ITF 65 | Confidence To Succeed

 

How do you get the confidence you need to succeed? By listening to the right people. Craig Curelop and Zeona McIntyre present Bradley LaBrie, the co-host of the House Hacking Success Podcast. In this episode, Bradley shares how he house hacked his way to success in the real estate industry. But his journey was filled with challenges and strange experiences along the way. What made him push through? Podcasts, books, and relationships that gave him the boost he needed to make it. Listen to the conversation and get the confidence you need. Tune in!

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How To Get The Confidence You Need To Succeed With Bradley LaBrie

This story is bringing back lots of trauma in my life. It’s funny because if you read all the way to the end, our guest is going to tell you about his worst house ever. He does a lot of renovation, so it is interesting to read. It reminds me of a house that I took a friend through. I have this friend who wanted to do a big renovation project, and we went to a house in Broomfield. It had dog feces everywhere, and there were animals through the house. It was a total hoarder’s house. It was super dark, and the smell was so intense.

What was hard was that when we walked through the home, there were children that lived there. Nobody was there at that time but it was one of those moments where you are like, “Should we call child services?” What do you do in that situation when you are around something so gnarly and feeling for the people that are in that situation? He has a similar story at the end. I’m curious if you have seen any crazy homes like that.

Honestly, I have been fortunate. I haven’t seen anything too crazy. I have seen a fair share of hoarder houses with some interesting things inside them but I know nothing where there are tons of feces, dead animals, and all that other stuff. I don’t understand how people can live in these situations. We have too many Amazon boxes in our living room and I’m like, “I’ve got to clean this up.”

It speaks to mental illness. If you read the story, we’ve got lots of great nuggets. I feel like he has a lot on preparedness and the value of partnership. It’s a rich episode.

Delayed gratification is a big piece of it, and he has done almost everything. I highly recommend reading this one through. It is a longer episode because he has done so much. We have got some great stories at the end. Let’s bring him on.

Brad LaBrie, welcome to the show. How are you doing?

I’m doing phenomenal. Thank you for having me.

This feels like déjà vu, except no one knows except us. Apparently, Brad and I, back when Nick was on the show, did an episode that did not record, and I did not even realize that until now. That’s on me but we are glad to have you back.

I’m glad to be here. It’s always a pleasure speaking to you. I know we catch up regularly. I appreciate you trusting me enough to send me some of your clients. It’s always a privilege.

Let’s get into it. Let’s take it way back. When did you first hear about financial independence?

I probably heard that term way after I started it. I decided that I wanted to do something different. When I was young, I was a star athlete. I went to college. I’ve got caught up in the idea that the world pushes of, “Go to school, get a job, and have fancy things.” When I was done with that, I bought everything I could. I had all the toys. There was a point in time when I started looking at people where I grew up that were ten years older than me and went that same path. I was like, “I don’t want to do the same trajectory they are, living paycheck to paycheck and buying new vehicles, new toys, and a bigger house. I want to do something different.”

Did you subtly draw out that you were a star athlete? Is that a self-proclaimed star athlete? What was your game?

I played football in college.

Who did you play for?

I played for a small school here in Michigan. I suppose it’s partially self-proclaimed but it was fun. I learned a lot. That’s where a lot of my confidence to do a lot of the things that we do now comes from because I succeeded at that. I succeeded as an all-state baseball player as well. On our podcast, House Hacking Success, I bring on a lot of former athletes that are house hacking. We have a lot of conversations about this that at least I had never considered but so much of what we learn as athletes are applicable to being a serious and long-term investor.

It’s a delayed gratification if you are a football player, basketball player or any kind of sport that does a season or a year-long practice. In football, we have 2 to 3 months but we will practice all year round, all during summers, two-a-days, and all of that to prepare for one single night. A lot of that I was able to carry over without even realizing it.

There seems to be a lot of parallels drawn between sports and especially football. I feel like I know a lot of football players that are now in real estate. You said delayed gratification. I know me. In my first house hack, I was sleeping behind a curtain. I was still making decent money but I was sitting behind a curtain in the living room because I knew that there was a better future ahead. I was so into that delayed gratification. I was trying to delay everything as far as I could out.

Instead of saying 'It doesn’t work,' step back and say 'I need to get better.' Click To Tweet

I was in Chad Carson‘s course to help them out with the house hackers. It’s a lot of fun. I love doing it. I’m sure some of your readers have read his books. We were talking about it. He played for Clemson. There’s so much that he and I have been able to take from football and put it directly into our investing career, and probably none greater than delayed gratification.

Let’s take it back. It sounds like you discovered the term financial independence after you started on your journey. What was the start of your journey? Maybe it was football. When did you start applying that towards business and real estate?

In my first deal, I probably lost $15,000 or $20,000. It was a train wreck. I bought this house. The long and the short of it is the tenant got murdered. The Flint water crisis hit, and I lost all my money. All within there’s a story, we can go as deep as we want but it was very interesting. I learned a lot. Probably because of understanding the importance of failure that I learned in my sports career, instead of taking that and saying, “This doesn’t work,” I was able to step back and say, “I need to get better and apply myself differently.”

We’ve got to get into this. To be clear, this sounds like a real deal. Zee, is there anything you wanted to add before we ask Brad to get into it?

There’s something I do want to go back to. You can’t say that somebody got murdered and then be like, “Let’s not talk about it.” We need to hear about that. It’s intense. This is Detroit but damn.

I showed up there one day at a repair request. The lights were off. I walked right past him. I had no idea he was sitting on the couch. I walked upstairs. I did a minor repair. I came back down and got that feeling that somebody was watching you. I turned on the light, and there he was, sitting on the couch. I will never forget it.

