0 (2s):
Boom, shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like Sales Evangelist. Today we'll be breaking down how a home inspector became a real estate millionaire by 27 years old. To drop these value bombs, I brought to Tommy Harr into EOFire Studios. Tommy is now a 29 year old home inspector turned real estate investor and by the time he was 27, he was financially free and a millionaire through real estate investing. So Fire Nation, we will be talking about the best way to get started in real estate. We'll talk about how interest rates are impacting rentals, but something to think about in this area.

0 (46s):
We'll also be talking about how to buy real estate without using our own cash and so much more.

Marketing Made Simple (51s):
And a big thank you for sponsoring today’s episode goes to Tommy and ours sponsors Marketing Made Simple hosted by my friend Dr. JJ Peterson is brought to you by the HubSpot Podcast Network, the audio destination for business professionals Marketing Made Simple brings you practical tips to make your marketing easy and more importantly make it work. A recent episode on whether vulnerability is a superpower in business is a must listen. Listen to Marketing Made Simple wherever you get your podcasts.

Shopify (1m 18s):
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0 (1m 38s):
Tommy say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with.

1 (1m 47s):
What's up Fire Nation Tommy Harr 29 at Columbus, Ohio. Something that people don't agree with is entrepreneurship takes a lot of time, a lot of effort and just is harder than most people expect. So not often shared on the internet that way.

0 (2m 5s):
Wolf Fire Nation, that might surprise you coming from Tommy's mouth considering the title is Home Inspector to Real Estate Millionaire By, 27 years old. But I'm telling you, there was a lot of hard work, there was a lot of grinding, there was a lot of time put into where he is today and there are Tommy a lot and I mean a lot of people in Fire Nation who have been interested in real estate for years, but they simply don't know the best place to start. So I wanna break it down right now. What is the best way to get started in real estate today?

1 (2m 34s):
Yeah, so the best way to get started in real estate, it, it obviously comes from where you're at monetarily too. So like it's a balance of time. How much time do you have? How much money do you have? And what, what does that look like? So the best way in my opinion to start is what's called real estate wholesaling. So basically it's a sales and marketing business and you're looking for houses. So if you're driving down the street and you see a house that's boarded up, beat up, that person may wanna sell and at a discount. So what you do is you put that house in contract and you sell it to another investor typically for cash and you make that middle money right there in the middle and you never own the house. So it's a great way to get in, a great way to build a business and create some active income to be able to buy real estate in the future.

0 (3m 17s):
Now let's not get too detailed here 'cause we have a lot to talk about today. Okay. But walk us through your first ever wholesaling deal. Tell us from knocking on the door to the conversation, to the contract, to finding the investor, to the sale, the profit. Let's get into some details there.

1 (3m 32s):
Yeah, so the first one that I ever did, so that I probably stumbled around it for at least a year before I actually closed my first wholesale deal, and this was 20 18, 20 19 maybe I, the texting services were brand new. So mass texting. So basically what you do is you pull a list from online so you can buy a list of public record data. And A big one is like absentee owners or high equity, meaning they own the house but they don't live in the house and they have equity in the home, meaning they can sell at a discount. And I sent out mass texts to that entire list. So I got their phone number, sent the texts out, this seller came back and said that they were interested. Ended up walking the house, putting the house in contract for $80,000 after some negotiations.

0 (4m 16s):
What did they want initially? I

1 (4m 18s):
Think they wanted like one 20, so one 20. And then just talking 'em through it and showing 'em what was wrong and just reasoning with them after a while.

0 (4m 25s):
Now did you know how much they were into it? Like did they own any money? Like what did, had they bought it for? Typically

1 (4m 30s):
You will ask that, but I was so new at the time, I didn't even know to ask that question. But yeah, that's typically one of the first questions you ask is, Hey, do you own this free and clear? Do you have a mortgage? What does that look like?

0 (4m 39s):
Mm, got it. And so then what happened at that point when you got it down to 80? How'd you find a real estate investor? Yeah,

1 (4m 47s):
So I was going to meetups there. So there's real estate meetups in every big city. If there's not one in your city, I highly recommend you making one. And it's just one of those things where Entrepreneurs like to hang out with each other and talk about money, talk about business. So through those, through those and also through Facebook groups, that was a main way to find my cash buyers at the time was posting it right in a couple Facebook groups and I found my buyer right there.

