 So now that you've seen the first part, the first part one of our two part series on in multi-unit investment property in Baltimore City, we now actually had the pleasure of myself, Chris Haskins and the buyer, the buyer of this deal. So we, the three of us decided this was not an ideal project or ideal investment for us, but we did get in contact with the person who won the bid and we're able to sit down with him and kind of go over his numbers and compare them with our initial ideas of what we wanted to do with this property. So let's cut to the video where we sat down with JT, who's the buyer, where he can further explain his strategy to make this deal work for him. These other units are quite interesting stuff. Quite interesting. This is stuff you was doing back in the day, Dan, in Brooklyn? Yeah, this is actually, I gotta tell you Chris, man, this stuff excites me, man. So I'll give you an example, right? What I would do here, you would finish taking down this wall, like you're gonna break it down to the brick, and this is strucolite, this is dusty, strucolite's more of a cement. That's another way you know it's pre-wall construction and you know by the last because you would need the last to catch the strucolite. Right? And it was all by hand. So you would just paint the brick? No, well you can, but I would rip this, I would finish just taking down the strucolite, and acid wash the brick, brick-pointed, and it gives it that authentic look. Yeah. And it saves a lot of money on future painting, future maintenance. This is crazy. One of the things I would do is get the electrical company to move all these meters outside so the tenants don't have to be home. Yeah, we don't have meters inside in Virginia. But you could see this, now this floor is slanting, so there's an issue with the foundation. It may not be the foundation, it just may be the beams below. But like I said, the owner we just spoke to, he said 30 grand per unit. No way. No way, it's 30 grand per unit. Unless you do a lot of the work yourself, but at that point you're buying yourself a job, man. But then, Dan, if you do the work yourself, how many months it won't be in here? These 10 units, again, it all depends on the crew that you can get in to come in and make it happen, right? No, I'm talking about if you do the stuff yourself. Yeah, it makes no sense for guys like you and I to do it because what we're doing is we're losing money on opportunities. Heck yeah. This is so nasty. Oh my lord. At least I like this in the bedroom. It's a small bedroom. Look at this, y'all. Chris, I tell you the truth, man. To buy this right, this is a 20 grand a piece. You gotta give this to me, right? Yeah. You gotta give it to me. This would be 20,000 a piece. Because the numbers don't make sense based on the rent roll. But you know what? You don't notice unless you actually come out here. And then when you come out here. No, man. Chris Birch. Chris Birch. What's happening? Chris Birch. Introduce yourself, Chris. What's up, guys? Chris Birch here in Baltimore. Baltimore. Baltimore. How you doing, brother? I'm good. I'm good. I didn't know he was going to be able to make it. Four hours on the highway. Poor thing. Is that me or you? Who's low battery? Is that me? I think it's a fire alarm. Yeah, it sound like that. I'm a smoke detector. Yeah. Ooh, one thing you're going to get here, Chris. This is something, man. This is something. See, my wife doesn't even want to come inside. It's the exciting one. So that was the one that needs Renault. Now let's go on the one that the gentleman said he renovated. So, Ann, tell us about this one, Ann. You already winning this one? This one was totally good. So you've got new drywall. You've got, you know, new trim, new floors. We're tired, you know. Yes, we are. Small, good cozy. This is where I'd like to put the video. Well, Ann, you can do a little $3,000 square foot house tonight. I got a preference. And so let me ask you, will the VA and Section 8 allow these stairs so narrow? Yeah, they're grandfathered. They're all grandfathered? Yes. So it's not, it's not, they don't have to meet new codes? No, it really depends. If the VA and the gentleman are inside, you know, in real chair or something like that, if the VA has to come meet me here, there's a send-off and I've had trouble with the stairs. Dave, this is a step up for somebody, no doubt. Oh, without a doubt. They might, they might. So I'll just... Section 8 will ask, be sure the windows are between code. So they can lock, yes. So it just stares as what concerns me because I don't, they definitely don't meet codes. So scared. Well, you're saying they could grandfather them in? Yeah, I mean... So this is what they're doing. The best way to change things, and then you have all the houses, both are set to change. Yeah. I mean, think about the ones with the circular stairs. It's horrible. So in New York, they actually make you change them. Oh, they do? Yeah. If you, depending on, if you, depending on the extent of the renovation, you know, if you want to do a full gut, they're going to make you change the whole entire thing. Which also means it takes away a square footage because you got to put in the biggest stairs and then you have to redesign the whole place. Oh, that's cool. Come on, Dave. Yeah. This looks nice, man. I wouldn't make it do. This is the one way. I would have broke my hip coming down this joint. One bedroom. What about you, Dave? Dave? I'm listening. What about you? I wouldn't make it on all stairs. So you see what they did? This is a perfect example. One we just looked at, that was a railroad. Basically, what they did here was they just made, when you come to this top landing, an area and they put doors on each side. So they lessen the space of the bedrooms. Right? But in here, it's a one bedroom. This is crazy. They did a good job here. With the amount of space they have, they should have went with a smaller sink. Yeah. They probably got it in a sale. So this is the deal with this, man. Chris, when you were with your wife setting that up, I was talking to the owner. He's really looking at around $420. $420. And he's estimating $30,000. I suspect there's more. Way more than that, bro. So that brings you at $100. The market is going to be about $105. There's not enough room. Yeah, none of this. Not even on a long term. But hey, man, you look and you go, right? But you know what? You learn. You meet Anne, right? Yeah, that's right. And then to me, this is going to require a specialized skill to be able to turn these around. Yeah, this is not something you would get into if you don't have experience. You turn them all floors out of square. Not only that, but every penny is going to count based on the acquisition cost. If you don't bring in your construction costs at the right number. You're done. You're done. You're done. You're finished. But I'm just talking about, Dan, your mind, when you see this, it's not the typical mind of an average investor just looking at this. I mean, this is, I could see so many unknowns there. I got to be honest with you. It really isn't. The floors, the problem is they have really good footings. But the spacing in between the two by sixes is too wide. They should be 16, 16 space. They're the same thing. Yeah, but they're more like 