Episode 146 | Donald Appleberry | Military Millionaire

00:00 - 05:00

What's up military millionaires. I'm your host, David Pere. And I'm not here with Alex Felice because this is a super last minute Saturday case, you can't tell by the setup, the office is taken down. This is the last thing I'm recording in the house before I move. But I'm here with my friend Donald Appleberry, who, ironically was recruited out of the town like next door to where I was a recruiter, and we, his recruiters, a friend of mine, and we met two and a half two years ago, out here, and Donnie is one of my go to agents out here in San Diego. And we do a podcast we've been meaning to do one for a little while and while we both don't have a life yeah.

Donald:

Yeah.

David:

I do like tonight is literally the going away party hence the like twisted tees to while while recording, we're going away shindig at my house, and then I'm out of here, but so it's either now or never. And so we get them on, we're going to talk about like using your VA loan and a hot market negotiation tips as a buyer and a hot market and how to kind of get past all the excuses that people use for why they can't buy a house as a service member because the market is too hot right now.

Maybe you can touch on some speculations about what the market will do. But anyway, I guess I didn't really say much about him other than he's a real estate agent and I know where he enlisted.

He was a recon marine. He's got some investment property, does some crypto, does a lot of other fun stuff. And just a friend of mine, but figure what you owe and Rookie of the Year in San Diego County, so clearly not a bad agent, right? 12 million in eight months.

Donald:

In 12 months, I had 10.5. In eight months, I had 7.5. And then year to date, I made about 16 million right now.

David:

No big deal. And that's in the hottest market that I've ever seen. And I would argue one of the hottest markets in the country, even with everything going on right now. If you guys don't know what's going on in San Diego right now, as far as prices, it's fucking nuts. But we'll probably touch on that. But anyway, a little bit about yourself.

Intro:

Welcome to the military millionaire podcast where we teach service members, veterans and their families how to build wealth through personal finance, entrepreneurship and real estate investing. I'm your host, David Pere and together with my co host, Alex Felice. We're here to be your no BS guides along the most important mission you'll ever embark on your finances. Vehicle one, you're clear to depart friendly lines. Roger Vic one Oscar Mike.

Sponsor:

Hey, guys, I want to interrupt this episode for just one minute to bring you a message from our sponsor for this episode, Rentometer. Now, whether you already have an established rental business, or you're analyzing your first deal, knowing the correct rental income is absolutely crucial to lowering investment risk and optimizing your rental income.

That's why our go-to source for rental data is Rentometer. Real estate professionals rely on Rentometer because it's the fastest and easiest way to access quality rental data throughout the US. Now don't take our word for it. Rentometer provides over 500,000 rent reports every single month and gets rave reviews from its customers. In fact, when I first became a real estate investor, rent ometer saved me $100 a month on my first property which would pay for the entire Rentometer membership. If you paid for the membership. Right off the bat, they have a free option to give it a trial. I use Rentometer Pro, it's absolutely worth your time. I still use it to verify my rent when I'm analyzing properties and it saved me or rather earned me extra 1000s of dollars over the last few years in rental income and I absolutely recommend that you give it a shot.

So go to rentometer.com today to start your free seven day trial and grow your rental business smarter with Rentometer or click the link down in the show notes. And that'll take you right there. Now let's dig into this show.

Donald:

Yeah, so I'm Donald, go by Donnie. I started as an investor or I guess I want to be investor at first you know, trying to break the ground when I was in the military, probably like a lot of people on the on the page and watch bigger pockets, things like this, but I started initially by trying to get into wholesaling, right because that's like the lowest hanging fruit though. And I fell into a trap there because it's the lowest hanging fruit and the people understand that there's a lot of people trying to get rich quick or however you want to look at it. Do one deal with a one page contract and make $50,000 on it by reassigning it to an investor. They monopolize this way so they make this program you go and you buy it. Not all programs are bad, do your own research, but I have a bunch of spiels on that. I don't want to get too much into it.

05:00 - 10:00

David:

I'm in a good one. There's not a whole lot of good ones. There's there's two that I would recommend.

Donald:

Yes. So, like I said, they're not all bad, but do your own research. I did not. I fell into the buzzwords. I really liked the buzzwords and get rich fast. The bank thing was actually a prior military guy. They put it together as prior Navy. I don't want to name drop, so I won't get sued. I don't know if he would sue me or not, but no, be safe. Sorry.

But I fell into that. Realize that was a scam. And then I kept going through the course actually, to see what you know was on the other side and see how I can better like to tell people like hey, this is what's going to happen. And if this is happening, or these things are happening, get out it's a scam, right?

So one of the questions they asked me was how much money do you have set aside for investing in real estate? And I was an E three in the military at the time. I had like, yeah. I wanted a special incentive pay. It was like my jump wings or whatever, but it was like 125 bucks a month additional. So pretty much based on the E three pay and I wasn't married. So I told him $90,000 right. I did not have 90,000 nowhere near and I was living million dollar weekends, right. Some people understand that. But sure enough, a couple weeks go by they qualify me for the premium course because I'm so engaged in the Facebook page. I never want to and after a couple phone calls drove out between the span of three four weeks. At the very end they pitched me a $90,000 mentorship course to work directly with the creator of the course right so be careful out there anyway, I circle back finally found bigger pockets and realize that hey, I should probably listen to bigger pockets and not these gurus that are on the YouTube ads before bigger pockets.

So I started learning by watching every single one and still watch them all to date. As much as I can anyway, I listened to him in the car, but started while I was in. I tried to buy a house in Missouri. I had no idea what I was lucky it didn't work out. Honestly, I had no idea what I sent it off and like I had like a little bit of money in the bank who just came back from the point and not a lot. I made an offer on those $40,000 houses through the listing agent didn't know I made an offer.

No Springfield, no. West Side Springfield,

David:

Yeah, like it, alright.

Donald:

It was okay. And the two brothers inherited this property and it didn't work out and I offered 38. They wanted 40. They came back to me two weeks later and said we'll take 38 and I said that was two weeks ago. Let's do 35 now anyway, it didn't work out. But the brothers ended up contacting me directly. They didn't want the property so we did like a seller finance deal.