Is he dead?

He is 100% dead. There was a giant slug hole through his head. There was a big picture window behind him. There was no blood splatter and bullet hole going through the window. Somebody obviously murdered him somewhere else and sat him on the couch. The police came in. I called the police. They were like, “It’s a suicide, and his three-month-old pit bull mauled his face off.”

I was like, “There’s a zero chance that happened but whatever helps you guys, keep those steps down.” It was an interesting situation. The Flint water crisis became the real deal during that time, too. It was an interesting time. I was twenty years old when all that happened. I had no idea about any of the whole world of real estate. I thought you just bought real estate, and you did well but I certainly learned otherwise.

In your first deal, there was some dude that got murked in the house. How did you react personally? Was that traumatizing for you? How did you deal with that as a real estate investor?

I suppose a little bit. It wasn’t severely traumatizing. It was a situation I never thought I would find myself in. I don’t remember ever second-guessing real estate. I remember saying, “I need to get better. I need to find better areas, higher-quality tenants, and better situations to position myself to do a little bit better.” We can touch back on this property. I transitioned from buy-and-hold, which that one was, to flipping. Immediately, I decided, “I’m going to try a different path.”

Looking back, I’m curious if there were warning signs for you like, “Maybe this was a dangerous neighborhood,” or when you were getting this tenant, there were some signs. Are there things that you probably would have done differently in the same situation knowing what you know now?

The warning sign was probably that I traded a $1,000 truck for the house. I didn’t pay a ton for it. It had $5,000 in back taxes and a few grand in the water bill. I ended up probably paying maybe $8,000 to $10,000 for the property to clear all of that stuff and the truck. That’s another thing I left out there. The craziest thing is I own a self-storage. That same guy walked into my building wanting to rent space from me and I was like, “I know you from somewhere.” It took me a minute, “That was the guy I bought it from.” That was super cool.

It’s not the dead guy, right?

No, it’s not the dead guy. It’s the guy that I bought it from. He was telling me he got hosed in that whole situation. He had twelve of them. The place was completely ransacked. All the electrical tapes, they took every inch of the copper out. They pulled the wires down. I had to rewire and replumb it. I added a bathroom. I fixed it up and rented it out. There were certainly a lot of things I would have done differently. Being young and dumb, I thought you could buy a property cheap, fix it up and get great tenants.

Can we get into the numbers a little bit on that one? I’m trying to get a little bit clearer. It sounds like you picked up the whole thing maybe the house itself, for $1,000, back taxes, and liens. The total all-in was $10,000, and I suspect you paid cash for that. It’s $9,000 in cash and the truck or something.

I don’t have any records of any but it was approximately $10,000. Maybe it’s $15,000 but it’s probably closer to $10,000.

Let’s call it $10,000. How much did you put into the rehab?

ITF 65 | Confidence To Succeed
Confidence To Succeed: Find better areas and higher-quality tenants.

 

It’s $10,000 or $15,000. I did all the work, too. It’s a light little rehab. I’ve got somebody in there. Probably it was all in around the $25,000 mark.

Did you refinance it or rented out?

Back then, I was a twenty-year-old construction worker. I don’t even think I could get a loan at that point. I just used cash.

You’ve got $25,000 in. Now, you have got a nice house that is livable. How much did you rent it for?

Maybe it’s $600 or something like that.

You were making $600 cash. If you subtract taxes and insurance, maybe you are making $500 or $400 a month on that thing. When he was alive, the dead guy was paying you. Was he a good tenant?

He was a good tenant. He was one of our workers.

You took care of the dead guy. What happened next? Zee, do you have anything to add?

Brad, you are so insensitive. It’s somebody that you worked with. This is crazy.

He was a friend of ours. My brother had a construction company. He worked for my brother. We helped the family. After the police department ruled that it was a suicide, they decided to get their own coroner. He came to the conclusion that somebody had shot him. It was a tough situation all around. During that time, they were trying to get all this figured out. It got broken into again.

They took all the plumbing, electrical, water heater, and furnace again. At that point, after they had done that and we were still working on the whole murder, I turned the keys back into what we call the land bank. They ended up foreclosing on it for taxes, I suppose. I washed my hands and cleaned them up. I was done with it.

You are lucky not to have a mortgage essentially because you can turn it in and call it a day. It’s not that big of a loss but it’s pretty unfortunate.

I didn’t think a whole lot about it but back then, that was everything I had. I was saving. I sold all my vehicles. I grew up in a small town where all the dudes drove trucks. I had three trucks. I was cold turkey, so I sold all my trucks. I sold my fifth wheel and a couple of my toys. I took all that money and bought this house. Six months later, I lost it all. It was a mini tragedy. I probably shed a couple of tears but I quickly got back, started working, and saving up again.

I want to touch on that because that was a note that I had to get back to. When you were first learning about financial independence, you were looking around, and everybody that you knew was doing that same thing, collecting a lot of toys and spending all their money. You were going to say that by the time they were older, they still looked pretty broke and that maybe wasn’t the trajectory you were wanting.

You’re meant to do something to change other people's lives. Click To Tweet

They were living the exact same life. I don’t even know what sparked me to consider that and look ahead. I’m like, “If I keep doing this, I could keep buying stuff.” I always had this feeling that I was meant for something bigger. Every time I take something on and succeed at it, it doesn’t feel like that’s the thing that I’m meant for. We all probably have it a little bit inside. It’s that feeling that we are meant to do something to change other people’s lives and help other people. I had that feeling. Back to delayed gratification, I don’t delay my personal gratification, sell all these things and invest in real estate because at that time, that’s all I knew. That was my only path to making it. That’s what I was looking at.