0 (5m 10s):
Fire Nation. One thing you just need to understand at the core is this, people that don't have money typically have time and people that have money typically don't have time. So that's why you can use that arbitrage when you're at one of those ends of the spectrum. If you don't have money, your time is what you need to use. That's valuable. And that's why when Tommy put in all of this grunt work and footwork and found a person and had the conversation and got them down to $80,000 and did all that that work, that was time that a rich person or a person with a lot of money is not willing to put in because it's not worth their time.

0 (5m 51s):
'cause it's gonna lead to a lot of dead ends. And so Tommy put in the time, sniffed it out, got the ball rolling, then found somebody with money and he's like, you know what? I am gonna pay more than Tommy put this under contract for or had agreement to because there was a lot of my time that was saved and Tommy's effort that went into that. And then you can Leverage that And so at some point Fire Nation, you flip the script and now you're Tommy who's a millionaire at 29 years old and guess what? Now he's the person that can kind of go and and have other individuals put in that grunt work and he can kind of say, okay, now I'm going to take the deals. That makes sense that people are bringing to me in this scenario. So there's a lot of exciting things there.

0 (6m 32s):
Anything you wanna add to that Tommy?

1 (6m 33s):
No. So just kind of what I said in the beginning, it's, it's all a factor of do you have, do you have money or do you have time? Because you typically don't have both and you need to figure out which one you are. So if you have a really good job and you make a lot of money and you wanna buy real estate, wholesaling's probably not for you. So you need to seek out those people that are gonna do the legwork for you and you're paying for a service just like anything else.

0 (6m 53s):
Interest rates are making everything a little more interesting these days. And I mean everything not just real estate but a lot of things. So let's dive into it. Can we still buy rentals with interest rates today?

1 (7m 6s):
The big thing about this is everybody looks at real estate in the terms of cash flow. So are you buying an asset today that's gonna spit you out more rent than you pay your mortgage? Let's say you get a mortgage for a thousand bucks and you get $1,300 in rent, you're gonna be cashflow positive a little bit with interest rates going up, let's call it in the seven 8% range. It's dropped a little bit here towards the end of the year, but that's just one factor of buying real estate, specifically rental properties. You have great depreciation so you can write off the income to your taxes, you can also get the appreciation long term. And then lastly, with the interest rate situation, if you have enough equity, if you buy that property, right, you fix it up a little bit.

1 (7m 48s):
If you have 20, 25% equity, day one when you refi, you can refinance that property again in a couple years and create your cash flow. So a lot of people don't think of long-term, but it's an investment. It takes a long time for these things to actually realize.

0 (8m 1s):
So let's again kind of go through maybe a little mini example that maybe you've seen recently because you know, and these interest rates right now are just continuing to kind of creep up. Maybe they're flattening off, sure, maybe in, you know, later in 2024 they will start kind of dipping down. But what does that look like on a real world example?

1 (8m 20s):
Yeah, so real world example, a couple months back we bought a house in Columbus, Ohio for $80,000. We spent three or four months getting a non-paying squatter out of the house. So I took a couple months to of holding time, but after we got 'em out we spent about $30,000 in rehab. So we're all in about one 10, let's call it one 20. And

0 (8m 40s):
Let's pause right here for a second. So I know every state's gonna be different, but what was the specific process you had to go through in Ohio to get that to happen?

1 (8m 50s):
So basically you just go through basic eviction things. You put a three day nonpayment notice on there, you send that to an eviction lawyer, they'll file all the paperwork and the process for you and they'll kind of give you updates as you go. So I would highly, highly recommend if you are managing your own properties, just get a very, very good eviction attorney on your side and they'll kind of walk your or step-by-step, hold your hand through the entire process.

0 (9m 12s):
Got it. So you got the person out, keep going.

1 (9m 14s):
Yeah, so we got the person out, we put about 30 into it. So we're all in about one 20. That property then appraised for $195,000 and we have it rented for 1600. So we, we have it, we have it stabilized, we have the equity, and now we're getting a refinance on this property. And I think the interest rate we got was 9.125%. So very high, not great, but we have that equity in that property. I think the payment, PITI is right around 1400 bucks. So not a home run by any means cashflow wise, but I know when these interest rates drop, I can refinance because I have the equity and create that cash flow long term. But I have the equity,

