Meet the Real Estate Cowboys
Meet the Real Estate Cowboys, John Larson and Johnny Collins as they talk passive income real estate investing.
Heard locally every Sunday morning at 8 a.m. in Dallas-Fort Worth on NewsRadio 1080 KRLD, the Cowboys invited Graham Parham of Highlands Residential Mortgage to talk the DFW market, mortgages, and passive income investing.
Host Amanda Guerra keeps the #CowboyCoffee hot while John and Johnny talk how to #BeACowboy and earn passive income in real estate.
1) Meet the Real Estate Cowboys
2) Passive Real Estate Investing and the Housing Market in DFW
3) Mortgage Lender and active Investor Graham Parham
4) Questions from Listeners and Weekly Words of Motivation
About Highlands Residential Mortgage
Highlands Residential Mortgage was created in 2010 in the midst of uncertainty and rapid change in the mortgage industry. A group of like-minded seasoned veterans came together to create a company with an employee-focused culture. A culture that values its members both personally and professionally and a company built on the idea that the customer comes first! We believe Highlands is such a place. Our Mission to value people drives everything we do.
Meet the Real Estate Cowboys
Spokesperson: The following is a paid commercial program, paid for by American Real Estate Investments, LLC, and does not reflect the opinions or advice of KRLD or Intercom Media Corporation.
Spokesperson: Are you wanting to invest in real estate? Get your cowboy hat on, and let’s talk passive income investing in the real estate market in North Texas. Here’s your experts, John Larson and Johnny Collins and your host, Amanda Guerra.
Amanda Guerra: A very good morning to you and welcome to the very first or Real Estate Cowboys Radio Show. I am your host Amanda Guerra with your head honcho, cowboy, John Larson, John is the owner of American Real Estate Investments. An active investor himself and the founder of Real Estate Cowboys. We will be joined this show and every show by the President of Community and National Title, one of John’s very good friends, Johnny Collins. Our goal of this show is to teach you everything you need to know about real estate investing and what is your return on life. So, guys, I’m super excited to start to share with you. A very good morning to both of you. Johnny Collins: Good morning to you!
John Larson: Good morning. Amanda, thank you.
Amanda Guerra: So tell us, John. For folks listening, give us a little bit about your background and why you wanted to do the show and your goal of it.
John Larson: I’ve been in real estate since I was honestly a teenager. Um, my family has always been involved in real estate, flipping houses, things like that, We’re from the Detroit area. I’m from Michigan, actually. I moved to Texas in the Dallas area in 2014. But in my teenage years, the summers, after school got out, I’d be on job sites helping out, learn how to rehab homes, things of that nature. Went away to college, got a business degree, came back, got my real estate license right away, started off as a regular real estate agent, right. Trying to help, um, retail buyers. I was working at a luxury brokerage in Michigan. Did that for a little bit and found out, you know, that investments was definitely the path that I wanted to go on, just because investors don’t necessarily buy on emotion, they buy on the numbers. And so I had the capabilities of doing a lot more deals. Through that, I met the team at American Real Estate Investments. At that time they were headquartered in Kansas City, Missouri. I moved my life from Michigan to Kansas City. Work there for a little bit with them, quickly became partner, and then we moved the company down to Dallas in 2014 just because I truly believe that the Texas real estate market is where it’s at. Um, it’s the number one real estate market in America in my opinion. It has the most investment opportunities and the greatest investment opportunities. I truly believe that. And so that’s why I decided to start the Real Estate Cowboys and, uh, get on KRLD and start this show so I can educate everybody here in the Dallas area, Texas and abroad about all the great opportunities that we have here.
Amanda Guerra: Johnny’s sitting right next to you on this Sunday morning and is vital to you. Johnny, introduce yourself to everybody.
Johnny Collins: My name is Johnny Collins. I’m from Fort Worth, Texas. I am the son of Helen Collins, who’s a long time real estate broker. So much so that she had her first seat with Merrill Lynch real estate. You guys don’t even remember that. You don’t even remember had a real estate brokerage, so that’ll tell you how long I’ve been riding in the back of a hatchback or pulling out yard signs and blah, blah, blah. I actually grew up really under her desk, um, at the height of her business all the way to 1997 when my father was diagnosed with cancer and she retired and she was able to do that based on what she had accumulated during her time as a real estate broker. So that’s given me an awesome perspective and insight into this industry and what’s really, really awesome about real estate is I was blessed to receive a scholarship to TCU. I ran track and of course, we won a whole lot. Had to give a shout out to TCU. Gotta show love to TCU always. But when I was a sophomore in college, I always tell people I bought my first house, but in reality, I bought my first two houses. I bought my first rental property for $4,000 on Judge Street on the south side of Fort Worth. Now what’s funny about it is I ended up flipping it for $12,000.
