Despite his six-figure salary and a sophisticated corporate job, this episode’s guest lived from paycheck to paycheck. Like many people, he did not understand what it truly meant to be financially free — until he got married and needed to provide for his family.  

 Craig and Zeona are joined by Henry Washington, a former software developer turned real estate investor with hundreds of transactions and eighty buy-and hold-properties under his belt. Henry made the leap from full-time employee to financially free through a combination of preparation, persistence, and courage. 

 Perfect for those just entering the real estate arena, this episode illustrates how building relationships with fellow investors, tenants, and even local community banks can jump-start your journey toward financial freedom. 

Watch the episode here

 

Listen to the podcast here

The Value of Building Relationships in Real Estate With Henry Washington

We’ve got Henry Washington today and he just want to dance. I like us little dances. I’m like, “Oh, I wanna have my little signature dance.”

 

Yeah, when he gets excited, he likes to dance, so if you’re watching this on YouTube, definitely check it out and listen to the end if you want to make sure you don’t play his least favorite songs because I would agree on one of them, but I definitely like the second one but some people just have those things, it is what it is. But where in the world are you today, Z? Because I feel like you’re in somewhere new every day?

 

No, I’m in Boulder today and, yeah, I think what I loved about his story is that he broke it down really great for beginners. So, I mean, he’s got a whole bunch of investing experience and he probably could have just named off like 10 things but he did a really good job of saying, “This is how I got my first idea and then this is the very first step I took and this is the first person I had to talk to and I had no idea what I was doing the entire time.” And so if you’re at the beginning of your journey, this is such a good episode to listen to or to share with people because it really lays out all the steps. And he does go into mindset. He’s really into manifesting and listening to his intuition and I think that led him to a lot of really — they seem like chance occurrences but he was prepared for them too.

 

Yeah, and especially, and I kind of wrote down the notes here, it’s right around minute 28 to 32, if you guys can fast forward to around that time, maybe give it a few minutes on the front and the back, but he goes into exact questions you need to ask and how to go into your local banks and request these loans that you may have never even known existed. And so if you’re new and you’re struggling to get your second or third house or even your first house because of your down payment or your credit score or something like that, go into these banks and see if they might be able to help you out. The worst they’re going to say is no, you’re going to walk away and they’re going to literally forget about you five minutes after you walk out the door, so that would be the one big action step from this podcast. And one last thing before we listen all the way through, if you didn’t already know, The FI Team has a whole bunch of different resources for you guys. If you go to thefiteam.com and click Resources, you’re going to see a whole bunch of things in the resources file, like calculators, you might even find some leases, you might find a bunch of other different stuff so we’re here to provide you with as much value as possible. Feel free to go and check some of the stuff out. And now, let’s bring on Henry Washington.

 

Henry Washington, the man, the myth, the legend. Welcome to the show, my friend. How you doing today, dude?

 

I’m well. Excited to be here finally. Thank you so much.

 

Dude, we are pumped to have you, man. I think we had you on an Instagram Live maybe like six months or maybe a year ago and that was super fun and I’ve kind of been following your story. Ever since we met at that BPCON like, shoot, I don’t even honestly — there’s been —

 

2019?

 

2019? Yeah, was it — that was in Nashville —

 

Nashville? Yeah.

 

Yeah, yeah. And, dude, you’re super inspiring and so we’re so excited to share your story with everybody. So, like any good story, why don’t we start from the beginning as to where you first heard about financial independence?

 

Oh, man. I first heard about financial independence, let’s see, so it was probably mid 2017 so like the summer of 2017, I think is when I started — when I found it, because I had a panic attack at three in the morning about when I came to a realization after being married for a little while, maybe a few months, that, although I have a really good job and I make a really good income. I can’t afford anything. And like as a single male, I think I was comfortable scraping by and living paycheck to paycheck. It was really worse than paycheck to paycheck. I remember times after getting paid where I would — I’m half a week away from getting paid again and I’m trying to figure out how many meals I can get off the dollar menu. This was back when things on the dollar menu were actually a dollar, but inflation sucks now, but I would think, all right, if I eat dollar menu food or ramen noodles or something for the rest of the week, I can get through until I get paid again. And as a single male, I really didn’t care about that. And then I got married and my wife does care about that so that wasn’t —

 

Surprise, surprise.

 

— wasn’t going to work. So, I had that wake-up call and then I also had my wife and I tried to buy a house together, as most new married couples do at some point early on, and the lender, I remember the lender calling me and saying, “If you want your wife to be able to buy a house, you can’t be on the loan,” essentially telling me I was screwing this up for her. And up until that point in my life, I’d done the things, like I did the things everybody said, I went to school, I got good grades, I got a technical degree so I can make money sooner out of college, I went and got a good job and started climbing the corporate ladder and was making six figures and I was like, “I did the things,” and I’m like, “This life isn’t comfortable.” I just wasn’t — and then that blow to my ego about not being able to be a provider was just kind of the straw that broke the camel’s back and then — well, that wasn’t, it was the second to last one. The last one was when my wife and I had a conversation. So, you know, you have conversations about your future, right? That’s what’s fun when you’re in a relationship and you talk about future kids and dream houses and vacations you’re going to go on and all these things and I was having this conversation and I just remember not being excited. I just remember being terrified, because, in my head, I’m thinking she deserves these things and I have no idea how to give it to her. I couldn’t even be on the loan for this house so how can I afford a dream house? She’s going to start doing the math in real life and realize it’s not mathing and then she’s going to leave me, those were the thoughts that I was having and so that’s what led me to my panic attack.

 

Okay. So, Henry, I just want to get a decent, like kind of a background as to what were you spending your money on, because if you’re making a hundred grand, especially in 2015, you’d think you could buy a house?