Honestly, it was more I have nothing to really other than that seller finance deal to reference other than that kind of sales. So I think realistically It was probably more of a glorified lease option in a way so I pretty much manage the property for them for a larger percentage and they got like 12% of rent and I had the property I was responsible for everything but rented to my friend. They wanted three grand down. I gave him three grand rent to my friend. He gave me a $1500 deposit into the gym 500 bucks my payment to them was like $234 like a weird number like that.

Anyway, I kept doing that for a little bit. I got married sorry you know this is long winded sorry but got married started doing now had a lot of moving parts decided let it go told him give back they're like yeah, we'll take it with 10 and play like you did everything for us. Thank you and I was like yeah, just lose my mind here. Get out of military doing this big change never intended on becoming an agent eventually, you know just kind of met some of the right people just weird like coin sale things just happened and put me on the path so I went for it and here I am. But to sum up everything else from then till now I bought a triplex in Imperial Beach. We were house hacking.

David:

Spit it, drop the numbers.

Donald:

Yeah, so we got that under contract for a million even. It appraised at 1,000,020 and had been sitting on the market for about 70 days and third call 64 days I think, but the reason it had sold was because the sellers were Chinese they had a Chinese listing agent. They weren't investors, they were just putting their money here instead of keeping it in Hong Kong permanently. Just negative interest rates there, we have a lot of Chinese investors.

10:00 - 15:00

David:

It's all I know about this house. It was bought with cash. The guy owns 20 something houses in the county. And my landlord's name is Xiaomg.

Yes, Sarah. Yeah. Yeah. Yeah, Chinese money.

Donald:

I don't claim to know a lot about it. But from what I hear they have negative interest rates over there. So they don't have any interest in making this investment more than hedging against their countries.

David:

We do it a lot in really big cities in general.

Donald:

Yep.

David:

Hawaii has a ton of Chinese investors. Buddy, right in San Francisco. So there's like a million dollar condo and like, like a penthouse level condo and the tower right across, and it's never been occupied. It's just empty. And he knows he's an agent. So he's like a, it's purchased. It was purchased in cash. They don't care about the tenant. It's just a hedge that’s what he says. So.

Donald:

Yeah, so I was talking to her, I kind of realized that from start looking at the numbers, all the rents were below market. One of them was dropped drastically blue market was a section eight tenant never. They've been there since 91. I believe. Great tenants, we still have great tenants who took immaculate care of the property. But their rent was like 1200 bucks and market rent was 1750.

So we're like, okay, what's going on here? You know, so we got to adjust. We can't adjust too much.

David:

Yeah.

Donald:

Because of the stipulations. So we've talked about that..

Yeah, we can dive into that in a second too. So anyway, we went through, the reason hadn't sold was because a lot of VA offers came through, but they're required section one, termite clearance, right, which requires the property be tinted or most people assume it requires property to be tinted.

Maybe I want to displace tenants, because I don't know the hard number off the top of my head. But I think it's like you have to pay X amount like twice or three times the amount of rent owed to the tenant. So if you push them out for three days, you'd have to pay them three times that day's worth of rent for relocation. During that period, they also have to pay for all the food, they have to do all kinds of things. So they don't want to deal with that. They're not even in the country, probably right.

So like, yeah, we can't do VA because of that. So what I did was I found a solution to their problem. Through my vast network of trillion people and their real estate, I don't know all the answers, but I know enough people to know all the answers, right? So we found the answer. I brought them the solution with my offer, submitted it asking even though we've been sitting for a while, just because we had been sitting at the same price for four months in a pretty high appreciating market. So we figured I'd come back a little high since it over got accepted. And yeah, got it repositioned a little bit. We put in about $20,000 worth of work on renovating it and fixing it up. Reappraisal. We haven't done it yet, but we're in the midst of doing it.

We're expecting about 1.4 1.42 reappraisal, after you know putting zero down with the Galen and having a pretty big boost in equity for the $20,000 worth of work.

David:

Yeah, I'm not much of an owner like not knowing only to get very long.

Donald:

Yeah. And we bought that in December. We went our contract in December.

David:

I remember cuz you guys, the last time we drank it by house. Is when we're talking about this. Yeah. So who knows what we're gonna come out of tonight. It's not that it's only been two or three times I've actually had people over to drink at the house. One of them..

Donald:

Last time it turned into meet partner with someone buying a triplex.

David:

Oh, yeah, that's right. He did it with another veteran. They partnered with him. So.

Donald:

Yeah. Not to dive in too deep to that. But he had already used his VA loan. So we didn't have entitlement. But he had owned the property for two and a half years at this point. When we were talking about it, he had a little bit left, and he had a pretty good paying W two job. I had a real estate agent, I did not have a W two job and I don't have two years of taxes on record yet.

David:

Yep.

Donald:

So what we did is he brought the income I brought the entitlement. We joined together on a VA loan and we purchased property as to Yeah, so it is possible you can do it. There are a few drawbacks to that if you don't bet on your partner. I've seen a few days with that. And just a heads up if someone brought someone partner with someone and they both came to me They say they came to a lender, and they think the partnership is good. But then they talk to the lender, and they realize one of them has a lot of liability that they're bringing to the table and the other ones are perfectly clean. If they buy that property, they're both going to be responsible for that liability, right?

So legally, I can't tell either person that and neither can the lender. So make sure you do your own due diligence on vetting your partner.

15:00 - 20:00

David:

So we put that in layman's terms if we partner on a fucking property, and I have like shit with creditors and bad debt and all this other crap, the lender can't tell him that. Like, you know, if he doesn't know, he doesn't know, it's not hard for me to be like, Well, yeah, no, I'm good man. And then, especially if we're using his income and his finances to qualify for the loan, he's now partially responsible for my shit. The creditors can come after him on the property too. And they can put a lien against the house and whatever. So yeah, and yes, I can't say I've seen that. Because if I said, I've seen that it would imply that somebody had told me about some of that stuff.

Donald:

Not this guy.

David:

Right. But what I may or may not have heard of situations like that from other people. Yeah, yeah. And it sucks.

