131. Escaping the 9-5 Through Real Estate with Brian Grimes

Average Joe Finances: 0:00

Hey, welcome back to the Average Joe Finances Podcast, I'm your host, Mike Cavaggioni, and today's guest is Brian Grimes with 24/7 Cash Flow University. Brian, super excited to talk with you today and especially with what we're gonna talk about regarding real estate. Welcome to the show.

Brian Grimes: 0:15

Thanks for having me. Really appreciate it.

Average Joe Finances: 0:17

Yeah, absolutely. Hey, just to knock things off, straight off the bat, I want to ask you the first question I ask everybody that comes on the show, and we wanna know more about you. So if you could share a little bit about yourself, tell us your story. Who is Brian Grimes?

Brian Grimes: 0:30

Brian Grimes is, I was a former basketball player, in a former life. Grew up in a Philadelphia area in that Allen Iverson era, fell in love with basketball early on. Grew to be about 6'5 by 13, 14, so it was nationally recruited, nationally ranked. My first high school game was against LeBron James. They flew us out to Akron Ohio to play at Akron University, Sold out crowd. And that was just, super nutty. But I'm very similar. I've had some crazy experiences, but I'm very similar to a lot of the Average Joe's out there, I did everything right or what I thought was right. I went to school. I graduated from Columbia University dotted my eyes, crossed my tees, and woke up one day in a cubicle wondering, how did I get here? I thought I did everything right. How did I get here? How long am I gonna be stuck here? And what do I need to do to get out? Because I always had this voice, in my head that would tell me I'm supposed to be doing more. I was just meant for more than just working a 9-5. I wanted to be an entrepreneur. I wanted to be my own boss, control my own destiny, my own lifestyle, and When I landed there, I just tried to figure out, what is my way out? And real estate was one of those things that I found in a, I would say like a Aha! Moment. Just looking for money at the 9-5 and figuring out, you're not gonna make a million bucks for the average person working a 9-5 so the question becomes, where's the money? If it ain't here it's out there. It's out in the street. And I was driving home doing a commute one day and I just was looking out the car window and seeing properties, really. And I pulled over, frantically, pulled up my cell phone calculator and just started punching numbers. And on one block there were 40 properties and I just figured, $500 a month cash flow per property, there's a quarter million dollars of cash flow on this one block. And I'm in Philly at the time and it's just like, how many blocks are there in Philly? I gotta get some cash flow. This is gonna be my way out. If I can just get a couple of properties, I can break free from this thing. So that was my Aha! Moment. And just looking at real estate as the way out and I took that leap of faith eventually through trial and error and just got into the game and learned from the school of hard knocks.

Average Joe Finances: 2:31

Yeah. I love that, Brian. It's funny cuz one of the things that I try to, like when I bring people on the show too is to pull that Aha! Moment out somewhere in this interview, right? Like, when was it that you hit and boom, right off the bat you're telling me in your intro. So that's awesome. You did things the right way, right? The typical American dream, right? You graduated from college, you got your 9-5 and you were like, it didn't take you long to realize this is not suck the way to go.

Brian Grimes: 2:55

Absolutely.

Average Joe Finances: 2:56

And I wanna rewind back a little bit too, cuz you didn't tell me man, like I knew you played basketball. You didn't tell me you played in high school against LeBron James.

Brian Grimes: 3:02

Yeah. You know

Average Joe Finances: 3:03

Is the hype that real?

Brian Grimes: 3:04

The hype was super real and I played some monsters, Greg Oden. For people who you know of our era, we know these names, Michael Beasley. Some of these guys are like beasts. And I played against these guys at Nike Invitational camps and all of that type of stuff. But nobody was how I would describe LeBron at this time. 6'8, he's at 230, 235. The way he can jump now at 37 ,38 years old. This guy could get his whole chest above the rim in high school. He could absolutely fly, and he was so fast. If you were standing next to him and you guys were both in a full out sprint and you reached over to touch him, he was two paces ahead of you. Like he was that fast. So he was just on a level of his own in high school. You really couldn't match him. He could jump out of the gym, he could do everything. He was like, just a basketball savant and has been, ever since. So it was a incredible experience. For me, going from playing at a little back gym in Philly in front of 150 people to going and playing in front of a 15,000 people in a 12,000 capacity gym was just like, Man, welcome to high school. This is gonna be a crazy journey.