 

Yeah, no, I probably ate most of my money, to be honest with you, like eating out, hanging out. I had a nice car, nicer than I probably should have had. I had a more expensive apartment than I probably should have had. I grew up, I would say middle class, upper middle class, so I didn’t come from a background of struggle and so I wanted the same comforts without having to work for them, I think, because I didn’t know anything else and so I overspent on things that I probably shouldn’t have but didn’t have the financial education to know that I shouldn’t have done those things, like I thought I was doing what I was supposed to do. And so I just overspent my lifestyle.

 

Okay, I want to hear what’s the turning point? Who did you hear that had something else for you?

 

Yeah. So, after that conversation that evening, I woke up at three in the morning literally panicking, breathing hard, sweating, losing it, and it was all because I was —

 

You sound like me today.

 

Yeah. It was — well, yeah, I sweat in any element but this was extra sweat. So I was freaking out because I was like, “I can’t afford any of this and she’s gonna leave me,” and so I started to do what anybody would do at three in the morning when you’re panicking about money and I started Googling how can I make extra money, and what started to pop up on Google searches, yes, there were like ways to make money but it was mostly articles about real estate. I started seeing terms like “financial freedom” and “cash flow” and “passive income” and I had never really paid attention to those things before and I never thought about real estate as an option, especially after a bank told me they weren’t going to loan to me but I started to see articles on BiggerPockets and I started to see TED Talks of people who have used real estate to build wealth.

I started to see that real estate was the common denominator amongst all these terms, amongst the terms of financial freedom, passive income, cash flow, equity... Click To Tweet

and I was like, “All right, well, real estate seems like the thing that’s gonna get me all these things that I feel like I need,” and so I really dove into that and I started to see that regular people owned real estate. I never thought about that before. I just thought super rich people and corporations owned real estate and that’s just what it was. I never thought that the dude who lives next door to you owns a bunch of rental properties, like it didn’t ever dawn on me. And so I was just in a place where I felt like my back was against the wall and I told myself in that moment, at three in the morning, I said, I actually ended up watching this video, this TED Talk of this kid, he was 20 something years old, he had 20 something single-family homes and he was financially free. That really put the guardrails around it for me, because, for me, financial freedom before I actually knew what it meant, for me, that just meant I need a bunch of money in the bank, I need millions of dollars so that I don’t have to worry about money anymore, but what he helped put the guardrails around it for was that financial freedom really just means generate enough passive income that it pays your bills, your current today’s life’s expenses. So if it costs you $5,000 a month in expenses, if you can generate that same income in passive income, you’re technically financially free and it just made it seem so much more achievable to me that I just decided, I said if this kid figured it out, if all these people I’m seeing on BiggerPockets and all these articles own property, I can figure this out, there’s no way I can’t do it so I’m just going to do it. So that was my turning point.

 

I love that story, man. I think you’re the only person that I heard of that has woken up in cold sweats and discovered financial independence at 4:30 in the morning while his wife is in bed. So good on you, though, for not resting on your laurels and waiting until 7 a.m. because, who knows, you may never have found it. So you found BiggerPockets, this is like 2015 is what it sounds like, and so what’s your first step in terms of getting on that path to I guess buying your first place?

 

Yeah, so here’s what I did. In hindsight, here’s what I did that was valuable that I didn’t know that I did so I wasn’t some super wise guy. Looking back, I’m able to tell how I got there. So I made a decision at three in the morning that I was going to figure this out no matter what, like there was no other option, there was no plan B, it’s going to work or it’s going to work. And I just knew it. I just knew it. I don’t know how else to explain it but I decided wholeheartedly that I was going to figure this out. And so I did two things. I woke up in the morning and I told my wife we were going to be real estate investors and she was like, “All right, sure,” and then I was like I don’t know where to start, how to start, I don’t know any investors. I know one person who’s a real estate broker who talks about commercial real estate that I sit next to at work and so I went to work the next day and I said, “Hey, I’ve heard you talk about real estate before, I know you’re a broker. I think I want to be an investor. Can you help me, like point me in a direction? Like I don’t even know what to ask you for,” and she lit up. She was like, “Yes,” and my wife and I met her at Red Lobster and she brought a box of books with her and she dropped it on the table and she was like, “Pick one. If you pick one and read it, I will help you.” And I just started rifling through. Guess which book I picked?

 

Well, Rich Dad Poor Dad, please.

 

The House Hacking Strategy.

 

And, honestly, I didn’t know anything about the book. It just — I remember I had heard the title somewhere before and I was like, “I’ll pick this one,” and then read the book and realized, “Oh, I’ve been doing everything with money all wrong.” It was just such an eye opening experience, but that was my foray into getting started.

 

The genesis, man. I love that, dude. And one thing I really love about your story is you weren’t afraid to ask somebody. Even though you had absolutely no idea what the next step was, you kind of just like — you almost like went through the red light cautiously, right? You’re like, “Hey, what’s next? I really don’t know what’s gonna happen next,” and that woman, I think we’ve all been in that woman’s shoes now where someone asks us about real estate and we’re like, “Oh my God, I’ve been wanting to talk about this to everybody for so long —”

 

Finally, yeah.

 

Yeah, like, finally, a friend. And so don’t be so shy, like there’s so many people that literally want to help and they want to talk about real estate but they’re just like afraid of being shut down because that’s what most people do. So, love that you did that, man. So you’re reading Rich Dad Poor Dad and this is while you’re at your job. Remind us what you did at your job.

 

I was data analytics and software development.

 

Okay, so super fun.

 

For 10 years.

 

Yeah.

 

Just like Dave Meyer.

 

Just like Dave Meyer, yeah. All right, so you read Rich Dad Poor Dad, man, and then what happens after you read Rich Dad Poor Dad?