I’m curious about your upbringing. Were you pretty simple? Was it blue-collar, and you didn’t have anybody to look up to? You have that vibe of being scrappy and wanting to do something different than you have seen around you.

I dropped out of college. It wasn’t like I could earn my way in Corporate America or something like that, so I had to be. Maybe I sold my trucks after that because I had gotten into General Motors, which is where I’m at. If you get into General Motors, you are set for life. That’s the notion. When I left, I had so many people who were like, “How could you ever live there?”

I sold my trucks, and I was driving this crappy little car that was beaten up. I will never forget that people were making fun of me. I will give myself many pep talks. I’m like, “You can do it. Don’t let them get to you.” I would have these pep talks with myself because they are trying to get to me and I’m like, “I’m going to make it.” I had to be scrappy, for sure.

By all intents and purposes, you are living the dream in Flint, Michigan or wherever you are at where GM is. Who plants that seed of real estate in your head if it wasn’t your parents?

My parents never owned investment properties or anything but my dad always encouraged me that I could do whatever I wanted. Although he never taught me much about real estate per se, he did give me the confidence to go do it. Especially as a younger individual, if you have that person you look up to, maybe it’s a parent, brother, friend or somebody down the street that you think is successful in whatever. When you get that vote of approval, and you are young, it gives you that little extra notion to go do it.

Where I’m at now, I work with a lot of people. They are at now what I was at that point. I’m very intentional in trying to loan my confidence because I do have an enormous amount of confidence in myself and maybe real estate or whatever it is. All it was for me was that little notion of confidence. It’s a couple of people in my life that were the key people who gave me that allowed me to get there. The proudest accomplishment I have in life is the couple of dozen friends of mine that I called true friends that I have been able to loan that confidence. They were able to do it when they thought they never could.

I want to get back to how do you get through something when everyone is telling you to do the opposite? A lot of us, when we are on our financial independence journey, especially if our friends and family had never heard of this before and you tell someone you are going to retire at 30 or 35, they are like, “Good luck. You are not going to do it. Just get a job.”

I had people berating me. My parents, grandparents, and everyone that I have ever loved and taken advice from were telling me to do the opposite. The pep talk, I would do the same thing. I would do my affirmations. I would be at the gym running and be like, “I’m going to fucking do this.” If you have problems with it, that self-pep talk is super helpful.

What people didn’t have years ago that we have now is this show right here. I was doing some of these things, and we can talk about how I went after this. The turning point in my life, even though I was still progressing in real estate was one day, I intentionally said that I wasn’t going to go out to the bars with my buddy from GM. I wasn’t an alcoholic or anything like that but I would go out on Friday nights. We would talk about stupid shit. It was never productive.

I will never forget. I was like, “I like them. I will hang out with them. I’m not going to go there because it’s a waste of my time, and I should be reading.” I made that decision, and I would listen to podcasts or read books. I can’t say I had a lot of great friends that were on this path. My friends were Chad Carson, BiggerPockets, and even Dave Ramsey. It’s all these people that were talking to me and telling me like, “If you stay on this path and do it, you can make it.” It kept giving me that horizon like, “If I don’t listen to these people, I can do it.”

ITF 65 | Confidence To Succeed
Confidence To Succeed: You could walk into a property and completely reconfigure it to improve the appraisal value.

 

I hear that a lot, too. People are saying, “I don’t have people in my corner.” I can’t say that I had a ton either but my dad gave me a little bit of confidence. He didn’t understand real estate but those people at BiggerPockets did. It’s all those sorts of people that I can listen to every single day on my way to work and back from work. I loaned confidence from listening to those types of people.

Let’s go into your second deal because this seems more like the real deal for you. How long did it take for you to get over licking your wounds and saving back up when you had lost everything to start flipping?

I don’t know how long it was. It’s probably was 1.5 or 2 years it took in between. I bought a house. It was a typical ugly house carpeted in every square inch. I decided to do the majority of the work myself. From close to close, it was about thirteen months. It took me 8 or 9 months to do the rehab. Approximately speaking, I made $30,000 maybe, give or take. I learned a ton during that process.

I hired out some plumbing and electrical. I can’t remember if I did any HVAC work or not but I would have hired that out as well. Everything else, I learned DIY. I went to Home Depot workshops. I grabbed their books, watched some YouTube, and talked to people that knew the industry. I did hire some people to be some laborers as well during that timeline so they could help me expedite the process. It was a great experience.

It would help us to know more about the numbers but I’m also curious, how did you find this house. I imagine there was a point where you were like, “Screw houses. I’m not doing that,” and then there was a change over to like, “Let me look in this place again.” What happened there?

I don’t even think I ever thought like, “Screw houses or screw real estate,” or anything like that. It was just, “I’ve got to get better.” My idea was better, “Let’s go flip in the suburbs.” I don’t know why. It’s probably reading books. The numbers were better out there. The prices were higher. I decided to do that. It was on the MLS. I bought it for $66,000 or $67,000. I remember being all-in right around the $105,000 number. It’s all my living expenses during that timeline. As I said, I did pretty much all the work myself and sold it for $135,000, maybe.

You mentioned the $30,000 profit. Were you working a job at this time, too?

I was working full-time.

You made a $30,000 side hustle. A year to make $30,000 isn’t the best investment but if it’s a side hustle, that’s a different story.