Average Joe Finances: 4:09

Yeah. Geez. I wanted to ask that because I have a friend of mine and I know he listens to the show, that when he hears this, he's gonna lose it. Cuz he's a big LeBron fan. And him and I always debate, we do the LeBron and Jordan thing.

Brian Grimes: 4:20

Yeah.

Average Joe Finances: 4:20

Back and forth all the time, so I'm a big Jordan Guy, he's a big LeBron guy. So we go back and forth a lot on that. Kyle, this is for you. It's a treat for you. I hope you like that man.

Brian Grimes: 4:28

Yeah we're the LeBronites, so there.

Average Joe Finances: 4:30

Awesome.

Brian Grimes: 4:30

Definitely.

Average Joe Finances: 4:31

No, that's good stuff. Yeah, so back on topic here. Back on topic, right? So you realize that this whole rat race thing was not for you, and you,

Brian Grimes: 4:39

not for me

Average Joe Finances: 4:39

to do something different and you were looking at real estate. And I like how you said that as you were going down the blocks in Philly, you were like, man, like each one of these properties could be $500 a month in cash flow and just,

Brian Grimes: 4:50

Yeah.

Average Joe Finances: 4:50

It reminds me that meme, with the woman that's sitting there and you got all the mathematical calculations and the equations coming up and so that's happening in your head right there in that moment. You're like, Okay, this is something I can do.

Brian Grimes: 5:01

Yeah.

Average Joe Finances: 5:01

Now, when you have this Aha moment and you realize that this is something you can do, what was the next step you took to actually take that action on that Aha moment?

Brian Grimes: 5:10

You just go all in. Like When you have that Aha moment and you know that this is what I'm supposed to do, like this is the opportunity, this is the way out. Everything else just fades in terms of importance. So at the lunch break of sometimes before work, after work, I'm not even eating lunch, Like I'm going out and I'm looking at properties. I'm doing everything that I can. To take the logical next step to get to my goal, and that's something that we need to know when we're just getting started is, you're not gonna know how to end up with the property at the end of the day, and you don't need to know yet. All you need to know is the next logical step. So the next logical step would be get with a mortgage broker and get a pre-qualification so that you can put out an offer. Then the next step after that is go find a realtor who can show you some properties, then start looking, go out and put your hands on these deals, put your boots on the ground and go touch the real estate. It's real for that reason. It's not a stock, it's not a bond, it's not paper. You can go feel it, touch it and learn it at a very intimate level. So just taking those basic steps and putting myself in striking distance to even put out an offer it was just doing the next step, in the next step. And after a point in time, you see enough properties, you're gonna put out enough offers and eventually somebody's gonna say yes, and you're gonna be under contract in a deal and then you'll go through that title work and that closing process. And before you know it, the scariest thing in your life that could possibly happen will happen. You'll close the deal, you'll sign about 50 pages and somebody's gonna slide some keys across the table and say, here's your property, good luck. You're gonna say, Oh, what do I do now? What do you mean I have to take care of this property? How do I do that? And that's when the journey begins and the really, the real fun begins.

Average Joe Finances: 6:51

Yeah. No I like how you described it too. It's very much like on the job training, right? Yeah. And like also how you said too, you got yourself within striking distance, because once you get yourself to that point where you're within striking distance, now you actually can attack right now. You can actually go out there and make it happen. So taking these little steps, as you continue to go and just follow the process and get closer and closer to that goal of getting to the closing table and then the way you describe it too is that, once you're at the closing table, like that's when the journey begins. You get handed those keys and now it's okay, now it's time to work the actual magic. All right, so let's talk about that for a second. So you took your Aha moment, you started doing your, everything else step by step methodically right, as you were going along and figuring out your way of how you want to do this. Now you in particular, I know you love the BRRR method, right? So

Brian Grimes: 7:41

Yeah.