 

I go, oh, this is a whole lot different than I’ve been learning to do with money. And so — well, two things that I did. I decided that I was going to start saving 10 percent of what I made, because that was one of the principles of the book and I was like that’s something I can do right now. I didn’t save money before. And then my wife and I read the book together so that helped us both be on the same page about investing and about financial freedom. It wasn’t like I went down this path alone. And so by doing that, it was easy to have conversations where I say, “Okay, well, now we’re just gonna take 10 percent of what we make, we’re gonna sit in in a savings account, regardless of if we feel like we can afford to do it or not based on our current expenses, we are paying ourselves first,” and I said, “Look, if we do this and all we do is that and we never buy a property in the next 12 months, if we wait a whole year and all we’ve done is save 10 percent, look at how much money we’ll have in our savings account. We’ll still be in a way better position than if we had done nothing so the least we can do is that,” and that step really opened my eyes to the power of thinking about money differently and seeing money differently, because, in all honesty, the money sitting in a savings account, it’s not earth shattering, it’s still there, you can still get it and spend it if you want to, but the actual physical task of putting it in a separate account and then watching it grow made me want to grow it more. And so, now, every time I did something where I made some extra money or maybe I got a little spot bonus at work or maybe we sold something, instead of us just putting it on our account and spending it, we would both go, “Oh, let’s put it in the savings account,” because we just wanted to see it keep growing, like our mindset’s changed about how we felt about money because we made this small adjustment.

 

But it sounds like you guys gamified it a little bit and that’s kind of like, that adds to that bonus, it’s like when people do snowball payments and it’s just like really fun because it’s like, “Ooh, I can just throw five more bucks of that and that’s gonna make a difference. I’m gonna see that needle move.” Great. So, what took you from just saving to actually getting courageous enough to buy something? I’m assuming you bought something, I don’t really know what happens next but let us in.

 

Yeah, so, I didn’t know what to do, obviously, and so step one, I talked to this person who helped me figure out what books to read, and then my next step was I was like, “Okay, well, there’s gotta be more people like her. There’s gotta be other people who are around here investing in real estate who I can just be around because I don’t know how to do this and so I’ll just spend all the time I can around people who are doing it and maybe I’ll learn what my next step should be.” And so I was doing things simultaneously. I was educating myself relentlessly, like I just made myself listen to podcasts in the car, audiobooks in the car, like I would just flip through Amazon and pick a book, like I didn’t even think through why, I was just like if it’s real estate investing, I’m going to listen to it and I was just consistently filling my head, because I didn’t know what I needed to learn, I just knew I needed to learn as much as possible. And then, as I would listen, the things that would resonate with me, I would dive deeper into. And so I didn’t really have this strategy of knowing how I was going to invest and so I was educating myself relentlessly and then I found every real estate investor group, meetup, club, I didn’t care. If people were investing and they were going to get in the room, I went to that meeting, and I went over and over every meeting, every single meeting.

I was in every meeting I could consistently. I didn’t stop. And I was just using it as a way to learn what to do but what I was really doing was I was building all these relationships. Click To Tweet

And then I also realized, like, you guys know, like real estate investors, it’s a pretty special group of people. Most investors want to help you. It’s not like a lot of other industries where people feel it’s not in my best interest to help you. It’s kind of the opposite with most real estate investors, like they want to help. They’ll give you all the secrets like there is no secrets and they share it all. And so I was building this network and people wanted to help me because I was consistently in the room and I was very intentional about how I got in those rooms. I didn’t get in those rooms and go hide in the back. I got in those rooms and I went and sat in the power seats. I sat in the front and center and most people avoid front and center because they don’t want to be called on or be asked something that they didn’t want to talk about or be expected to know something they might not know. I didn’t care. I was like I’m being where I can absorb the most information and be around people who know the most. And people just started to assume that I had all these properties because I was always in the room with investors and I was always right up front in all the mix and people would say, “Hey, what’s your portfolio look like?” and I’m like, “Oh, I haven’t done a deal yet.” “You haven’t got a deal yet?” They would be surprised, and so they naturally wanted to help me. And the other thing that I did at this time was I started to tell everyone that I was an investor even though I had never done a deal. And my intent with doing that is I’ve just always been a believer that you attract in this world what you put out, like if you don’t like the results that you’re getting from something, if you don’t like who was around you, then you probably aren’t paying attention to what you’re putting out there that’s drawing those things to you. And I knew I wanted to be an investor so I was like if I just tell people I’m an investor, (a), if I don’t believe it, who else is going to believe it? But, (b), all of the things that come to investor should come to me too. And so I was like, I’m just telling everybody I’m an investor, that’s literally how I got my first deal. My buddy heard that I was buying property that I worked with and he literally called me, he said, “Hey, I was talking to so and so because I was trying to sell my house and he said you’re buying houses now and I gotta sell this thing, I’m in a really tough spot.” And so I ended up landing my first deal just because I was telling people that.

 

Dude.

 

Amazing.

 

That’s such gold. And I think it’s such a perfect progression to go from, listen, listen, listen, absorb information, read all the books, do all the things, this is exactly what I did too, I listened to every BiggerPockets podcast, and then you kind of figure out what your niche is, you can at least go talk the talk once you listen to those podcasts and listen to those books so then, again, it seems like you’ve done a lot of deals and then you got to go to the events and network and see the people that make it happen. And so, now, it seems like we’re getting into the, Z, are you ready?

 

Yeah.

 

The For Real Deal.

 

This is the first deal that you ever did as a real estate investor so give us all the details of how you found it. Sounds like it was from a friend.

 

Yeah.

 

What you bought it for, roughly, if you don’t remember and what you did with it?

 

Oh, I remember very vividly.

 

All right, perfect.