I was working full-time. It’s 60-plus hours a week working at GM. I worked for GM for seven years. Right after this deal, I decided to go to midnight so that I could spend all day in real estate and then work at night at GM. I did that for five years.

When did you sleep?

Never. Sleep is for the weak.

You’ve got into real estate. You had that bad first deal. In the second deal, it seems like you learned a lot. This one was a little bit more fruitful for you. How long did you flip residential single-families for? Was it the same process or did things change?

I still do. Now, it’s a lot different and has a lot higher volume. I have my own construction company now. We’ve got seven full-time employees and multiple deals going. What I did was I had a lot of books. It was all about developing relationships, mentorship, and taking people out for lunch. I used to do that a lot. I still do take people out for lunch. One individual that took a liking to me before I’ve got into GM, I was gutting out his house. I was doing whatever he needed for maybe $10 or $12 an hour, doing all the nasty stuff because he had a lot of properties. He developed a lot of trust in me, and I thought that he was pretty good at what he did.

Hire people to help you expedite the process. Click To Tweet

I took him out for lunch and said, “I’ve got the $60,000 now from this flip between all the down payment and materials. What would you do with it if you were me?” That’s pretty much all I said in that lunch. Two days later, he called me. He said, “I’ve got this deal. Do you want to go 50/50 on it?” In that deal, there were many points that changed my trajectory but that one was probably more so than any. I bought the majority of his portfolio now over the course of it.

That was one thing with the relationship piece. He opened me up to so many things that I had no idea were there. The biggest was we bought this flip. We were 50/50. We did the majority of the work. He was a hands-on guy. He still is to this day when he flips. We completely redesigned the entire layout. It was a lake house. It was a 2-bed, 1-bath. We turned it into a 3-bed, 2-bath.

The idea that you could walk into something and completely reconfigure the property dramatically improved the appraisal value based on an additional bedroom, a better floor plan, vaulted ceilings or whatever it is that you are doing. That concept blew me away. From there, every deal proceeding that, I become strictly a value-add guy. It was because I had somebody show me something like that could be done. It was the greatest mind-opening thing that had ever happened to me.

It sounds like it blew you open and was like, “There are so many more possibilities than what I’m seeing right in front of me.” I’m curious about the numbers. Do you remember the numbers on that deal?

This place was bad. It didn’t even have the plumbing to it for several years that’s why it got condemned. We bought it for something like $40,000. How much do we put into it? I remember walking away with it for $25,000, and we sold it for $130,000. That would have been $50,000. We probably put $30,000 or $40,000 into it. We did everything on it ourselves.

It seems like the deal itself was great. You made some money but the real value came in with your partner. A lot of people, including myself, for a while, were afraid to partner because it’s complicated. You’ve got to set up structures. What if it doesn’t go right? What if you lose their money? You made $50,000 or whatever it was on this deal but the relationship is what you do. Even if you lost money on the deal, probably you are still your most valuable.

I did everything in reverse. Now, I hang around with lawyers and accountants. They all smacked me all the time like, “You’ve got to start this entity.” Back then, I don’t know if I even cared. I was like, “I’m just going to do it. I’m going to figure it out, and then we will go from there. We will figure out the pieces.” As far as starting entities and stuff like that, that came to a lot later, and something that people should do and should definitely consult. Back then, I wanted to work with this guy. I knew he was better than me. I knew he could show me things that I could never show myself. In that one deal, I learned so much.

It sounds like you’ve got a quite successful house flipping business. One aspect of that, which you briefly touched on, was starting your own construction company. I’m not sure if you do this. You can tell us if you do. If you start your own construction company, you can get paid in two ways. You can get paid by saving on the costs of what would it be to hire another construction company but also, you could take on other clients. You’ve got multiple ways to make money by doing flips and helping out other people. Do you do that? How does someone start a construction company? What would be one thing that you recommend as the first step?

ITF 65 | Confidence To Succeed
Jab, Jab, Jab, Right Hook: How to Tell Your Story in a Noisy Social World

First, you’ve got to understand construction or whatever trade you are going to try to do. Being in construction is an incredible trade. There are a lot of incredible people. It’s also a tough industry. I’m sure a lot of people have come across working with general contractors. To get into your point, I do very little working for other people. It’s messy. You are working on other people’s timelines. I will do it for clients. It’s supposed to be a work on our personal projects, whether it’s commercial or residential.

Generally speaking, if you are going to do large-dollar transactions, pay yourself or pull permits, you’ve got to have a builder’s license or work under a builder. It’s 1 of the 2 things. To answer that question, it’s beneficial. I do very little working for other people occasionally. It’s not too fun. You can make money but it’s a brutal industry.

I wanted to ask you before we leave this topic and this person that was a mentor to you. What was the value that you think you added? A lot of times, people are looking for a mentor but they don’t feel like they have anything to give in return, so they don’t make that leap and invite the person to lunch.

This was probably 1 or 2 years previous to becoming his partner. I went to work for him for $8 an hour. Even back then, that was a low wage but I was like, “I’m going to do it. I will do whatever crappy things you don’t want to do.” I was taking toilets off and cleaning out places after his tenants. It’s all the things that no one else wants to do but I wanted to work for him and understand it. He was like, “You are worth way more than that.” I went up in pay. From there, I started doing side jobs for him that I was good at and some extra construction back then.

That was the value initially. He recognized that I was a hard worker, honest and trustworthy. It’s something that I have always done because there have been a lot of people that I consider mentors. Number one, I have never asked anyone to be a mentor of mine. I decided to go add some value to them. Number two, I love Gary Vee’s book Jab, Jab, Jab, Right Hook. It’s how I live my whole life. I read that book well after I developed that concept. My idea of mentorship is to give, give, give, and then ask for something in return.