Donald:

It doesn't always turn out bad. But you know, obviously, if you're, you know, this, especially if it's your first property you don't want, don't want it to be totally shot down because of who you partner with didn't tell you the truth, right? So be skeptical, but you know, trust but verify.

David:

Yep.

Now, we got into a little bit about you. And obviously, we know your fucking Rookie of the Year for San Diego, which by the way, I thought was just like, amongst your brokerage. But I saw the award yesterday. That's a much bigger pool of people.

Donald:

One out of 140,000 yeah.

David:

Yeah. No, big. No big deal. Yeah. Subtle, subtle fluxys going on over there. That’s pretty sick.

Yeah, I was like, I saw they were I was like, oh, oh, that's a much bigger deal that yeah, it’s fuckin sweet deal. So that's what you have to look forward to. If you use one of our recommended agents, not that I'm, you know, gonna shamelessly plug that in there.

Donald:

Appreciate it. Yeah.

David:

But Alright, so San Diego, right? You were clearly successful this year, because you've done a lot of real estate transactions. But Donald, we can't, we can't buy with the VA loan in an expensive market in a crazy seller's market, like we got going on right now. It just doesn't work. No, VA loans are not competitive. But what is it you specialize in?

Donald:

VA and investing.

David:

Alright. So how is it that you're able to do so well, when everyone for some reason thinks the VA loan isn't competitive in the south in a hot market.

Donald:

So there are quite a few factors that operate that there's three big factors you need to think about when you're submitting an offer, or especially if it's VA, the first thing is who you're obviously I'm, this is gonna sound biased, right. But here working with an agent, lender, team, whatever it is, they need to be very cohesive, they're working together. And they need to be looking out for your best interest and be able to perform on what they're telling you they can do.

So I don't want to discourage any companies. You know people have had good and bad experiences with probably most companies. I don't typically recommend Navy fed or USAA for mortgages. You can say you go to, I want to use the name John, but john..

David:

John might walk in in a minute. And he is somebody that yeah..

Donald:

So John Smith is, this is..

David:

By the way, the John who was on the podcast last week, by the time you hear this.

Donald:

You talk to John agent or lender, John Smith. But then you go talk to Steve Smith Jobs, Steve Jobs as the lender, right. So you talked to Steve Jobs. And Steve Jobs. Oh, he called you a 3% rate? Well, let me quote you 2.75% rate, cool in this market that sounds realistic. Sounds doable. What is this guy doing where he can get a better rate is this guy, but then say he matches it takes some points away? And then this guy says, You know what, I'll do it for 2.25 no points, and he's like, Okay, then all these other things go into play. I'm not a lender. So maybe I'm saying something that sounds a little off to some of the lenders. I don't know your lingo, right?

So anyway, what happens is, they might promise you the best deal, you might get under contract with that promise, if they cannot deliver and close then what's the point of having that pre approval? What's the point of having that approval? If they can't perform on it, then you're at close of escrow. This just happened to one of my mentees actually, where the buyer ended up going with their lender, and the lender couldn't perform on what they promised them now it's five days past close of escrow sellers get Nancy and they're saying what's going on? It's on the lender because the lender couldn't perform on the loan he promised he could.

20:00 - 25:00

Donald:

So rate isn't the end all be all when you're looking at the loan again, right? So with that out of the way, make sure the agent you have working for you is also not just, uh, I always call it a Sunday in the most Sunday brunch, Mimosa drink an agent, right? It's, it's got to be, there's a glam aspect to being a real estate agent. And that's because you show up, you know, not put together and not...

David:

Says the guy who drove up here in an Aston Martin.

Donald:

Yes, Yes, I did.

David:

But I'm a cheapskate at heart. We’ll talk about that later. We'll get to it. He bought smart.

Okay..

David:

Thank you.

Donald:

But make sure they're put together, make sure not just you know, personally but professionally. And what I mean by that is how you package your offer and send it over matters a lot, you can have the best offer. But if an agent just goes through, sends it through DocuSign and puts the listing agent's email in there, and it goes from DocuSign to the buyer to you straight to the listing agent. There's like context, there's no breakdown. And in between the signing period, your agent has been talking to the listing agent. There's no rapport built, there's no no questions asked, like that matters a lot. And it stands out to the listing agents and stands out to the other side, which regardless of what side you're on, it stands out right.

So I can't tell you the number of listing agents have call that they've never got back to me or have never picked up the phone. But I still call them right. And I still send them texts associated with emails, even if they don't respond. You know, in this market, I understand why. Because, you know, if someone's only doing listings, and they have five listings, and they're all going live in one weekend, you know, if we're having 20-30 offers on every property yet, I think as a buyer's agent, they probably have 10-20 phone calls a day for each property, not not including, you know, the random emails again, asking kind of ridiculous questions, which will kind of go into max but be overwhelmed, right, they up turn the phone off, they have to say texts only they have to open voicemail to check their voicemail every hour, it gets overwhelming.

So make sure your buying learning team is put together well, of course cohesively together, and it knows how to package a deal properly, especially if you're using VA.

So when it comes to VA loans, a lot of people think you can't close quick VA loan, which is very arguable. And actually someone that I close the VA loan with in 12 days is doable. So that deal I'm speaking of in particular, we're actually up against two cash offers, and we beat up to cash offers as a VA finance deal. Reason being is because we put the package together correctly or professionally. We weren't wordy. We weren't over the top, we didn't ask unnecessary questions, we asked important ones. And it resonated to the agent, the agent understood like, Hey, we're serious buyers, my clients are serious clients. And this is our offer. And we dropped contingencies as low as we could, as fast as we could without over promising and under under delivery. And we made it happen.

We actually have that one weird story. And completely unrelated, it was supposed to close in 12 days and closed in like 10 days, nine days, or 10 days. Because of an underwriting err either way, we would have closed in 12 days we closed earlier than that. When someone tells you VA is not competitive against cash it is you have to make sure you're structuring the deal, right. And the seller feels comfortable taking a finance deal over a cash deal. The reason cash is so powerful, or the same as cash is so powerful is because there's no contingencies a lot of times, right where they say there's no contingencies and can close quick.

And, you know, a lot of times, you know, if someone's first time selling a house, they think you're gonna get a briefcase of cash at the door. And that's not how it works, right? You get paid the same way as cash or finance just goes through a small process because you have to finance the buyer.