John Larson: Wow.
Johnny Collins: Well that’s profit right? And I was in college. And so, that’s given me great perspective. We’re now in the title business. I’m the President of Community National Title myself and Philip Pastel, my other partner in business, you know, he’s an awesome guy. We’ve been able to do some pretty good things if I can say that along with our wonderful team at Community National Title. so we’re excited to be here. When you called, I said, Yeah, I’m in. Let’s do it.
Amanda Guerra: So we’re talking a lot on this show about real estate investing, passive real estate investing for people who are curious about it, those who don’t know fully about It. Explain what that is.
John Larson: So in my business, at American Real Estate Investments, we buy, renovate, place tenants in these properties and then manages properties for our investors so they can get a passive experience. But me and my team, we’re in the trenches every day and I could sit here and tell you for days about how many problems we run into, and things that come up that are unexpected. When you’re doing this stuff yourself, when you’re actually going out, dealing with the real estate agents, dealing with the wholesalers to find these deals and then you’re dealing with your contractors, who some of them aren’t very trustworthy and will take advantage of you. And uh, you know, then just the day to day management of the asset, dealing with the tenants and things like that, it can be very, very problematic. And it really turns into a job. So at my company, what we do is we do all that stuff for our investors, so they don’t have to do the heavy lifting. They just sit back, relax, collect their rental checks each month. And that’s just one aspect of passive investment.
Amanda Guerra: Well, and I think you and I talked about for people when they’re first thinking about getting into real estate, they’re watching all these shows on TV. I’m going to flip houses. That’s what I’m gonna do, and you just said it. That’s a messy job.
John Larson: You know, you watch these shows, then it looks like, you know, you can make $70,000, $100,000 in a one hour show, right? It really doesn’t work that way. It’s an everyday job. You gotta be constantly watching these properties as they’re going through the renovation process. And so, you know, the whole reason that we decided to get on the air and talk and start the Real Estate Cowboys is one, we love Texas. I’m from Michigan, but I believe I’m a Texan, and I love Texas. I ain’t going anywhere. And I believe that there’s a wealth of opportunity in this state of Texas here in DFW, Houston, all the major cities in Texas. But you know, the opportunities that these investors have, to passively invest in real estate that we can show them and teach them, It’s, it’s just really great. So this is just the first show. You know, we’re going to be talking about a lot of different passive income options in real estate. Looking forward to it.
Johnny Collins: And I love it too, John, you know when you’re watching these reality TV shows about flipping and fixing, you know, they’re not going to make any money if they show you, you know, just a whole bunch of bad situations. But you all have to know is there are a lot of bad situations out in the world right now. We deal with them, you know, on a weekly occasion where I’ll see somebody that’s paying somebody to be coached by some guy that has never really done anything in his life and the flipping movement he’s got on social media and started something. Now all of a sudden he’s an expert or well, that’s not the case. And what happens is you have a lot of people who are jumping into those types of platforms. Everybody involved in the transaction looks dumb because the expectations were not set properly on the front end. So I love what you all are doing because the expectations are being set, but more importantly, they’re being met. And there’s something to say to that.
Amanda Guerra: Absolutely. Well, John and Johnny, thank you so much. We’re going to come back and like you heard John say, even though he came from Michigan, we’re not going to hold it against him. He is a Texan now. And why the Texas real estate market is so hot and why you need to be investing here. This is the Real Estate Cowboys Radio Show.
Passive Real Estate Investing and the Housing Market in DFW
Amanda Guerra: Welcome back to the Real Estate Cowboys Radio Show. I’m Amanda, along with John Larson and Johnny Collins. This show is all about real estate investing, specifically, John and Johnny, about passive real estate investing. Talk to us about that. Give us some more examples of what that is for folks listening.
John Larson: We touched on rental properties, single-family rentals, uh, briefly, and also there’s the private money lending options. syndications, a lot of investors are interested in that. I would say that that’s probably the most passive model because it’s basically the ambassador becomes the bank. Gives guys like us the money to go and get these great investment opportunities here in Texas, you know, single-family land developments, commercial land developments, all this stuff is in huge, huge demand right now here in the Texas market, DFW, Houston, all the major cities, and then also vacation rentals. That’s something that people don’t necessarily think about. It’s still a rental property. It’s still in demand, right? And some of these nice areas across the world, the Caribbean, just south of us, and it gives the investor the opportunity to also use that vacation rental sometimes. And when they’re not using it, we rent it out for them and they collect cash flow off the rental.
Johnny Collins: And that’s passive income.
John Larson: Absolutely. And that’s that, What is your return on life that we always like to talk about as well?
