Multi-Family Real Estate is a Relationship Game w/ Grant Warrington

[00:00:00] Grant Warrington: I'm just sitting there and all of a sudden I get a text from him and I'm like, what's this? And I look, and it's a picture of a check. And it says my biggest check to date. And it was a check for $636,000. Cuz he just refied a bunch of properties. And I was like, dude, I'm out. I am done. And I'm not kidding you.

[00:00:19] Something broke inside of me. And I was. I am gone.

[00:00:24] intro: You're listening to the real fi podcast where we discuss time, tested tricks, techniques, and strategies for pursuing financial independence today so that we can enjoy a better tomorrow financial independence. Isn't about getting rich quick.

[00:00:42] It's about cultivating a foundation to grow financially, mentally, physically, and spiritually. Let's figure out how to kick the nine to five. Here are your hosts, Patrick and 

[00:00:53] Patrick McGrath: James. All right, buddy. Ooh, let's try that again. Fuck. Leave that one in there. All right, everybody. [00:01:00] Welcome back to the real fi podcast.

[00:01:02] I'm your host Patrick McGrath with my co-host James Ripon. How's it going today, James? It's going 

[00:01:08] James Rippeon: man, going well, nothing to complain about today. It's a little rainy over here in Fayetteville where I'm at, but we're here to make some deals happen and talk with great investor with grant Warrington.

[00:01:17] So let's get. 

[00:01:19] Patrick McGrath: That's right. Everybody. I sure. If you haven't heard yet, you will be soon. We've got grant Warrington here with us today. He's on Instagram. He's on TikTok. He invests in apartments. His goal is to get himself out there. Just so you recognize his face and the type of content that he's bringing in grant.

[00:01:41] How's it going? Great 

[00:01:42] Grant Warrington: man. Hey, first of all, thanks you guys for both having me on this show. I'm super excited. I've been looking forward to this, so really appreciate you guys having me on here. Good. 

[00:01:51] James Rippeon: We know our listeners are looking forward to it as well. So grant, why don't you get us started with telling us a little bit about your background and how you got started in your career and [00:02:00] leading us up to you being in real estate investing?

[00:02:03] Grant Warrington: Yeah, so my background I'll let you know I'm I was in construction, right? I was a 23 year construction worker. I was actually a crane operator here in Michigan. My grandfather was a crane operator, my father, I was and in 2003, actually I really ventured into buying our first my first homes.

[00:02:20] I bought three houses in 2003 and I bought Carlton sheets. If anybody remembers that it was cassettes, you could buy to learn how to buy houses. I wasn't I had a lot of issues in my personal life. I didn't have enough information to do it. Long story short, every one of my tenants owed me like $5,000.

[00:02:37] I owned three houses. It was a disaster, it was a nightmare. I met a guy that was selling me these houses and you know what I, I had to declare bankruptcy. I gave 'em all back. They were in great condition. I just it was killing me literally. And I gave them back and I was outta the game.

[00:02:55] And 2007, the bankruptcy was finalized. Finally I could [00:03:00] breathe again and, but I always thought, you know what, I'm gonna get back into it one day. I knew that. I loved it, but I, a couple of things, my mind wasn't. And I didn't have the the knowledge to do it. I didn't put in the time to learn.

[00:03:13] So one of the things in 2011, I believe it was I quit drinking and that was with the help of God, man, that changed my life. That's where my life started to change. Let's put it that way, but not only did I do that I also learned I needed to grow because if I'm an asshole and I quit drinking, I'm still an asshole.

[00:03:33] I just don't drink now. So exactly. Yeah. So my point was I need to be a better human being. So I worked on that is little in little increments, the best I knew how at that time, fast forward, I met my wife in 2014, we bought our first rental. We both had this desire to own real estate and I'm like, Hey.

[00:03:51] I used to own some real estate. I won't tell you what happened, but no, I told her everything and I said let's do it again. And she's yeah. And we bought our first house together. [00:04:00] That was 2015. Like we bought our first or 14 end of 14. And we had built up 11 units by the time.

[00:04:09] I finally said, you know what, I'm ready to quit. I was a business agent at that time, which mean I worked for my union. I had a great career. Two, I had two pensions. I drove a tr a company truck. Things were great. I wasn't out in the field anymore, work in construction. I was in the office and I just finally I had enough and I'll be honest with you.

[00:04:29] You got the time, I'll tell you what happened. I was I, my boss had asked me to do some things, my immediate boss, and I didn't feel right about, and I just morally disagreed with it and I said, no, I'm not gonna do that. And he's I'll tell you what go to this Starbucks. I was out in the field, meet me at this Starbucks.

[00:04:46] And we're gonna talk about it. And I'm like, fuck, all right I could lose my job. And I had a mentor at that time. Like I said, we had built up 11 units, luckily, and I'm sitting there in the Starbucks, waiting for my boss to come in. And I had this mentor. He's a friend of mine, but [00:05:00] we didn't talk every three months or something.

[00:05:01] Every time I did something, I'd reach out to him. Hey, I bought a house. What should I do next, whatever. And I'm just sitting there and all of a sudden I get a text from him and I'm like, what's this? And I look, and it's a picture of a check. And it says my biggest check to date. And it was a check for $636,000.

[00:05:19] Cuz he just refied a bunch of properties. And I was like, dude, I'm out. I am done. And I'm not kidding you. Something broke inside of me. And I was like, I am gone, dude. So I was like, that's it bring the boss on whatever I gotta do whatever you guys wanna do to me. No problem. I'll do it sounds great.

[00:05:39] Whatever, but I'm freaking gone, dude. I knew it mentally. I didn't know how though. 11 units, I didn't have enough money. And two months later, this is just about being intentional again. I'm like I'm gone. We'll figure it out. Two months later, I'm working for my boss and I'm managing 800 units.

[00:05:56] For him, he owned a property management company and and that was [00:06:00] it. I was done two months later, had a new career. I'd quit that W2 and moved on to the next phase of my life in property management, which lasted two years. And then I quit that as well. So 

[00:06:11] James Rippeon: at that point when you had 11 units yeah.

[00:06:14] Did you own those outright or did you have loans on those? Cause I know you said you went through the bankruptcy procedure proceeding, and I'm curious how that ending in 2007 set you up for your future real estate dealing. So maybe you could walk us a little bit 

[00:06:27] Grant Warrington: through that. Yeah.

[00:06:30] So the great thing about my my that earlier I would say failure, but really it was a lesson. The great thing about that lesson was I learned how to deal with people. I learned how to deal with tenants. I learned that they're gonna tell me things and sometimes it's not the truth. I learned I'm not their number one priority, but I also learned I can still be nice to people.

[00:06:51] So I learned. This is the way it is. I can still be nice, but you're gonna follow the rules or you're just not gonna live here. So I learned all those things. The problem I, [00:07:00] that came from the bankruptcy though, is I was like, I'm never getting debt again. Never. I paid cash for everything from that point forward.

[00:07:07] I'm like, I'm not putting myself in that situation again. And then the problem, arose, we bought our first house. My wife had $20,000, my Monique up my girlfriend at the time I had $20,000. We put our money together. We bought a house and it needed everything, man. It needed a roof, a driveway, a furnace and air conditioning, new electrical, new plumbing.

[00:07:28] And we were broke and we were outta money and that's how, what we've done really throughout our career. We've invested with no money. We're at 41 units personally owned now. It's three apartment buildings and a duplex, and we have debt on everything. We've refinanced everything to grow. That's just how we've done it.

[00:07:47] And yeah we did this with very little money and now we're moving into the next phase of syndicating apartments and we just closed on a 98 unit with partners. So that's our next step. But yeah, like I said, we started out one single family. [00:08:00] And ran outta money, 

[00:08:03] Patrick McGrath: man. I really love that story and that, that really resonates with me a lot.

[00:08:07] And I think that you would've been in a different position, morally and in life, had you not had those 11 units, whatever, if they weren't covering everything. But they were covering something, something big enough to where you could sit there and go, you know what it's okay.

[00:08:27] Is it gonna hurt? Yeah. Am I gonna have to figure it out? But at least you had that, 

[00:08:32] Grant Warrington: yeah. And it what those did for me was it shifted not a lot, but just a little bit. It shifted my mindset to where I was like, I can see the future a little clearer, I have these 11 units, we built it before we needed it.

[00:08:46] And then when I was ready to quit, then we needed it. But I was like, I can see my path is now going in this direction. And that's how I was able to quit that job because thankfully we had those 11 and I knew wow there's something more out there for [00:09:00] me. 