 

Yeah. So it led me to get this lead on this deal. My buddy, he had this house that he used to live in and we were friends so I had been to the house and it was a 90s built house, brick all the way around, solid house, and he was like, “Hey, I haven’t been living in my house for the past couple of years. I’ve been letting somebody from the church live in it who was supposed to be able to be fixing their credit so that they can buy it and then I was gonna sell it to them because I needed the cash from that to go buy this other property for our church. I have to buy this property, I have to sell this one to do it, and I have to do it by this timeframe. That’s 30 days away. So as long as you can buy the house in 30 days, I’ll sell it to you for $115,000. The house is worth about $150,00 to $160,000, I don’t care about that. All I care about is I got to sell it for $115,000 because that gives me exactly the amount of money that I need to go do this other deal. So if you can buy it in 30 days, you can have it for this.” He said, “Can you do it?” And I said, “Yeah, absolutely I can.” I had $1,000 in my savings account so I had no money for a down payment, and I still had not the greatest credit. I had been working on it since the terrible phone call with the lender before but it wasn’t in the best place. And so, all normal human logic and reason should tell you that I should have said no but I decided 90 days before that that I was going to do this and this was my opportunity. And so I didn’t hesitate to say yes. And so, now, I had to go figure out how the heck I was actually going to do this, but that’s where the network comes into play because I was able to take them this contract— oh, by the way, I didn’t even know I needed a contract. I literally had to Google, after he said, “Will you buy it?” I had to Google how do I buy a house without a real estate agent and it said to put it under contract and then I had to Google how do you put a house under contract, and then I had to download a contract off the internet, change some names, we signed this contract that I had read only a couple times, this is a terrible idea for people, they shouldn’t do it, but this is like — that wasn’t going to be stopped. So I signed the contract —

 

Luckily it was a trusted person that you knew, all that stuff, yeah.

 

Right, right, yes. This is to talk about the mindset. The action part, you should do a little more due diligence about, but we signed the contract, I took it to my network of investors, and I said, “Here’s the situation. (A), is this a good deal? It sounds like a good deal to me but I’ve never done one. And then, (b), how the heck are you guys buying these things if you’ve only got limited funds and not great credit?” And so they were able to help me brainstorm ideas and so — well, the first idea I had before I went to them was like I knew I needed money so I went to a bank.

 

That was probably funny.

 

I chose the bank because it was the closest bank to my work and I just walked in there and I took the contract and literally had it and I told the lender, I said, “I want to buy this house,” and he looked at it and he goes, “You know it’s worth way more than that, right?” and I go, “Yeah, that’s why I’m buying it,” and he goes, “All right, well, as long as you got a 15 percent down payment, as long as you got about 20 grand to put down, we can help you buy that. We’d love to lend on that.” I was like, “Yeah, I got that, for sure.” So that’s when I went to the network because now I had this issue, the issue was I have the house now but how am I going to buy it? And they helped me brainstorm ideas for how to be able to get the money for the down payment, so they started bringing up things I had never heard about, like do you have another asset you can pull a line of credit on, I was like I don’t even know what that means. Do you have this and that and somebody was like, “Well, you have a job, right? You can borrow against your 401(k),” and I was like, “Well, I don’t wanna do that because then I gotta pay all these penalties and fees,” and they were like, “No, no, no, no, no. You’re not cashing out your 401(k), you’re borrowing against it. You can borrow money from your 401(k) and then your employer will take the money for your payments out of your paycheck and they’ll take it pretax so it’ll actually reduce your taxable income and the interest that you’re paying on that loan is to you, it’s your money, so you get the interest too.” And I was like, “That sounds really cool. I would do the math,” and I did the math and thought about what I could rent it for and I was like, “Well, this seems to work,” and so I was like, “Great. This seems like the way I’m gonna get the money. Now, I just gotta go find a 401(k).” Because I didn’t have one of those either, but my wife had the 401(k) and so I got to go back to her and say, “Hey, remember when I woke up at seven in the morning after my panic attack and said we’re gonna be real estate investors? Well, I’m here to cash in on that. So, we need to borrow 20 grand from your 401(k) so we can buy a house,” and she said, “Let’s do it.” And a week later, I had the money, we bought the house, we kept the same tenant in it, we raised the rent to market rents, it cash flowed, it was paying for itself, it was paying us cash flow, it was paying back the 401(k) loan and I was just in shock that we had gotten there.

 

So I just want to highlight something. I think it’s so cool that you guys read Rich Dad Poor Dad together and got on the same page, because then when you came to her with your crazy idea, it didn’t seem so crazy to her. She was like, “Okay, finally, we’re gonna do this,” rather than having a spouse that is fighting you the whole way. So I think that’s really awesome. Craig has more to say.

 

I’ve got one question for you, Henry, about the 401(k) and how does that work in your debt to income? And so does the bank take into account that you’re paying yourself interest on that or how does that work?

 

You mean as far as getting a loan for another property?

 

So you’re getting a loan for the down payment, right? So I always thought that banks kind of want the down payment to come from your funds or could be like gifted funds but if the fund is loaned, isn’t that kind of like another issue or — oh, you’re doing the dance. You’re doing the happy dance so you got some stuff to drop.

 

Yeah, that is a phenomenal question. So here’s, again, like I was no genius, this all just worked out this way and I learned some things. So I said the bank I chose was the bank that was closest to my work, right? That bank happened to be a small local community bank and not a large bank. The lender that I talked to happened to be the commercial lender and not your standard conventional loan type lender. And so what I actually ended up doing was using an investor loan or a fix and flip loan or a commercial loan, there’s tons of different words for it but, essentially, I did a commercial loan from a small bank to buy this residential property, I had to put 15 percent down and they put it on a 25-year amortized loan that was at a fixed rate for five years and then the rate adjusts. The loan isn’t called due but the rate adjusts after five years to whatever prime plus one is. And what I learned when I went there is I remember he said, “We would love to have this loan here,” and then not long after I bought it, that same bank called me and said, “Hey, Henry, that house that we gave you the loan for, it has equity in it because we appraised it and we know what the equity is. We would love to give you a line of credit on that equity so that you can go use that fund to go bring us more deals like this.” And so as I started to dive into why all this was the case, I learned that small local banks, (a), have loan products I didn’t realize they had so you don’t have to use your typical conventional loan to buy a rental property, so they have loan products that were meant for real estate investors, meant for small businesses, and they want those loans because they get paid by lending money where your big, larger banks get paid by selling loans. So they’ll service these conventional type loans and then they’ll go sell them off and so all the people they loan to have to fit in this box of debt to income and credit score and all these things have to be perfect. Small local banks, they need to lend to small local businesses to stay relevant and so when I brought them a house that I bought for $115,000 that I still put money down on and it was worth $150,000, they were so comfortable with that because if I was Henry’s Food Truck instead of Henry the real estate investor and I go ask for a loan for my food truck business and they give it to me and then I go buy a truck and a stove and all the things for a food truck and a restaurant and then I go belly up, they get back all this equipment that they can only go sell for pennies on the dollar and then they end up in the red on that loan, whereas Henry the real estate investor, if he doesn’t make his monthly mortgage payments, they foreclose on the house, they get back a house where it’s worth $150,000 but they only need to sell it for more than $115,000 for them to be right side up so they can go sell that house for 130 as it sits and pocket way more money than they are at just Henry making his interest payments every month so it was a nice safe investment for them and they wanted to do more of them so I started to learn a whole lot about how small local banks work and how they can be an asset to real estate investors. And so they also don’t care where your down payment comes from. They literally said borrow it from this asset we’ve already loaned to you on and use that for your down payment for your next property.