Johnny Collins: Well, Jim, let’s talk about that a little bit. I love Robert Kiyosaki’s cashflow quadrant, that top left-hand quadrant, that’s the employee quadrant. Then you start getting to the bottom left-hand corner, which is the self-employed. That’s where most investors usually stay because they want to manage the whole shebang. The problem with that is when you walk in and you have no experience when you mess up, you pay for it. And that’s why I always say when you’re first starting off, if you’re not in a position where you’re doing the due diligence and you’ve got somebody with some real wisdom behind you to support you, right? You’re going to pay that first house. You’re just gonna pay for it. But when you’re focused on truly moving to a passive place, that top right-hand corner of the cashflow quadrant, which is called the business owner perspective, that’s when you have other people to come in and do the work, right? Using the concept of leverage. Why wouldn’t I want to use and leverage the knowledge that John Larson has to go out and make my money work? John, why wouldn’t I want to do that?
John Larson: I don’t know why you wouldn’t want to do it. Honestly. I mean I’ve made all the mistakes that a lot of new investors would maybe make if they tried to do this on their own. And I’ve learned from those mistakes to where now I have a great model where an investor can step into my office and basically just sign the contract and I’m going to deliver a totally turnkey product to them with an investor in place and I’m going to do the management.
Johnny Collins: John, you know what I love about what you’re saying? I’ve heard you say that all over the world. From Texas to Africa, I’ve heard you say it all over the world. The same rule just keeps applying.
Amanda Guerra: You guys have talked about kind of at the mistakes that people can run into or John, that you’ve come across yourself. What are some of those troubles that people try to do this on their own without some help that they can run into?
John Larson: Well, I mean, it all takes its knowledge and experience in this game really and also, relationship, very much so. So you know, the guy in Douglas Street, even though he lives here, it doesn’t mean that he can find a good deal in this market. You know, this is a very, very hot market right now and inventory is at an all-time low.
Johnny Collins: It’s the greatest rental market in the history of mankind.
John Larson: It really is. And so, you know, even somebody that wants to go do this themselves, how are they going to find these deals? How do they know that they’re getting a really good deal? How do they know that the repair estimate that this agent or wholesaler gave them is actually accurate? And if you don’t have a construction background, you’re going to walk this property. You have no idea what things cost.
Johnny Collins: And John, it’s not like it’s feasible to just to walk into Home Depot and buy everything, you know, on the retail side and think that’s going to work out. What I love about some of the things that you all have done is you’ve gone in and you’ve cut deals and you’ve gotten, you know, these materials at way under market cost just to pad in even more margin for the client.
John Larson: That’s absolutely true. I mean, you know, you don’t go just to a retail buyer can walk into home depot, Home Depot and get, you know, contractor discounts or you know, you’re not buying things in bulk and getting that cost down because margins here in this market today, we’re in a seller’s market. Plain and simple. And so there’s really no deals on properties and also there’s scarcity when it comes to property. So you’re really gonna have to make your margins in the rehab costs and that’s material costs and in knowledge and knowledge of course. But, so that’s one thing. Um, you know, another thing would be, I’m one turnkey provider, right, and I focus in Dallas and some other markets around the country, but I’m mainly here in Texas and DFW in Houston, and you know, I do what I call a high B to an A class property. I really avoid those C class type of properties because those are a lot more risky in my opinion. And when your risk increases, the passiveness of the investment really decreases.
Amanda Guerra: Explain to people what those properties are.
John Larson: Yeah, an A and B property is going to be more so priced. The price is going to be in line with whatever the median value is in that market. So right now we’re looking at DFW. The median value is about 280K today. So you really need to be buying in that 200 kind of price point to get that A class property or that high B property because that’s really going to attract that middle-class type tenant, a business professional tenant, someone with a family, someone that’s going to stay long-term, take better care of the asset.
Johnny Collins: Take pride in the property.
John Larson: Exactly. And, and pay their bills. Right. You know, this becomes passive when you’re getting your rent checks consistently every month and you’re avoiding things like evictions and all that other stuff. And I’ve found that if you deviate too far below whatever the median value is in any market, it doesn’t matter where it’s at, you’re just going to run into more risk, and that takes the whole passive investment model out of owning rental property conditions.
Johnny Collins: Sure and the reason is because now your air conditioners have been stolen and somebody is going to get up and go replace them. So nothing passive about replacing stolen air conditioners at 2:00 in the daytime when people have children and they’re all sweating to death.
John Larson: Exactly. And not only that, but you know, you get into some of these risks of your neighborhoods, these lower priced neighborhoods, you know, crime and theft and break-ins and things like that are a lot more, you know, they’re more common.