24. So you're going to have to re-support. And then on the top, you should use three-quarter inch ply and that'll really tie it in together. But even the guys you're using, Dan, you can't use a regular guy. No, you need to bring in your guys that know what they're doing. Dude, round up what I'm telling you as well, if I were to bring my guys here, I would lose my shirt because they don't know how to turn this stuff around. They're not turning this small space. These small spaces, stairs, you know, little things. Dan, they wouldn't even know how to cut them. No. They wouldn't even know how to make it fit. Let's do this. This is any contractor would need experiences with city work. Thanks, Mike. I got to be honest with you, man. I love this particular project. All right, round up. So you've seen the property. So now let's get to some of the backstory. You are actually going to be in the presence of the buyer right now. Also, you're going to get to hear from Daniel and Chris, the thoughts on that property. And just kind of how we wrap this thing up, hanging out in Baltimore. Thank you for joining us. Jordan, Daniel, Chris, what up? Yeah. Hey, what's going on? What's going on? Nice to see you all got you guys again. Yeah, yeah. So before we get into, I know we got so much to talk about, Dan, you were saying you are, you've been in here a little, a little, a lot longer than all of us. You were saying bigger is not always better. And then we'll get to this thing. Yeah. I guess you want me to elaborate on that. So I've always said, bigger doesn't mean better. You know, I've seen a lot of people continuously leverage to go buy other properties. They leverage properties that they currently have. And that's great. I don't have a problem with that. I've actually done it myself. You don't want to over leverage yourself, right? And you get into the hype and you start, you know, when everything's going well, it's dandy, right? It's easy, right? And then as soon as, you know, a situation like Corona, let's even forget the COVID virus out of it. Let's take that out of the picture. Any downturn, whether for whatever that reason may be, that's where you really see the ramifications of over leveraging. So guys, I could, the only thing I could always say to people is, you know, it's good to leverage, don't over leverage. You got to do it at a price point that you're comfortable with. Could I have grown faster, you know, before 2008? Absolutely. But I didn't suffer during, after 2008 or during 2008. We didn't lose one property. You know, I didn't change my lifestyle. Everything continued as normal because I wasn't over leveraged, right? And actually I was in a position to take advantage of all of properties as a result of everyone having over leverage. Yeah. So, you know, when everyone else was telling me I was not, and I didn't feel comfortable with it, I was like, all right, you do you and I'll do me. And, you know, it wasn't that I was smarter than everybody else. It was just me, my personality, right? So having said that, you know, great, it bigger is better to a certain point as long as you can handle it without, you know, over leveraging is what my point is. I agree with that. So let's get into this. We went to the property, walked it, saw the condition of all of them, 10 units. So I would like to just go and start with Jordan. I want to know before we talk about the acquisition and all the numbers and all that stuff, what were you thinking as you were walking it? And I want to hear everybody's opinion on just gut, how those properties made them feel, because real estate is a lot about where it feels when you walk through. People want to feel warm and fuzzy. Thanks for joining us, gentlemen. Hey, no problem, no problem. Yeah, I mean, my gut reaction when I went in, you know, it was a little bit, I was like, whoa, man, I wanted them to be a little bit better. You know, you always want them to have a, you know, just like, all right, I can just do a little bit to it and, you know, it would be good to go. But, you know, as I was walking through it, I saw some of the renovated ones, the one that we looked at, which was completely finished. And then there were the other ones that, you know, needed work. And I was like, okay, look, if they're going to go ahead, full gut. With doing the full gut, because those, like you saw them, they weren't like huge square footages, super tight quarters. And so, you know, I was like, look, potentially down the road because of the location, you know, we definitely have something that we can work with. So if we go ahead and, you know, we can make this, you know, turn it around real quick, get some people in there, start getting some cash flows going. There definitely is so much more potential for, because I, you know, thought about doing maybe some expansion later on down the line, because I ran some of the numbers. And the numbers actually look really good for some of the comps in that area. So if you took a look at some of the comps, some of the comps for similar square footage, maybe about an extra two, 250 square foot, we're going in the 180s to 200s. And so at about 30 to 50 per unit, you know, and we were saying maybe 40, 45 would probably cover that kind of square footage for renovation. So you ended at about 80, 95. For rent ready, rent ready. Right. So to, you know, rent ready and then you probably want to put a little bit of icing on top because for the comps that we were looking at, those ones were a little bit higher end. So with a little bit of a better finish. So, you know, depending on who you want to, what type of, what customer type you want to appeal to, that's the type of tenant that you want to get. You want to get long term and then somebody that's going to be looking to pay a higher price point just for the location to be a little bit closer to the city because you take the left turn on Pratt Street and maybe about two blocks, you know, right best University of Baltimore and you're in the heart of the Harvard. It was crazy. I saw that. It's almost walking distance to the Oriole Stadium. You know, it might be a little bit of a hike but, you know, for an Uber and maybe less than like a three or four minute Uber ride, I've got a property that is on the other side of the bridge over closer to Harbor Hospital and I was doing Airbnb for that. A lot of people were coming just to go watch the Orioles games and that was maybe about a five or ten minute Uber ride and, you know, I was charged and I was probably close about top 75 percentile, 85 percentile of that Airbnb market. So for me, you know, looking at that, I was like, for sure. You know, the proximity to like I said, the hospitals to downtown I don't think that it'll have any issues renting. You know, most of it was, you know, how much can we get away with on, you know, the renovation renovation side of it. Dan, what would you have got saying as you were looking to be, have you seen a million of these being in the commercial market? I actually, properties like that excite me, right? Because I walk into a property like that I already, I'm already envisioning what it's going to look like when I'm done, right? And I came in with my numbers between 45 and 50, dressing them up a little bit more about 55 but I didn't come up with the