0 (9m 55s):
See Fire Nation, this is where you can really play the waiting game when you find the right properties, get at the right price and you know that hey, when the time is even better and the future goes at some point, you know, everything is cyclical, what goes up will come down, what is down will go back up. This is a cyclical world that we live in. You can jump on the better opportunities and then hey, maybe you're gonna lock in, you know, a four, 5% interest rate at you know, 15, 30 years, whatever that might be. And now you're like, okay, now I'm really sitting pretty on this. And of course you have that equity as well. So we have a lot more to talk about when it comes to this cash, et cetera. When we get back from thanking our sponsors,

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0 (13m 42s):
Tommy, we're back. And we often hear from a lot of individuals that cash is king and that one of the benefits of real estate is the Leverage that you have in using other people's money, so to speak. Now, we talked a little bit about that before the break, you know, where you were able to go in and you know, even at nine And A, little over 9%, you, you're still able to get that interest rate and have a $1,400 loan on a month to month basis, but because of the equity you have as an appraisals 1 95, you know, in the future that man, you're gonna be in a refi and be in a pretty sweet situation. So talk to us exactly how we can buy real estate without using our own cash.

0 (14m 23s):
Because either maybe number one, we don't really have a ton of cash, or number two, we don't wanna tie it up,

1 (14m 29s):
It's all lever, right? So if you use your own cash, you can like say you have a million dollars in the bank that can only buy you maybe two or three properties at a time in Columbus, Ohio and Columbus, Ohio is not an expensive market. So being able to find really, really, really good deals and give that opportunity to somebody that has money, whether it's in a 401k self-directed IRA, you can get a home equity line of credit, cash, whatever it is. So let's take that example. I just gave you the $80,000. I could have bought that with my own cash, but we took it to what's called a private money lender. They lent on the purchase and they also gave us the renovation of that property. So they cut us a loan day one of $110,000. And what we did is we went off to the races, we fixed it up, and then it was worth 1 95.

1 (15m 13s):
So it allows you to scale your business efficiently, effectively, and not constrain your cash reserves. And also at the same time, it gives you predictability. So being able to, as long as you can find really good deals and underwrite them properly, it's pretty low risk on that end. So that allows us to do 15 or so, maybe 20 of those at a time instead of using our own cash and being tapped to two or three.

0 (15m 38s):
See Fire Nation. This is what can happen when you have the experience, when you know the process, when you know the steps, which is why we're having this conversation. Let's dive a little deeper, Tom, because I'm just curious, like what would you want Fire Nation to really know around this topic? Especially if they're in that camp where they're like, you know, hey, I agree, like I, maybe I do have one or $2 million, but I don't just want one or two properties. I I wanna really Leverage that or I don't, I don't have that much money at all, but I really want to start getting into this game.

1 (16m 6s):
So at the end of the day, there is risk involved. So it's an investment, it's an investment for the person. So you have to understand, nobody really cares about what's in it for you. You have to explain to the lender what's in it for them. Mm. So the biggest thing for them is that they're secured by a real tangible, hard asset. They're not investing in stock, they're not investing in crypto, they're investing in that individual property. So what we do, let's go back to that $80,000 example, I took it to a guy I met through a, through through networking. I gave him a note, And A mortgage, a cogno promissory note. So basically I'm signing personally on this property and I'm signing as my business and I'm putting a mortgage on that house that ties him in first lien position.

1 (16m 49s):
Meaning that if Tommy Harr goes belly up bankrupt and whatever may happen, which is all possible, right? 'cause it is investing, then he has first right of refusal for that property. So if I don't pay him back, he forecloses on me and he now takes back the asset and is discounted because he can also review and underwrite that deal as well. It's not like valuing a stock where nobody knows what they're looking at. It's, it's a, it's a, it's real estate. If everybody knows somebody that knows how to evaluate real estate, so that is what's in it for them and they make double digit returns. So we're paying anywhere from 10 to 14% annualized returns on these investments.

0 (17m 25s):
Fire Nation. I hope you're starting to understand that this at the end of the day is a game. It's an investment, it's risk, it's a real game, but it's a game you can play when you know the rules that again, could end up going against you, couldn't up going for you. If you're willing to put in the work, you have a better chance of having the type of success Tommy's had opposed to just kind of walking around blind, just hoping that everything falls into place. Now you believe, and this kind of goes back to, you know, your experience that by first becoming a home inspector, you are able to become a good real estate investor. Tell us more.