Johnny Collins: More prevalent, I mean, just the reality of it, the copper, the copper will be stripped. It’s just a matter of time. Don’t put too nice of a light fixture on the outside. It will be taken, specifically, if no one is there to monitor. It’s funny because from a title perspective, we have a lot of builder clients and I have a handful of really great buddies that are in the custom home building industry and look, in some of the nicest areas in the metroplex. If you don’t have an eyeball on it, they’re still in there too, so you have to go in with them, with a proper game plan and something that’s going to mitigate risk and save you money versus having to pad in, you know, the slush fund for all of the stuff.
John Larson: Yeah, exactly.
Amanda Guerra: Now Johnny, you’re from Texas. You got your hat. I mentioned your TCU hat, now Johnny got here, as they say in Texas as fast as he can. So why the Texas market? Why even specifically DFW for real estate?
Johnny Collins: Have you been to Michigan?
Amanda Guerra: No, I don’t think so. I don’t think I have been, it just seems very cold. I heard you can golf there or something.
John Larson: Yeah. I mean really the only thing that Michigan has got going for it right now is their, uh, their basketball team’s pretty good. The Michigan Wolverines, so, uh, but other than that, I mean you’re not seeing the same type of population growth, economic growth that you’re seeing in Texas. And so another one of my risks would be a risky market. Me, as an investor, I’m not really looking into the Detroit area. I’m not really looking into the Midwest area for real estate investments and development opportunities because I just find that those areas are a little bit more volatile and they’re just, they’re, they’re more risky. Um, and when it comes to, you know, when we go through tough economic times like you look at the last recession, it really, really hurt the Midwest. It really hurt Detroit specifically. People are moving out of Michigan in the Detroit area in droves.
Johnny Collins: You know, it’s funny, John, let me just chime in on that. It’s funny because I just had this conversation at lunch and um, one thing that we were talking about is how, you know, for as bad as it was in the DFW in Texas markets, it was nowhere close to the other markets. People don’t really understand in terms of the numbers of what happened in Texas, a lot of ours was fraud based. There was more fraud committed during that time in Texas than most states. Now here’s the thing. In other states, there was no fraud involved and it still went to hell in a handbasket. Texas has the ability to absorb because of our appreciation rates.
John Larson: That, and the diverse economy. Uh, the Midwest, you look at Detroit specifically. I’m just using Detroit as an example because I’m from there, but it’s very, very reliant on the big three. And when the automotive industry wasn’t doing very well, it really affected Detroit. But then you look at, you know, Texas as a whole, I mean, we have oil here and we have pretty much the most diverse economy. Texas and California and New York City have the most diverse economies in the nation. So, okay, let’s say we do go through some tough economic times and it does affect some sort of business, right? We have the most corporate headquarters right here in Dallas Fort Worth.
Amanda Guerra: And more and more are coming.
John Larson: Exactly. So you know, all the Fortune 500s that are here, and I believe Texas is the second or third most in the country in terms of Fortune 500 headquarters, I think it’s just behind New York. So you see how diverse the economy is with me as an investor and someone that’s looking for passive investment. How do you go wrong with this market?
Johnny Collins: Just kind of from a grassroots level, the simple economics of Texas is phenomenal because we still have so much room for growth. There are a bunch of companies that are coming in and they’re not having to pay the corporate taxes at the rates in which they’re getting them at other states. Your biggest issue is just ad valorem taxes. And you know what? When you have children in school, I’m not worried about that. All it does is make my children have a greater school experience. So hopefully they can be as smart as you one day John.
John Larson: I hope so too.
Amanda Guerra: Well, we’re going to teach you how to be successful here in Texas in the real estate market. Again, you are listening to the Real Estate Cowboys Radio Show, and coming up, John, we’re going to talk to a good friend of yours, Graham Parham, with Highlands Residential Mortgage. One reason people need to stick around and listen to Graham.
John Larson: Well, yeah, Graham, he’s a special friend of mine and he’s definitely a key role in my business. He’s a very investor- friendly lender that gets those loans done quickly and efficiently.
Amanda Guerra: We’re going to talk to Graham coming up. This is the Real Estate Cowboys Radio Show. In the meantime, check us out at Realestatecowboysdfw.com
Mortgage Lender and active Investor Graham Parham
Spokesperson: The following program has been paid for by American Real Estate Investments, LLC. All opinions expressed on this program are solely the opinions of American real estate investments, LLC and do not reflect the opinions of KRLD, or Intercom Media Corporation. You should not treat any opinion expressed on the program as a specific inducement to follow a particular strategy regarding real estate, financing or investment, and before acting on information on the program, you should seek advice from your own financial, tax, mortgage or real estate advisor.