[00:09:02] Patrick McGrath: Man that, that's so awesome. I think everybody out there listening just needs to know, like sometimes when you're getting into real estate you have the dream of being financially free, down the road at some point.

[00:09:16] But at some point that you're not expecting, life's gonna happen and just having started and having built up something, even though you're not at your goal yet, it gives you the ability to make some decisions in life that normally you wouldn't be able to. And when you're on your financial independence journey or financial in financial freedom journey, things change, life changes your goals, change, and what changed for you was your ability to quit and go do something else.

[00:09:45] So that's That's really awesome. Right now you, you told us your next goal is syndication. What does that look like? What's the ultimate big picture that you're going for? 

[00:09:55] Grant Warrington: Basically, like right now I wanna have 10,000 units. [00:10:00] I want big numbers.

[00:10:01] This is something we can do. And we never have to quit. My wife and I, and li and I just wanna let people know that my wife and I are 50 50 on all of this. Like she is 100% in this. She handles most of our property management like 99% of it. She's in there with me. So it's her and I.

[00:10:17] Our goal is really we happen to be able to jump on with the team and take this property down. That worked out great that the team has 780 million in assets, under management. So for us to be able to jump on with them was phenomenal. So we're gonna continue with them.

[00:10:32] We're gonna continue doing our thing. And in the future we're gonna, we'll be doing our own deals at some point in time. Perfect. 

[00:10:39] James Rippeon: So tell us a little bit more about your current portfolio. I know you said you've got three apartments and duplex. Yeah. Uh, Walk us through how you built up to getting from that 11 units to acquiring your apartment complexes.

[00:10:52] Cause I know that's a huge step that a lot of people are fearful of taking and it almost seems insurmountable. So why don't you walk us through the [00:11:00] process that you went through to make that leap and get into apartment 

[00:11:03] Grant Warrington: buildings? Yeah. So I, I think that's what people need to understand is this is, I have people call me all the time.

[00:11:10] I offer like a three a free 30 minute phone call and I just had a guy call me the other day and he's I don't feel like I'm growing fast enough. And I'm like, bro, dude, I know the feeling, but everybody feels that way. But like we started with no money, like I said, so we just cobbled some houses together.

[00:11:28] Like my wife moved in with me and she had her condo paid free and clear. So there's a house free and clear we had, we turned that into a rental. We bought another house for 20 grand that needed a ton of work. And we had some people say I'll lend you the 20 grand to buy it. So there was another one free and Claire and then our third property we bought, it was like 55,000.

[00:11:48] It was a three unit. And and we took out credit cards. I think we took 10 grand on a credit card. Put it in our bank account. I took out a personal loan. My wife took out a personal loan and all through this time [00:12:00] I've sold some retirement that I had. I sold my stocks. I sold my boat. I sold my pool table.

[00:12:06] I sold my truck. We're all in. We don't have any money, so we're doing everything we can to buy these. So anyway, we get these first three, we do a blanket loan. We rehab 'em right. Just like giant burs. But we rehab them, put some tenants in and then we do a blanket loan. So we package all three of 'em together into a commercial loan.

[00:12:24] And then we get a check for 75% loan to value. On those properties. So I think our first check was like 80 grand. Took that 80 grand. And we're like, dude, this is it. We're on easy street now. And then my mentor's okay, now you need to get people to buy the properties for you. And I'm like, oh shit.

[00:12:42] All right. So then we found three people to purchase the properties for us. The next three we bought and we took that 80 grand and we used that for rehab money. Six months later we had all the houses we purchased rehabed we had tenants all in them and we did it again, another blanket loan. And we got a check for 125,000 [00:13:00] at that point.

[00:13:00] And at that point I was telling everybody, it's just you hear tell everybody, what you want and what you're looking to do. I was telling everybody we're gonna buy apartments because my wife did the math and she's grant, do you realize we have debt on everything? So if we get a hundred dollars a door, we let's say $10,000 a month, we wanna get, that's like a hundred houses.

[00:13:19] We'd have to own. And I'm like, I can't do a hundred houses. Like I can't physically do that. I'm like exhausted. I didn't know anything about teams about different things. And I'm just like I just can't do that. And we're like let's switch to apartments. So I was in that $20,000 property we bought, we had it rehab, the city inspector was in there and I said, Hey, we're looking to buy a PERMA buildings.

[00:13:40] And he goes, you know what? There's a woman in your city that owns a bunch of properties. Why don't you call her? So I called her and she said, call this person, and this person, those three people do a very bad job running their buildings and they own properties. So I happen to know I, I called all of 'em [00:14:00] and I happened to know one of 'em and I stopped into his place of business.

[00:14:03] And he's yeah I think I'll sell it to you. And that was a 20 unit apartment. That was our first one. That was a whole nother disaster. But we hung in there. We couldn't agree on a price for a year. A year later, my wife and I said to each other, we're like, if not this, then what other property out there?

[00:14:19] And we went back to 'em and we struck up a term, we did seller financing and we ended up buying that thing from, it's such a long story on that. It took nine months to close. He actually lost it. He lost it for taxes. My wife caught it just in time and told him like, Hey dude, you need to pay 50 grand or it's gone for good.

[00:14:37] Two weeks it's gone forever and he didn't believe her at first. And then finally he did. He paid the money. So it was just, it was 

[00:14:44] James Rippeon: amazing. I feel like we gotta dig into this deal a little bit more. There, there seems like there's a whole bunch of hidden nuggets in here. Ah that we should just crack.

[00:14:51] And how did first of all, title company, didn't come up with that tax lie on the property. Like you saying your wife found it. 

[00:14:58] Grant Warrington: They did correct. So they did, [00:15:00] and it was an exception on title. But back then, we didn't really know what it was. No one really explained it to us. That's the big deal of title too.

[00:15:09] If you don't have a good title company, they'll just send you the title, work back with the exceptions on it. Nobody's gonna explain it to you, you're just gonna go. Oh, okay, cool. Yeah. There's his name? But there was some exceptions on title. We didn't realize that. So my wife dug into it more and was like, oh.

[00:15:24] This is what that means called the title company did the due diligence on it. So that's how they're like, yeah, that's exactly what that means, but nobody reached out to us and cuz we, it was seller financing. We had no, no broker or realtor involved. At the time I was a realtor, I wasn't really practicing back then.

[00:15:40] And so that's what's happened there. The other thing that was on there was in 2011, they paid off their loan and or 2010, whatever it was, they paid off their loan. So it was free and clear. However, the bank that they had the loan through went out of business. So they couldn't prove [00:16:00] that the loan was paid off.

[00:16:01] So now we had to go to court and his lo his lawyer, he hired drug his feet and this took forever, but we had to go to court to prove that there was no lien on the property. So that's why it took nine months to get through all of these issues. And finally, we ended up closing like January 29th, 2019.

[00:16:20] Patrick McGrath: I love this story because there's so many layers to this onion to peel back because one, you guys decided that you wanted to go into to bigger stuff. And you're like, I'm telling everybody, you've got a city inspector at one of your single families doing an inspection and you decide to say, Hey, I'm looking to buy apartment buildings, do you know anyone?

[00:16:45] I should talk to? Yeah, go talk to this lady. Boom. You actually called her. And then she gave you three people to call and you reached out to all them and were able to put a deal together. Even though [00:17:00] you had all these hiccups along the way you were committed, like we are taking the next step.

[00:17:07] We are going into apartment buildings and you're just gonna just keep bating away at everything to hit your goal. And now, Hey, I bet you every title. Assessment you get back, you guys are looking through it with a fine tooth comb. I bet you now you're looking at all the tax lie and everything before you put the offer in now, you know how owner financing works and the different creative structures that you can do, and you knock that one all out on your first one.

[00:17:38] So it was just because you took action. You decided you committed and you took action and people out there. I think just need to realize that you it's a lot of work. You just have to grind at this stuff sometimes and just not give up, the fruit is there. You just have to climb for it, man. And everything you just [00:18:00] said, at the time, I'm sure you guys felt overwhelmed and had all these different things going on, but looking back at it now, you're like, man you could have paid someone to tell you how to do all that stuff, but it wouldn't have made the impact of going through it and taking that year, 

[00:18:13] Grant Warrington: Yeah, exactly.