comps that you came up with, Jordan. My comps were actually, Chris and I discussed those comps between 95 to 110. So in that 200 square foot addition makes a huge difference when because it'll lay out in that particular prop in those apartments, they were very especially with those stairs going up to the second floor. So is that concerning you, Dan and JT? It concerned me especially if you wanted to rent to any type of city type of program. I wasn't really sure if that would pass to be honest with you. It likely is not because the restrictions are a little bit tighter. There's a decent amount of section 8 in that area as well. So what you're comparing it to and what their requirements are. If I was looking to go that route, I definitely wasn't going to be doing those specifically those ones specifically. I think the one that was renovated even had a super tight stairway as well. So a lot of that would have had to be rearranged. Yeah, so that was my concern and Chris, we all spoke about that where to do those stairs the right way you're going to lose at least another 100 square feet and in such a tight space that was each one of those units where that's a lot of space to lose, right? So that's why we weren't willing to go up. I mean, I wasn't willing to go up on my numbers precisely because I would have wanted to dress them up not to have to deal with section 8 primarily because of the size of each unit and not having on-street parking. It was all all-street parking. So that's in my opinion, your idea going for an upper-scale tenant that would work great but you're going to have to dress them up more than 50 grand per unit. Birch, what would you have got saying you're from D.C., so you've got a little more of feel on that stuff too. Well, I mean Jordan would probably agree with me the difference between some areas of Baltimore and Washington D.C. are between night and day and there's areas east of the harbor that are in Baltimore that are night and day difference between the west side. I mean, there's that vast difference and I thought it was kind of cool that the whole reason why the four of us are now doing this is that I shared it with Dan I shared it with Chris look, there's this 10-unit auction coming up I've talked to the auction house and that's the whole reason we all got there because we were like 10 units for starting bid, it was low Chris mentioned it was like 150 units for starting bid and I spoke to the auction house the week before and kind of went through the numbers with her, of course she can't disclose the number but I asked would X amount buy it, would 200 buy it she said no, would 250 buy it, no and where she didn't agree with me but she felt comfortable saying that I was very, very close is still I think, you know, Dan and I discussed probably about $90,000 above where we thought they were going to sell it for based on talking with her but so you asked my initial reaction the guy who owned it he was an investor, obviously he didn't buy it that long ago I pulled it up I don't think he fixed anything per se on the exterior, he painted it so it looked presentable, right going inside of course you already mentioned the ones that have been renovated were renovated on the cheap you know, the appliances the finishes, it was just as simple as could be I did hear him mention I think Chris or Dan actually mentioned in the first video that he said his strategy was government subsidize income for these properties but I do as well as all of you guys question if any of these would ever even pass the current floor plan you know so Jordan let's get into the numbers on this thing tell me how do you have a cash flow number first of all what is your exit strategy are you holding on to these or are you planning to fix them up to sell them so this is actually was going to be a hold for me based on the area and based on the proximity to some of the features of the city and with the growth they actually had a couple projects maybe about two or three years ago over close to the University of Baltimore that are relatively new that have brought people over towards that west side so a little bit northwest of Pigtown is actually been changing relatively quickly in my opinion that's some of the properties that I own in the city so it's just a challenged area kind of a depressed area it's a block or two over from brand new development and it's continuing to move westward but south of the train tracks yep so yeah and I don't necessarily bank a lot on appreciation so that's usually the last part of my equation really is looking to make any of the overall improvements as long as I can be within usually I'm looking for about 12% as far as cap rate for this one it's probably going to be a little bit lower than that just because the amount that's going to take for as far as renovations and so because this is definitely a longer term play you know doing the repairs and like I said upscaling it to drawing that higher quality tenant I can actually limit my turnover limiting that turnover and then in addition to that there's a couple additional profit centers because I know I was talking to you guys about solar before that's actually the background being able to include a solar array on that entire block would actually be able to increase that profit increase a profit center I'd be able to get it's about a two year cut down on the return just from being able to produce excess power and then have the power that the tenants are paying directly to me so with the energy efficiency upgrades because that's really where a lot of people end up going wrong is that when you're building not building with high quality actually costs you more money that's true long run when you're building with higher quality more durable materials and things that are really tenant proof nothing's tenant proof the better you can build it the less likely you are to have to go and do the repairs do the refinishings and then again you'll also have a happier tenant as well so with all those things it actually cuts down it increases overall profit just from the sake of limiting your exposure to all my boilers going up again let me go ahead and go put a cheap two or three thousand dollar boiler in there and then it's going to go up in the next five years again because the tenants when you're not there there's not theirs they're not paying for it it's going to be abused and so if you don't have something that can withstand the highs and lows of tenants I take a lot of my experience from I did a lot of handyman work when I was in college so anytime there was a party there was a rager somebody bust a hole in a wall man call George call George come fix it and seeing the way in which college kids treat things being able to circumvent any of the damages and prevent the abuse that you can be exposed to with tenants when you can cut down on that it saves you a ton of money on the long term and then as far as your energy I include the energy bills into the rents and energy efficient features now I'm actually making a margin that delta on what I'm making on the utilities goes directly to me and now tenants can feel free to turn on that faucet and I've got low flow low flow faucet heads you have the conservation the toilets the ones with the dual flush system LED bulbs everywhere