Amanda Guerra: Welcome back to the Real Estate Cowboys Radio Show. I’m Amanda Guerra, along with John Larson and Johnny Collins. We’ve been talking to you this Sunday morning about investing in Texas real estate, how to be successful here and why it is such a hot market. But joining us now, we are so excited to have Graham Parham. He is with Highlands Residential Mortgage, also a very successful investor himself. And John, you’re a huge fan of Graham’s.
John Larson: Oh yeah. I love Graham. Graham’s been a mortgage loan officer for over 18 years, with 25 years in sales and marketing. He specializes in loans here in north Texas. Graham’s ranked in the actual uh, this year, you were 1% in loan originations for 2017 in the whole U.S., which is awesome. And Graham is also passive a real estate investor himself. He owns several rental properties in DFW and other areas in the U.S. He is also well versed in the 1031 exchange rules and how to maximize investor capital. So Graham, thanks for being on today.
Graham Parham: Thank you, John. I appreciate you having me.
John Larson: Absolutely. So Graham, one, tell me a little bit about Highlands Mortgage and how they can help our listeners.
Graham Parham: Highlands Mortgage is just located right up the street here. We’re privately held. The management of our company has been in the industry for 20, 30 years plus; very strong group. We’re well-funded and uh, one of our specialties is that we deliver our loans directly to Fannie Mae and Freddie Mac. Predominantly to Fannie Mae, cause they’re a lot easier to work with, but we primarily deal in those arenas for the investor. Highlands Mortgage really is, they’re very user-friendly when it comes to investor lending. A lot of lenders out there view investor loans as a hot potato right out of the chute. Simply because of all the scandalous things that went on prior to the 2008 mortgage meltdown. A lot of the mortgage fraud was done primarily in the non-owner occupied category, which is investor. And so a lot of the loaners out there, they are just very gun shy of doing investment loans where we kind of welcome them all the time. And, uh, it seems to work out very well with our investors that when we deliver these loans out to the secondary market, and I mean they’re clean loans because, you know, predominantly the investors that we work with as far as, you know, John and you and I mean the great credit scores, lots of money in the bank, they just want to put their money in a quality product, which is what you offer. But, uh, you know, user-friendly is the key here as we have a machine set up, uh, at our office. I have a complete team set up ready to go, I have two processors, two underwriters, a couple of assistants and closers, but we all have our lanes that we stay in and I think we do a really good job and the key is timing especially when it comes to 1031 exchanges because that’s a hot button these days. Everybody’s trying to take the equity from their existing inventories and houses and reinvesting into real estate, which is why they’re coming to you, John because they want to invest that money in some good quality products.
John Larson: Yeah, my experience working with other banks, you know, Bank of America, Chase Bank, Wells Fargo, it just seems like the underwriting process is really tough. Whereas working with your group, it seems like you’re really able to expedite the process of getting these loans closed quickly and efficiently.
Graham Parham: Well, the underwriting guideline that Fanny Mae wrote back probably around ’08, ’09, somewhere in that ballpark. They wrote it so difficult for lenders to interpret correctly where it’s really was designed for builders that were doing scams in which comes back to haunt the turnkey environment. And a lot of lenders are gun shy and they won’t even do it. We can certainly deliver more directly to other servicing companies, which just say we have 20 that we can pick and choose from. Only two will buy turnkey properties. It doesn’t matter what the borrower’s credit or FICO scores or how much money they have in the bank. It’s just the nature of the beast of the turnkey product. Our company understands how to do turnkey loans and that’s the key and we do it in a very timely fashion.
John Larson: Okay, so what are you seeing right now with interest rates? I do see that they’re steadily increasing over the past couple years. And then what is your prediction with the rates for the rest of 2018?
Graham Parham: Yes. Unfortunately, the rates have come up. They started getting pretty aggressive right around the holiday period, then we had a pretty good spike this first week in January and they’ve been slowly creeping up a little bit. I think they’ve somewhat stabilized in the last week and a half. But I think we’ll probably creep up maybe another quarter of a point. That’s just my guesstimation. Of course, if I knew what that would be, I’d be living on Wall Street, but I’m hoping that we won’t go any further than another quarter point up in rate.
John Larson: What would you say to an investor that saying, oh, rates are creeping up. Maybe I’m just going to sit on the sidelines.
Graham Parham: No, I’ve been working with investors for close to 20 years and you talk to any of the seasoned guys out there that’s been investing that long and they’ll all tell you any rate below 7% on an investment rate is still a good rate. And that’s still true today. I think what we experienced, we’ve all been spoiled for the last eight years. With the last administration, the rates came down considerably and we’ve been sitting on a kind of a low environment for quite some time. So delivering this type of performance to these clients of yours, John, you know when you see a five percent rate versus a four and a half percent rate, well your cash flow’s off that much, but it’s still a very good buy. So, I don’t think that’s going to hinder the buying power at all in my opinion. And as far as the equity is concerned, people are recognizing that they do have equity in their homes and they’re getting them two ways. They’re either doing a first lien cash-out refinance or they’re getting HELOC. And I love HELOCs. I’ve got one personally, and I think that’s really a great way to go and you don’t have to disrupt your first loan because chances are your first loan rate is probably at a good rate at this point.