In some of the other relationships and some of the people that I hold near and dear to my heart that has built me into the person and man I am now, I have repeated that over and over again. I will do whatever it takes. I want to get in your atmosphere. I want to breathe the same air you are breathing. I want to understand fully what you are doing and why you are doing it. I’m willing to sacrifice money in return in a lot of those cases.

I love how you could figure out a way to bring value to this guy. One thing a lot of new people starting who are looking for mentors is they either ask, “Can you be a mentor?” Even if they don’t do that, they even made us ask, “How can I help you?” That is work to ask me, Zee or you, like, “How can I help you?” It’s like, “I see you are doing this project. Do you need someone to clean up after the construction is done?” “Yes, that would be great.” That would be something that’s value-add versus like, “Tell me how you can help. Don’t ask me how you can help.” That’s huge.

I had a couple of people who asked me, “Can I come help?” I was like, “Sure. You can do two things. You can take these lists, run them through searches and pull the number.” It always amazes me how people are like, “I don’t want to do it. I don’t know what else I could do. Do you want to come in and hang out with me? There’s a project.” Where I developed that, I’m not sure. I understood that people are super busy but I can add value by hustling and doing something that they don’t want to do. Usually, it’s the dirty work.

You developed that from being a star athlete. Let’s take who is the best. Let’s say, LeBron James. He is the best basketball player of this era.

He is not even a football player. Come on. You’ve got to get a football player.

The first guy that comes to mind is Tom Brady.

He is a great quarterback but a horrible athlete.

Calvin Johnson is in Detroit Lions. I know more about sports than I’m showing myself now. Calvin Johnson was the best wide receiver in the league for the years that he was playing. He got paid, let’s say, $20 million a year. How high do you think he can jump? How fast can he run? Maybe his vertical was 3.5 or 4 feet. Brad, what is your vertical?

It’s not that.

Let’s say it’s 2.5 feet. Let’s say it’s half of that but no one is going to pay you $15 million or $10 million to jump half as high as Calvin Johnson. It’s that incremental inch that people are paying for that no one can get to. Athletes have that, and that’s in their heads. Their motivation is they have to be like, “I own the better than everybody else.” If you take that to real estate, it works in all facets of life.

That’s why I love interviewing some of the house hackers. It blew me away, and I’m sure you have met quite a few yourself. We have interviewed several NFL and NHL players. A lot of them were house hacking around the country in those spots. A lot of times, it’s built into us to be scrappy, especially when we maybe weren’t the Calvin Johnson of the league. You had to work your way up. A lot of those guys house-hack because they had to. They were on small salaries or they were on week-to-week or month-to-month smaller contracts. Those carry over, those same traits, delayed gratification and the ability to be scrappy, seek mentorship, take direction, read and digest for sure.

I love the parallels between sports, business and life. Brad, let’s get into a little bit about your real estate stuff because I know you are a realtor. We have referred you to a couple of people. How did you go from house flipper to real estate agent? Was it to save on the commission to the flips? Let’s talk about that transition.

The number 1 thing that adds most value to a house is square footage. Click To Tweet

I transitioned to house hacking after that. The next one I did is a 203(k) loan. That was a nightmare because no one understood it but I learned a lot from it. I had a string of three crappy agents. I was like, “Screw it. I’m going to get licensed.” That’s my origin story, and it grew from there.

I want you to tell people what a 203(k) loan is because jargon sometimes is hard for people.

FHA has a 203(k) program. It’s a renovation loan. VA and conventional have it. There are a few of them. Back then, I heard it from Brandon Turner. I’m like, “That sounds fun.” The lender told me he knew what it was and he didn’t. The realtor said he knew what it was and he didn’t. It took me four months to close, and I’m pretty sure I’ve got some gray hairs. Since then, I have learned and understood it.

Matt Porcaro, if anyone is interested in it, @The203kWay on Instagram and Facebook. He is a good friend of mine. He fully understands it. He has easy and actionable steps. If somebody is interested in something like that, the 203(k) was a home pathway for conventional, and VA has a similar product. They are great products.

For me, I bought a three-unit because I had partnered with that individual and took a 2-unit into a 3-unit. I found a three-unit and I was like, “I’m going to turn it into a four-unit. I will live in the fourth unit, and this will be the best cashflowing property in town.” It turns out I was right. It was a lot of fun doing that. That place was a disaster. We covered the entire thing with all new HVAC and plumbing. I turned it into a four-unit and bought it for $105,000.

FHA had some red tape around certain things, and I had a decent amount of money for my last flip. I did a $70,000 rehab. I did half of it from FHA and half of it without. In the fourth unit, I did it all with my own dime because they were being difficult with it at that time. In retrospect, there was a way to do that but no one understood what I was trying to do, and they didn’t understand the loan in general.

I was sleeping on plywood. My wife, who was my new girlfriend at that time, walked in and was like, “You can’t live like this.” It was another scrappy move. We added the fourth unit. We make about $2,000 a month in cashflow now on that property. It’s worth three-plus times what I bought it for. It was a lot of fun. I learned quite a bit on that one.

If there’s one theme that you seem to have through all of your real estate career to this point, it’s construction. I am known for telling people that when you are house hacking, you shouldn’t do rehab and get tenants in because the rehab is going to cost money. You are not able to rent it out. It delays you from doing your next house hack, assuming you are pulling from your down payment money to do the rehab. I’m hoping maybe that you have a contrarian view of me or do you not.