So yeah, structuring the deal. A lot of people and as much as I hate to say this right now, a lot of people are waiving appraisal contingencies, or waiving appraisal contingencies, and I don't recommend it often like, and I'm not recommending it now, just so that's not misconstrued, but people are waiving appraisal contingencies all over the place, and his reason being is because appraisers are having a difficult time saying, yes, this is appraising value, even if it's at list price. A lot of times right now sellers are thinking, hey, everything's going over asking. So I'm gonna list my price above the value. And that's not what you should be doing. So that's not every case. But that is some. And that's why, you know, there is a little bit more hesitation with appraisers. And, you know, I'm not going to go into my inflation rant, I did a little bit of my stand today. And I think that plays a big part in why appraisers are so hesitant or can't find value right now.

25:00 - 30:00

Donald:

But make sure you structure that I wouldn't waive appraisal, and never waive inspection, I would say, what we do is we make it as low as possible. So a lot of times I'll do you know, a five to eight day inspection contingency. And the moment I get that, hey, you're certain as soon as I get a counter, am I okay, I start prepping. You know, I have my home inspectors on my favorites tab for my messages. So as soon as we encounter Okay, I'm like, right, I prep the text and then I send it over once we get offer accepted, all I do is send a prep text to with the with the address to my home inspector and he schedules me this so the moment it's accepted before we even open escrow, I'm scheduling the home inspection. This doesn't work for everything. Because sometimes it's you know, if it's an occupied place, you need to make sure it's fine for tenants with the owner, time, but you know, at least getting a date from him wherever the availability. I send that to the listing agent as soon as offers accepted. That way you can get your inspection done with such a short contingency. any repairs done request repairs before that timeline shows up so you're not once again over promising and under delivering, you don't want to over promise the seller, the listing agent and then still undelivered by being late on your contingencies.

And then when it comes to VA, there are some I guess requirements and restrictions and I understand where some of the hesitation comes from the listing sides or the seller sides. But a lot of it is a myth. A lot of it is just a misunderstanding of what the new VA loan is. And things like the appraisers are a little more conservative. Yes, in a way. But at the same time, we did a deal in Fallbrook. It was like my fourth client ever actually did a deal in Fallbrook that was owned by a hoarder for 40 years, had rats and dead rats in the walls. One of them had two heating systems, one of them didn't work. And when we looked inside the ventilation, there were rodent droppings on the right, which is a huge hazard. Greg had a lot of problems. But the bones were good. It was an old house, it had rat bones, yes, the rat bones were solid.

The property was good. And he just needed a lot of cosmetic work and, you know, a decent amount of honestly health and safety things and we did take care of. But the appraiser signed off and said hey came in a value and is good. And that was like a total gut job foot honestly. And then I had a deal that same deal to close in 12 days or 10 days where we had an appraiser say hey, there's a couple pieces of chip paint on the wall or on the exterior of the wall, you need to repaint the whole house, right.

So it's not the VA loan. It's the appraiser you get right? It's honestly, you know, there's not like some crazy inside program or inside knowledge that appraisers have that other people don't. It's literally a factor of human error when it comes down to getting a bad appraisal. So that's why people say, and I actually mentioned this in the group the other day, when people are like, hey, my appraisal came back low. What should I do? Like, am I screwed? Like no, like, you have to realize the appraiser appraisal was done by an appraiser. There's room in there for human error with the amount of property selling right now, with the amount property selling above asking you need to make sure that that appraiser isn't missing comps that they're not missing or, or kind of ignoring some comps out there because there's been two times now where it wasn't the listing side it was you know, I submitted the comps to the listing agent, where we had a low appraisal, Tidewater. And we went back, I looked at the comps they had. And I sent them the actual comps up to date comps. And we added in at value now some people are gonna say what's the point of helping your client pay more for a house, you're just the list. You're just an agent trying and get a higher commission, right? And that's not the case. Because if we didn't send those comps over and bring the value, you're not changing the value, right? You're not, you're not just increasing the price, you're increasing the value of the property. So even if they would have dropped the price would have been the same value, right.

30:00 - 35:00

Donald:

So we sent it over got it back up to contract price and my client went From this deal is dead back to the drawing board to, I still have the house I love, it's still affordable. And because it was the price we sent over, and we got the deal done. So that's happened twice that you can find Tidewater appraisals. It's not, you know, it's not easy, but it's not difficult either just like real estate in general. So I'd say overall due diligence the team you have, and then make sure you're running your numbers. But don't you know, I don't want to say anything, you know, bad for bigger pockets or anything like that. I love bigger pockets. A lot of the programs and things though, like people take for example, the 1% rule. And I've been saying the 1% rule is not really one that works here, it would be great to have a bunch of 1% properties here. But we're in a premium market.

David:

You'd be $10,000 a month for a million dollar house.

Donald:

Yes.

David:

And it’s realistic.

Donald:

Right.

And the reason being, especially for California now, you know, rents can only go up a true 5% each year. But appreciation, then, you know, last three, four years have been 8% plus. So how you supposed to keep rents at market when appreciations outpacing rental increase, you know, unless you every year you're kicking tenants out front and back end. And that that alone can be, you know, more popular than just keeping tenants in there.

David:

Yeah, absolutely.

Donald:

Carpet and paint and all these are things. But thankfully, not too long ago, I want to say last week, Brandon Turner actually went on bigger pockets and addressed the 1% rule, in particular, and was like, you know, is the 1% if a property doesn't meet the 1% rule, is it a bad deal? Or is it a bad deal? And he was even like, Yeah, not really, there's way too many factors, way too many, many variables in real estate to base your entire strategy off of a rule that also relies on a lot of factors.

David:

What's up guys hope you're enjoying the show, I wanted to stop for just a few seconds to talk once more about Rentometer and know that they did not sponsor the second ad. This is a mid roll ad, they sponsored the beginning of the show, but I believe in Rentometer enough that I wanted to just poke my head in here and reiterate that you guys should give it a shot. It's a seven day free trial. This will absolutely save you money by helping you get greater rents on a property or helping you avoid from trying to ask for too much in rent and sitting vacant forever, which can be almost as costly, if not worse.