John Larson: Right. So you know, what I see with a lot of my investors is its kind of like a double-edged sword. You know, a lot of investors are looking at it, looking at the market and saying, wow, it’s at its all-time high again, should I buy? And then you have other investors that are saying, well, rates are still low. Now’s the time to buy. What would you say to those types of investors?
Graham Parham: Well, the Dallas and Fort Worth? Yeah, we’re experiencing some better than usual appreciations. There’s no question about it. But I’ve been investing personally for about 15 years and even in the ’08 bust, we saw depreciations probably on an average no more than like two percent. So yeah, we’re experiencing some appreciation right now, but if they’re scared about going into the “bust,” I mean it’s really not that big of a bust in the whole scheme of things.
John Larson: Okay, Grahm, that’s great. Now, now that you mentioned yourself as an investor, tell me a little bit more about Graham, the investor. Why DFW and why Texas for your investments?
Graham Parham: Well, when I started working with investors with, a lot of them were on the west coast, but they own inventory here in the Dallas and Fort Worth area. And one guy in mind, he was an accountant by trade, he’s been investing since probably the early eighties and he’s looked all over the country, being an accountant and obviously he’s very analytical, and he’s looked all over the country and all of his inventory is here. So the answer is why? And it’s because the price points are good here, and the rent rates are good here. And he finally convinced me of that and I bought my first property sight unseen from him, and actually made a profit on it. And then after that, I started acquiring a lot of properties back in ’03, ’04. And it’s true. I mean the retail price points are good and the rents are strong. And that’s why I’ve always loved investing here in Dallas and Fort Worth.
John Larson: Great. So, you know, with my company, American Real Estate investments, we offer a turnkey rental property. What attracts you to that turnkey route? Um, just, just kind of elaborate on that.
Graham Parham: John. I’m going to be biased here and almost say that I work with turnkey providers all over the country. And I’ll have to say hands down that your rehab is probably the best in the nation. It really is. And I’m very fortunate to get out and see the products myself, and I’m very, very impressed how John takes a distressed property and turns it into, in my opinion, a very nice piece of property. Uh, but as far as the turnkey concept, I’ve got a full-time job. I don’t have time to get on the open market to battle on the MLS where everybody else is going to outprice me, and I just don’t have that time. And you’re coming to me with a turnkey program, you know, I want somebody to find a nice house, renovate it, put a tenant in and, you know, I get the loan for it, I go home and you send me a check every month. That’s all I care about.
John Larson: Yeah, absolutely. That’s exactly what we’re trying to do for our investors. And that’s where I think that my company brings a lot of value. Um, so tell me what type of single family investments have you purchased and invested in that brought you the most success? And by what type? I mean, you know, there’s A class buildings, B class buildings, C class buildings. I like to relate the higher B class and A class properties to really kind of in line with the median value in the market that you’re looking to invest in.
Graham Parham: When I first got started off back in, ’03, ’02, I bought a condominium, OK, first and foremost. And then I got the taste in my mouth and I said, OK, I got some momentum going. So I ended up buying a couple of, actually about like four duplexes, I bought a couple of fourplexes. Oddly enough, I didn’t buy any single families. I bought a townhome. And then over the course of the last, say 15 years, I finally recognized that I was buying in sea property areas which were not as good as the areas that I really wanted to be in and have my assets in. Because, you know, in my opinion, you buy in sea area, you’re going to get a sea tenant. OK. And I decided last year to go ahead and upgrade my inventory; which I sold eight and turned around an bought nine, and I did it all through a 1031 exchange and I came to you, John, as you know and you graduated me from a, you know, a C minus to, like a B plus and A minus properties, which I’m extremely pleased with. My rents are much higher. I don’t have to deal with these tenants that are, that are coming and going and destroying your property. So, you know, there’s always a risk as being a “investor,” but you want to go with the right type of asset in my opinion.
Amanda Guerra: Thank you so much. Gotta go to a commercial break real quick and we actually have some questions from some folks here in Dallas that want to know about the interest rates here in Dallas, if that’s actually gonna help them or hurt them. So we’re going to talk to you coming back. In the meantime, make sure to head to RealEstateCowboysDFW.com. We’ll be right back.