 

Dude, I love that and I love going into small banks. And it sounds like you kind of like almost hit the jackpot and you got lucky, because I’ve gotten into small banks, they’re not all like this. Henry got lucky on his first one but if you’re doing this, make sure you’re going into many local banks and see what products they offer. Henry, what does that conversation look like? Like if somebody is here, maybe they got one property, they’re struggling to get the down payment for the next one, they want to move quicker, maybe they can go to a bank, one of these local banks for the option, what do you say when you walk into that bank?

 

Yeah, so you always want to speak to the commercial lender at the bank so you ask for the commercial lender. I tell people be as overly prepared as possible, have a general understanding of what it is they’re going to ask you for, have it with you, or have it where you can access it and get it to them in their email box like almost on site, on the spot. And so you have your two years of tax returns ready to go in an email, have your last two months of bank statements ready to go in an email, have your LLC documents, if you have one, your articles of organization, all of those things you should have ready to go, and then I tell people create an experience portfolio, which is a fancy way of saying create a PowerPoint deck and have one slide for every deal you’ve ever done and all it really needs to do is have a picture of the property and then what you paid for it, how much you spent fixing it up, and then what you made on it if you sold it or what you’re renting it for if it’s rented or what you wholesaled it for if you wholesaled it, whatever the case may be, and then every time you do a deal, just create a new slide. And then, literally, I would print that out and take that with you if you’re going to physically walk into a bank to be able to hand it to him. Obviously, you can email it to him too, but like saying you have all these things and you’ll get it to them in an email is cool but being able to sit there, if you’re going to sit in front of somebody, and show them that you’re an experienced investor and that you’re prepared and that you know what you’re going to do, it helps them have that level of trust and you can start, because they’re going to want to do business with people who they feel like know what they’re doing and people who they feel like have some experience.

So if you can make it as easy as possible for them to get comfortable with you quickly, you can start to ask for favorable financing terms because they want those good deals. Click To Tweet

All right, I just want to pop in here and do a little ad real quick. So, this episode is all the magic that comes through meetup groups, and so both Craig and I have meetup groups. If you want to check them out, mine is called Airbnb Investing, you can check us out on Facebook, we have a Facebook group, we livestream our in-person meetups that happen here in Boulder, Colorado. I don’t have all of Craig’s info but if you want, DM him on Instagram at @thefiguy and he’s got events through his team and personally in Denver. So check out our groups. Now, I want to ask you, Henry, what did you end up doing with this property? Did you rent it? Did you turn around and flip it? What happened with it?

 

Yeah, we rented it and we kept it as a rental probably for about a year and a half, almost two years and then we sold it to buy a 12-unit property.

 

Oh, wow. You just kind of went all the way. All right. Well, so tell us like a little bit about what was your mortgage, how did that end up being, how’d you find these tenants, what did they pay, that kind of thing?

 

Yeah. So we kept the person in it that was living there and, basically, we went to them and said, “Hey,” because all they were paying was whatever the mortgage payment was, that was an arrangement with the previous owner, and I went to them and I said, “Hey, we just bought this place and so, obviously, we have a mortgage payment, our mortgage payment that we have to pay so we’re gonna have to raise your rent,” and I pulled rent comps so that I could actually show them what rents were in the area to justify what I was going to be raising the rents to, and I think at the time, market rents were about $1,200 for that house and he was paying about $875. And so I said, “Hey, if you move out, I know I can get about $1,200 for rent based on this.” I was like, “I know, that’s substantially more than what you’re paying, here’s what we’re willing to do, we’ll let you stay for 60 days, so two months at your current payment and give you time to find something else that may be more budget friendly for you. And if you choose to stay after that, then we can move you to $1,100, which is under what I would be able to get somewhere else but higher than what you’re paying now and that would be a win-win, and if you find something else, then, by all means, take that route and go to that place.” And so we did that and after about 30 days, he called me and said, “Hey, I think we’ll just stay here.”

 

Nice. Well, that’s really generous of you, because a lot of people just go, “All right, let’s hike it up. Let’s get this person out or make that money.”

 

I was new enough to know that if they moved, it was going to cost me more money on top because I was going to have to do the turnover and I just didn’t want to have to do that if I didn’t need to but was willing to so as to not get such under market value rent and so I was trying to be as accommodating as I could be in that situation.

 

So it sounds like you were making about $1,100 a month in rent. Do you remember what the mortgage payment was?

 

I don’t. I wish it did.

 

Was it less than that?

 

I could probably do the math and tell you. I think my loan was for about $95,000 at 5 percent, so on a 25-year, that’s not too hard to figure out.

 

Yeah. So I’m guessing you’re probably right around like 600 bucks or so a month. So you’re cash flowing, let’s say, like a couple hundred dollars —

 

Oh, that’s still nice.

 

Yeah. So, you’re cash flowing probably right around, $200, $300 after you set some aside for expenses and all that and so that’s — I mean, that’s a 1% real deal. And where are you? Where is this deal located?

 

This was in Northwest Arkansas. Fayetteville, Centerton area.