and then also as far as insulation that's about 30 to 40% of overall energy consumption in the US homes it comes from heating and cooling and so when you're insulating you're doing your standards are 15s but if you're doing R20s R30s it may come at a cost but again that's insulation really until you're rebuilding that wall again and so when you cut down on all that turnover you're controlling the humidity and the airflow that comes in and out of the home you're cutting down on that turnover time over our heat exchange and reducing your overall energy expense and those have been steadily creeping up over the years so if you're putting the solar on there you're sucking up the power bills I want to make sure I'm getting a clear picture that also for my viewers I'm envisioning you're having the solar panels there that's a set you have and you're passing that on I mean your tenants moving in they don't have a power bill correct that power I just got to ask one more question on that Chris when you're explaining that to Chris please explain how you have a separate meter to figure out the usage per tenant so each tenant will still register with the utility so they still register with BG&E there is a certain amount that they're allocated every month that's covered that's covered in their rent anything in excess is actually paid to BG&E so now for me as the owner let's say if I know I'm covering baseline $200 and that month they use $250 so I've already made my margin with them that $200 in that extra $50 they would end up paying to BG&E right and now typically because if you're talking about 10 units somebody's going to use less somebody's going to use a little bit more and it nets out you do historical usage over the past and you can pull the data from BG&E for any landlord they'll let you get data as far back as they have it on that property and if you look at the trends you look at what the trajectory is for overall consumption for that year average home is for those smaller homes maybe about 10,000 kilowatts per year for those size maybe about 7,500 kilowatts a year and you size the system maybe within about 10% BG&E throws a fit if you try to oversize the system but you want to do it to the maximum total consumption for that year and then like I said you reduce the amount of ability they have to consume so all the appliances you increase your amount of energy efficiency to further lower that threshold that they would pass and then that is just how you control somebody over consuming or not being able to provide enough for that single unit and like I said they're still all separately needed so it doesn't necessarily make a difference to me because BG&E credits me that same let's call it 70,000 kilowatts per year for that system and anything in excess that's over that's consumed is either paid for by the tenant or if they use under they actually send a credit back to the owner of that system and this is aside from any of the subsidies that are received so Chris if you're in DC any homeowner especially a business owner that is not installing solar they are missing out right now it is a 26% federal tax credit so on the total cost of the system it would be let's say a $30,000 system you get a 26% dollar for dollar federal tax credit whenever you're going to do your taxes and depending on which state you live in so that's why I was up in Jersey Jersey has some awesome they're called SREC's solar renewable energy credits DC's I think I think they're floating are you guys at about 240, 250 right now at a time you guys were at about 400 yeah in DC we're doing the whole green renewable so they're actually you can actually not only do the solar you can actually do a green roof on your property and you're getting like an additional 10 to 15% on your tax savings as well yeah it's everything that's involved in the process of installing the solar it gets that tax credit applied and then there are like I said the solar renewable energy credits let's say you have a 10 kilowatt system you're generating 10 credits for the year if you're at 250 bucks that's 2500 bucks every year Jersey's expires after 15 years I believe in DC theirs is for the life of the system now you're talking about lifetime production that system typically will pay itself off and they're closing in on about 7-8 years now some of those timelines have been going down depending on the price of the system and the installer but then also if you're talking about a commercial urges that is financed through a business you also get accelerated appreciation and so within 5 years you can write off the total cost of that system and you get all the tax credits you get all the SRECs and then any overproduction of those systems goes to you as the owner and you know just like real estate you have so many different deductions that you can get against the income that you're getting it makes it a lot easier to make those numbers work out the way you need them you're still real knowledgeable on that stuff man I'm glad to make my viewers aware I need to reconsider my dark process on that stuff too so cash flow, let's talk about your cash flow do you have a per unit that you're looking for because you're coming in on this thing from my notes here there are only 3 3 units occupied on that 10 unit so basically you have to be aware of what you're walking into Jordan tell me your thoughts on that what is the amount of cash flow as opposed to where you want to take it right so right now I think the rents they were bringing in was at 750 bucks 750 yeah so let me ask you guys before you said do you not believe that's below market I was looking at 100 to 200 bucks below market yeah I would say it's slightly below market but I also think that there were a lot of units and he had just moved in so I think that they were maybe in a rush to get him in there or they had discounted the prices because the specific unit that they were in was actually wasn't a whole lot going on with that one so I did want to ask some more questions about that so right now are you I mean I can not imagine how much value that you plan to bring to it you're walking into it with three units rented tell me your thought process is there a dollar amount of cash flow you want on each one I just want to kind of see tell me where you're at regarding turning them getting them rented so as far as getting them rented so the current ones that are rented are we're going to be looking to do you know it's a small bump on those but ideally I always like to do renovations prior to you know so I can justify the rental increases you know I don't like just jumping up rents on people just because I'm a new landlord coming in that never spells you know great relationship between the tenant and the landlord that's not a good way to start your relationship right right so you know really go ahead what do you think you can get over there Jordan will you keep them two bedrooms actually with the market checked a few of the rentals they were anywhere from 11 to 14 I've seen a couple that were 16 but those were some of the larger two and three bedrooms so those ones were getting above that 16 range and so if you're and if I'm adding that much square footage on enough to be able to get an extra bedroom in there that's what we were looking at but you