[00:18:14] And you know what, like I always tell people I'm like, it's really not hard. Like digging a ditch, like outside in the winter is hard work. If you're a ditch Digger, bro, that's hard work. So what I did was inconvenient and growth and I had to push myself cause I didn't wanna do it. Cuz nobody really wants to go through all these things, but it's really not hard.

[00:18:34] And it's just really copying, like if people listen to your podcast, they're gonna find out how to do these different things. And that's all I did like that mentor I talked to you about, he told me, a while back, he's you're the only person that did what I told them. I'm like, isn't that crazy?

[00:18:49] He's I gave you like five things to do. And you came back to me and were like, Hey, I did those five things. What would you suggest next? And he's I was blown away. Nobody ever does anything. I tell 'em and that's the same with me. [00:19:00] I talk to people all the time and they just don't do what I say.

[00:19:02] And that's fine, but that was a side note, but I can go into some of the financials and the seller financing. If you guys want with that a deal, I 

[00:19:09] Patrick McGrath: would love to hear that I was gonna ask you, what did you pay for it? What were the seller finance terms? What were the rents at the time?

[00:19:17] And. What's the cash flow. And how much is it worth now? Cuz that was 2019, 

[00:19:22] Grant Warrington: right? Yeah. correct. Yeah. January, 2019. So we got into it right at the right time. Three years 

[00:19:28] Patrick McGrath: ago. So yeah. So give us the breakdown on this deal. Yeah. 

[00:19:32] Grant Warrington: So we bought it for 625,000. We put $125,000 down. So you gotta understand we're getting into this.

[00:19:40] I told you, I think we had a check for 125 grand, right? So you can see things are getting thin. This needed everything like it needed a roof. It, every single unit needs to be turned. It's a 20 unit. It had multiple leaks. All the zone valves were bad. They had buckets 50 gallon buckets under leaks in the basement, [00:20:00] holding water full of water.

[00:20:01] They just didn't fix anything. It was a disaster. Flooring all throughout the whole property, common area, everything needed to be replaced, all new windows, everything. We get into this, we put $125,000 down. It's a, the nice thing was we got 'em to amateurize it over 30 years, which helped bring our payment down.

[00:20:17] But we had a balloon payment in 28 months. I believe it was because there were older gentlemen and they're like, we don't wanna wait around forever for the money. So he said, that's fine. There was five vacancies when we got in, he told us two originally he didn't have leases for a bunch of people.

[00:20:31] It was just a mess. Nobody paid him. This is a great tip too. Nobody paid him. He had a sign up by the mailboxes that said, if you do not pay me, the water will be shut off by the city. You need to pay rent. And nobody ever paid him. So that was a problem. But I, the month we took over, guess how many tenants paid us?

[00:20:52] I say 10, all of them, every single one of them paid us and they've all paid us continually that we've [00:21:00] never had a problem. So that's the difference in mentality, right? They knew oh shit, we can't screw around here anymore. And that's what happened. And we didn't go in there, guns blazing and saying anything.

[00:21:11] We just went in there, started doing work and telling them these are the important things. Take care of your unit, pay your rent on time. That's what we wanna see. Cuz everybody had so many questions, are you gonna kick us out or are you gonna raise rent or are you gonna do this?

[00:21:22] We're not gonna do anything right now, but here's, what's important. Pay your rent on time and take care of your take care of the unit. And that's what we did. So we turned those units. We get tenants in average rents for four 90 back then. Which was horribly low in that market. Let's say they should have been 700 6 5700.

[00:21:39] But again, the units weren't rehab sold, so that take it with a grain of salt. The units were in horrible conditions. So maybe you couldn't have got that for that condition of unit, but average rents now our rents now are 8 25. We're getting, which might be still on the touch low side. But they're all one bedroom units.

[00:21:54] I think average rents now are like seven, I'll say seven 40. But yeah, four 90 is where [00:22:00] they were at. And it was a nightmare. 16 months later though, we had turned the property around, we refinanced it. And we got an appraised, the appraiser said that the building was only worth $900,000.

[00:22:13] And I said that is wrong. And I looked at the appraisal, this is a great, another great problem. We went through. It was right during COVID. So he gave us a low appraisal. All the comps he used were pro properties that my old boss had purchased. So my old boss had purchased these distressed, extremely distressed properties and renovated.

[00:22:34] 'em just like we did while they're comping those distressed properties against our updated rehab property. So my boss gave me all his financials. I sent it to the appraiser. I also said, look, you're I looked up city data, for one of the comps. One of the comps was in Wayne, Michigan, and our ours is in Trenton, Michigan.

[00:22:53] And I said if 200 is the average crime index the lower, the better right. 200 [00:23:00] let's say is average in the United States. I'm guessing it might be lower, but Wayne's was like 400 crime index Trenton's is. I said you're comparing these two things and you're comparing a lot of crime to very little, these are two different cities you're comparing.

[00:23:17] So I hit him with all that. And thank goodness the guy said, you know what? You got a point. He reevaluated it. He gave us an appraisal at a 1,030,000, which still was light should have been probably a 1.1, but we got a check for or I'm sorry, we got a loan for $800,000. And that gave us a check for $300,000, 16 months later.

[00:23:38] So we were able to now do some more updates and then we were able to purchase apartment number two, which I also found off market. So 

[00:23:46] James Rippeon: the more common, go ahead, James. Yeah, I was gonna say, this is a more common problem than you would think, appraisals on commercial properties. They do come in low and.

[00:23:56] Frequently. I have a lot of friends who've had this issue. I've [00:24:00] personally just finished going through this issue. Not finished waiting for the new updated numbers to come in, but they're 100% raising the value of the property because we went back to them and said, Hey, these comps are off.

[00:24:10] You didn't even include the right price on this one. Your cap rate is a little questionable that you're using determine value. So going through those steps and not just taking the appraisal at face value, super valuable. And I know that Patrick, I've storm brainstormed with him before on this issue before my problem was I wasn't proactive enough upfront.

[00:24:29] So Patrick, he, he's super involved with the process. He'll, provide some comps and he'll meet the appraisal appraiser at the property and let them know like the updates that have been specifically done and just to put everything in the context. Just for everybody who's listening, when you start to get into the commercial side of things just.

[00:24:47] It's okay. To be told something by a professional, like an appraiser. And it's also okay to question it, if you have a reason to do that and offer some value to, to help yourself. Cause you just made what an extra hundred, hundred, $30,000 on that, that you [00:25:00] otherwise wouldn't have had. Just that just a couple hours of work, really pay it off.

[00:25:04] Grant Warrington: Yeah, exactly. And that's what I do too. I do the same thing. I meet the appraiser there. I'll talk about all the upgrades, what we've done, what we're seeing other buildings, I'll tell 'em where the comps are. What, this is why we're doing this way, because this building down here does it and this is what they get for rent.

[00:25:18] It's always nice. And they, and, but always be respectful, and I was when. When I challenged that appraisal, I went through our commercial mortgage broker. He facilitated it between the two, but I was very respectful and I did not say you're wrong or you're I just said I think there might be a misunderstanding here because that appraisal could've said appraiser could've said no, and that would've been the end of it.

[00:25:40] Yeah, exactly. 

[00:25:42] Patrick McGrath: And especially when you're doing a refinance like that because you have a balloon payment, you need to pay off you need to get, you got it for six 20, I'm sure you put a decent amount of money in there, so you've gotta repay and it really, and with those other buildings that were [00:26:00] getting bought up distressed, I'm sure they had higher than what you were expecting.

[00:26:04] Cap rates as well for everybody out there, that needs to understand with the cap rates, it goes off of net operating income and the average trading cap rate and the lower the cap rate the better. So the difference between a seven and a nine on a building like yours is a couple hundred thousand dollars.

[00:26:23] So you know like James just said, you, you really have to have your stuff in order. Just in case something like that happens because you could be screwed or you could be sitting, you could have lost 150 grand and not been able to get in to this next building. So what was the next one?

[00:26:43] Grant Warrington: So the next one I had quit that I, like I said, I managed those 800 units in Southeast Michigan and Northern Ohio. And I had told my mentor like, Hey I'm gonna do this two, two years. Ended up being like a year and a half. And I'm like, Hey, I gotta quit. I don't have time. I gave 'em a month notice.

[00:26:58] And And [00:27:00] I still needed to supplement my income though. So I became a realtor, I had my license and I'm like I'll just do that. That makes sense. And so I started doing that and I had a client and, I showing her homes and the market now is just obviously leading up to where it's at now, just getting crazy and crazy.

