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In this episode, you’ll discover:

  • The “dive bar method” to getting big rent checks from low-end properties. (2:56)
  • Why repairs can make your tenants move to rundown properties in a rough part of town. (6:25)
  • How to get rich off of low-income rentals you’d hate to live in. (7:57)
  • Why tenants prefer old hardwood floors over plush, expensive carpets (even if you’re paying for it). (8:50)

Hey! Want to do a deal? Need my help? No cash to make an offer? Send me a quick text at 440-389-3883 and we’ll work together to get you the deal.

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Welcome to Cleveland real estate investor. On this podcast, you'll hear about every aspect of the real estate investment business. You will talk to your rockstar investors about their businesses, how they built them, where they came from, and where they're going. Who am I? I'm Joe Lieber and I've made millions of dollars from the real estate investment business over the last 20 years. If you're ready to hear the good and bad from a guy who's learned this business from the school of hard knocks and get educated by some bad ass entrepreneurs, then put your helmet on, strap on your chin strap. Let's ride.

(00:36): Yo yo, what's up guys. Thank you for tuning. In another episode with me, your host, Joe, how it gets your attention here for the next 20 minutes. So I'm super excited to talk to you guys again here. Right? So tonight I wanted to talk to you about a story that happened this week, and I'm gonna tell you a story. So I have a property that I purchased recently in old Brooklyn. The nice part over there, all spring road, real nice little pocket back there. And I got a three bedroom ranch, the finished basement, one car garage. It's a nice home. It's expensive. I'm renting it out right now. And it's expensive. It's 1150 a month. And you know, it's a real, really screening, hard to find the right person for this. What I feel is a real high caliber home and my leasing agent, it's been about three weeks now and we've asked me applications, we've turned a lot of people down, but my leasing agent called me today and said, Hey man, he's like, this might sound crazy, Joe.

(01:38): But he goes, this house might be like too nice. And I left. I was like, okay, man, that's interesting. You know, and he's never experienced this before, but you know, I have, I've obviously been around the block for a while and it brought a story. I'm gonna tell you a story, except for something to mind that a friend of mine went through a little while ago and he was telling me about his personal experience. And I'm gonna tell you a story now. So settle in, kick back, relax. And uncle Joe is going to tell you a great story. So I have a friend named Bob. Bob owns a bar over in the West 73rd in the Dennison neighborhood. How a rough area, you know, Bob's on the bar for quite a number of years now. He has some very loyal patrons that come there, his regulars this prior what they call them in the bar business guys that just come every day after work.

(02:38): And they're there everyday. It's like their family, you know? And he's got a pretty good steady flow of customers and the bar shitty, to be honest, it's just a dumpy place, you know? So Bob's like, Hey man, you know, he's thinking I've been in business like seven or eight years now. And it's, I'm making money. It's time to go put money back into this bar. You know, really give back, give them my patrons, really hook them up. So he says to his crew there, those guys, listen, we're gonna make this place a little bit nicer for you. Okay? I'm going to do a nice rehab at this bar. I'm going to make it nice. I'm actually going to close the bar for two weeks and you guys come back. My loyal friends, you're going to have a nice place, no more crappy bar stools and busted up countertops, dirty floors.

(03:32): I'm going to make the one do something nice. So he closes down and he does about 40 grand worth of work to this bar, all himself. Nope. Previously he had barstools that were like rocking back and forth because the bottom piece came off and there were literally tears in the seats. The bar stools looks like you're sitting on a damn bolt or something, you know, and they're rocking crappy. The countertop you told me was just beat up and like just dirty and nasty and really terrible. The floor goofed up. The bathrooms were atrocious. The back of the bars is old, like from the 1970s, like avocado green, that funky orange from the seventies, just Brown paneling through there just don't be, you know, light bulbs burnt out. So he goes in, he gets all this cool stuff, man. And he does a lot of works.

(04:33): He's busting his ass over there. He puts in a new countertop and illuminates. It puts like nice vodka bottles and different things on top. And the light shoots through the vodka bottle of looking cool. He comes in and gets that new countertop. And it's like a live edge countertop or it's like 20 coats of lacquer on the dang thing, new barstools. And he spent so much time picking out the right bar stools, you know, make sure they're comfortable, relaxed. I have a good time. And he gets all new bar in there, lays down laminate flooring, perfect. Even gets a new bowling machine, like a new bowling machines. They come in there and bowl, he like just made it nicer, you know, hooked all that up. And then he decides it's time to reopen where opens up and calls all those people and says, come on there.