There are a lot of benefits to it. Usually, what I will tell people is this. If you are willing to put up with headaches, be scrappy, and have a lot of problems, go for it. If you are trying to get into it, it’s probably not the right way to go. My whole philosophy up until maybe a couple of years ago, where I started to become maybe a more mature investor and break down certain systems was like, “If something goes wrong, I will outwork the problem. If I have to throw another 100 hours at it but I get through it, I’ve got through it.” I was willing to do that. That’s why I was willing to take on a lot of these things. Most people aren’t. They have jobs. They have lives. I didn’t have much of that. Real estate was my life.

Something that I forgot to mention is always one of my favorite stories. In the middle of that first flip that I did, I had NFL RedZone. It was my favorite thing in the entire world but it was swaying my flip. I cut the cord on that and threw it in the dumpster. They charged me $150 for not returning the cable box, and I never had cable TV sets. That’s where my productivity started to kick in. Construction, if you have the right people, yes. A lot of times, getting tenants in and getting on the next one could be the better move as well.

You mentioned that there were a few turning points in your life. I’m wondering if you can take a quick zoom out and maybe tell us a couple of those points where it shifted. The first one was partnering with this guy and doing the lake house remodel. What are some others that changed your trajectory?

First, it was looking at people that were maybe ten years older than me in my area town and realizing that getting a bigger truck or a more fancy this or that is not what I want to become. That was number one. Number two, when I’ve got into General Motors, my thought was, “This is the greatest thing ever. I’m going to be rich and whatever. I have made it.” After a little bit, I quickly realized that I scared myself because I was like, “I’m going to leave GM by 30.” I scared myself when I said that in my head. I started telling people about it, and they were like, “You are bunkers.” I realized that I couldn’t tell anyone about it.

ITF 65 | Confidence To Succeed
Confidence To Succeed: We found a three unit, turned it into four unit, and lived in the fourth unit. It became the best cash flowing property in town.

 

Looking at their lives and seeing the trajectory that they were on was another one. I’m like, “This clearly isn’t the path that I want to go.” It’s a great life. You can have a great family. General Motors is an incredible company but it’s not the life that I was meant for. That was another one, partnering with somebody and helping me envision the ability to completely redo a space, property, bedroom count, additions, vaulted ceilings, and all those things.

Another crazy turning point in my design and development career is meeting my best friend’s dad. He was a broker. He introduced me to quite a few different things, being not only a businessman but somebody with a high level of character in business. The focus is on my reputation and character because the more I’m in the industry, I come up with a lot of people that maybe aren’t the people that I want to become in business.

This is awesome. This is going to be a loaded episode with tons of gold. You have to go back and read it. I highly recommend it. Before we end, we’ve got to hit on a couple of more things, though. One question I have is a lot of people are doing these rehabs. I just want one thing. What is the number one thing you see that will add the most value to a house?

The number one is square footage.

Is it finished square footage or unfinished square footage?

It’s finished square footage, and that means heated. The number one thing that I do when I go into a property is to see how I can maximize the square footage. I added 125 square footage. Had I added a bedroom in that area, it would probably be a $7,500 appraisal increase, approximately speaking. Adding 125 square feet was $15,000. It had a three-car garage. We pulled permits and all that.

We kicked out into the garage. We made it a two and a half car garage. It’s still a nice size but made a big master suite. We added a full bathroom in there and a walk-in closet with all that extra square footage. That’s the number one on my goal when I go into there, “How can I add any additional square footage if possible without building out because that’s expensive?”

Number two is bedroom count. Anytime I see a two-bedroom, sometimes 800 but usually 900 to 1,000 square feet, I know that there’s at least a possibility that if you rearrange it, you could make it into a three-bedroom. Sometimes it’s depending on the neighborhood and the market you are in. Usually, in my market, it’s anywhere from $5,000 to $15,000. Maybe at $20,000, you will get added for a third bedroom. In the fourth bedroom, you get an addition. Fifth and above, you don’t get a huge valuation for it. I’m trying to get a third or an additional bedroom. A half bath, full bath or another bathroom is another value-add. It’s little things like that.

Being an owner of a brokerage and seeing it from the side that you see as well now is I’m always looking at it from a valuation side from the perspective and appraisal because adding more curb appeal is valuable to the consumer but a lot of times isn’t valuable on an appraisal. It always boggles my mind. One of my goals in life is to change some of the aspects of the appraisal process and I’m going to do that for the next 50 years.

You will get the same valuation for decks no matter what you do with them. They are going to rubber-stamp your deck valuation and outbuilding no matter what they have out there, at least in my market. I’m always looking at it from that perspective. I take it a step further and say, “How can I add something to the consumer experience? What is the best value-add to the consumer experience as well?” In my area, I do a lot of vaulted ceilings.

You mentioned prior that you are at the final turning point or at least one of the bigger turning points was your friend’s dad, who was a broker. I know that you have a brokerage now. What does your brokerage do? How are you doing it for other people? What is your deal there?

Is it like, what are the details of the brokerage?

If you have one break in the chain the entire team will suffer for that. Click To Tweet

You mentioned that you had three shitty realtors. There’s a stat out there where it’s like 87% of realtors fail in their first year or two. It’s because 87% of them suck. You’ve got to find the 12%, which is hard to do. You decided you will be a realtor. It sounds like that while you do mostly construction for yourself, you are taking on other clients to be.