[00:27:15] And she's you know what, I'm renting I'm I think I'm just gonna stay where I'm renting. And I'm like, you know what, why don't you? And she goes I'll just talk to my landlord and see if I can buy that house. I said, I think it'd be a great idea. Cause I wanna do what's best for my clients.

[00:27:28] I always do. And I said, that's great. And she goes, would you facilitate that with my landlord? Would you talk to him on my behalf? I said, yeah, that's fine. And she goes he also owns apartment billings and I'm like, Okay. Yeah, no problem. We had a hundred, another what we had maybe a hundred grand earmarked for another purchase in the bank, so I'm like, all right, cool.

[00:27:50] So I call him and he's first of all, I'm not dealing with a rent owner with with a realtor. And I said that, that's fine. I'll just back off you two can do the deal. I just want whatever's best for both of [00:28:00] you, I'll just step outta the way, but she also said you own apartment building.

[00:28:03] She goes, yeah, I got an 11 unit I'm looking to sell. I said, great. Can I go look at it tonight? And he's yeah. My wife and I went, looked at it and I think it was like the next day we had a purchase agreement in his hand. And he's this is moving pretty quick. And And we're like we're ready to buy.

[00:28:21] We got the money. And we had to, there was another group that wanted to purchase it as well. They had bought one of his other buildings we're in the process of buying it. And I had to sweet talk with everything I had to get him to, really accept our offer. And, I told him, I'm like, look, here's, our commercial mortgage broker is here's our preapproval, here's my bank account.

[00:28:43] Here's the money in our bank account. These other people, you sure they're even gonna close on this one. And he's I don't know. And I said, so now you're gonna give them two we can do this, let's do this. And finally the price was going up cuz they were bidding.

[00:28:56] And I said, listen I can't do this anymore because you had me bidding [00:29:00] against someone that's probably not even qualified. So I'm bidding against myself. That's really what you're doing when you're coming to me, you're saying they said, they'd give me this much. I'm bidding against myself because they are probably not in a position to buy two properties at once.

[00:29:13] So it worked out and we ended up buying that one. That one was, I'll say 430,000. It's somewhere in that range. I don't really even remember. We went, got a bank loan on that one. Average rents were low there as well, maybe five 90 600, something like that. And I think they're probably maybe five 50.

[00:29:33] They were low. I don't remember all the numbers and now maybe they're at again, seven 50 some somewhere in there. 

[00:29:40] Patrick McGrath: That's really not bad. That one's 43,000 a unit. So actually a little less than that, like 37,000 a unit. Yeah. The other one was like 32.

[00:29:49] And you're putting some money in, but I'm sure you're not investing double. You're almost getting one and a half percent rents yeah. On the money that you have in. That's huge. And a lot of the [00:30:00] listeners that we have out there are just trying to find the 1% rule, on duplexes and plexes and quadplexes, and it's really hard right now because they're tied to the single family market.

[00:30:12] Yeah. When you start getting into these apartment buildings and especially the ones that you want to buy, the only ones that people are selling are the ones with problem tenants, problem maintenance. Like why is someone gonna sell you a cash cow we buy. Yeah, exactly. Yeah. You're you gotta expect the headaches, yeah. But with those headaches, if you do all the right things, it will pay off, down the road. We bought a building last year, a 10 unit for $850,000. I'm in Maryland from a woman who it was her last building. All the tenants were paying almost, let's say 50% less of market rents, like [00:31:00] crazy.

[00:31:00] And I think when we bought it, it was bringing in 7,000 a month and we're just finishing the last unit and it's bringing in 14,000 

[00:31:07] Grant Warrington: a month. Nice. 

[00:31:09] Patrick McGrath: On a 10 unit and this is like a seven cap. So it's the power, it's the power of knowing your market, and being able to go out there and, make those things happen.

[00:31:19] So I really love it. We're, we've broken down some numbers, we've talking about cash flow. What are these 41 units, bringing grant and his wife every month, 41 units, it sounds like you've got maybe 3 million. Ish dollars two and a half million dollars worth of real estate, right?

[00:31:37] What is that bringing in every month 

[00:31:38] Grant Warrington: so that yeah, I can talk about that. I got, I can also, I'll let you know that we had some problems, like you said, with that 11 unit some major problems and I but the cash flow and we also had some major problems with the eight unit we bought too, but I can tell you about that as well, but cash flow it's all over the map.

[00:31:55] The problem being is we had to rehab outta cash flow. Like I said, we didn't have a lot of money, so this is a [00:32:00] problem you're gonna get into when you are. When you're, when you don't have money, you gotta get it from wherever you can. So we have a home equity loan, or a home equity line of credit on our personal house, 50 grand, that we can deploy when we need to, and then put it back when we're done with it. You gotta have money. We have people we can that'll lend us hard money 50 grand here and there. If we need it, we've done that on every single deal. 50 grand. And then just paid 'em back. So really we've been doing this seven years.

[00:32:25] We didn't start truly, really, I think we were taking 3000 a month in cash flow off all those units for the last three years, maybe or two years. So not much because we're constantly, you'd get a great paying back all the loans. Yeah. You'd get a great month. I'll tell you what happened. Just yesterday.

[00:32:43] We're a hundred percent occupied, right? Friday. Saturday morning we wake up and we have domestic violence issue. Second one, we have to ask the tenant to leave. The rest of the tenants are scared for their life. So we say you, you gotta go. So there's a vacancy. [00:33:00] Okay. Then next thing we know another and these are inherited tenants.

[00:33:03] We didn't put these people in place. They came at the building. Another inherited tenant said we're not, I'm not I'm gonna move and I'm not gonna pay you cause I can't afford it. So there's two vacancies. So that would always happen. And everything we owned was garbage just about needed to be rehab.

[00:33:19] Nobody did anything these past owners. We're constantly rehabbing. We're doing two a month and at, let's say seven to $10,000 a rehab. So your cash flow goes like that. So that's why we couldn't take a lot out of it. This year we've had some things change and we're now, again, it's all over the map, but I think we took maybe 8,000 last month in cash flow we've taken, it just depends how the building performed, what we had to do, any kind of maintenance and we've been everywhere from down to 4,300 up to maybe 13,000.

[00:33:58] A month. So[00:34:00] 

[00:34:00] Patrick McGrath: I wanted to preface that just because, to everyone out there that's not in the space. When someone says, wow, Grant's got 41 units, you must be a millionaire and just rap in the dough, man. Like you're a net worth millionaire. Yeah. But what's that translate to cash every month and all these landlord hate groups out there and all that.

[00:34:21] Yeah. Thinking that we're all just sitting back chilling. Yeah. Driving our core vets and stuff. It's Hey, it's been seven years. And sometimes we're able to maybe bring in three grand a month. Yep. Because you've gotta borrow money from here and borrow money from there. And I like how you touched on that, because that's so important.

[00:34:40] Like you, you've gotta be creative and you've gotta build relationships to be able to get those funds because. Most people do not have a hundred, 200, 400 grand just lying around to be able to go put 20, 25% down and then a hundred plus grand into [00:35:00] renovating all the units and having 10 vacancies. Yeah.

[00:35:03] So you can redo 'em all at once. And plus you want to be a good person. Yeah. And not put all these people out on the street. Yep. So there's all these different dynamics that go into it. The thing is that, in the long run it's gonna pay off all these units will be turned.

[00:35:20] They'll all be up to market rent. And then you'll probably acquired couple more buildings by then. And then you take in three to five, will all of a sudden turn into 25. 

[00:35:31] Grant Warrington: Yes . And you know what we do too, when we acquire a building and we tell people, rents are going up or whatever we tell people like, look.

[00:35:38] No one's ever repaired anything here, right? No, not he doesn't do anything. It's garbage, blah, blah, blah. I'm like, okay, that's gonna change. But the problem is this building does not make money. Okay. It needs to produce income. That's why nobody repairs anything. And the tenants understand that they might not be happy, but they understand that's why there's no repairs being made.

[00:35:57] It needs to bring in income. That's why we [00:36:00] have to raise the rents. And I tell 'em we had to repair at that 11 unit. I can go into that. It would, we ended up spending like $30,000 on plumbing. And I tell them that you see what happened right there. Do you see what that was? 7,000, this one right here.

[00:36:14] This was $15,000. And I tell the tenants that, and we're very upfront with what the carpet costs and the common areas, what it costs to for the parking lot. And they're like, holy shit. And we're like, yeah, you, that's where, that's why we have to increase the rents because no one ever took care of this.