 

Okay. Very cool. And so basically you kept this property for how long renting at $1,100, $1,200?

 

Yeah, we had it for about a year and a half.

 

And so what year did you buy it in? Just to get an idea of time.

 

Bought it in late 2017.

 

Okay, and so that means you sold it in what? Like 2019, 2020?

 

2019, early 2019.

 

And what did you sell it for? Do you remember?

 

$175,000.

 

All right. Hell yeah, dude. So that’s a $60,000 profit and you didn’t do anything to the property, you just found a good deal, you found somebody that was in trouble that needed to sell the property to, and that was it.

 

That’s right. Once they moved out, we cleaned it up a little bit before we listed it but that was about it. We didn’t have a second tenant. That was the only tenant that was in it.

 

Wow, okay.

 

Nice.

 

And so then you mentioned, and I love to hear the stories about, and this is like why real estate investing is so exciting and why I’m excited about it, is that your first house hack or your first deal is not going to make you rich but it’s going to give you the foundation to then lever up and become a lot richer. And so it sounds like you went kind of balls to the wall here, for lack of a better word, like one to twelve units. So, tell us a little bit about that, how you had the courage to go from one to twelve, and how you found that twelve-unit deal?

 

Yeah.

 

Well, you probably got a few in between, I’m assuming.

 

I’m sure.

 

Yeah. And so the story goes, a couple of things happened after I closed on the sale of that first property. I immediately knew that I had found the thing that was going to not just help me supplement my retirement but help me now retire my wife, like I knew instantly that this was it. That was my proof of concept. Also, the other thing that happened is I also knew that my goals were too small. We had set a goal before we bought that property that we were going to buy one house a year for five years, because those goals were based on what we didn’t know.

And then once we have that proof of concept, we sat back down and we said, “We gotta go bigger,” and then we ended up doing five deals in our first month. Click To Tweet

And the third thing that hit me like a ton of bricks was I was excited that I had gone from panic attack to now owning this property and knowing that I found the thing that was going to change my financial future forever, but the feeling that I felt because of that wasn’t joy, it was responsibility. I felt an overwhelming —

 

Like Spider-Man.

 

— responsibility to share this information with as many people as possible. Ninety days before that, I was panicking, thinking I wasn’t going to be able to pull myself out of this, and now I own this property and I’d found a way to do that and I know I’m not the only person that’s been in that boat and financial education isn’t something that’s taught in a lot of homes, it’s definitely not taught in a lot of homes of people who look like me and I said, “I need to put this out here for as many people as possible,” and so that’s why I started my Instagram. I didn’t know what to post or how to post or why to post, I just knew I needed to share my journey so that somebody could see that this was possible. And so that’s what led to all this.

 

That’s great. Because a lot of our listeners are on their first deal or even second deal, they’re usually pretty early on in their journey, I think it’s great to kind of dive into the second one because it looked like you went one to five, but how did you get this next one? Did you do the same thing or did you kind of change it up a little bit?

 

Yeah, so I did a couple of things. I immediately started pouring some of the cash flow into marketing so that I could find more deals. I knew I needed to find good deals and I learned that from those real estate investor meetups because as I was going, the thing I would hear all the time, I still hear it and I heard it then, I hear it now, it doesn’t change, everybody always says, “It’s hard to find deals, it’s hard to find deals, it’s hard to find deals.” It doesn’t matter what market you’re in, investors always say it’s hard to find deals. And so I said, “All right, well, if I can get good at finding deals, I know I got a room full of people who will buy ’em from me —

 

100 percent.

 

— who’s good at finding deals,” and as I started to study, obviously, I saw that wholesalers were the ones that were typically out there hustling for deals and so I said, “All right, well, I’ll just operate my business like a wholesaler,” meaning, on the front side, I’ll do direct to seller marketing, I’ll go all in on direct to seller marketing, I’ll just generate my own leads and I’ll buy them all, because the two things you need for scale are you need deal flow and then you need money flow.

If you’ve got deal flow and you’ve got money flow, you can scale as fast as you want. Click To Tweet

I knew I had money flow because I had worked with that bank and they told me how I was going to get all these deals financed and then they started to finance the deals at 100 percent for me so I wasn’t even bringing down payments. And so I knew I had money flow and so I just had to figure out deal flow and so I started to do direct to seller marketing. I bought everything, I still do, I buy everything that’s a deal, I keep the ones I want, I sell the other ones to this day. That’s how I operate. So the second deal that I did actually came through word of mouth as well and it was a flip. So, a real estate agent brought me a lead on a house that he had as a listing that the lady didn’t want to list. She was going to list it and she kept backing out on him. She just wanted to do a quick sale and he wanted the commission check and so he was like, “Hey, if I can get you in here, here’s what I think it’s worth, would you buy this house?” I went and looked at it and bought it and pretty much put it under contract and ended up buying it. It was a flip, we paid $175,000, and then we put about $40,000 into it and sold it for $325,000.

 

Wow. And so at this time you had your team, you had your contractors. Was that a whole story —

 

Heck, no.

 

No?

 

Absolutely not.

 

You sound like you’re —

 

No, I had none of those things.

 

So how did you find good people so quick?

 

I found the contractor that I use, so once I had the deal under contract and I was like, “All right, well, I gotta find a contractor,” and so I ended up seeing a big dump trailer outside of a property on my way home, because I would pass this house every day and I kept seeing a dump trailer outside of it and I was like, “I need a contractor so I’m just going to go knock on the door and see whoever the contractor is and see if I could talk to him and see if they want some more work or if they bid the job for me,” and I did that. I went and knocked on the door and the contractor answered the door and it just looked like he was living there and I was like, “Hey, is this your place?” and he was like, “Yeah, it’s my place.” I was like, “Oh, that’s cool. Are you renovating it?” He was like, “Yeah, it’s being renovated,” and I was like, “That’s cool. Who’s your contractor? Would you share that information?” and he was like, “Oh, it’s me.” I was like, “Oh, you’re just remodeling your own house?” He was like, “No, I’m actually a contractor, I remodel other people’s houses, I’m just also doing mine and this happens to be my house,” and I was like, “Oh, well, I’m looking for a contractor. Would you be willing to bid a job for me?” and he was like, “Yeah, I’ll bid a job.” He was like, “Do you wanna see what I can do?” and I was like sure and he walked me into his house, on the spot, dude off the street, he’s walking me through his house showing me his work. His kids were like sitting there and I was like, “This is cool,” and so he bid the job and it was reasonable so I gave him the job.