know as far as whenever I run my numbers I'm looking to be more conservative so you know just a quick question before you say that you're comparing that to at least units that are 2 to 300 square feet so were you looking to add to the bump out in the back if there was room what were you looking to do to add that additional value to justify that rent that you're stating so it was going to be the bump out in the back from what I was looking at it was a couple that looked like they potentially may need new rooms and during the process that I'm going through walking and checking any of the ones that need any of the structural work those were going to be the ones that I was going to try out first I'm actually doing a level up I'm actually working Chris around you in DC on a project now we're adding it's an additional 700 square foot on property in L street if that one goes as planned then I may actually consider doing that over here as well and add an additional level so your numbers so I'm a little confused man I'm just trying to figure out because your numbers are not coming in and lined with ours and not to say that yours is wrong or mine is right I'm going to trust your judgment because you have a lot more knowledge in the area so that's why I'm going to ask you these questions so essentially you're not looking at $45,000 unit anymore you're looking at bumping it up to close to 100,000 if you're looking to do that bump out yeah for sure and that's why I was considering just doing the interior renovation prior to so portion that I'm reserving for doing those bump outs and that was going to be actually something I was going to do over time as opposed to just you know going in hard just to make sure that those rents can justify because right now as far as the time that we're in I'm not too confident and I'm not trying to time the market or make future predictions so as quickly as we can get some people in there and we can get everything dressed up then we can start talking about doing some of the additional square footage look I personally believe it's a great spot if you want to dress up those units rearrange those stairs, make them up to code and do everything you said because that's actually primarily how I run my business I don't go cheap on anything actually Chris has visited a couple of my job sites and he was in New York and he could tell you you know I don't go anything less than five eights on sheetrock everything is leds you know the most efficient appliances all of my units tend to pay their own heat hot water electric whatever the walls will permit me to go is what I'll go as far as our ratings whether it be it's never less than R19 because in New York and just like in Baltimore you have real two by fours right that allows you to go to 20 sometimes a little higher but so everything you said I agree with you with my average tenancy in areas like Fort Green Brooklyn where it's about 18 months 13 to 18 months my average tenancy is 12 years and it's not because I'm discounting my rent because my rents keep up with the market actually sometimes they go a little higher but I provide a service so my tenants call me within 24 hours there's somebody at their door to make that repair assuming it's not on a Sunday if it's on a Sunday and it's an emergency within two hours there's someone at that door right so I agree with everything you said I just don't understand where you're coming out with your numbers and that's what I'm trying to figure out so I hear you what you're saying with the energy consumption and making adding revenue in that end but where else can you make up that difference to justify that 12 to 13 cap rate is what I'm asking so with those rents are you still counting it at what are you pricing the rents at we're pricing them at around 1100 okay because of the square footage there's no parking on the street you know there's a good and bad to that right because now the way I envision that is if you dress up the units and you specifically target a specific market that enjoys being in a little cul-de-sac type of atmosphere you put some flower pots out you clean up the entire street whether it's your property or not you clean it up and it becomes an enclosed community people are willing to pay extra for that and put aside the inconvenience of parking your car two blocks down the road right but I still don't have those numbers right that's what I'm trying to figure out from you Chris do you see where I'm coming from either one of you Chris's I want to follow, good Chris no I actually I somewhat agree with your questions and not being critical but even for me even on a long term scope if you're talking about doing bump outs you're going to drastically affect your cap rate at the same time you're now further investing into that hoping that that's going to come back around I think that immediate neighborhood you know that Union Square is basically the neighborhood that that property is in it leaves a lot to be desired but there's so much potential Dan mentioned in the earlier video you're not going to find that architecture all over the city a lot of that architecture has either been burnt up or torn down you know I guess my long term question would be at what point can you get the properties to the $700 a month between now and when in our time today it's an uncertain thing so I don't question that today but what is it going to take you to get those properties to that condition and over what time period are you going to start to see some sort of residual return and so I think that a lot of it has to do and like I was saying because for me the solar becomes the strategic part of the investment just to be able to say if for the three properties that were on the the very right side being able to start one of those within this year and get them all new roofs with the roofs and those bump outs the roof down to the deck qualify for the ITC so any of that bump out at least about 40% of that is covered by that ITC so that's the part that does become a bit of a benefit there's a savings on doing those bump outs and if those are actually necessary to do even if they aren't necessary to do those can actually be baked in as far as like the long term numbers go so let's say if within the next two years I can actually get the remainder of the remainder of the units done including the roofs including the solar systems with the additional square footage and if I'm going to be putting the structures up for the panels themselves then they actually get to rooftop decks not necessarily anything that's like large scale but with building on to flat roofs and the study has to be done for the structural has to be done if those are without any of the height restrictions because there are only two floors because that's typically what you'll run into after you get above three stories there actually are height restrictions and it becomes a lot more expensive but if we keep it at two floors and we can take the tops off and get the at least a 20% tax credit on redoing the roof and the roof for the bump outs those actually cover a lot of the costs that you know you wouldn't you would have to see at least about a three year return that's actually getting subsidized with the install of the solar system and I'm trying to pull up my spreadsheet