[00:36:32] And I want you to, I want you to bring people here and be proud of where you. And that's why we're raising rents. You might not have to like it, but that's the thing. I want you to be proud. I want people to come here and you to say, this is my home right now. I'm not proud of it. And you're probably not either.

[00:36:49] And we have that conversation. Yeah. 

[00:36:51] James Rippeon: I've had clients of mine on the property management side. Some single family rentals and when it comes to the turnover, sometimes they're a little cost conscious, [00:37:00] we'll put. In those turnover efforts and they want to, cut some corners, save some dollars today.

[00:37:06] But I think a lot of times what they don't realize is that the more you put into it up front, a, the better tenant you're gonna get. And even when you get a good tenant or just a decent tenant in there, the better they're gonna treat the property. Cause it's starting off at a better condition, higher quality, and they're just gonna respect their own living space more when you put the new, fresh pain in there and the flooring and it's clean and nothing's chipping on the outside and everything's just nice and tidy and everything's square.

[00:37:33] They're just gonna respect the space a lot more. 

[00:37:36] Grant Warrington: And we do exactly. Just like you said, right? We do exactly that. If you can touch it, we're gonna fix it. We're gonna make it tenant proof. Like we'll cut out galvanized drains for one thing right off the bat. Because those are all clogged, right?

[00:37:47] So we'll cut the drywall, cut it back to the stack as close as we can get it, put a FECO on there, rubber boot and PVC it. We replace shutoffs. So we got our guys coming in, checking shutoffs. We replace shutoffs for the toilet, the [00:38:00] bathroom sink kitchen sink, the tub. We do that. Anything we can do because a lot of times those aren't gonna get replaced, but we, our work orders are so minimal right now at 41 units because that's what we do.

[00:38:13] We come in and we replace all this stuff, brand new appliances. We spend a lot of money in the beginning. But, our headaches are very minimal after the fact when we put a new tenant in place. I was 

[00:38:25] James Rippeon: literally just gonna say that the more money you put in front, it's just a coefficient for reduction in future headaches.

[00:38:31] Yes. And also more cash flow and a better property to refinance more money out of, in the future. 

[00:38:37] Patrick McGrath: 100%. Yeah. My, my dad has a saying that I've taken to heart and it's. It's everybody always has the time and the money to do it right the second time. like why don't you just do it right the first time?

[00:38:55] And it's always gonna cost more the second time, cuz it'll be an [00:39:00] emergency. You were in there fixing up the unit, change those shutoffs. You know what I mean? Check those drains. Hey, the hot water heaters from 19, 98. Let's just go ahead and take that out now while it's easy, they're only five, 500 bucks.

[00:39:14] Like those little things that are gonna cost an extra 500 here or whatever down the road, you got a tent in there, hot water heater. That's a big problem. They don't have hot water. They can't get ready for work. Their kids can't shower. Like all these things. Start becoming a big problem.

[00:39:30] Cutting out drywall, cutting out the tubs. Yeah. Cause there's a leak behind that's going into someone else's unit. Now you've gotta put them in a hotel, potentially all of this stuff that people being I love James's word cost. What did you say cost. Cost conscious in the beginning look, you're gonna have to spend the money at some point.

[00:39:52] Yeah. They're cheap. Yeah. Everyone's always got the money to do it right the second time. So just do it right the first time. And it sounds [00:40:00] like, that's exactly what you're doing as a landlord is, you're taking pride. In your business and you, it sounds like you self-manage like you're the face to your tenants.

[00:40:11] A lot of people preach out there, Hey, get a property management company. You don't want people knowing it's you and all of that. Don't build relationships with your tenants. I'd love for you to break that down a little bit for us, cuz that I think that's a really important piece of this whole thing to make your business 

[00:40:29] Grant Warrington: successful.

[00:40:30] Yeah. And we, like I said, my wife does 99% of the property management. I'll get involved like more if there's higher level construction things or but she handles everything. I she does a great job, but she knows all the tenants I don't anymore.

[00:40:44] So I'm not in there like she is, but she knows 'em all And, on, on one hand, like we have one tenant that decides, we're not gonna pay your rent anymore and we hate you. And on the other hand, you have a tenant saying, I, this is the best experience I [00:41:00] ever had. I love you guys.

[00:41:01] I wanna renew my lease. What's the difference, right? Because you're treating 'em all the same. We treat everyone the same and they all have to follow the same rules. I just think this is fascinating. I was thinking about this the other day one's experience is horrible. One's is fantastic. They're both treated the same and they have to follow the same rules.

[00:41:20] What's the difference. One is an inherited tenant that we didn't put in place. And the one we did and screened, it makes three times a rent is having a fantastic experience with us. So I got off on a tangent there, but I think that's interesting, but one of the things I try to do is everyone's told me like, yeah, you don't want to be, don't tell everybody you own it and everything.

[00:41:39] And we did that for a while. And my wife was always like, eh, that's bullshit. Why, you know what, who cares? I'm always trying to act, oh yeah, I'm the manager. So we kinda let that go. And then with my social media, it's You know what fuck it. I, yeah it is what it is. So yeah, we own it. And I try and do that.

[00:41:55] And then I think too, like, how can I help people? Because when we started and we bought this building, there's a [00:42:00] million websites out there to learn how to buy an apartment, building podcasts and things like that. Bigger pockets is where I started. And I'm forever grateful for that.

[00:42:08] But what happens after you buy. That's where I thought, you know what? That'll, that's where I can add value to people because we're sitting there for months going, do we put glue down or click plank? What color are the walls? Now, this is what we're gonna do in all our units. What color paint should we use?

[00:42:23] What about common area? Should we use common area, carpeting, common area, LVP all these things that we had no idea and were trying to search, and there really was nothing out there to tell that owner this is what you do after you buy an apartment building. Cause I wanted to copy again.

[00:42:38] That's what I did. That's how I grew. I just found somebody and I copied, oh, this is what you do. Fuck it. We'll just copy you. And it was easy. And then when we got in this space, I'm like, nobody's really sharing that stuff. Yeah. They'll show videos, but guess what? I show a video and I tell you Sherman Williams does our flooring.

[00:42:55] They're the largest, one of the largest flooring distributors in the United. They do all our flooring in our [00:43:00] apartments. That's nationwide. Everybody can benefit from that. So I'm like, why don't I get that out there and just help people? So that's something I do. 

[00:43:06] James Rippeon: No, I think what's important is also, with your experiences and everything that you've been through, you're sharing a lot of, some of the setbacks that you've experienced along the way, too.

[00:43:15] I know, when you go on, bigger pockets and listen to some of their podcasts, not that the, the content's not informant, if it helpful hundred percent is a lot of it's puppies, unicorns, and the highlights and the positives and all the great things that can happen. But we all know the fundamentals of real estate investing is tenants, termites, toilets, and all the headaches that come with all this things.

[00:43:34] You're putting that stuff out there, especially on this episode. There's things to be cautious of and be wary of and there's strategies for how to do things bright. Upfront, even though they're gonna be a headache to get through. So that's 

[00:43:44] Grant Warrington: super valuable. Yeah. And one of the, one of the biggest things that we always, we still joke about Monique and I not really joke, but we'd listen to these podcasts and people are like three to four grand for rehab.

[00:43:56] And we're like, okay. Three to four grand, we didn't know any better. And then we bought an apartment building and [00:44:00] went whoa, three to four grand. We're spending six and not even redoing cabinets, we're painting cabinets. Like holy shit, cuz the plumbing's always bad. I'm like that's bad information. When I first started, I'm like, we're gonna put a dishwasher in every unit we're gonna put washers and dryers in units.

[00:44:17] And then we bought it and we're like, but that doesn't make sense for every building. It's and it's not cost. We can't do that. So that's kinda what we like to do. 

[00:44:25] Patrick McGrath: The key thing you just said there is, it doesn't make sense for every building, every market, it really doesn't like, Hey, I'm painting cabinets in mine and I could put new cabinets in my units.

[00:44:38] But am I really gonna get that much more rent by spending, 1500 bucks? On cabinets for an apartment when majority of the ones that you're gonna get at home Depot now are junk and aren't gonna last 20 years, like the ones I would be ripping out. Yes. LVP, it costs a dollar 52, $2 a square foot to get it [00:45:00] installed with shoe And if you're gonna buy decent stuff, that's $2 to $3 plus. So you're 700 square foot apartment, boom. You're already 2,800 bucks in just for doing the floors. Then you're gonna pay a, you're gonna pay a painter, a thousand to 1500 bucks because you want all the trim to be white. You want the ceilings to be white.