So I absolutely recommend that you go try Rentometer for free at rentometer.com or the link down in the show notes and give them a shot you absolutely can't lose with a free trial that will literally make you 1000s of dollars on your rentals. Now back to the episode.

David:

Yeah, like the 1% rule is great. But it doesn't like the 1% rule was the idea is if a property meets the 1% rule, then you can basically assume that it will cash flow. It doesn't mean anything under the 1% rule is a garbage deal, right? It just means do your freakin due diligence, right? Like, when you get into a million dollar property, you have to factor in probably paying down 2000 a month in principle, right you buy a $100,000 house you're paying down like 200 bucks. So a totally different ballgame right there.

And then like you got to figure in the maintenance repairs, capex and stuff like that on a $100,000 house is probably about the same as a million dollar house with the same square footage, maybe a little bit of a price difference, but not 10 times, right. It's not like your water heater goes from $1,000 Water Heater to a $10,000 Water Heater just because your house is more expensive.

So there's a lot of things to factor in there where you might be able to get away with a point seven or point 8% rule house or even even less, depending on the market. Especially if you've got some appreciation, you're paying on principle you've got it, there's all these other factors that go into it.

Donald:

100%.

And a lot of the investors out here, there's, you know, a couple that I'm pretty close with that. swear by the point six 5% rule is what they say percent to you and say if it meets point six 5% then that's the deal they take and they're pretty savvy investors. One of them actually makes sure ensures that when he's upgrading his portfolio, he lists below point six 5% for rents that way other investors see that this is a deal and it gets sold faster than other properties on the market. Because if you're a sophisticated investor, we have a lot of them out here. They're not looking at the purchase price as much as they are the actual investment breakdown. Obviously the purchase price plays a role in that. But if everything pans out, and it's you know, like come down my cap rates and things like that if the cap rate meets what they're looking for, if the rental ratio meets what they're looking for, then they take the deal. It's not not necessarily based on purchase price alone, which a lot of people know you know, based the entire purchase around the purchase price which there's a lot of other factors to look at, not saying purchase price is not important. Obviously, it is, you know, make sure you try to get the best deal at the lowest price you can. But like I said, we are in a market with a lot of us sophisticated investors. And typically people know what they own here. So you're not going to find that distressed property. Oftentimes, the minus a nose is 1%. But oftentimes, you're not going to find that distressed property with a distressed seller who will take, you know, $200,000 for their property, and it's worth eight, right.

35:00 - 40:00

Donald:

And once you start, even here, I tried to do a little wholesaling. And we talked to one person who was going to sell their house for 400, it was worth about six. But the more and more we talked to her, and the more and more we followed up with her, she looked more into selling the property, and was like, Well, why wouldn't I just take my property to market and sell it for 600? If not more in the market we're in? And then why would I give it to you 400. And so they start asking those kinds of questions where as you know, because if, if you're looking at percent wise, you offer 70%, below value, right? So there's some spread in there for the investor and maybe a wholesale fee for trying to do wholesale. But when you're in the Midwest, that's a, you know, it could be a small number, right? 70,000.

David:

30 grand difference 300,000.

Donald:

Exactly, then when you're here in a more expensive market, that's a lot more money. And even though it's only percents, you know, when people see those dollar signs, when you add a comma, or an extra comma in there on different price points, then people get a little more picky and would rather pay a two and a half, two and a half percent commission then then discount the property and sell it off market.

With that being said, actually, my last four deals this year have been off market. They have been listing, and I've been doing cooperating buyer broker agreements with the seller. And we've done deals off market. So kind of interesting, that's kind of where it's going. A lot of sellers, you know, don't either want to prep for sale, or I have one seller that still wants to hold on to the property because of how fast properties are appreciating or going up in value, I should say. And they want to hold off the longest and get more, which I'm like, it's time in the market, you have to be in a seller's market sellers don't want to sell. So I have low inventory because they want to keep making a lot of money. And then in a buyer's market buyers don't want to buy because the incentive is if you buy real estate, it's never going up again, or we'll never see the prices we saw. And then, you know, 10 years later gloom yeah, this how it works. It's you know, narrative and emotion based a lot of time just like those buying and selling markets. So it's interesting, but yeah, we've done four, three, I get no I guess one's in contract. Now I have two more off markets with exclusive right, but the developer builder developer doesn't want to list right away because he wants to move his money into the next projects right now, he has a lot of really good opportunities. So he doesn't want that lag time.

So what we've been doing is marking hey, this is an unfinished product gonna have to have a vision for it and see where it's going. The buyer comes in kind of picks up some of the litter like a regular new construction deal comes in and picks some of the finishing touches, cosmetic only, no structural changes. And then we send over an offer they get accepted to the one we just did was VA they get accepted. And once they have the final stamp of approval and everything from the city, that's when we open escrow and commence the contract. So it's not necessarily a new construction deal. And move forward and buyer gets kind of a customized home experience as well as a property that had no competition, which also plays back into the point where you need to make sure the agent working with is also working for you, not just sending over an offer for you, not just doing paperwork for you.

David:

Yeah, I'll vouch for the fact that I say it in the Facebook group all the time when people like Oh, the VA loans are not like your agent and or your lender isn't doing what they need to do, right? Because immediately, like I've seen you and Jon's hiding over here on the stairs, but like I've literally seen Donnie texture call Jon and be like, Hey, we got an offer. And then Jon, jump on the phone with the listing agent and talk through like, this is what I'm gonna do with the VA loan. I'll offer you a per diem if we don't close on time. There's this, there's this, let me address all your concerns. No, it'll close here's why it'll close. It's my reputation. I can do it this fast. Yes, I promise I can do it that fast. Yes, I'll offer you $250 a day if I don't close it that fast and it's my fault. Then they get under contract, because the agent knows the lender, knows the product, knows what they're capable of believing the product, and are willing to put their own reputation on stake behind it.

