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): What's up guys. Thanks for tuning in. I got a good one for you today. This will be interesting and fun. Talking about adding value. You know, they say that how you really make money in real estate is they add value, add value to your clients, add value to the home, add value to the buyers, bring value and you'll make big bucks. So I'll give you some example. All right. So I stole a deal from you guys right out from underneath your noses. Here's what I mean, this deal was not off market. I didn't direct mail it. I didn't send a bunch of mail pieces out. I didn't have a squeeze page or a Facebook ad. It wasn't hard. This deal was right on MLS. Right. And hiding in plain sight. Anyone could have got it. Just couldn't see the value still sat on the MLS for like 80 days.
(01:32): It was a two family home on West 120 fifth street. Yep. Right there, two family homes. They're a challenge to manage. I used to own like 15 for a long time for over 10 years. And they're tough to manage, you know, the rents are 500 and maybe 700 bucks a month. They, gosh, the only things I can say about this, you know, you have two family homes in Cleveland, Ohio, upstairs, downstairs. There's always something going on. They're calling the office complaining because the guy's parked in the driveway. He's not over far enough. The basement on his side is a mess. He's smoking weed. And it's going up through the docs, into their unit and making too much noise. They're having a party. So-and-so's been going out with his wife. Now they're getting divorced. I mean, I think I'm making this stuff up on that. These are all real.
(02:32): I'm just thinking in my head, like just off the cuff, like all the real experiences I have had with these doubles, wow. Spent a lot of work. I mean, to get one, to run smooth, I mean, it can happen, but well, I'll tell you what I like to do. What I like to do is either buy these doubles and do a master lease option on them. And what that is is let's say, I'll tell you have one going right now I've had for years can never get the damn thing to go smooth. So I did a master lease option. What that is is I rented the whole house to one person. So I could have got, let's just say easy numbers. I could have got $500 per unit thousand bucks a month in rent. But instead I'd say to one person, you owe me 800 bucks a month.
(03:22): If you choose to rent the upstairs unit out for $500 a month, you only got to pay $300 a month to live here. Cool. If it is vacant or you choose it, doesn't get rented out or whatever you owe me 800 bucks. So you're the manager of this property. So to speak, you're on a lease with option to buy. So you're kind of vested, right? I get a little scratch, a little bit of money down and it makes my life smooth, very smooth. Stop the turnover. I don't have to worry about excessive water usage. Gosh, there's so many things. So that's one way to make your two family go smooth. Or the other way that I'm doing right now about the deal that I took right off of MLS is this was a two family home. They had like a really tight driveway, no garage, but you can just look at this and just know it's going to be a challenge.
(04:18): If you keep it as a two family home. What I chose to do is turn into a single family home. So it was each unit had two bedrooms, one bathroom living room, dining room. It's like 2000 square feet each year. It's a thousand. But if you turn that into one, now I can add all these bedrooms, right? I can rearrange the upstairs unit to where the dining rooms have bedroom the kitchen out. And now that's a bedroom and I am making this a seven bedroom, two bath house now, single family. And it's going to look great. A lot of these doubles, the doors are right next to each other. So like, just think of a house and the front doors are right next to each other. The door on the far side goes straight upstairs. The upstairs unit and the door on the right side goes right into the downstairs unit.
(05:10): But what you can do is you can put a large like double door, like almost like a French door in there. And you can go right into the house basically. And you can have the option of going upstairs or staying downstairs, right? I mean, it's hard to get a visual. You know, I'm probably not explaining this that well to you, but I'm making this a single family home. There's two furnaces. I'm removing and making a one furnace. We're taking the electrical box, put it into one, the water meters already there. It's already one anyways. And now by doing that also by making it a single family home, I don't have a water bill anymore because on a two family home, the owner has to pay the water and sewer bill, but a single family home they're not required to. Now it goes on to the tenant.
(05:53): That's a huge cost savings right there. And we're doing some modifications. Did they cost money? Don't get me wrong. But the value add, I'm gonna do very well, give you some numbers. So this unit, you know, we're in a better market than we were prior to right now. I'll say these units sort of rent for $600, a unit 1200 a month. What I'm going to do is I'm going to put section eight in this property. I'm going to get a pit 1500, maybe 1600. So I'm gonna get more rent, but also less turnover. I have one tenant to deal with. Now. Everyone really wants to be in a single family home. I owned a 48 unit apartment building for 10 years. All right. So I'm telling you from experience, the people that rented that building, it was a stepping stone. They just wanted to live there because they were getting, going through a divorce or they were getting ready to move out of town a couple of years, or they were new.
(06:49): They were going to get the management position and a lot of one year leases that would constantly turn at my building. I hated the turnover. Turnover will kill your ROI faster than anything. So by having a single family home, now I'm adding a ton of value. I'm getting more rent, I'm deferring a water bill. I'm going to get way better. Tenant retention, section eight. My average tenant will stay five years before it turns over. That is gold. By the way, this section eight program right now, I'll do a show just about section eight soon, but it is goal here in Cleveland. People not really participate in the program like they used to the independent landlords. And when you have a high house of available, it's just the call volume for these things. It's just unbelievable. We'll get 20, 25 calls a day for a house like this when it goes live, and it's going to be wild, but that's a real value add.
(07:49): And that was Ralph, the MLS, right? Hiding in plain proven sight. Love it. It was an easy one chain Jen and up add value, huge rent things going to be really, it's a big rehab. There's a lot of work. There's going to be a new roof on this house, new windows, you know, new furnace, electrical box boxes, you know, and all that standard. You know, the bank carpet, appliances, whatever there's going to be a lot done here, but it's really a good asset in a great neighborhood over there. Just really nice place on the West side size on it to share that with you tonight, add value. You know, I understand you wholesalers out there. I get what you're doing and thank you for all of you. Please keep calling me. Thanks for the calls I am buying. I will buy. If you've got something you want to wholesale, send it over.
(08:43): But when you're wholesale and you know, you're, you're making a small fee, which is okay, but when you add value, like I'm doing, you're really going to increase your profit margin too. If you have the ability to take these things down and do renovations like that, and there's a lot more money to be made, but please keep calling me. I don't want to discourage you from wholesaling to me. So please do. And I thank you for all of you that do wholesale to me. That's I want to share with you tonight though. So it's a great value add play, and thanks for tuning in, make it a great day.
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