[00:45:20] You want the walls to be a different color. You want 'em to clean up after themselves. And then, You don't want junk paint. So now you're spending 250, $300 on a five gallon bucket of paint. Yep. It takes two or three of those for an apartment. So just paint and floors. You're already four or five grand in to an apartment and you haven't even done any of the major stuff like AC hot water heater, washers and dryers, light fixtures, electrical.

[00:45:50] Yep. I know for me, a lot of my units. They still had where the switch would go to an outlet. Yeah, to me, nobody does that anymore. No one has [00:46:00] lamps. Like now I have to put ceiling fans or lights in the center of all the rooms. So now I'm paying an electrician 5, 5, 5, there's another, thousand, $2,000.

[00:46:09] So I, I love that. You're putting that information out there. I try to put that information out there too, because you're right. There's everyone caters to single family, two to four units, and then it's apartments indication. And you don't need any experience for that. No, one's in the middle telling people, how to get, those eight to 20 unit apartment buildings and the struggles that you're gonna go through.

[00:46:35] Grant Warrington: Yeah, and we, and that's what I do. I'll put a video and I'll put exactly the cost $600 to reglaze the tubs around yeah. Thousand dollars in labor. We spent 2000 in material, including appliances we spent, I just go over and over everything and break it down and go, here's what it was 10 grand for a two bedroom, like flooring was 2,800.

[00:46:54] Yeah. It's just, it's crazy. But yeah, people need to know that and see that getting into it and not be shocked on that [00:47:00] 11 unit that, that I wanna talk to guys about that for a minute, too, that we had a major plumbing repair when we bought that. And I share this with people too that's the importance of having a HeLOCK or having some money set aside just in case you need it.

[00:47:12] We had everything drained. We had all the drains scoped, cameraed and everything. And the owners told us, he's I'll be honest that this one will, this one unit in the basement will back up occasionally, but we just snake it and it goes away and we're like, okay no big deal.

[00:47:26] So the plumber we were using had us do these different things and we spent maybe 10 grand with him. And we're like, okay, should be fine. Then it would back up every other day. So whatever we did caused a major problem, we ended up, my wife, we'd have people come out. It would back up.

[00:47:41] And in the unit and we'd have someone come out and put a camera down and it was gone. And the plumber's I can't fix what I can't find. So we had two more guys come out camera, couldn't find it. So we're praying. We literally prayed to God and said, we don't care what it [00:48:00] costs. Please send us somebody that can find this.

[00:48:02] I got a call on my birthday. We're celebrating my birthday, downtown Detroit at a nice hotel. And my place backed up again. It's 11 at night. It's Ugh, we're just, it's just sickening. And we ended up finding a plumber. What happened was, this is a good tip too. These cameras, when you camera a drain, there's BES in the drain, right?

[00:48:21] So the cam it's cast iron it's old 1970s. So the drains were cast iron. The camera would go into the belly. It'd go into the dirty water and come out and they'd say, listen, it's fine. It's dirty water. I can't see bellies are okay. The water's still flowing. The water will sit in there, but generally the water flows through it.

[00:48:40] So you're fine. The plumber we found said, let me, let's run all the water in the whole building. We ran all the water on that drain line, right? and that what that did was flush all that dirty water out of the bellies. He put his camera in. He's there it is right there, man. Bottom of the pipe fell out.

[00:48:56] So the toilet paper would come in. It's like a [00:49:00] zipper it'd come in, get snagged on it. And it would sit there. And by the time we got there, poof, it would let go. And it was gone. So $15,000 later we had to rip a kitchen out. It was in the next unit. It was, rip all the kitchen out 25 feet of PVC.

[00:49:16] We had to cut out, replace 25, put PVC in solved the problem, but 15 grand and then he de scaled and power jetted the whole, all the lines for us. Yeah, like 30 grand man plus the 10 grand before that, right? Yeah. 30, 30 total. There was another five grand. He had to put a clean out outside. And so yeah, $30,000 later for this plumbing repair, it was a, it was nightmare.

[00:49:38] And 

[00:49:38] Patrick McGrath: Hey, you got the line scope, you did everything that you were supposed to do. Yes. Beforehand. So that is the importance right there of saving for CapEx and maintenance. Yeah. Because you're putting that 500, a thousand bucks a month away on all your properties, depending on how big they are, yep. [00:50:00] And stuff like that happens. Yep. And like you said, that's the importance of have in a HeLOCK now you have to pay yourself back, but luckily you had it and that's what happens is yeah. You're buying properties from landlords who didn't have those reserves who weren't thinking about that. Yeah.

[00:50:16] They don't have the 30 grand to go and do. So they'll just spend the two or 300 to send somebody out there to unclog it all the time. And these are the problems that you run into. 

[00:50:28] Grant Warrington: You go, he'd snake it every month he'd snake it. But now that it's good to know that when someone tells you like, Hey, I have to snake this drain once a month.

[00:50:35] You need to know that's not normal. There's a problem there. So that's a good tip. Like you need to realize that it could be roots, it just needs to be augured out. And the tree roots outta there, but more than likely there's a problem. So pay attention. So I know you 

[00:50:50] James Rippeon: got that HeLOCK and that's what you're using, maybe to handle some expenses that come up, but how do you conceptualize what should be available for reserves?

[00:50:59] Do you have [00:51:00] a per unit amount that you should have access to, whether in, easy credit or cash, or is there some other metric that you use to, to know how much you should have available for 

[00:51:10] Grant Warrington: reserves? Yeah. I'd love to give you a real professional answer, but I'll tell you the truth, dude.

[00:51:16] We were squeaking into these things and it's like, whatever we can, we will get into the deal and we'll figure it out. You know what I mean? Yeah. We weren't like, okay, we can't do this deal unless we have so much in reserve. We're just like, okay let's take 50 from here. Cuz we know this, and need to be done.

[00:51:33] And we'll take that money and we'll try and do that. Okay, we gotta do the roof here. We gotta do this. Let's, we'll take 50 grand from them. We have the money in the HeLOCK if we need it, we don't want to touch it. But and then we have this money from whatever left over.

[00:51:46] And then usually it all goes to shit. For us, we didn't have a lot of money. So like that first 20 unit we just got in the deal and then that's why we just rehabbed outta cash flow. Is so going forward, I would suggest people get like a construction loan maybe. [00:52:00] Or something to help them out to get some of these costs, these upfront costs in the loan.

[00:52:06] So they don't have to do it the way we did. We just didn't know any better. I know the, with everything 

[00:52:11] James Rippeon: I've ever bought, starting out, it's like you're running on fumes. Yes. At the beginning. And you're just praying that the cash flow comes in a comes in and B can build up a little bit to cover something that might happen.

[00:52:23] Yeah. So it's definitely a common 

[00:52:25] Grant Warrington: thing. Yeah. People would ask me like what was your criteria? My criteria was it's available and we can buy it. That's it, dude. You know what I mean? I'm like, I don't care if we can buy it, we'll buy. That was it. It's gotta be for sale. We gotta be able to buy it.

[00:52:40] Patrick McGrath: I completely agree. And so we just. All of the money going into one checking account. And then we take, I save me personally, I do 5% for maintenance, 5% for vacancy, 5% for CapEx. So [00:53:00] 15% of E on, on the gross of everything that comes in, we put that in a savings account. And if something comes up from a property over here, I'm pulling out of that.

[00:53:10] That bundle. It's not just that property. It's out of all of 'em, until we get enough, yeah. And like the cash flow and that, and the cash flow. Cash flow is sitting in another savings account because we're just reinvesting and reinvesting. Like we're not really taking in anything out of our business either.

[00:53:29] So it's like just building up this big nest egg to one, be able to purchase more properties, but for two, be able to pay when something happens, like it's, and we know down the road, like one day, it's all gonna pay off when everything's nice and shiny and new and fixed 

[00:53:47] Grant Warrington: and then my wife will do that too.

[00:53:49] We have two, we have our cha our operating account and our savings account. So she'll take Property taxes, insurance and the water bill, and she'll take so much per month, and put that into savings. And then we [00:54:00] also take 250 a unit per month. So now we have a lot of funds sitting. So we're really good, but to get in, to get started, you just gotta squeak into it, but two 50 per unit.