Average Joe Finances: 7:41

Is that what you started with right away? Did you find that first property and say, Okay, I'm gonna like rehab this thing I'm gonna fix it up really nice, refinance it, and then I'm gonna cash out and go get another one. How'd that work for you?

Brian Grimes: 7:53

Absolutely not. So when I started off, I did a house hack, right? So I had my FHA, my goal was to go out and get the best multifamily that I could afford, the biggest deal that I could afford. So I negotiated a seller's assist, like a 3% seller's assist. I ended up putting down all in maybe 5 to 7,000 into a duplex that had a unit in the basement that wasn't like a legal unit, but I was gonna live in it and ran out the top two units and I could live for free and make a little bit of cash flow. So I just went turnkey and that is a good way to go when you're first getting started because you don't know, you really, you don't even know what you don't know. So going into a full gut renovation can be just completely daunting when you haven't even been a landlord for a couple of years and learned that game, the monetization game. So I started off just completely turnkey. And I did that kind of turnkey process where you find a bank owned property, you put down the 10 and 20%. I did that game until I ran into that roadblock that we all run into, which is, if I keep doing this and putting down 20, 30% on every deal, it's gonna take me 10 lifetimes to build up a property, a portfolio that is gonna allow me to break out of the 9-5. So once I ran into that roadblock, I had my second Aha moment, which is, I'm never gonna get there with this strategy. My strategy's flawed, I have to change it. And that change was the BRRR strategy.

Average Joe Finances: 9:12

All right, Fantastic. So you actually started off with a house hack and so it was a duplex that you turned into a triplex by living in the basement and still renting out the two units.

Brian Grimes: 9:20

exactly.

Average Joe Finances: 9:20

So were you actually cash flowing right away since you were renting out both units?

Brian Grimes: 9:24

yeah, I was getting paid. The mortgage is about 800 a month. Each unit would rent for a 700 a month. And I'm living in the basement. So you're getting paid to live.

Average Joe Finances: 9:31

Come on.

Brian Grimes: 9:32

So this is

Average Joe Finances: 9:32

That's awesome.

Brian Grimes: 9:33

Yeah. And for a young guy who's working a hundred percent commission, I'm a financial planner. I'm selling insurance and annuities at this time. Being able to just live for free, this makes you better than I don't wanna say better, but puts you in a better position than 90% of Americans, it puts you in a position where you're not spending money on rent or really a mortgage. You're living for free, or you're getting paid to live. And when you get paid to live, Everything changes for you. You can save every penny you earn and put it into more deals that produce more cash flow and continue to break yourself out of the 9-5 and build wealth, true long term wealth.

Average Joe Finances: 10:07

Absolutely. Cuz you're now at a point where you're stress free, right? You're living a stress free life. You don't have to worry about, Oh, can I make my mortgage payment? Yeah, you can make your mortgage payment because your tenants are making it for you and you're still pocketing some cash out of that, so you got money for some groceries and some utilities or whatever you need. So yeah, that's what a great first property get into. And then, you said you had your second aha moment where you realized, okay, if I wanna scale, if I wanna keep doing this, I can't just keep dropping. 20, 25% down on these investment properties. So that's when you started looking at BRRR, right? Because you were like, Hey, I could buy this property, fix it up. I'll buy an ugly looking house in a pretty nice neighborhood or a decent neighborhood, right? And get it up to par with the rest of the home so the value catches up or exceeds it. Cash out, refinance, now you've got your money back to go rinse and repeat and do it again.

Brian Grimes: 10:56

Exactly.

Average Joe Finances: 10:56

Tell me what that first BRRR deal was like for you?

Brian Grimes: 10:58

It was not as rosy as, we just mapped it out. But the learning was,

Average Joe Finances: 11:03

it never is.