40:00 - 45:00

David:

So if you're not, and this is in a market where properties are routinely going over asking price, like that. So if your agent if you're not able to get something under contract, because of the idea that VA loans are competitive, and the VA loan wanted this to be able to do that, unfortunately, it probably is because either your agent or your lender doesn't believe in the product or isn't capable of doing, or they're not confident in their own ability to stake anything behind it, right? They don't have skin in the game. And that's unfortunate, but that's the reality. So I just threw that out there. Because every time I say that to somebody everyone's like, Oh, no, my agents are great, maybe, but they might not understand the VA loan, right? Like your lender might be great. But there are a ton of really great lenders out there who don't understand the VA loan, because it's not, there isn't a company out there. That is like we do the VA loan, there are companies out there that are like, Hey, we do a lot of loans. And we also do the VA loan.

There's not very select lenders, in markets who actually focus on mastering the VA loans. And don't, I'm not going to get into the tangent line just because veterans united says they specialize the VA loan doesn't mean they're really that good. They seem to close a little late and have extra fees hidden in there. And even still with them, and they with any big bank, you're still running the issue of maybe that specific lender is okay at the VA loan, and they, you know, have done it like but there's a big difference between someone who's done the VA loan, or who can do the VA loan, and who focuses on the deal. And like you, your niche is working with VA buyers. So you understand the VA loan a ton more than most agents. And then you work with lenders who specialize in the VA loan. And so you guys know what you're capable of doing, you're willing to stake your reputation and throw a little skin in the game behind it. And you guys close properties all day long.

Donald:

Yeah. And there's a lot of misinformation out there. That is, I guess, misconstrued it is law were actual literature, because there's literature on these miss information points. And actually, it was with Jon, we like dove into the VA guidelines for a while and tried to explore all the possibilities to the point where we literally found like this niche market that doesn't exist, but the VA technically would cover. But that market for lending isn't in existence. So it's like, there's a lot that goes into it. And, you know, I honestly wouldn't expect every lender to understand all the VA loan rules and guidelines because there are a lot. And if you're doing a lot of different loans, then you know, sure, maybe you don't know it in depth. But you know, make sure you have if you're only using the VA loan, I would try. I would highly recommend use a team that does know the VA loan, I'm not advocating myself not saying not recommending me out there, obviously I would be glad to help. But make sure you get your agent to make sure they know to be alone. I know a handful of VA loan agents that are very good, very professional. But I know a lot to say they are and all they do is run Instagram ads. I hate to say it, I mean I'm an agent too. I'm not trying to discredit other agents. But there's, you know, what's the rule is 90% of the agents do 10% of the deals. 10% agents do 90% of deals. And there's a reason for that. Because you can get your real estate license for $302 in California, and you'll take a one weekend quiz. And then you have your real estate license after learning nothing about real estate. The real estate exam does not teach you about real estate.

David:

I’ve been licensed since 2017. And never sold a house. So yeah.

Donald:

And yeah, so it's when people just because someone's license age doesn't mean they're, you know, a professional.

David:

They don't teach you crap, right?

They teach you how to, they teach you the legal mumbo jumbo to not get in trouble. They don't tell you how to negotiate. They don't tell you market trends. They don't tell you. You guys heard me talk about it a million times don't just get sucked into using a friend or family member as an agent because they have a license because unless they're a full time real estate agent, they aren't going to be they might have your best interests at heart but they don't know what they're doing. Like you wouldn't give your 10 year old the keys to a Ferrari and say well he's my son. So I'm sure he'll take care of it. Okay, he's told us not to frickin drive the car.

Donald:

There's a really big misconception that a lot of people make you know. Even, I'm guilty of it, you know, I got my real estate license now. My friends and family use me as an agent right? This would have been my first deal. My best friend at the time, Jack. He was looking to buy a house. I put them in touch with a lender and put them out of the process, you know, it's familiar with it. I've been, I guess, interning as an agent for eight months, because I had this huge licensing delay. But walked into the process, you know, taught him some basic stuff about real estate, how to set it up for, you know, two, three years out from now when he goes back to the east coast.

45:00 - 50:00

Donald:

And it was good now. And then when it came time to actually go do the deal. He ended up using a different lender, if you didn't trust me, was not that interesting. I'll get into that in a second. He ended up using a different lender, and he ended up using a different agent. And I was heartbroken first, but I had to take a step back. So I'm gonna try and say, Why do you do that? Well, the simple fact is, he’s my best friend in the military, right? We were the same billet on different platoons in different teams, right? So we had the same job. Just he ran in the first platoon and I ran in the second platoon.

So when we would get together, you know, we do out have those million dollar weekends together, right. You know, go make memories, if you keep trying to keep this PG. And when it came time for a professional relationship, we had too much history with a personal relationship. He knew too much about me before I was Donald, the real estate agent, right? Or Donald, the real estate investor. He knew me as Donnie died man, right. So when it came time to make that decision, he wanted to use someone that he only knows on a professional level. It wasn't like, you know, it wasn't anything personal. It's just the fact that we were so close actually is the reason why he didn't use me. So I wish, honestly, my sound that and I said out loud. It's not a bad thing. But this happens all the time. Like, you know, if I mean.

David:

I usually tell people not to use the brand new agent who's a friend or a friend or family member to do like, at least four deals a year to be relevant in that market.

Donald:

Yeah, you have to.

David:

I would have told your friend not to use you. Yeah, without knowing anything about you like, Whoa, whoa, whoa, whoa, yeah. Your recon buddy they used to get drunk with got his license yesterday. And you think that's the best agent? Come on, man.

Donald:

Exactly.

So when Suzie gets her license, she is mad that her friends and her peer group and her family members, even parents , don't use her as an agent. She gets really and says why do you use me? That would have been in their mind, that would have been an easy paycheck, right? And in reality, it's not because you're not, you're not working for them. So you get paid, you just get paid for working, right? If that makes sense. Like you're handling a massive transaction, you are in charge of their money, right? They are trusting you to make finance or help them, guide them on making financial decisions, and best courses of action take during a real estate transaction. And if that's not what you're focused on, and you're more focused on the commission check at the end. You're not going to succeed in the market, especially in a market like this at a time like this hot level like this. So.