[00:54:11] And I forget what else we do. We just look at what's coming in and go, okay, let's there, there's extra there. Okay. We could take 5,000 this month out of this one, single building, let's take 4,000 and we'll throw an extra thousand on top of our reserves into the reserve fund. So now we really want to get that up to certain numbers.

[00:54:30] We keep three months of operating in the operating account, three months of expenses. So yeah we're a little more, we're better capitalized now. So yeah, I just, I, but in the beginning, yeah, it was a little tough. 

[00:54:40] Patrick McGrath: I love that part. I love that part so much. It's Hey, you're just squeaking by the seat of your pants.

[00:54:44] Like you said, just it's available. I can buy it. Let's just figure it out. And then, Hey, a year or two later, now the money starts is starting to flow in alright, let's build up those reserves that everybody says, you need to have, let's get three months of operating expenses. [00:55:00] If everyone in the building decides, to not pay so we're covered. And then you have that over your whole portfolio. And then that's the smart investor that you need to be. Yeah. But off the get man, you just gotta get started and just, ring that bell just. Ding, ding, 

[00:55:17] James Rippeon: ding, it's all about deciding, take, committing, taking action. I like to say sometimes, you don't want to, you don't wanna for safe being proactive and having a clear mind of what you're doing, but sometimes I like to say it's, it can be tomorrow's problem, you don't have to have everything figured out right ahead.

[00:55:33] When you're getting started, you don't have to have all the cash available. You can find sources of income to take care of some of those things. So 

[00:55:41] Grant Warrington: exactly. Yeah. We knew we had good properties they're right in our city. In our backyard, we come home for lunch. If we're there working on something like it.

[00:55:48] So like we know this area, like the third building we bought it was a 10 31 exchange. I can go into that. I, we sold three. Single family homes. We just closed on it last year, [00:56:00] May 4th last year we sold three single family homes and we did a 10 new exchange. So you have 45 days to identify the property.

[00:56:07] You're gonna buy in 180 days to close on it. And if you don't identify in 45 days, you get your money back, which is fine, but then you have to pay. We would've had to pay $70,000 in taxes, capital gains taxes. But if you identify a property and you do not close on it, they'll hold your money for the 180 days.

[00:56:26] So you don't wanna just throw properties out there. This was day 43. And this eight unit hit the market and I'm like, oh my gosh I know this property, I've cold called it. I've tried to buy it in the past. I know it's garbage. It needs everything I already know because it's in this area. And these people don't, nobody really fixes anything it's 1960, so everything needs to be done, but I knew the roof was good.

[00:56:49] The windows looked decent. So we got some things to work with four hours later. This is I called the realtor. I was a realtor at the time. And I told him who I was and he goes, oh, you know what? I know who you [00:57:00] are. One of your realtors in your office talks about you all the time.

[00:57:03] You're an investor. You own apartment buildings. I've seen your content online. So yeah, I know you, you do what you say. And that was huge for me, that really helped me. And I said, he's, it was 6 25 for eight units. And I said, listen I'll write you a purchase agreement right now. And he said the owner wants six 40.

[00:57:21] I said you got it advertised for 6 25. It's in the MLS for 6 25. He's I know, but he just said right now I want six 40. And I said, it's not gonna appraise. It's not gonna appraise for 6 25. He goes, I know, but that's what he wants. And I knew I was on day 43. My wife and I'm like, I gotta lock this up.

[00:57:40] I said, listen, $18,000 would've been my commission. I said, I'll give that 18 grand to the owner, not to you, but to the owner, tell him that he can keep that. And that got it locked up. We got that check or we, signed it, we closed on it. And that was probably one of, [00:58:00] for a year.

[00:58:01] It was like a year of terror. It was it was terrible. We had a van vandalism, one of the tenants was vandalizing everything. Imagine spending $625,000 and every day you go there and you're proud of it to improve it. There's spray paint, there's words, kill, this and that. And it was so defeating every single time.

[00:58:18] So we had to deal with a Vandal. We had to deal with. A tenant that just would not pay rent. That's the first time we had to really go almost to full eviction. We've never gone in seven years to full eviction. It was terrible. We had to deal with all kinds of different stuff. I don't even want to get into all of it, but man these people had lived there for 20 years and one of, one of the gentlemen told me I've seen six property managers come and I'll see you come and go too.

[00:58:42] And I said, okay, sounds good. You gotta go. Oh my 

[00:58:46] Patrick McGrath: goodness. In that note, I gotta ask on that note, yeah. I gotta ask so why are you doing this? What's the reason behind putting yourself, through all these headaches and all of this stuff, like great question.

[00:58:59] It sounds [00:59:00] like the last three years, you've just been banging your head against the wall. Tell us why, man. 

[00:59:05] Grant Warrington: So yeah here's why. Because we wanted a different life. So here's the other thing on the flip side of that, my wife and I don't have jobs. These are our full-time jobs. We both quit our w two S we have freedom to go do things.

[00:59:17] And now we have financial freedom where we can vacation and do some different things. Y but what we realized and what happened in January, I'm in GoBundance. And I was at an event in January this year. And I'm telling one of the guys there, I'm like, yeah, from now on, we're gonna syndicate.

[00:59:33] I said, we're gonna syndicate a hundred units and more going forward. And we're also gonna buy 16 unit building ourselves, my wife and I own those 41 units, no partners ourselves. I said, we're gonna buy a 16 unit ourself. And he goes, let me ask you this at 16 unit, just like you said, he's like those other units.

[00:59:51] Beating your ass, right? For how many years? I said, yeah, is the 16 unit gonna be the same? I said, yeah. He says, it's gonna be a lot of work. I said, yeah, a lot of work, a lot of money, [01:00:00] two years. It'll take us to get all the old tenants out, get new tenants in. Yeah. It's gonna be a lot of work. He goes, why are you doing that?

[01:00:07] Why don't you just syndicate? If you're gonna syndicate a hundred units, go all in and do that. And I called my wife that night and I go forget the 16 unit. Let's just syndicate these going forward. And she goes, thank you. You're right. Let's do it. So now our goal is and that was January two months later, we were under contract for a 98 unit in P city, Alabama, it's Birmingham, basically.

[01:00:28] And we just closed on it. So it's I was intentional with that. Just like we were intentional with no more single families. We're going into apartments from now on. And we were intentional. We told everybody, this is what we're doing. And we ended up closing on that and now the goal is to get ourselves out of all of this.

[01:00:47] Excuse me managing all this ourselves, we're gonna either hire someone or give it to a property manager at some point, which will cut our cash flow. So that's we're trying to figure that out. And we're going to move into the the [01:01:00] syndication space full time. And our goal is I wanna work with a cell phone and a laptop from anywhere in the world, so I can't be married to these 41 units.

[01:01:09] So we're gonna, we're gonna figure that out but now again, it's got our minds shifting again and we're going okay, now we need to change again, cuz what we're doing. Everything we did got us here right now. We need to change. And because now we gotta get to a thousand units and everything we did in the past, isn't gonna get us to a thousand units.

[01:01:28] So now we're shifting and we're moving forward towards that goal. 

[01:01:32] James Rippeon: That's what financial independence is all about. Living life on your terms. And you're creating that business where you're gonna have the opportunity to work from your cell phone laptop anywhere in the world you want to, and syndicating really does offer that opportunity.

[01:01:45] Cause you're gonna be able to outsource a lot of the work and components that go into that. And especially when you remove yourself from that property management aspect of your current portfolio, like it's gonna be awesome. Awesome situation. So tell us a little [01:02:00] bit about your obstacles that you have in the near term between, now where you are with self-managing units to get into that syndication lifestyle business that you're gonna start growing into.

[01:02:11] Grant Warrington: We're already there with that, with the syndication piece, but the problem now is getting ourselves out of the 41 unit. So what we're looking at, here's some things we're looking at doing. We're going to hire a VA we're thinking, right? For the property management side, I just hired one for my content creation in that's another whole nother ballgame, but for the property management side, we're gonna hire a VA.

[01:02:31] And this again we're thinking this through to answer phones, to deal with our contractors and handle all of that workload. And my wife would oversee the VA. And then we're also gonna hire a local realtor or someone. Maybe that's retired and only needs like maybe 15 out. We don't need a lot of work, but we need somebody to go there and maybe pick up, walk around the building, pick up some trash, adjust the floor, mats, let somebody in.