1 (18m 4s):
Yeah, man. So I'm, I'm a big proponent on career capital. So what you do in the past is gonna work in your favor or against your favor in whatever you wanna to go do. So I graduated college in 2017 and my dad's been a home Inspector for 20 years. So I jumped into his business. He was a one man show and I learned how to be a home Inspector. Now that's not the sexiest business, it's not the coolest business. You don't go around the bar talking to women saying, oh, I'm a home inspector. And they love that, right? So, so as time went on, I was starting to meet investors and I was seeing that they didn't really know construction, but they knew numbers, they knew how to find deals and they were always coming to me asking questions about, Hey Tom, like what do you think about this?

1 (18m 44s):
What do you think about this? So I was teaching them about some of the construction aspects as I was learning and I was giving, bringing them value. And in return I was asking them what they knew, right? So it was basically an old school like, Hey, show me what you know, I'll show you what I know. And that ended up making me an amazing real estate investor because we talked about wholesaling in the beginning. I got to meet all these wholesalers in my town, I got to understand their systems because I was now a piece of their system and their puzzle. So they were ordering inspections and I was that person. So I would go talk to the sellers, ask 'em how they were, how, how they put the deal together. And I was just asking a million questions. So learning that, and then learning just, just sales. So my dad never had any marketing, he had never had any system, he never was on Google.

1 (19m 27s):
So at 22 years old, I just had to basically figure out how to grow a business from no backbone, I would call it and just work my way up. So it was, it was a mix of a lot of good things. fire,

0 (19m 39s):
Nation, career capital. I love that phrase. I hope you're really taking that in and understanding, hey, you have knowledge, you have skills, you have experience that you've acquired thus far in life. How can you, how will you use that going forward? Now Tommy, we've talked about a lot of awesome stuff. Give us the one key takeaway that you really wanna make sure Fire Nation gets from our conversation today.

1 (20m 5s):
The one big thing that I tell everybody is, especially if you wanna invest in real estate, it takes time and don't deviate from a bunch of different things. So if you wanna wholesale, learn wholesaling, build it, build the bridge, don't quit when before it's done. 'cause everybody gets on the internet, they see people like me posting, Hey, you can flip, you can wholesale, you can do Airbnb, you can do multifamily, but you can't do all of them at the same time. You have to have to have to learn something, master it, systemize it, build a business and put the right people in the place before you go chase the the next big thing, right? So make sure you spend the time, the effort, really the time to build it and build it properly.

0 (20m 45s):
Now, Tommy Fire Nation has been taking notes, they're excited, they understand there's a lot of opportunity here. If they wanted to connect with you, they wanted to learn more from you. What call to action do you have for Fire Nation today?

1 (20m 58s):
I post free content every day on my Instagram. I go live on Instagram every Monday. It's with Harr zero five, a lot of real estate content. So whether you wanna flip properties, whether you wanna wholesale properties or hold rentals, I give a lot of information on that. And then beyond that, I've built a community of nationwide investors. It's called the Real Side of Real Estate. So a lot of people on the internet don't share the real side I like to call it. So the failures, the hardships, the the, the things it really takes to become an investor. And we're putting all those people with the same mindset in the same room to be able to learn and grow together. So if you wanna join the community, I'd love to have you.

0 (21m 36s):
And one more time, where are they gonna go to find out more information? It'll

1 (21m 39s):
Be in the link in my bio on Instagram. So tommyharr05

0 (21m 42s):
and that's HARR Fire Nation. And you're the average of the five people you spend the most time with. You've been hanging out with TH and JLD today. So keep up that heat. For links to everything we talked about, visit EOFire.com, just type Tommy in the search bar, the show us page will pop up right there. And Tommy, thank you brother for sharing your truth, your knowledge, your value with Fire Nation. For that we salute you and we'll catch you on the flip side.

1 (22m 10s):
Absolute pleasure brother. Thank you.

0 (22m 12s):
Hey, Fire Nation, a huge thank you to our sponsors and Tommy for sponsoring today's episode. And Fire Nation, successful entrepreneurs accomplish big goals. That's why I created The Freedom Journal to guide you in accomplishing your number one goal in a hundred days. And we're talking step by step. Visit The freedomjournal.com and I'll catch you there. Or on the flip side, Marketing Made Simple hosted by my friend Dr. JJ Peterson is brought to you by the HubSpot Podcast Network, the audio destination for business professionals Marketing Made Simple brings you practical tips to make your marketing easy and more importantly, make it work. A recent episode on whether vulnerability is a superpower in business is a must. Listen, listen to Marketing Made Simple wherever you get your podcasts.

0 (22m 55s):
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