Brian Grimes: 11:03

It never is. It never is, and that is the golden key. But it definitely was extremely educational. So I got inspired, right? I go on, I'm digging on YouTube, and YouTube is not, it's built as it is now. So I find some guy and he's flipping Philly, like he's going in and he's doing heavy deep rehabs. He's buying properties from the sheriff's sale for $2,000-3,000. And he's going in and just full gutting these things. So he's got these videos up where he opens the door for the first time and it's like the roofs caved. The roof's in like the basement and it's just a puddle of water. And he's blowing the bricks off, he's cutting the roof off, he's doing everything and full got renovating and it inspired me. I started doing that. I bought a three shells on one block right by La Salle University, one of the big five universities in Philly. And one was a burnout, one was a tear down, one was just a shell. Raised some money, partnered up with somebody to do this, hired some contractors who gave the best, the cheapest bid out there, and when you get the cheapest contractor, you get what you paid for. They ended up burning us running off with $40,000. And then that was when that third, we'll call it the third light bulb went off, which is if I'm gonna survive this BRRR strategy game, I have to take ultimate control. I have to cut out middlemen, I have to learn the rehab game, I have to know what every screw, nail cost, and everything that goes into these properties, the timelines. I have to basically become the GC if I wanna win in this game. And it was good that experience happened early on and on a smaller scale because that's exactly what happened. I ended up becoming the GC for my projects, managing everything directly, buying materials and managing labor and paying that directly, and that was the major key to scaling up successfully and being able to produce massive profits with the BRRR strategy.

Average Joe Finances: 12:52

Yeah that's a great point. And a lot of people, like when I talk to them, especially on their first deal that they're actually doing contract work on, a lot of times people get burned because they feel like I'm gonna go with the cheapest contractor, I wanna try to save as much money as possible to get as much profit as possible. And a lot of times, like you said, you get what you pay for, right?

Brian Grimes: 13:11

Yeah.

Average Joe Finances: 13:11

And that's very unfortunate, man, that They ran off with 40 grand. That's that's one of those horror stories that you hear all the time, and it's real. So for those of you that are listening, pay attention here. Don't just go with the cheapest guy. Go with someone that you know has a good track record and that you can trust. But yeah so Brian, I need to educate myself on the actual construction side here. I need to learn how much this stuff really costs, what type of materials are really gonna be needed. Basically turning yourself into the gc. I even see you got that hard hat in the background back there. Is that to remind you like, Hey man, remember you know this. This is the stuff you need to know. But so you had to go and learn all that stuff just to make sure that in the future you're not gonna get burned again. So I think that's huge that you took that time to say, Hey let's have a tactical pause real quick. I need to learn something, I need to make sure I know what's going on here so this doesn't happen again. Kudos to you for recognizing that right away off that first deal cuz sometimes it takes people a couple times where it's man, what the hell am I doing wrong? And how do I keep getting screwed out screwed out of these deals and losing this money. Yeah. So you learned the first time right away. So that's good man. Alright. So after you learned that hard lesson, that expensive education, that's what we call it in real estate. When something at least happens like this happens, right? It's an expensive education. So once you got educated what did the next deal look like?