Questions from Listeners and Weekly Words of Motivation
Amanda Guerra: Welcome back. You are listening to Real Estate Cowboy Radio Show. I’m Amanda, along with your head real estate honcho, John Larson with a 20-gallon hat as we are calling it here. We are talking about real estate in Texas, more specifically in Dallas, Fort Worth and we’ve enjoyed during our last segment with Graham Parham with Highlands Residential Mortgage. So as you guys have been talking, we’ve been getting some questions from our listeners. This is from Robert in Dallas. He actually has two questions, so this is the first one he wants to know. Does the increase in interest rates lead actually to better deals on real estate? What do you guys think about that?
Graham Parham: I think the demand is still strong and I think it’s gonna continue to be strong as I alluded to earlier. Anything below 7% is still a great rate. If somebody is going to quibble over a quarter percent interest and have a negative impact to their cash flow of say 10 or 20 dollars, they probably shouldn’t be investing. So I think we’re going to continue to be strong. As far as the deals out there, I really don’t see that people are going to start slicing deals simply because of interest rates. I think we’re going to be strong even through six, six and a half to be honest. You know, I purchased properties in the past and I was in the sevens and I was just happy as I could be. So I mean, like I say, we’ve all been spoiled. I think that some of the newbies may come at you a little more aggressive than, than most saying, well, you know, the interest rate’s up your cash flows are not that good. You know, what, they shouldn’t be in the game in my opinion.
John Larson: Yeah, I definitely agree with Graham and I don’t see any slow down in demand at all. I mean, actually, with my turnkey rental company, I have more demand than I’ve ever had for single-family homes. Uh, inventory is very, very scarce in this market and it’s with all the people that are moving in. I mean there’s just huge, huge demands for inventory right now. And with me, I, I’m with Graham. I believe the money is still cheap.
Amanda Guerra: Alright. And Robert’s second question, is it more beneficial to invest in single family or multi-family? It’s a question a lot of people have.
Graham Parham: Uh, I can give you my personal perspective on that. When I initially got going, I did invest in some fourplexes and it took me awhile to figure out, and I had my good buddy that was the accountant, that I was alluding to earlier, point out that he had some fourplexes himself and he started getting rid of them. I asked him why, and he started saying, well, you know, the fourplexes are typically a two bedroom, two baths, and a common area to park. Whereas a single family house, it’s a three two two or more, with a fenced in yard, garage door opener, the whole nine yards. So the families themselves have a tendency to stay a lot longer than the more transient people in like the four-plex because they’re almost like the apartment renters. And so, you know, even though when you get a fourplex that’s full, it’s a cash flow monster, but when you start putting the numbers to it for an annual overall profit, when you have to take a look at the make readies, you know, sometimes it’s not as profitable as you think. And plus on the resale side, you know, you can sell that single family a lot quicker than you can the fourplex.
John Larson: Yeah, I love this question. Um, I’m a single family guy, so I like multi-family stuff, you know. But like Graham said, when you get into four units, I mean your, your renter pool is a little bit smaller. You’re not really getting families at that point. Those people, the turnover tends to be a lot more when you just have a single person, maybe it’s a student or whatever it may be, they’re renting for you for the year because they’re going to a nearby college or whatever it may be in that incident. But I like single-family homes because they appreciate in value, you know, Multifamily properties, if you need to exit out of these investments, you really can only sell to another investor because they’re being sold based on cash flow and cap rates. Whereas single family homes, especially B and A class, single family homes in good areas and good neighborhoods, those are attractive to retail buyers. You can sell it to an actual homeowner and that person doesn’t care how much the property is going to rent for him, what the cap rate is, they’re gonna pay you market value or in a market like this more than market value, to win that property. So in my experience, where I’ve really made wealth in real estate is by investing in single family homes, taking advantage of Fannie Mae Finance and leverage and letting these property, sitting on them while they appreciate it, and then in turn selling to a regular homeowner and cashing in on that equity. And one last thing I’d say is just if you can find a two to four unit building, many times, if it’s going to be at the right price to really see those cash flow numbers that you’re looking for, they’re not going to be in the best areas a lot of times.
Graham Parham: That’s true. That’s very true.
Amanda Guerra: Graham, thank you so much. Though really quick before you leave today, how can our listeners get in touch with you?
Graham Parham: Very simple. My direct dial at the office is 972-581-2998 and I’m even available after hours. If I leave the office, it goes directly to myself, so call me anytime.
John Larson: All right, Graham, thanks so much for coming. Uh, you know, first guests on the Real Estate Cowboys Radio Show. Really good to have you. And I just like to tell the listeners again, you know, Graham and his team at Highlands Mortgage, if you’re looking for, you know, taking advantage of that Fannie Mae financing, the 30-year fixed rate that they’re offering right now and looking to invest in some investment properties, they’re definitely the team to do it. Like I said and Graham said, he is an investor himself, so they’re a very investor-friendly lender and they get these loans done, which is something that I really like.