now just for the audience could you explain what the ITC is the ITC is the investment tax credit so if I as an owner business owner want to go and get solar if I need to be able to redo my roof to make it structurally stable to get a solar system and the federal government gives you a tax credit on the total cost of that project so you know a $30,000 typical solar system installed by an accredited installer that is just for the hardware and for the installation itself but if they don't is a tax credit also including bringing down the roof to the deck and building it back up to the equipment itself right it's down to the deck so anything that is further than the deck is not included so the deck any replacement of beams the torch down roof whatever that entails including the equipment that's where you get your tax credit from the 40% correct so if you need even if you just need to shore up the roof and you know add a couple a couple six buys also included in the tax credit see that now this is starting to make sense it's starting to make sense now I don't think he's just buying based on ROI I think you have a whole lot of stuff going on here Jordan I think we're interested in learning that for young guys it's almost like you're playing a chess you're matching profit with some of your tax credits and other profit centers which is admirable in my opinion yeah listen that's something I've always done in my properties where I'll go in and I'll bring in you know first thing I do is change all the common areas to LEDs I put in I put in cages in the basement assuming the property allows me to do that so now I create another $100 per unit because they always rent that storage space in the basement and then I also put in depending on the size of the property the washing machine, the dryers and that's another source of revenue but you're taking it to a whole different atmosphere wouldn't you agree Chris? yep I commend you man it's really interesting thank you for sharing that with us ROI I got my notes here financing are you a cash guy or do you have a debt service on these things JT? I don't want to push you too hard on what you want to talk about no no it's not a problem so I've anticipated for debt service I already have a couple lenders that I've worked with in the past I have been looking to source for some different lenders that actually do more the community involvement but ideally I'm actually looking to bring in some other investors that I've worked with some of them up in New Jersey and then also some of my family members to be able to actually get in on this so that if we're counting, paying an interest to someone then it should be kept within our community within our local environment so just as far as the initial bridge we got the traditional stuff but I look at it as something where if you're invested into the community my family members have been here for 40 or 50 years plus so I want to give them opportunities to be able to own a part of this and to continue this on in the perpetuity because that's something I'm really about is generational wealth it's about legacy building being able to give that to a bank they don't give the same type of love they don't necessarily care about what's going on in the community they're just looking at a bottom line and where you can say I've got people who have been here who know what's going on they see the potential and they want to see everybody in this community do well those are the people that I want to have involved in this project as opposed to you know it makes me feel good so good to hear a young man speaking like that and actually out there doing it that's what really makes a difference you're not saying it you're doing it man congratulations good for you let me ask you about brainstorming is condo conversion on your radar or is it even available in that area Jordan do you consider that what process on that so that's the thing that I will probably have to say I'm not as familiar with changing into condos or looking to do any type of structure or setup like that but if you've seen things in the past that have worked for you or if you've seen work for other people I am all ears like you've seen I try to get as creative as I can take any opportunity whether it be to make the quality of living better make the actual structure itself better if you think that that's something that would be ideal for that area then for sure I'm definitely open to something like that I had no idea as you're talking about solar I'm just trying to obviously figure out how to pass value on just like a really serious entrepreneur just pass the value to the end user just curious about it having each one of them their own tax parcel that way and so I've already actually being able to bring it back my family like I said my brother my dad my uncles, my cousins we all invest in real estate being able to give them an opportunity to get in on this would be able to you know we've already spoken to a couple people that are in transitions some people have already expressed interest in moving in so if it were to be like a co-op where everybody owns an individual piece structures like that, like I said I'm very willing to get creative and it either empowers other people to get invested in real estate or to do deals of their own you know why would I stop that I want more people to do this because for me it's been very beneficial so let me ask you about those stairs Jordan would you change that I was literally and I'm just I want to be transparent with me my feet were belly fitting on there is there a comment up there personally I know I would end up breaking my back breaking an arm, leg, something going down the steps if I lived there so a couple of things that you know pumped into my mind were and I was like alright I could probably go on the cheaper end but if I'm going to go cheaper you know it's actually got to be something that's worthwhile and I've seen a couple of the is it a particular geometry that will allow more square footage on the step to be more sure when you're just using the step when you're climbing the stairs and they actually have them that they are angled and it would be a lot easier to be able to show you the image of it but you know I've got it saved in my ideas and concepts because I am as far as like modular design I love efficient modular design being able to take and maximize you know a very small space because you know in America we've got so used to living in huge four and seven thousand square foot you know homes and stuff like that but to be able to maximize a small space so that it feels much larger you know you definitely have to get creative with some of those things or if I were to take that entire staircase out and then do the iron spiral staircase that was also something I was playing around with that would take up less space too I guess it would be compact going straight up good idea dude let me ask you is that common in Baltimore that's not common here in the Hampton Rose area Jordan I wouldn't say that it's like super common but I have seen it before and like you said you know Chris was talking about is definitely you can see it's probably in some of the older properties you know where there is limited either on square footage or somebody who's tried to convert