Brian Grimes: 14:26

So the next deal it was similar, right? There wasn't really a problem with the deal, it was the approach to the deal. So the next deals were all similar, buying as low as we can. So what I like to, where I like to operate is in what I call the developer. So a developer spread means can I buy properties for $30,000, $40,000 in shell condition? That'll have an after repair value of 230 or 240,000. So I have a $200,000 spread that I'm operating with them. I know because I essentially became the GC that I can control the labor and materials and rehab these properties. Full gut renovation style for about a hundred. Maybe 110,000. So if I buy it for 30, put 110 in, I'm in at 140 and it's worth 240. I now have the perfect conditions for a cash out refinance, where I can go to a credit union, a community bank, a local bank, maybe even a Bank of America if I'm getting started earlier, or a portfolio lender and get like a 80% or 75% cash out. Slap a 30 year note on it, put the tenants in, maybe I section eight, maybe I room rent, maybe I do market rent depending on where I'm at there. There's co-living. There are all these different strategies out there for monetizing. And then I wash, rinse, repeat. I get my money back, I might even get paid like 20, 30 grand in the cash out refinance which is tax free money by the way. And I put that into future deals and I continue to scale and I use Construction lenders on the front end. Hard money lenders and different construction lenders on the front end to increase my capacity and my scale. Now I have three to $5 million of purchasing power and rehab budget that I can now scale up with. I can get a warehouse, I can get a dump truck, I can start to cut all of my costs down to the bare minimum because when you get heavy into this birth strategy, there's making money and saving money, and both end up as green dollar bills in your pocket. A lot of us will overlook the saving money because it's imaginary. Like we don't see it. So we just think, ah, you don't need to focus on that. A warehouse, for instance, $3,000 a month for a 10,000 square foot warehouse could save you, to save me about $200,000 a month operating at full scale. So these things are very powerful. Buying in bulk and getting these dump trucks and these different things that increase your speed and your efficiency.

Average Joe Finances: 16:44

Yeah. That's a very fair point. You'd mentioned though, that there's several strategies, right? Once you renovate the property and how to rent it out. And I don't wanna get to that, but I also wanna point out something else that you said too where you mentioned that when you refinance the property and you get that cash back, that's tax free money. So turn around, if you were to, if you were flipping that property right, and you had this, a hundred thousand dollars spread and you sell it for a hundred thousand dollars profit, you're not getting a hundred thousand dollars in profit. You're paying some nasty capital gains on that too, right? Doing it this way, now, not only did you get a nice chunk of that change back, that cash back to you tax free, but at the same time, you now have a cash flowing asset that you put tenants in. And that you get to keep and watch it appreciate and go up in value over the next couple years.

Brian Grimes: 17:26

Yeah.

Average Joe Finances: 17:26

That's huge. I wanna go back to what you were talking about with saving money, right? A lot of people ignore this portion, right? They say, Oh yeah, if it's not making me money then whatever the cost savings, like you said, is gonna put some of those green dollar bills in your pocket too, right? And it sounds like you've learned that early on.

Brian Grimes: 17:43

Yeah.

Average Joe Finances: 17:44

And actually there's a lot of things you learned early on too, including the multiple strategies on how to put tenants in a property. So actually I wanna touch on that too. But first let's talk about the savings piece. So what are some things that you realize that you can do, like little changes that you can make on the properties and things like that, that are cost effective savings for you, that actually puts more money in your pocket in the future?

Brian Grimes: 18:04

Yeah little changes in terms of rehab. I mean you can do, you can create streamline processes. So like a modern property will have hardwood flooring so you might run the hardwood floor from the living room through the kitchen, even into the bathroom, Put a nice trim around it, and that allows your speed to increase. So money, they say speed is money in real estate. The saying is, if you lose a day, you lose an hour, couple hours, you lose a day, you lose a couple days, you lose a week, you lose a week, you lose a month in real estate and rehab. So it's all about speed, and speed is the money. And as you start pushing your crews you're gonna maximize their speed by sending like property inspectors at 'em and different things at them to keep everybody on their toes and control the environment just like a sports coach is going to try to control the team environment. We like to run, we like to push the ball. So you're running sprints and practice, right? You're not just walking the ball up to court and practice. You're controlling that environment. So you try to speed up your contractors first, and that's iteration one, and then you speed them up and you realize, They can't go any faster by themselves, so you have to get efficiencies. Dump trucks, inspectors, warehouses. Why is the warehouse important? Not only can you buy in bulk and that's a savings, you're getting like 30 to 40% discounts by buying in bulk, but by having your own little Home Depot where guys aren't spending two hours in a line at the pro desk at Home Depot to order things and then take them to the job when you can get those things out to your job sites in 15 minutes and beat traffic in the morning, and there's always materials there so guys can always work at their maximum speed. You now increase your efficiency, your production, and how quick you can turn tables. So you have to think like a chef with this game. If you're a chef and I'm a chef and we both have a restaurant. We're across the street from each other, and we both have a line out the corner, we're trying to compete. Who can make the most money? If I can fix food and flip those tables, somebody comes in, they order, I get the food to them in 10 minutes. They eat, they're out the door in an hour and it takes you two hours. I can flip more tables in a night than you, so I can run eight dinner services and you can run four. I'm making more money than you. Period. So the speed and that efficiency allows you to do more deals in the same amount of time, just make more money, and it just cuts down your labor costs when you're paying guys by the day. So there's just so much savings. As I dove into this, every efficiency I created was focused on speeding up my guys and speeding up my systems and then saving in terms of bulk buying at bulk and just creating these different relationships. Even at bulk, you can negotiate an a lender down on their pricing, so I'll even take it there. Here's a quick tip, there are no fixed prices in real estate. Everything's negotiable even with the lender. You can sit down with the lender, say, I don't like that origination fee. You might not like it, but you're moving $150,000 single family house, and I'm moving 10 of them. I'm moving 1.5 million. So they gotta talk to me and they gotta wave that fee. So as you do everything in bulk the red carpet continues to roll out to you and you can do more damage. So I learned that early on and then focused on scale and efficiency.

