hundred over a hundred thousand a year. So, um, 50,000 of it is, is marketing expense. They were like spending money in all these like different like marketing, like systems and websites that was like completely unnecessary. So we're basically, you're reducing that 50, 60,000 they're spending a year to like $3,600 a year for apartments.com and that's about it. So that's the main one. And then insurance costs where you to kind of tighten that up a little bit because our property manager owns and manages a couple of complexes nearby. We don't have to pay for it, leasing agent. They just have people kind of bouncing around. So we're kind of able to share resources a little bit as well. And they had a lot of turns that they did in the last T 12 basically. Um, and so we won't have as many turns we're going to have, we have a maintenance guy that's there full time to kind of reduce maintenance costs as well. So all that stuff combined is I think it ends up being like a $112,000 in savings in the first year alone.   Michael: So for those of our listeners that don’t know what a T12 is shed a little light on that for us.   Jonathan: A T12 is basically just all the income and expenses for 12 months of the year. And it just details like if the rent income, if there's like a utility bill back income and like breaks down like insurance, property taxes, all the maintenance, everything all in one big spreadsheet. So you can kind of see get an, I get the whole story, you know? And like a lot of times with these bigger, um, apartments, you could get T12 like a few years back. So you can kind of see the progression of the whole story, the novel.   Michael: Right, right, right, right. Yeah. So the proforma is looking forward. This is how we projected the property to perform. And I think the T comes from trailing and it's the trailing 12 months looking backward. And how did it perform? So it can be really helpful. I love that. It's, it's a novel, it's the story of how the property.   Jonathan: Yeah. Well, I mean, I guess they couldn't make up those numbers, but they technically are not supposed to.   Michael: It's bad form.   Jonathan: Yeah. But that's why you back it up, you looked at like bank accounts, utility statements, rent, rolls, everything leases. And you kinda like look at everything. Like the due diligence process is huge and lengthy and if you're doing it right, you know,   Michael: If someone says it's easy, they're not doing it right.   Jonathan: Exactly.   Michael: Awesome. So what, having done it now, are a couple of different times, Jonathan, what would you say are some of your top tips for those who are just getting started investing out of state?   Jonathan: You mean like what to do when vetting vendors and that of thing, or just to do it in general?   Michael: Or it could be, it could be high level of like, Hey, you know what? I've invested, you know, I bought a house ‘cause I think a lot of investors on the marketplace own their own home. And so I understand what that process looks like, but I cannot imagine what it would be like to go buy a property out of state. I have no idea, conceptually, physically, emotionally, how that would work. How would it make me feel? What would you recommend it to those folks?   Jonathan: First? From my end, like it took me like two, three years to actually take the jump and go out of state and actually feel comfortable with that because I, you know, I'd done hundreds of deals in LA and I was like, I can't leave LA, this is crazy. Like, why would I ever do this? This is like the sure thing. Right? Yeah. You know, but like real estate, there's some inherent risks and you got to take the plunge sometimes. Right.   Emil: I'm always curious to know, like it's really hard to mentally get over that feeling of, okay, I'm going somewhere where I can't just drive to the property. And like you mentioned, you were already doing stuff locally. So I feel like that's a double mental barrier. I'm curious if there's like, what kind of just got you over the hump? Was it the, the potential reward and it was, you know, early enough in your career?   Jonathan: Yeah. I mean, another thing too is like in LA we have rent control and the cities, we don't have rent control. So you can, you could give someone a notice to move out in LA you can't just give someone a notice to move out. You kind of have to either pay for them to leave or you're stuck with them. So like for example, like I've just had a lot of like, like scariest situations with tenants, like psychopath tenants that call me for every smudge on the wall and I've come to my office and cuss me out because they're basically a psychopath. And I can't just tell this person to leave in 60 days. I literally I'm stuck with them and I'm like, I should have the freedom and the right to tell someone to leave if they're a pain in the ass. Right. So that was a big one. Um, so not having to deal with that, like in Oklahoma, the property manager basically said I can evict someone in 21 days. I mean, I'm not advocating for just throwing people out, but I'm just saying, if you have a problem person, you can get them out quickly.   And that, to me, that was important. I think the most important thing is just picking the right team, right. Picking the right property manager, picking the right contractor, the right broker is all that like vetting them, getting referrals, you know, like one thing I heard someone that they do is they pick like a lot of times that the property managers will have the buildings that they manage on the website. And you'll be like, I want to talk to the owner of that, building, that, building that building. And I want to talk to them to see how their experience has been. Right. So you get like a random, they can't just give you their best referrals that are going to talk the best about them. Right. And then also like shopping their existing listings. So like having like maybe like a burner email where you email a couple of their listings and see how quickly they respond.   