 

Nice. I have a question, like is your life just magically unfolding all the time? Are you just like a manifester that lives on this journey? It seems like everything just happens so perfectly.

 

You know, it does seem like that, and it’s not that. It’s about — like I said, I think there’s power in decision. I’ve always been good at listening to my heart, good at trying to listen to what God is telling me to do, and I just try to stay faithful to that, and there’s also power in positioning. So, yes, it seems like I got lucky when my buddy calls and says, “Buy my house for under market value.” I think, to most people, that seems like luck. But it’s not luck. It’s positioning. We’re given opportunities all the time.

Opportunities come our way all the time. Some of those opportunities we should take, some of them we shouldn’t take. Click To Tweet

We have to discern which ones we should take, but the ones that we know to take is typically you’ve positioned yourself to be able to take advantage. He could have come to me and that same day he came to me and asked me to buy his house but if I never would have started networking with the investors, if I never would have started to do all the foundational things beforehand to make me feel confident enough to say yes, I’d have just passed on that opportunity. I’d have just told him no. So, yes, the opportunity came but the more important thing is that I was ready for the opportunity when it came because I positioned myself to be.

 

Great. Love that. Well, we need to transition to the final part of our show but before we do, do you have any final words of wisdom for people that are listening right now maybe just wanting to get started and feeling a little scared?

 

Yeah. Investing is super flexible. That’s what’s pretty cool about it. There’s a hundred different ways to buy a property, there’s a hundred different types of properties to buy, there’s a hundred different avenues you could go and that’s cool but when you’re new, that’s super overwhelming because who wants to research all of them before you take any action, right? So I would say to a new investor who’s scared is to put the blinders on and focus on the lowest common denominator.

If you want to be successful in real estate, it doesn’t matter what your exit strategy is, it doesn’t matter if you want to flip houses, wholesale houses, rent houses, Airbnb houses, the common denominator amongst all those strategies is you have to… Click To Tweet

In order for you to do that the better deal, the better your return on investment is going to be no matter what your exit strategy is. And so instead of focusing on, “I wanna be a house flipper,” or “I wanna be a buy-and-hold investor,” focus on figuring out what does a good deal look like in my market, period. Go figure that out. Talk to other investors, ask them about their deals. They’ll tell you. They’ll tell you what they bought their last house for. They’ll tell you how much they put into it. They’ll tell you what they sold it for. They’ll tell you what they rented it for. You can start to learn all kinds of information about what good deals look like in your market just by asking other investors about their deals. Then the other thing you focus on is what method, what one method am I going to use to find those good deals? Is it going to be an off market strategy like direct mail? Is it going to be an off market strategy like cold calling? Is it going to be an on market strategy like analyzing properties that have been on the market for longer than 30 days and just shooting your shot and making your offer, whether your offers $100,000 less than what they’re asking or not. All of those are strategies to help you get off market deals. Pick the one that you feel like you can fund appropriately, which means you can give it enough money for it to be successful and it’s going to fit your personality the best. If you’re just not good at cold calling, don’t pick cold calling as your strategy unless you’re going to pay somebody else to do it. So learn what a good deal looks like, go find a good deal, just relentlessly, consistently, implement that one strategy until it produces results, and then go figure the rest of that stuff up. I didn’t go find a contractor until I had a house to have a contractor bid. I didn’t even worry about it. I don’t need to worry about finding a contractor if I don’t get any work for them. So I solved the problems as they came.

 

One foot in front of the other.

 

I love that, Henry, dude, and your story is just like, again, it’s so incredible, man. And I want to give people, before we head into the Final Four, I want to give people kind of like the ending. We went into the beginning, how you got your first deal, you scaled up very quickly doing five in your first month, and I suspect you just kept going and going and going and you said it yourself, like you’re still doing the strategy to this day. So, to date, we’re sitting here at the end of 2022, roughly how many deals have you done? What kind of organization have you built? Where do you stand as of today?

 

We’ve got a portfolio of about 80 rental properties and we probably flip anywhere between 10 and 15 houses a year, and I say flip, some are remodel, some are hold tails were I just buy them and clean them out and sell them as is, but I close on everything, I don’t wholesale anything so they’re all transactions so I’ve done hundreds of transactions.

 

And you’re doing all these through your private banks and those relationships you’ve made through your banks.

 

That’s correct.

 

Incredible. Incredible, man. All right, well, Z, you know what time it is?

 

Yes. It is…

 

The Final Four.

 

All right, Z, kick us off.

 

All right, Henry, what are you reading right now? Since your journey started with a book, it’s probably continuing with a book.

 

Yeah, that’s funny. Right now, honestly, the only thing I’m really reading is the Bible and trying to learn more from that aspect. I’ve never really read it all the way through.

 

And that’s a tricky read, so, yeah.

 

What book are you on?

 

Yeah, no, we started at the beginning, so, well, here’s one thing I like. There is a YouTube channel that I like that I want to be able to get right, so I go through this — so I’ll read a chapter of the Bible and then I go through this YouTube channel and they summarize it before and so like I’ve never really read — like I’ve read chapters of the Bible before and never really felt like I understood and so my hack to this now is I go through this YouTube channel where they break it down in summary and then I read it and then they have like a recap and I read that and it’s really helped it to start to sink in so I just go — we started at Genesis and we’re going all the way through.

 

All right, man, what is the best piece of advice you’ve ever received?