Average Joe Finances: 21:12

The whole scale and efficiency portion of that is what gets you to that point, right? You are able to grow your business to this point where it's become its own self-sufficient beast, right? Yeah. Now you have your own warehouse, so you have time and cost savings cuz you're buying in bulk. Your contractors have one spot where they go to get everything, they don't have to take all these different trips to different warehouses and different places where up, Hey, they didn't have the part I needed, so now I gotta go to this one over here. Now you got everything right there in house. And I think it's pretty safe to assume, and I'm gonna assume here, but when you do your renovations, that you're doing pretty much the same thing in every single property so that you will always have that material cuz you're always buying that stuff in bulk. So there is no worry about we didn't have this exact countertop, or we didn't have this exact cabinet structure. You have all that stuff set up. That's pretty awesome, man that these efficiencies that you build. Okay. So that's one way to save a lot of money and a lot of time. And like you said before too, like actually saving the time is probably one of the biggest cost savings that you're gonna get

Brian Grimes: 22:08

so much

Average Joe Finances: 22:08

because you lose a couple days, you lose a week, then you lose a month

Brian Grimes: 22:11

yeah.

Average Joe Finances: 22:12

And that's that, you're right. That's how it works man.

Brian Grimes: 22:14

That's how it works.

Average Joe Finances: 22:15

Yeah. Okay. So moving on to tenant placement, right? So you had mentioned that there are a couple different ways to place a tenant in the properties. You had mentioned, that regular, just having a month to month tenant. You had mentioned section eight, you had mentioned, rented out by the room or cohabitation, right?

Brian Grimes: 22:32

Yeah.

Average Joe Finances: 22:32

And I've seen a lot of that actually. There was a conference I went to earlier this year and there was a whole breakout session on that, on coha b rentals.

Brian Grimes: 22:39

Yeah.

Average Joe Finances: 22:39

Which was,

Brian Grimes: 22:40

it's the trend

Average Joe Finances: 22:40

mind boggling when you looked at it because of the amount of cash flow one property can make.

Brian Grimes: 22:45

Oh, yeah.

Average Joe Finances: 22:46

Only need a couple and you're good.

Brian Grimes: 22:48

You're done. You're done.

Average Joe Finances: 22:50

Yeah. So can you tell us about that a little bit? What are some of the different strategies that you've looked at when you place tenants and are there specific areas where you do things differently?