My brother runs completely the construction side of things. He has been a contractor for years. I said, “I will fund the entire thing. I need to get you over here. Let’s come in together. Let’s do this.” In COVID, it has put this all on steroids. It’s incredibly challenging to find labor. I have had this idea, and it was an infant idea back in the day. In the last many years, the greatest commodity was access to capital. From my perspective, the greatest commodity in the next years is going to be labor, specifically at least for the industry that I’m in, the development and redevelopment.

I wanted to create a company around that, not necessarily service and do a kitchen remodel for consumers but to service my development and redevelopment company. I was sick of working on contractors’ schedules that I wanted to bring it in-house so that we could be more efficient, understand better and know if there are problems, it’s on us, and we can address it rather than chasing it down. There’s that aspect. To be clear, I don’t have a whole lot of roles in the day-to-day of that. I have a little bit.

For the brokerage, we have agents. I started out selling a little bit. I viewed myself as whatever. I will hold my license and use it for my own deals. In the first year, that was the ordeal. In the second year, I sold six figures, and it progressed from there. In those first few years, I was working the third shift and working all day in real estate and General Motors between those two.

In 2021, I started a brokerage. We have agents in here. We have a full-time wholesaling team. They source a lot of my investor client deals. Also, I’m buying a fair amount of raw land because, in 2022, we are going to start building. We are wholesaling for that, and I’ve got some clients that are also looking to do something similar. That’s the origins of the brokerage. I have a partnership. I’m very strategic about partnering.

If you would ask me, what was the other turning point? For me, I learned it in sports. Football is an incredible team sport. You have one break in the chain, and your entire team is going to suffer for that. I fully understand that you go much further and faster with a team approach rather than a do-it-yourself approach. I have applied that to the construction, brokerage, and investing community. A lot of my private lenders, I pay more than other people because I love the terms that they trust me more. To me, it’s all about spreading the wealth and making it mutually beneficial. I have done very well doing that.

That’s so true where you have to partner. You have to stay in your 20%. Whatever your 20% is, it’s probably not a construction company or wholesaling. Your 20% is probably starting a brokerage. How do you stay on that path? That’s something that I learned in 2021, too. We are going to head into the final part of our show. Before we do, do you have any words of wisdom for the audience?

ITF 65 | Confidence To Succeed
Shift: How Top Real Estate Agents Tackle Tough Times

It sounds daunting, and it sometimes can be. At least for people that if they want a house hacker, reach out to all three of us here. At some point, you have to start. If you look at my story, I lost everything I had when I was twenty. I’m not advocating that. This is what I tell people. If you hire a good realtor like Craig, if you get an inspection on the property, you get it appraised. You figure out a way to at least lower your costs of living in doing that. If your goal is a house hack, and I know this show centers around it and myself included, that’s a win because I started and lost everything.

If you hit a base hit, that gets you the confidence in the game that 95% of people will never accomplish. It’s that momentum theory, and that’s what I have applied throughout my life. The saying is, “When the student is ready, the teacher appears.” That is 100% true but if you don’t take that one swing and get into it, you will never be ready for that teacher to come.

They would have always been there but I would have never been ready and receptive to receive those right timing, blessings or whatever you want to call it from those types of people that have spoken to my life or helped in my life. It was all because I took strategic approaches. A lot of the things I did, I wouldn’t necessarily advocate again. You can if you would like. If you take that base hit and get into it, those teachers in your life will come.

You probably had them before, too. You just don’t remember them because they weren’t significant and we all probably have. Brad, I love that advice. Get started and look out for those mentors. Look out for opportunities to look for themselves. Let’s head into the final four. Zee, kick us off.

Brad, what are you reading now? You said you are a big reader. You probably have something good.

I’m going back through a book that Gary Keller wrote. It’s called Shift. In the industry, we are headed towards more of a shift rather than any kind of severe recession, and that’s a good thing. That’s historically true. I love the book. It’s a shift mentally. It’s a shift in the market. What that book centered around is how the coming shift might happen in the real estate sales industry. It revolves around all things real estate and being ahead of the curve mentally, and the preparedness for it.

What I love about the book is increasingly more that I have got more and more. You hear all kinds of people advocating outlandish things. I will never forget I used to lose sleep in 2015 when Robert Kiyosaki was screaming like, “The real estate market is going to crash. Sell it all.” I’m going to be like, “I’m holding the bag on this one. I will never be able to get out.” Since then, at least in my market and probably in every other market, the real estate market is tripled.

It’s not about timing and predicting. It’s about preparing yourself mentally for when shifts come. People ask me a lot like, “Why are you still flipping? What happens if?” I’m like, “I will shift.” That’s why I have strategic private money lenders. I don’t work with hard money lenders. I don’t like working with institutions when you are talking about short-term capital because what I want to do when things shift is shift personally.

Every note that I have on my flips, we have the option to shift into a long-term note. I can quickly turn it into a rental demand if we have anything like some of the previous recessions. Rental demand is usually increased because people get pushed out of the residential buy-side. That’s the book I’m reading. It has been a great read. It might be my third time through it.

You always need to have a plan B. That’s important when you buy a house. It’s like, “This is the perfect plan but if that doesn’t work out, what is the plan B or C that I can turn this home into?” Having different rental strategies is smart. Craig, what is his question number two?

What is the best piece of advice you have ever received?

Quite a few people have advocated that, “Put business third.” I love business and real estate but I try to put it in its place, and not allow possessions and things to run why I do things in what I do. I do real estate and the things that I do because I love it. I wouldn’t start a construction company and do some of those things if I didn’t love the challenge. That’s what it is. It creates a challenge. There are constant problems and problem-solving. If I didn’t love it, I wouldn’t do it. That’s why I do that.