Cause that's important. Like, I, she just did that with my property manager in Kansas city because they were having some trouble leasing, one of the units and I sent an email to the advertisement and they actually responded in an hour. I was like, wow. Okay. That's, that's, that's really good. You know, as long as they respond within 24 hours, I think that's really important because if you don't then you lose that person. Right. And then I think the other really important thing, like before I would buy anything, I mean maybe if you're buying like a single family home, it's not as big of a deal, but if you're doing like a larger investment, I would just go there, meet these people in person and actually get a feel for the area. Because like any big city, different pockets could be different from each other. So like, if you go North or West from a certain street or freeway, it could be completely different. And then over time, you'll kind of figure out the different areas that are the best and that will work. And that's why it's important to kind of focus on like one or two cities and not being like 10 different cities, I would say.   Michael: Yep. I love it.   Emil: These a solid, solid tips. I also, uh, I wrote this down. It's kind of a takeaway. I love that. You know, for you, you started small granted it's in Los Angeles, so it's a more expensive market, but you started small. You started with duplexes at the time.   Jonathan: At the It was an expensive market.   Emil: Yes, exactly.   Jonathan: When I first started, it was actually somewhat reasonable.   Emil: Yeah. Yeah. But you started small, you were in a good market, you know, you waited this, wasn't like a year down the road that you were able to leverage it. And some of these things…   Jonathan: We're talking like a decade here, you know, like I think that's also a big misconception people have. They want it like right now, they want to like have a, you know, and it just takes time. Like real estate takes time. You need to buy it, hold it for awhile. And then that's when the magic happens. Right. It doesn't happen overnight.   Michael; Wait, I'm forget this whole real estate thing. I'm out.   Emil: If you follow people on YouTube, certain gurus. Yeah. They'll tell you, you can be a millionaire in like six months, but don't listen to them.   Jonathan: Don't listen to them for sure. And that's another thing too. It's like a lot of people, another big misconception is you don't need money to do this. I mean, you could raise it from other people, but if you don't have experience or money, you kind of need one or the other, you know, like, it's good to work in a W2 for 10 years and really save up some capital and then get into it, you know? And you learn a lot in those businesses and companies and how the world works and whatever. Right.   Emil: A hundred percent couldn't agree more.   Michael: Yeah. Yeah. I'm right there with you.   Emil: All right. Michael, anything else you want to ask before we do the wrap up?   Michael: No, this has been killer. This has been killer.   Emil: Cool. So Jonathan, we'd like to kind of ask a random question on every episode, but before we get insurance, what is the best way that people can get in touch with you if they want to get in touch, chat with you?   Jonathan: Yeah, just go to my website. JB2investments.com or email jb@jb2investments.com.   Michael: And Twitter right?   Jonathan: And Twitter. Yeah. You look at me up on Twitter. That works too. It's just my name and then there's some numbers. I think if you go to my website, if you email me, that's, that's probably the best way.   Emil: Awesome. Yeah. Cool. Alright. So random question for you. What is something new that you've picked up during, since lockdown started since COVID hit something new real estate wise or, or any, it could be like, no, just in general, general habit. Yeah. Like, I don't know. One of our other coaches started slacklining at home. That was kind of his new thing during COVID.   Jonathan: What’s slacklining?   Emil: Oh dude. It's, it's the best. It's a, where you tie a Slack line between two posts and then, you know, your people like walk across them and do like the balancing thing. You see parks and stuff.   Jonathan: Yeah. I've seen, I know we were talking about, I guess a lot of people have time on their hands. This person must not have kids or maybe they do.   Emil: He just had a kid. It was, it was when the baby was like brand new though.   Michael: So, you know, like before his baby could walk and crawl, you could just set it down and identify where it was going to be when he got off slackline.   Jonathan: Um, I think, I think what this time is, I guess taught me or, or maybe not something necessarily new, but just like patience, you know, because like, you know, we left the business in January and then basically started our business and then COVID hit and then we're like, Oh. You know, it basically put like everything on hold for like almost six months, you know? So like filling that time and being patient and keeping at it and knowing eventually it would happen and like taking incremental steps every day. I think that's a big part of being a real estate investor is like the psychological side of it because there's a lot of ups and downs and how to deal with that.   And like all the different things that you need to deal with and things that come up and you gotta be mentally strong to be able to handle those things. And so building that, this was a good time to really build that. I guess you could say.   Emil: Yeah. That is a very important skill that nobody talks about real estate investing is just having like mental fortitude because you're eating crap all along the way. Like there's just constant things and pain.   Jonathan: Yeah. The wins are like only every once in a while. Right. But when the wins happen, they're sweet and it makes it worth keeping going. Right.   Michael: Sometimes it's a fire hose of crap. Other times it's just a trickle from a garden hose. There's always something to deal with.   Jonathan: And you literally got a fire hose. Right.   Michael: That's so true. It's so true. I think a fire easier to clean up than all the water damage from the. It's crazy.   Emil: Jonathan. Thanks so much for coming on the show, man.   Jonathan: Thanks guys.   Michael: Thanks so much, Jonathan.   Jonathan: Thank you guys. It was fun.   Emil: Alright big. Thanks to Jonathan again for hopping on this episode with us. If you guys haven't already, I'm sure you're tired of hearing it from me, but please go subscribe to the podcast. Leave us a review. We always like to hear what you guys are thinking. Good, bad, ugly. Hopefully not too ugly, but all the good stuff. And we'll catch you on next week's episode. Happy investing.  

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