David:

Yeah, I mean, I get hit up all the time by agents who want to be like, you know, a member of the see that I have some recommended agents like oh, I want to be one of your agents where there's a guy in San Diego who reached out. Well, there's several people that reach out. But like, I got to the point now, where it's like, the first thing I asked is like, how long have you had your license? Average number of deals closed a year?

Donald:

Right.

David:

Right. Like, unless you've had your license for like, at least a year and done at least five but I usually like I'm looking generally for a federal license for over a year you average 10 deals a year. Like alright, 12 preferably like one a month then it's like okay, cool. Now we're talking that like A your full time, B you're consistent. You know, it's not like just a one year one they're like, you understand you want to have your finger on the market, right like the market changes. I mean, look at today's real estate market compared to six months ago in San Diego. Yeah, totally different bs six months ago, people were like, oh my god the market in San Diego so hot people are getting 30 offers a weekend it comes on the market now. It's like oh my God, if you don't have a $40,000 appraisal waiver, and you're offering, you know, 50,000 over asking price within the first like 10 hours without looking at the house. Well, we're not going to look at your.. It's like, oh, I don't even know what's gonna happen if things keep up like this six months from now it's gonna be like, Yeah, well, you weren't one of the 50 offers we received before the house went on the MLS. So pound sand because you waited till we listed it.

Donald:

Exactly.

Now the thing is, oh my goodness, this house went to market. Why did this property go to market? Especially if someone's on a team, they have a listing? And you're like, how did you not sell this right like we're getting 20-30 offers on property I do not sell less than house before you list it right? Because there's that little grace period when you get the contract to sign a property for sale.

50:00 - 55:00

David:

What are days on the market like right now in San Diego?

Donald:

Yeah. So days on market, I break it down by I think I do think nine or 10 different zip codes in San Diego their breakdown every month and I reflect the data. All besides one went down. I think there was one that was overall for San Diego County, I would say if you exclude the outliers, right, the ones that have been overpriced for two years out in Ramona that no one wants, right? Because it's way out in the boonies and is overpriced, and needs a lot of work. If you get rid of those kinds of outliers or even the really desirable $25 million property in the Hoya there hasn't really niche buyer for it. Get rid of those. I think realistically you're probably looking like maybe eight days on the market. I don't have the numbers in front of me. I'm sure there are some solid hard numbers. But I want to say eight days, but in reality it feels like three days Friday, Saturday.

David:

Only counting stuff that went on market.

Donald:

Exactly.

David:

I mean, that's the crazy thing. Like, at what point are you able to like okay, well, we're gonna add in a negative three for this one because it sold three days before they were going to list.

Donald:

Yeah.

And that's literally what my last handful of deals have been. You know, I was talking about this earlier this year with my previous team. One of the agents on there, Cody, a good friend of mine, we were kind of bouncing back and forth. And we worked a lot of buyers and I wanted to start, you know, pushing for sellers a bit more just kind of how the direction the market was going. I was, uh, we should, you know, we're all getting more and more buyers, but very few listings are popping up. And the people that get listings are also getting these buyers too.

So maybe we should probably turn change focus to listening. So I did, I took a hit to my life, I took a hit where I had a month where I was slow. You know, I had a lot of buyers coming in, but I didn't have you know, I didn't have anything under contract for a little bit. And the reason being is I had to readjust my focus from buying side to the listing side so I can better serve my buyers right? Just because I didn't put someone under contract on a property 40,000 over asking doesn't mean it wasn't working for my client, I was still outsourcing. And now one of my buyers that actually got after partnering with an agent from Orange County on David Green Team.

I found a property in Oceanside, we have it off market, they don't want to really throw it on market because they're going to, you know, still be here for a little bit. And they don't want to be moving around and then come back and then have to pack and move again. So what's what's happening is they're going to they want to sell for 620,000 the property is probably worth 640,000 I told him this I was you know, upfront about hey, this is what your property comps that this is the price they told me they initially wanted, I might hear a little low honestly, which is the exact opposite of what people are trying to sell by themselves are they're usually way high. Yeah, I might hear a little low. And, and we talked about the strategy, you know, they have like a $2,000 month mortgage payment they're leaving this ball I told him not to sell and we talked a little bit longer and they said they're you know they brought to camper anyway, so they want to go in the camper kind of travel round San Diego camp out when when he gets out they're going to travel us go camping certain places, and they'd rather have the money now.

David:

This guy's first name is not Richard isn’t it?

Dondal:

No.

David:

One of the guys I work with literally just moved out of his house into a camper like last week.

Donald:

Nice.

Donald:

That's a new thing going on, you know, so ironically, this guy was, you know, Reagan was there, right. But it was actually very level headed when it came to this, like a lot of you know, we talk to a lot of sellers. You know, they hear market incentives. They don't hear actual facts and stats about the market. So if you're in a hot market you can sell at whatever price just because an agent wants to get an appointment with you. So they say, you know, the text line is would you consider selling for a ridiculous offer on your home? Right. I know so many people listen, this live and text based campaign. And they say yeah, sure, what's ridiculous price, right? That's the obvious question. And he's like, hey, I need to come by the house, you know, look over and kind of give you the insight and then I can present you the offer. Get the appointment because what they're trying to do, they're not trying to give you a price or sell your house over the phone.

55:00 - 1:00:00

Donald:

So but this guy, he was like, yeah, you know, I don't want to try to time the market anymore. He's like, you know, prices are high, I'm happy with the game I have, if it goes up, it goes up, I don't care. I've already made my profit. But I don't make my profit until I sell. And a lot of people and not just real estate, but other investing strategies fail to recognize that just because your account reflects a certain amount or your value of your house reflects a certain amount, doesn't doesn't mean anything until you've actually cashed out or liquidated, right or sold. So he says I'm happy with everything I have, I really get this done now and not risk any chance of the market correcting or softening.

We had a conversation, I don't think that's the case, numbers don't say that's the case. But have the conversation anyway, wrapping it up, they're gonna end up selling for 620, that buyer there from the David Green team, we're going to make this 620, and he's going to get a property $20,000 under rough value, obviously, we have to get the appraisal done. But $20,000 under, it's been mostly updated. There's one room that needs a little, a little bit of work. But it's not anything major, just like flooring and paint. It's just like a storage room, that could be a bedroom. And that's it. So they did my work a year ago. So it's gonna be clean, it's gonna be an easy deal. And it's both good for the seller and good for the buyer.