 

The best piece of advice I ever received really has to do with both life and investing. It’s when someone pointed out for me that real estate isn’t a real estate business, it’s a people business, and if you want to be successful in real estate, you need to start looking at how you can be of service to the person across from you. And that really hit home for me because you hear it all the time, we are in service, like our job is to solve problems, our job is to solve problems, you hear that, but I didn’t really put it together like if I can be of service to the person across from me, it’s going to open up so many avenues as far as success goes, because most people in the world are looking to take. They want to take something from a relationship. What can I get out of this relationship? And if you’re looking to give instead of take, it helps set you apart, it helps you build trust, it helps people want to work with you, it helps you get more sales, it helps you get more — like all the things you want in your business are not around — if you focus more on the “What can I give?” you end up getting more. And it never really resonated with me until I started to do transaction-based business and real estate and realizing that take the transaction out of it, focus on the people and you get more done and it’s changed not just my business but my life where I like to consider ourselves like a service-based company.

 

I love that, man. Love that. All right, Z, to you.

 

All right, question number three and this is, yeah, this is probably a little bit of what you just explained but what is your why? After hundreds of transactions and 80 holds, why keep going? Why aren’t you on a beach with a margarita right now?

 

Yeah, that’s a phenomenal question. My why is a couple of reasons. My why before I got started was to provide my wife with the life that I felt like she deserved, and that still is what drives me. We’ve since had two kids and so that’s added to my why is I want them to be able to do what they’re called to do and not what they have to do. And if I can teach them how to build wealth, it’s going to help them be able to focus on who they are supposed to be and not what they have to be to make money. Now, I’m not saying I’m just going to give them a bunch of money so that they can go be who they want. That’s not what I’m saying.

I’m going to teach them about wealth and financial freedom so that they can build it for themselves so that they can go be who they’re called to be. Click To Tweet

And then my why that’s not attached to my family, again, is around I feel this responsibility to educate people. I firmly believe that none of this information about real estate and none of the wealth that I get to create through real estate is for me. It’s not for me. I get to reap the benefits of it while I have it but it’s not for me to build and then keep, it’s for me to create and share. And I truly believe if you look at the stories of people who’ve built wealth and then lost it, somewhere along the way, they lost focus of service to others and giving and sharing the information and the wealth and I feel like if you don’t do that, it can be taken from you.

 

I love it. This is exactly what I needed to hear tonight because before I came on the show, I was telling you how nervous I am speaking at this meetup tonight, it’s my own meetup, and it’s because I’m worried about me, but if I’m looking at it as like I’m the pass through, I’m just the channel for whatever needs to be said and brought to these people, then it doesn’t matter about me. I’m just delivering. I’m just a pastor.

 

What a blessing that you’re called and chosen to be able to do that. And you’re a rock star, right?

 

Yeah.

 

Some days. Thanks, guys.

 

And a published author. I see your book. I see you.

 

Right.

 

Henry, I got one last question for you before we get into one last question after that. What is your least favorite song of all time?

 

Least favorite song of all time? Oh, that’s a phenomenal question. I’ve never been asked that. I have so many least favorite songs. Let’s see. “Gangnam Style” is probably one of the least favorite songs I’ve ever heard in my life. “Mambo No. 5.” That’s probably an unpopular opinion. I hate that song. Gosh, yeah, those two definitely grinds my gears.

 

All right, so now you know. Do not listen to those songs if Henry — don’t put those songs on if Henry’s in your party. All right, Henry, and I know you got a multitude of ways for people to find you and to reach out to you and so lay them out here. People want to know more about you, you’ve got an incredible story, we couldn’t possibly fit the whole thing into an hour but if they want more from you, where can they go?

 

Yeah, you can find me on Instagram, I’m @thehenrywashington on Instagram and my website, henrywashington.com.

 

Cool.

 

Awesome.

 

Bro, thanks so much for coming on, man. It’s always inspiring to talk to you. I swear next week, I’m going to go to like ten different banks and start having those conversations and see if we can make anything happen.

 

Dude, absolutely.

 

That’s it, and that’s the action step for all you listeners out there too. Go to five of your local banks and ask them the exact questions, go back into the interview and see what Henry’s asking them, bring everything you need and see if they’re able to help you out at all and maybe you can get some low down payment loans and you never even knew about it. So, Henry, thanks so much for coming on the show.

 

The Bible Project.

 

The Bible Project? Oh, is that where you’re —

 

Check them out.

 

Okay, I’ll take a look at that.

 

Check them out.

 

All right, my man. Thanks so much for coming on the show and we will talk to you soon, my man.

 

Thank you. Thank you.

 

And that was Henry Washington. Z, what did you think about Henry?

 

I love him. I feel like he’s just really thoughtful and he explains things really well in like a clear, easy to break down way and I think he’s just very encouraging. Like he’s definitely one of those people that if you asked him questions, he would really just give you everything he had. So I love that spirit in the real estate space.

 

Yeah, he definitely embodies kind of like the original BiggerPockets culture of just abundance mindset, here to help out, always down to just give you the advice, here’s his whole playbook, go out and do it, because he really does just want to serve others and impact people as much as possible and you can see it, like what a relatable story of somebody making $100,000 plus but still considered broke, having that fear of not being able to provide for his family or having that fear of whatever it is, of not being worthy enough for his own wife, and then that panic attack and, boom, he’s got one, five properties, now he’s got 80 properties five short years later, it’s just such an incredible story and Henry is such a great dude too so make sure you give him a follow.

 

Love it. Well, guys, if you enjoyed the show, please share it because that’s getting us out there into the world and helping more and more people so take your favorite Invest2FI show and share it out and then definitely go out and reach out to Henry because he’s not only got really good content on Instagram but he is one of those people that will get back to you and help you out along your journey so don’t feel like you have to do it alone.

 

Yeah, don’t lone wolf it. We’re here as a pack. If you haven’t already, please, please, please leave us a rating and review on iTunes. We absolutely love to see all of those coming in. And so, Z, if you don’t get anything else for us, I’d say we can get out of here until next week.

 

All right. See you next week.

 

Peace.

 

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