Brian Grimes: 22:59

Yeah, so we'll talk about the iterations, like this whole real estate game is a game of growth and iterating getting better and improving on your product. So first, when I started doing the BRRR strategy, it was, let's just play it safe. We're gonna do like section eight. So you buy a three bed, one bath, you spit shine it, you go find a three bed voucher holder, you put 'em in it, done, you get your cash flow. Then you start getting a little bit harder. We start doing what we'd call like a kitchen flip. So your traditional row home, and I do this a lot in row home cities, it's you open a front door, you're in a living room, then you have the dining room and then a kitchen in the back. So we'll start doing kitchen flips. We'll flip the kitchen from the back of the house into the dining room in the middle. And then in the back we'll put another bedroom on the first floor. So now I turn a three bed, one bath into a four bed, one bath. Sometimes I'll turn it into a four bed, two bath, and that increased my cash flow. So now I can rent that out to a four bed voucher holder and increase my cash flow. And then you will continue to iterate there. Then you can get away from section eight. Section eight has some, it's great, but it can have some headaches in terms of inspections and how slow it is. So as you're trying to scale a operation, The section eight might actually move too slow on the tenanting side. So you'll start to look at co-living. Now, co-living. What do I do there? Will I iterate even further? Instead of just a kitchen flip? Why don't I just blow up the whole house? Why don't I take this three bed, one bath, which I could room rent. I could rent those rooms for maybe 5 65, but who wants to live in a room rental anyway? And who wants that headache, right? What kind of tenants can I get to Cohabit in that manner. There are some areas where you do it. If you do it in Center City or the super A class neighborhoods, you can get some really good tenants that'll do that and younger tenants. But what if I just wanna do it for a working class person, somebody who I'm creating like an affordable housing unit for. You get crafty and you take a three bed, one bath, you full gut it, and you rebuild it into three beds, three baths. Each bedroom has its own bathroom that's only accessible through the bedroom, so it's like a master suite with a washer, a stack washer, dryer in the bathroom, standup shower, glass enclosure, nice 24 inch vanity, nice mirrors, has everything. If actually, it's starting to feel like a studio. And I take that kitchen, I flip it all the way to the front of the property. So now they have this Eden kitchen shared space, common area and their own little studio that'll run out for about 725, 750 a month. In terms of cash flow, the typical three bed one bath will rent for about 1250 a month. Co-living property, three bed, three bath, each unit running for about 750 a month, that's 2250 a month. So I increase my cash flow of that property by a thousand dollars a month. And I can do that within the single family ordinance in a city like Philly. In Baltimore, I could do that with 4 people non-related by blood. In Atlanta, in parts of Florida, I can do it with six people. So depending on where you're at, it'll let you know how many people can co-live in a certain property. And that's just research based. But it's extremely profitable and it is a build it, you will come. So I built about 150 of these properties. But the fun fact is during what happened during Covid, March 2020, pandemic hits us. Everybody is thinking like this thing's airborne. If you go outta your house, you're just gonna get covid and you're just gonna drop. I tended it a hundred of these co-living units in 90 days from March to June of 2020 in the heat of the pandemic. The demand for this product is insatiable as well, because millions of Americans are living on their parents' couch, in their basement, in the bedroom that they grew up in. So creating this product creates an affordable housing product that doesn't need vouchers, doesn't need low income housing tax credits, doesn't need anything, doesn't have section eight inspectors breathing down your neck, and it creates affordable quality, granite countertop, stainless steel appliance, mini split system, A Type of living for good quality people. So it's been a win-win. It's been extremely profitable.

Average Joe Finances: 26:54

Yeah. No that's fantastic. And thank you for being like so descriptive with everything cuz you know, for the listeners here, they can get a much better idea of how this works, right? Now I got to take a whole, I guess like small course on this when I was at this conference, and it was amazing because that's actually one of the places that they were investing was like down in Atlanta and Florida and stuff where they were five, six bedroom homes. And adding the bathrooms and everything. It was just insane with how they were doing it. And it's just another great strategy that people can put in their tool belt. Because as you're looking like, as you're going through and getting deals, especially with now, how things are starting to slim down, with the higher interest rates, the low inventory, it's making it a little bit harder to find a deal. But they're out there, the deals are out there, you have to find them. But what this does is gives you an opportunity to say something that might not have worked where you were gonna rent it out, room by room, or it might not have worked with a month to month tenant. Might work as a cohabitation space, right?