[01:02:55] If they get locked out, it's all local. Keep an eye on, Hey, the weeds, we need to pick the weeds. [01:03:00] We need more mulch. Let you know, let's get some mulch in this year and do some things, or this is getting outta control or the gutter's loose. I, we need somebody there cause we're moving.

[01:03:08] We're planning on moving. Like we're thinking we're gonna move to Florida. So we're like, we need to put somebody in place that can handle all that. So we have a maintenance guy and we're splitting time because obviously 41 units It's $30 an hour. We pay him and he does a really good job, but, we can't afford that full time.

[01:03:26] So what we do is when we don't have work, we have another guy local in this area that picks him up and he uses him. And then when we need our work again, we'll like these two rehabs, he's gonna come back to us for the month of July and he's gonna do our rehabs and he'll go back to the other guy. So we're figuring this out as we go.

[01:03:45] And that's the beautiful thing in networking. I didn't think about that, but my buddy called me and he is Hey bro we both are got this problem. We need a maintenance guy. Why don't we split it? And I'm like, you know what? That's a great idea. So networking though, that's how I meet these people with at events and [01:04:00] things like that.

[01:04:01] You're gonna meet people that have similar problems and you can you can go ahead and solve 'em, but that's our goal moving forward. And then possibly we might sell those 41 at some point and buy something bigger and newer ourselves down south 

[01:04:15] Patrick McGrath: man. I absolutely love it. You have been bringing so much great energy, so much great insight into, your mind, your business, your goals, like putting your intentions out there and just being committed.

[01:04:31] Like everything it does on the hat right here. Just, you've been speaking to me and I'm sure all the listeners out there have gotten a ton of value and this kind of transitions us into our last segment of the podcast that we call the big four James, take it away. 

[01:04:50] James Rippeon: So grant, tell us something that you do on a consistent basis.

[01:04:54] That kind of feels like a financial independence hack, something that just makes, your pursuit [01:05:00] of getting to financial independence that much. 

[01:05:01] Grant Warrington: I'll say this and it might not make a lot of sense, but what I do is content creation. So that might not make a lot of sense. How's that gonna get me there because I'm not there yet.

[01:05:10] But I know one thing I'm documenting what I'm doing. I know another thing where I want to be in life. It's probably gonna be the, I'm gonna need more things than just department buildings. I'm gonna need businesses and other avenues of income. So I create content. I put that out there and I think that's gonna lead to the level of financial independence I'm looking for.

[01:05:30] Eventually. And, I know in five years I'm gonna look back and go, gosh, I'm so glad I did this than opposed to in five years going, why did I make all those stupid videos? You know what I mean? So I can't put my finger on it yet, but I'm getting closer to developing a plan and figuring out like, where am I gonna be with this content creation in five years?

[01:05:50] So that's something I do. I encourage everybody to do it, man. There, you guys do cool stuff every day. So everybody does, so just throw some stuff out there. 

[01:05:59] Patrick McGrath: Yeah. I [01:06:00] think. I think that's huge in just putting yourself out there because even if you don't know what you're doing, it is networking.

[01:06:07] I think the content creation side is networking. That's how I found you. A lot of people reach out to us, that's how they, that's how they find us. That's how we find great guests for the podcast. So many people have reached out to me, I've grabbed a beer, I've grabbed lunch, my wife and I have grabbed dinner with other couples that are going through the same thing.

[01:06:25] So I think what you're saying is you just gotta put yourself out there. And there's so many times in this last hour and a half, almost that you've talked about, putting yourself out there and it helped you get to where you are today and you just need to put yourself out there even more to get to your next levels.

[01:06:45] So I think that's a great little nugget and hopefully I helped like sum, summarize that in a little bow for you. Yeah. But All right. The next thing that we always like to ask our guest is resources. So is there [01:07:00] any particular book, we know bigger pockets, podcasts, any other podcast book or any particular kind of influencers or people that are listeners, can benefit from going and checking out, either reading subscribing or going and, finding out that person.

[01:07:16] So what do you got for the listeners out there? I 

[01:07:18] Grant Warrington: will give my number one book recommendation how to win friends and influence people. If you are looking to be a real estate investor, or just a better human being, it's a phenomenal book. It teaches you how to listen to people, how to interact with people.

[01:07:34] I was fortunate enough to take the class. It's like a 12 week course. It's phenomenal. That book is great and it just really helps you become a better communicator. I know 

[01:07:44] James Rippeon: Warren buffet, attributes a lot of his success to that book. And he took Dale car Carnegie's course as well. And if anybody hasn't learned this yet real estate is a relationship based business.

[01:07:57] You can't just be some nerd in the corner of your basement, [01:08:00] crunching numbers, buying these buildings. Cause there's a lot of interpersonal relations, whether it's your tenants or people on your team, from your attorneys to your property managers, to your agents so knowing how to manage those relationships is gonna get you to the next level, especially when you're jumping up to the syndication business, which you're growing and developing into.

[01:08:18] Jumping off from there, paint, the future picture that grant Warrenton has five years in the future. Describe to us, your personal life, are you on the beach in Florida in your mansion? Are you scaling your syndication business? How many units do you have give us that five year picture of your personal life in your business.

[01:08:36] Grant Warrington: Sure. Yeah. I would say and it's always changing. Everything's always changing for us, but I would say, yeah, we're in a warm climate. We're in Michigan and we're just sick of the winter. So we're in a warm climate, let's say it's Florida. Is it a mansion? No. I, my wife and I talk would we like to live in a 10,000 square foot home?

[01:08:52] I'm like, no, what would we do? It's just her. And I like, and I wouldn't be able to find her. And then who's gonna clean it. It's just these little, it is just funny how you get a little older and you're [01:09:00] like, yeah, I don't want a 10,000 foot man. 4,000 might be nice. We have a nice car.

[01:09:05] We vacation all the time. I see myself on a laptop and a phone. I see myself being a better husband being a better human being. I see myself contributing hours and money to to things I care about. Things to help other people. Charities. And I see my wife and I really truly being happy.

[01:09:26] And those are the big things for us. I, my, my personal growth is big. I want to be happy and I want to enjoy life and be better to, to not only her but to other people. And so I don't have. This grand idea, but those are some important things to me.

[01:09:41] And I, I think 

[01:09:42] James Rippeon: the takeaway nugget is, even going back to the beginning of the conversation when you had those 11 units and you were gonna go to Starbucks and talk to your boss about, yeah. What might happen with the future of your employment? Like you had the optionality to choose to do more fulfilling things because you took the [01:10:00] step forward.

[01:10:00] And that's exactly what you were describing just now is, being happy, being a good husband, finding fulfilling things to do for the benefit of others. And that's really all this business is it's like real estate is the means to get to those higher level objectives. For sure. 

[01:10:15] Patrick McGrath: Yes.

[01:10:17] Yeah. And you didn't say once about, I'll be making 10 million a year or any of that stuff, yeah. Because it's more meaningful than that. The money is the tool that gets you to the meaningful things. It's not the goal. Yeah. And and that's huge. All right. You've dropped a ton of nuggets.

[01:10:33] I'm sure everybody wants to know how do they get in touch with you? What's the best way to get in touch with you? Is it a phone call, Instagram TikTok email let the listeners know the best way to get in 

[01:10:44] Grant Warrington: touch with grant. Yeah, the really three ways Instagram and TikTok.

[01:10:49] Excuse me, Instagram and TikTok at grant Warrington on both of those I'm on YouTube as well, grant Warrington, but if you're on Instagram or TikTok, you can click on my link. You could schedule a free [01:11:00] 30 minute phone call with me. We could talk about real estate investing in real estate. Working with me, anything like that or you could go to Warrington, capital.com and you can get a little more information about what we do in the large apartment business.

[01:11:15] Patrick McGrath: That's great. Everybody out there grant, we thank you so much. I know you definitely brought a ton of value to James and I, so you guys know the drill. If you guys enjoyed this podcast, make sure to go follow grant on Instagram and also make sure to leave us a review on apple, Spotify, Google, and all those other places.

[01:11:34] And we'll catch you next. 

[01:11:35] Grant Warrington: See you guys. Thanks. 

[01:11:38] outro: Thank you for listening to the real fi podcast where you learn from the investors that have lived, the hard lessons for you to connect with us during your pursuit of financial independence. Be sure to join our community by following us on Instagram or emailing us@infoattherealfi.com.

[01:11:55] If this content made you financially, mentally, physically, or [01:12:00] spiritually richer, please make sure to leave us a positive review on your preferred content platform. Cheers to kicking the nine to five.