That mentor that’s a broker is a pastor as well. That was one of the reasons why I became close with him because he put everything in perspective. He is a top commercial broker in the area. I look at his life and I say like, “He is one of the most respected individuals in the community. He is respected by his family. He is respected by the community. He is respected outside of the real estate and business. That’s the kind of person I want to be.” That’s the advice that stuck with me.

What are the top two?

It’s God and family. I have a daughter now. My best sale has been to keep my wife house hacking all these years. First, it’s getting her to marry me, and then it’s getting her to keep house hacking with me. My sales skills are still strong.

Craig is all chuffed because he is engaged now. He is like, “I’ve got her to agree.” I’m excited about it. This is a great segue to our question number three, which is about your why. It sounds like you have said what it is but will you elaborate on that?

Family is a part of it. It’s probably all three of you as well. All great entrepreneurs talk about it a little bit but there’s something in me that says that there’s something there. It’s not real estate, development or the things that I love doing. It’s something greater than that that involves people. I haven’t quite figured it out. I try to. I think about it a lot. It’s something that keeps me going. It’s not the money, notoriety or anything like that. It’s giving back in some way. We do a lot of that, my wife and I, in the community and within our friends’ group and church.

It’s also a moving target, so it changes. Knowing that is part of knowing your purpose. As you develop that and understand it more, it becomes a little clearer. That’s great. Thanks for sharing. Craig, give us your crazy question.

In all the houses you have seen, what is the weirdest thing you have seen in any house?

I go into way too many houses. I have seen sex swings. I bought the worst house I ever bought I have ever been in my entire life. It infuriated me walking through it. They had seven kids in it. It wasn’t a very big house. It’s 1,000 square feet. It’s disgusting. It got condemned by animal control, the health department and our jurisdiction. I have never to this date been a part of all three condemning a property. I have seen 2 of the 3.

Everything you can name was in there, human feces and animal feces. We found thirteen dead animals in there. He was a poacher. We found eleven deer antler skulls around the property. It was a very disgusting place. Kids were living in a true attic. One of our workers is phenomenal. He should start to have his own company. We have developed a different approach where we spend a lot of time trying to develop these construction workers into the leaders of the community. He loves working with us.

ITF 65 | Confidence To Succeed
Confidence To Succeed: We found 11 antler skulls around the property and it was a disgusting place.

 

He was abused as a kid. That’s what this project is for. We are doing it to give back too. That place is going to be a halfway house for domestic violence. He went through this cell phone because he was hell-bent on figuring out what was in the cell phone that one of the kids had because he was so infuriated. I will probably never forget those images.

That house was something else. We gutted it. We took the whole roof off. They probably had meth fires, is what we assume. We did the entire thing. Honestly, I probably should have burned it down but we wanted the story of it to resurrect it from the ashes. It has been cool. By far, my favorite deal I have ever done was that one. We are about halfway through.

You have been through a lot, for sure.

I didn’t even mention the fleas and bedbugs. I walked in there for ten seconds before I bought it, and I had at least 1,000 fleas on me. I had never seen anything like it.

The last question, where can people find out more about you?

It’s Bradley LaBrie. By all means, you can DM me. If you want my number, you can google search me. I’m sure you will find it. It’s everywhere. House Hacking Success is where we have had Craig on for an interview. If you ever want to listen to my podcast or Craig’s podcast, that’s out there. I have a little eBook if anyone wants to understand house hacking. Reach out to me. I’m an open book. I enjoy talking to people and relaying the confidence that I have.

Thank you so much for coming to the show, and I know we will be in touch. We will see you around.

You guys have a great night.

That was Bradley LaBrie from House Hacking Success. Zee, what do you think of Brad?

What a big story. There was so much there. He came up with many good learning lessons. I love the way that he took that Rich Dad Poor Dad approach, where he found a mentor and started working for him cheaply, and then over time, showed his value and created a rich relationship. Now, he has bought most of that guy’s properties, and they are friends way down the road. He showed a lot of hustle, and I respect that.

If there’s one thing to get out of this episode, and there was a lot, it’s that if you are looking for a mentor, go find someone and do something for them, and you think of the thing to do. That is such valuable advice because a person will change your life more than a house hack. Someone that can teach you to do multiple house hacks would be great. That would be my one takeaway. What would you say if you had one takeaway from everything Brad said? What would it be?

I liked that he was talking about the turning points in his life. Sometimes people get into a place of feeling stuck or analysis paralysis but if you zoom out, there are these points in your life where something as small as a chance meeting at a Meetup, a book or something can give you that light-bulb moment that changes your life.

What I think is to keep moving and going forward. If you feel like you have a spark of a little bit of interest in real estate, get out there and meet more people that do that because that might be your turning point or moment. If anybody reading this episode is inspired about becoming an agent or curious about it, all three of us are agents, and we are happy to chat with you about it. Feel free to reach out to Craig or me, and we will talk to you.

If you could, please leave us a rating and review on iTunes or wherever you can. It tremendously helps the show. If you leave a review, take a screenshot and send it to us on Instagram, so we can shout it out for you. We love that. Thank you so much for reading, and we will see you in the next episode.

 

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About Bradley LaBrie

ITF 65 | Confidence To SucceedBradley LaBrie is a serial real estate investor, owning a real estate brokerage, Title Company, construction company, two full-time flipping crews, owning a portfolio of rentals, storage facilities and commercial real estate. His wife and young daughter still love house hacking in the greater Detroit area!

 

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