some of the town homes into multi families you know where they have scale those down but for the most part not very common from my experience yeah I just think it's a little different different experience up there oh yeah they were janky you think I know y'all in the first video we talked about a railroad walking through a bedroom to a bedroom here not happen like nobody I mean I'm not I can't rent a property like that here in Hampton Rose so I'm presuming I mean I just I love the fact that real estate is so different different places are you concerned with that or does that not cross your radar so I took a look at that and I was like I could probably take a hit on this or you know let's get a little bit more creative there are a couple of the units like I said these are things some of some trial that I've already done I actually prefer to be able to have a good enough mix where I'm doing long term and short term right now short term has taken a small bit of a hit but we have University of Maryland I mean sorry University of Baltimore that is there and I actually have used what is it things called furnished finder it is for traveling nurses and to be able to be within walking distance of the hospital you know you're only usually getting a travel nurse they usually by themselves they might have a dog or something like that as companionship and they'll usually do sometimes six month nine month terms and the they get stipends from the company that they're with and for that space I did a partial rental so this was like an Airbnb for one bedroom and that was $1800 for an entire unit for that entire unit I'm pretty sure I could probably be starting at 18 and probably get the full two and so those you know for the ones that were railroads like I said if I wasn't staircase or the modified stairwell you know if I have to deal with a railroad then that was something that I was going to go ahead and do for those they're less concerned because they won't be staying there for long term is that what you're saying and for somebody who's so low or you know really works like a studio you know that's not necessarily a concern that's just an office space and then they're at their bedroom Birch, Barrero y'all got anything else for Jordan? you got all my questions answered I mean you got finance and you got your ROI cash flow you're talking about the flow of the property what's your plan on renovating them that's what I had well I'll add one thing not targeted towards Jordan but Chris would you in Hampton Roads would you buy a house without a driveway buy a house in Hampton Roads yes, however I would be I would get they would have to give it to me it would be my point being I've never my entire life I grew up I was raised in DC I still live in DC I have never had off street parking now I have been able to park on my street but that's dependent on if the 20 other houses aren't doing something that evening or there's not an activity around the corner of the church to me it's a more urban environment where people I mean Dan'll probably tell you some of his tenants they don't care about parking because they don't plan on having a car because they're gonna jump on the train yeah I would say 95% of my tenants in the city here don't have vehicles though yeah and my point being is Dan has mentioned before in in previous videos some of his best real estate is a garage or a parking lot oh yeah yeah similar to the DC market the Baltimore market there's an added value by having a garage or on street parking that even further adds to it yeah so one of the one of the places I saw what you could add a lot more value is buying the lot so according to the realtor there one of those lots was actually owned by the city and according to the laws in the city the property owner could get that at a discounted price right and then the one across that was across the street which was next to the other three properties is owned privately now I would actually be even be willing to pay that person a premium for that lot because you're gonna be able to get so much more per spot from those same individuals living there so yeah I've made a lot of money so Jordan just to give you some history on my side before you go ahead I don't know what Jordan thinks about that I mean you're in it and that's exactly what I was thinking so I was like for the two lots that are there depending on how many spaces we can get see what the profitability is on it and then just like you spoke about before being able to have that private almost type of community whether that either be an area for additional parking or that be a you know a private space you know let's say before the rooftop decks are there as far as like a recreational or community space you know and then be able to fully have yourself isolated that is where I was thinking about being able to add some of that value you know so that people are you know much more attracted but the parking I was thinking I was like I got I got to figure something out I was figuring because I actually when the plat maps you could actually get three cars per each one of those lots not into and leaving enough room to get in and out right right and then so like I was saying also with the travel nurses because right because it's Maryland's right there getting the city bikes getting Ubers and then walking are all viable options so depending on what the ratio is if I'm doing maybe about a third or you know four of them that are you know two travel nurses just to buy the time then I would actually have six spaces that were available for long term so you know it's a little bit of a balancing game and problem solving on the fly which you know that's what I have fun with it that's what we do what were you saying I cut Dan off I was saying that my biggest profit margins have come from garages and parking vacant land that I've converted into parking lots that eventually I hold on to it eventually until the developer decides to buy for me at a premium price right because we always so we concentrate and is always buying right outside of sexiness so those properties to me I'm not going to kid you I was excited about because I could see the potential I could see the probability of appreciation over the next 10 years it's just it was just a home run it just if I just didn't see the and I still don't see it unless you're doing it the way you're doing it because you're coming in with a total different idea and I'm excited I actually want to watch you do it man yeah man maybe maybe get some footage yeah it's going to be exciting to watch you do this man just for the learning aspect you don't think so Chris Chris Birch Chris Askins without a doubt I mean just hearing hearing the conversation about the potential additional parking and I'm sure Jordan knows this but just south of that property is union market union market during the daytime has two hour street parking where do you think vendors have to park parking spaces this for lunch I paid $26 for an hour and a half yeah you know what he was complaining about that Chris I go into the city man it's $42 for an hour and a half and that's before your taxes right that's before the tip so because in the city you actually have a parking attendant they don't let you just you know go get your car so I was kind of laughing