(05:27): Now the bar's open. They come in there and I feel like snooze weirds and I feel uncomfortable, you know? So they leave a couple of guys, come in a couple other regulars, come in, have one beer and leave. Here's our code, school, math, you guys, you guys sit here all night and drink beers. Like what's going on? You can't put a pulse on it. You know? And what happened? Two things happened as I come to find out. One was when he closed his bar, it updated, they found other bars to go to. Right? So I started settling into their new areas, couple of their local bars. But this big thing that happened, the second thing was they came in and they were uncomfortable. There. They're like, dude, I don't know, man. It's nice to nice. What do you mean I did this all for you guys.

(06:21): I don't feel right. I feel uncomfortable here. It's too nice. So I started thinking like, what do they really mean? And like, I'm going to try to draw correlation here. Have you ever been in a situation where you don't feel comfortable? You're like, Oh man, like I'm out of my element here. Like, I'll give you an example. The first time I was younger that I got into a rolls Royce house. Like Holy crap, this thing is ridiculous. This is a $400,000 car. I don't have a form thousand dollar house. And my element you're sitting real still like, okay, you don't mess anything up. You know, if you break it, you can't afford to fix it. And you're like, Oh crap. Oh crap. Right. That's what they felt like, okay. They're in this bar. They're not used to beautiful live edge wood bar. They're not used to these nice, comfortable stools out of their element.

(07:14): I guess the almost be like even wearing a suit. Right. For guys that I don't wear a suit. I'm a blue jeans, tee shirt. Okay. So when I put a suit down, I'm kind of like, like walking straighter, like I can't wait to get the same off. Right. That's how they were feeling like, are we get out of here? It's too nice. They can't relate their homes. Weren't aren't like that. They don't like to be around that. They just want to sit there, smell nasty air from cigars or cigarettes or whatever. They want a light bulb burn out. So it's not too bright for them. They want to drink beer. Just want to relax. They don't want to feel out of their element. You know, I would read a book a couple years ago, many years ago now by Robert Shimon, it's called us secrets, millionaire, real estate investors or something like that.

(08:06): And he was saying in there he did a lot of low income housing. I remember him saying in that book that a lot of tenants in low income housing actually prefer low pile or no carpets because one of the facts and they just kind of want to sweep up a little bit done. That's their preference. And I always think, but I was doing a lot of low income stuff. Like, Hey, let's get nice plush carpet in here. It's real soft, but it looks good. But people even like that, that's not what even they expected. What was the, what they wanted. They wanted hardwood floors. You don't have to own a vacuum so they could just sweep it. But up or that real low pile carpet, like you would find when you're walking through Macy's or something, you know, you just kind of sweep it up and that's it.

(08:49): You're good. So sometimes you can improve these rental so much. Cause you think that people are gonna want them to be like the way you would want it, but that's not necessarily true. Now let's use that example that like, when I walked into a foreclosed home, I see all the time, like one bedroom, like purple ones, like some crazy bright blue. And one's like lime green. It all got to repaint this place and yes, don't get me wrong. You do. And you should. But just think for one second, somebody liked it. Somebody wanted purple, crazy blue and lime green. That was terrorized for somebody. But here we are so quick to want to say, let's change it. Let's just gray, gray walls, white based floors, make it like that, you know, make it nice. But they're just gonna come in there and want to change it anyways and purple and blue and all that, which is okay.

(09:43): But maybe we shouldn't go that far. Sometimes people feel like they're out of their element when you go above and beyond and go crazy land land these houses out. So I did procure a tenant today, by the way, on my self Hills property over there in old Brooklyn, from a nice neighborhood, I had a great family and they're super excited about it. I've got a buyer in New Jersey going to buy this property tonight. He's excited about it. It's a great opportunity. It'd be a long term rental for him. And I'm sure it will serve him very well and help him with his plan to wealth. You know, we did obviously rent and there's someone for every house, but just something to think about, you know, when you're going through and you're rehabbing these houses, you know, don't go overboard, you know, and they might really not need to do that. That's all. So I just want to share that thought with you tonight. Thanks for tuning in on another show.

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