Amanda Guerra: Absolutely. And I hope for the folks listening, you guys have really come away with some insightful tools to get started or even just become interested in passive real estate investing. You’re going to learn so much from the show as it goes on. And every week we’re going to turn it over to Johnny Collins who’s not just a real estate guru, but someone we here really admire and learn from. And Johnny, you have a takeaway for our listeners?
Johnny Collins: This story I want to, I want to share with you, um, I won’t say is really motivating as much as inspiring. I hope, you know, as a, as a youngster, I already told you that my mother basically raised me in the real estate industry and I watched her, you know, a mass, a, a small, you know, fortune in terms of just a lot of houses. And uh, unfortunately, my father died very young, He died when he was 47 years old and that really placed our family in a tough situation because he was a giant and he was really the leader of our family. But I want to say this when it all hit the fan, we weren’t worried about money. And I say that as humbly as I can say it because you know, I’m a believer and I don’t want to go in and all that, but I’m a believer and I know that God provides, but we were not worried about money because my mother had strategically placed things. You literally went out and took all the money out of the market and on top of all the houses she already had, she put it all back into real estate, right? So when she got to a place where she needed something, she’d just go sell a house. And that’s the plot I’ll ever need, right? When she got to a place when somebody else needed something, she just went and sold a house. And that supplied all of the need. And what I’m saying is real estate, passive, real estate investing is an opportunity. But more importantly, it’s a platform to where you can not just take care of your household, but when the time comes, you better take care of somebody else’s household. Specifically, if you partner with the right people and get the right things in place. And I think, what you and I are doing, John, is we want to give people enough information where they can make decisions from an informed place. Because everybody talks about the good stuff. I am an example of the bad stuff. I am an example of someone who lost, you know, the biggest giant in my life, very own, but it was because of real estate is because of the decisions and moves and my parents had made in real estate through where we never worried about money. Like how many times talking about return on life. Like how many times can you really wake up in the morning and say as an adult, as a parent, as a grandparent, as a great uncle, as an uncle, as a great aunt and say, you know what, nobody’ll have any problems because if I need to I’ll just go sell one of my 15, one of my 20, one of my 120 homes and just write a check forward. But we’re talking about where we’re positioning people is to make sure they don’t have any checkbook problems.
John Larson: Yeah, that’s, that’s a beautiful message. That’s exactly what we’re trying to do here on the Real Estate Cowboys Radio Show. We’re trying to give people, you know, trying to educate people and just make sure that, you know, they’re working with the right team, they’re investing in the right market, and they’re doing the right thing to actually build passive income. So in case some hardships come down the line they’re prepared for it.
Johnny Collins: Well, I’ll tell you this, I wanna make sure that people know kind of how we think cause John’s slipping right now. What we don’t do is we don’t use words like “try” in our business. I can’t try to help y’all get to a place because if I try that meant I have an opportunity to fail. We’re going to set the expectations with this show and give you all the knowledge and all the data, the things needed so you can make an informed decision. So things and decisions you make or foundational. That way you’re not in the trying business, right? We’re in the, either you do or you don’t business, and I’m excited to be here. Thank you for getting me involved in this. When you called, um, I got excited. I’ve been excited. I’m still excited so I’m, I’m just really happy for the people that are going to get a chance to experience you like I’ve experienced not being able to watch you all’s seeing phenomenal thing that you all have done to both good and bad. Right? And I think, I think they’re going to be better for.
John Larson: Yeah. Great. So I, just to piggyback off that, for those of you that are listening, you know, go to the RealestatecowboysDFW.com website, and take our passive investor test. Find out what type of investor you are. I mentioned a few different paths. Investment options today, rental properties, private money lending, syndications, vacation rentals. We have a quick quiz just on our website that you take that quiz and it’ll tell you what type of investment option is best for you. So go to RealestatecowboysDFW.com, and take our passive investor test.
Amanda Guerra: All right, John and Johnny, thank you so much. I’m Amanda Guerra. This is the Real Estate Cowboys Radio Show. As you heard John say, when we’re not with you here on air we are with you on the line, make sure to check it out. RealestatecowboysDFW.com. You guys have a great Sunday.
Spokesperson: Get your cowboy hat on and talk passive income investing in the real estate market in North Texas every Sunday morning at 8:00 here on KLRD with your experts, John Larson and Johnny Collins, and your host, Amanda Guerra. The preceding was a paid commercial program, paid for by American Real Estate Investments, LLC, and does not reflect the opinions or advice of KLRD or Intercom Media corporation.