when you were complaining about the $26 but I understand because where you're coming from right in Virginia they don't have those parking in that one yeah in the city I got to tell you man like I was driving around there if I saw a garage a two or three four five car garage I'd buy that in a heartbeat I don't care if I pay a premium for it man it's in my opinion it's the best investment you can make man it's very low customer service you clean it you paint it put some electric LED light bulbs in there you put it so that it go off as soon as people leave so it cuts down on your consumption and you charge a premium price for it because people are willing to pay for it in city environments you're not going to get away with that we're in Hampton Virginia empty forever alright $275 though hey Jordan final thoughts I want to hear what would you recommend new people getting in the industry I guess this will be for everybody I would like to just get your opinion we'll go real quickly we've been on here for 50 something minutes Jordan will give us a nugget for somebody that's new getting into the game what would you recommend since you're giving us a perspective from the millennial aspect and do it find some friends find people to talk to YouTube universe literally anybody that is in the millennial you know my generation we literally have no excuse there is infinite knowledge that is available on the interwebs you can figure anything out that you ever wanted to and you cannot say that same thing 30 40 it's 50 years ago yes they had to go read a book and that was the single source of knowledge that they probably would have been able to get too readily available at your fingertips learn as much as you can and move take action you know you gotta move in the it's not with the absence of fear because fear is going to be there you have to move knowing that it's going to be scary it's going to be terrified Jordan is that a habit because I'm even looking at myself and I'm thinking God that now I have the habit of going learning go and apply I don't recall myself doing that years ago I mean even more recently I think like I said my background is engineering I really enjoy puzzles and solving problems and for a lot of my life I said I was everywhere by myself usually living in somebody else's state and I haven't had a lot of family or friends so anything that would happen I get broke down on the side of the road I figured out real quick so I think it's a little bit of a rush because I'm an adrenaline junkie love snowboard and love riding motorcycles and stuff like that I think that for certain people there is a certain risk tolerance that people have an aversion to but for the rewards and the benefits of doing things like this I actually get to be able to help a lot of people and I can put myself in somebody else's shoes where it's like I don't know a lot I don't know everything there is to know like you guys have been teaching me and just from this call right here I'm changing strategies I'm looking to increase and optimize but you're never going to know you're never going to know what's going on you're never going to be able to plan and know exactly everything so for me it's like I'm probably going to be scared to do it but you can't not because you're just going to be in the same place that you were yesterday and if I got to the end of my life looking at that my thing is you leave it all on the field and you're never going to be upset about putting all your effort in nice Birch what are you going to give us my round up viewers to see for an entrepreneur slash investor yeah so unlike Dan or yourself I'm considered fairly new to real estate not new to business but new to real estate in the last you know 10 years but I got to say you're a hell of an entrepreneur I mean you're if I had the tools today YouTube University you have wholesalers all over the country showing you how to do it you have real estate investors like yourself and like Dan have YouTube channels promoting and sharing your experiences if I had those like eight years ago I can only imagine where I would be so I guess the point being is it's out there it's free I'm not saying everything is correct but vet the information learn from the people try some other strategies the first guy who ever told me how to try real estate he said do one and learn how to do that one correctly because if you don't you're going to start listening to all these gurus saying get into multi-family and all this other stuff just learn how to do it you're going to learn it quick you can learn how to buy a piece of real estate finance it, private money however you do it, learn how to locate a tenant vet a tenant and then learn how to do that Chris Haskins, Dan Borrero they're going for free on YouTube take that information it's free and you can learn from it just do it I don't think people realize that anyway I don't even want to go there yeah Borrero final thoughts man final thoughts man stop over analyzing the deal and just go do it you can prepare I'm a stickler for preparation and I'll be the dead horse as far as research is concerned to death right but at the end of the day you got to take the risk and get over the fear as Jordan said earlier there's never going to be a time you don't do the deal without having some fear and that's okay but what reduces my fear factor is the research I did in preparation before I made the deal I look at every deal as to why I shouldn't do the deal rather than why I should and if it still makes sense then I'll proceed with the continuous research but at the end of the day you can stop over and analyze the deal whether you listen to Chris or any one of us or any one of the four of us here that are willing to give out this free information or go to someone else that's irrelevant get it it's free just get out there and do the deal you'll learn more by actually doing it than just listening to us messing it up okay gentlemen this has been an honor round up I hope you guys I don't know how many years of experience you have here probably a hundred years of yeah a hundred what I like to do is that's just half of the stand yeah you know I gotta tell you I love doing this guys thank you so much for participating and let me participate in this as well I want to come on do it this is our recording but I want to see if you guys after this release is released if you could come on live and we can take some questions from around the country I'm sure it would just load be on there all afternoon man I'm like look the holidays are coming so let's see where when you're doing this work man please send us some photos man I'm excited for you to be honest with you I'm like that's the best part about this business is that if you're successful you don't begrudge someone else's success and if you see somebody doing something different you're like let me watch that and I get it I love watching people do their craft whether they're masonry men or real carpenters when you see guys that love doing what they do with their hands and they do it so exceptionally well and similar to what you're doing Jordan right I enjoy watching it right and at the same time I'm learning right but again please keep us informed I look forward to your success in this project thanks, thanks appreciate it man