David:

Yeah.

Donald:

But I didn't even go to the market. And that client, I've shown him two properties, my second one being today. And I've had that client for two and a half, three weeks now. So if you look on the outside and say, oh, Donnie has had a client for three weeks, but he's only showing him two houses. He's not doing his job. He's not working for him. But on the back end, where people don't see where people, agents aren't taking Instagram photos, or Instagram stories.

David:

Champagne.

Donald:

Right.

We're not doing anything flashy, they're sitting in front of the computer calling for four hours a day off market center and to have conversations with potential sellers to connect them with their buyers. That's what's going on in the background. So it's not what every agent does. It's not a bad thing. Every agent doesn't do that. But I prefer to work a lot. I'm trying to balance it now. Just because my wife's getting tired of me working all the time. But you know, she gave me a year. So I'll probably start bouncing out. But yeah, so that's kind of what it comes down to. As far as the markets side right now. I think it's better for the agents. And there are a lot of agents looking for off market. But it's, you know, there's 100 agents to talk to one seller, why does that seller pick the one, one agent, so the same thing comes down to by side to do just as much due diligence.

David:

Alright, so we're gonna have to wrap up here in a second because it's been at it for almost an hour. Now we have people coming over in a minute.

What's the one thing a VA buyer should know? In a hot market?

Donald:

Okay.

There's a few things. But I guess something is one thing. One thing, I'll keep it to one, I've been rambling a little bit.

David:

It's a podcast, you're supposed to talk, I'm supposed to sit here, okay. Drink more twisted tea, which is here in my hand.

Donald:

The one thing so this is not necessarily been confirmed, for sure. because not a lot of people understand va loan. But waiting appraisal on a VA loan is more of a paper gesture, in my opinion, Reason being is so you can if you want to approve funds, we don't send anything over even if you do send over a proof of funds and you waive the appraisal contingency. And it's VA finance, you still have what's called FHA and va amendatory clause. That means when you fill that out, there's a price on their input, which is typically the offer price. And you say we will not pay above this map that is also tied, that's for the loan, right?

So if the appraisal comes in, it comes in low, that clause still activates, right? So even if you say you put it in at 560, and it comes in at 550, that clause is still going to activate and say, Hey, we can't fund because of this clause, we cannot fund up to 560 we can only fund to 550. So a lot of people are like, Hey, will you remove the appraisal contingency on the VA loan? I'm like, sure, man, like I will. But if, you know, once I started my client for, you know, someone asked me their day to do that. And I was like, Hillary was with one of my other main lenders. And you know, I call him and talk to him. And I'm like, hey man. This is what he's saying. And he's like, I don't think you can even really do that, right? I might. Not really. But yeah, that's the thing that not everyone knows that thing. So it's literally just a paper gesture, saying, Hey, we don't care about appraisal. If you have proof of funds. You can Do it. Say you're offering 560-550? I mean, it gets more realistic. Realistically, it's 660 on a 650 place. And you waive appraisal? Honestly, if it doesn't matter, that clauses they're gonna come in and save you. If it comes in low. Depends how you view it save or mess with you. But if you have poor funds, it shouldn't matter anyway.

David:

Yeah, I guess it's a fun fact.

But then the three questions I ask everyone, we're gonna rapid fire it because this camera is going to die in one minute and 52 seconds. Got it? We're gonna end with a no video. So.

E one E two come up to you asking you for advice on life, finances, whatever, something you wish you'd known when you join the military.

1:00:00 - 1:04:10

Donald:

I wish I would have focused more on. For one, I wish I would have bought a property way sooner. And two, I wish I knew how to manage my credit better. I had terrible credit when I joined and rebuilt my credit from the ground up. I wish I had a better guide on how to do that.

So I would work on my credit, make sure that's stable, not just the high score, make sure you have a solid provable credit history. And I'd open up a couple lines of credit that I wouldn't use on any expense that I didn't already have to have. So like any overhead if I'm going out. If I do a meal prep service, I would like I do now I would pay on my credit card, because I know it's already gonna come out of my bank account. And then at the end of month, I just allocate and just move the money to help make more money. Right. So managing credit.

David:

Yeah, I think managing your credits, one that gets overlooked a lot as people get further down the road, but a very valuable starting step.

One resource, book, course, website, whatever that you recommend anybody looking to get started in real estate?

Donald:

Anyone? Okay, I would say I've been asked if I had to pick one form of education, what would I keep and it would be YouTube. As bad as that sounds. There's a lot you can learn on YouTube. There's a lot that, you know, there's a lot of bad information on YouTube. As far as resources for real estate, I would say biggerpockets.com not the not just a podcast. Go on there. Start reading forums, start reading some of these posts in your area about problems people are having successes people are having find a local meetup in that area. Go to meetups and network with other like minded people. Veterans and newbies. Everyone knows something you don't talk to everyone, you know, that's interested in the same goals.

David:

Yeah, I agree. I think YouTube University is huge. And then finally, where can people get a hold of you?

Donald:

I just switched up into an ESP, but my email is [email protected] my course will be in the show notes.

David:

Okay.

Donald:

My phone numbers Missouri area code, they've given it out to me time to change it now. So 4176501409 is my phone number. I live in Downtown. My Instagram is Donald appleberry realestate. Follow me there. Reach out to me there. I honestly have so many interactions on Instagram versus email or text anymore. It's like Instagram is the main platform on so yeah, that would be the best way.

David:

Right on and if you want to get connected with an agent in San Diego like Donnie, or I mean, obviously you can reach out to him but anywhere else, you know, as I always mentioned, like that's one of the things we do is recommend agents and lenders to people in the community because there's just a lot of garbage ones out there. So we spent a lot of time trying to vet people who are actually worth the shit.

So if you want a connection, the link will be down below but Frommilitarytomillionaire.com/VArealtor, and happy to introduce you to people where you can reach out to Donnie, Tony got from this podcast that don't know I'm not wasting his time. But uh, as always, thanks for joining us on the show.

Donald:

Thank you for having me.