Brian Grimes: 27:47

Absolutely.

Average Joe Finances: 27:47

As a co-living space. And by doing it that way, you might be able to afford that higher interest rate and still cash flow because in a market like we're in right now, especially since, technically we're in a recession, but technically we're not because they're not officially announcing it. But anyway, I'm not gonna get into that. But, with the current market we're in right now, Cash flow is king. And that should be the focus for everybody. Don't buy an asset that's not gonna cash flow. Right now's not the time to buy for appreciation. It is not the time. To buy for appreciation. So what you're doing, and your strategy from the beginning has been like a plus to make it happen. So Brian that's awesome, man. I've already got like a whole good page of notes, man. Just in this short conversation. It's just been really good. Now I wanna talk about something. We touched on this a little bit, when you're investing in these neighborhoods, you're bringing value not only to that property and to the people and providing affordable housing, but you're also enriching these neighborhoods, right? You're giving them better properties. How do you create like an exciting real estate investment opportunity that enriches like Class C neighborhoods? Cause a lot of people will say, I wanna try to invest in, maybe B minus B, I try not to invest too much in C class. But what do you do that kind of provides these better opportunities in C class neighborhoods?

Brian Grimes: 28:57

One, I love that you said that because what you're talking about there, I look at everything like I'm an econ major, from Columbia University. So I look at a lot of things in terms of supply and demand. So when I hear people saying I'm looking for B minus, maybe, C plus, I dive headed first into the C class because there's less competition, less people know how to navigate it, and that usually means wider profit spreads for the people who do. So less competition. The key to C class, and I had to think about this a lot because, one, I grew up in a C class neighborhood. I know how to navigate it and it just comes naturally to me. But what's the key to C class investing? The key is volume. The key is volume, meaning I can go on one block and I can buy three properties in a C class neighborhood. It's not really easy to do that in a B neighborhood, definitely pretty hard to do it in A class neighborhood because they don't have the volume block by block. But I can go on a really reasonable block. One thing you need to know is every neighborhood, no matter if it's good or bad, has good pockets and bad pocket. Whether it's A class, B class or C class. So even in a C class, there's some great blocks. I can go on a good block in a C class neighborhood by two or three properties that are so close you could throw a football to from one to the other, if you're standing at one and catch it at the other. And now I can create atmosphere. So when I'm showing a tenant at the property, oh, you see those two over there? Those are full gut renovated. They don't even need to know that I did but now they're seeing the development, they're seeing the activity all around them, the existing residents who live there. It's restoring community pride because they're seeing guys hanging outta houses on ladders with hammers in their hand banging and that is essentially going to just restore that community pride and they're seeing money is being poured into these neighborhoods again. It's putting what I call the eyeball effect. So when you move, if you move a single mother into a property in a C class neighborhood with four kids, that's 10 sets of eyeballs. That's more people to call the cops. There's more people to complain. There's more people putting that property on payroll, utilities, taxes, more people going to the corner store spending money and money bouncing in the community. It's just uplifting this community. Brick by brick, person by person, and it starts to run out blight and run out crime literally. I've had blocks where I bought 10, 15 properties on one block and it can completely transform it. You have all of these things working for you, but that volume, that ability to control blocks and, I have areas of Philadelphia where I've purchased where you couldn't go two blocks without seeing one of my houses. I've purchased 150 properties within a zip code. That type of control that you can now have over that zip code in terms of how it looks, how it feels, what kind of services are there, I've flirted with services like getting like hiring, like just a private like they'd have like public safety. I could just hire a private security company, just drive around, check on our people, just like our own public safety. We'll pick you up from the train, take you to your house. Like you can do a lot of different things to just uplift a neighborhood in the community. So having that access and having access to cheap properties that you can buy in bulk to create value, create comps, maybe flip one, keep five. Creating that value there. You can just make so much money and you can do this on the cusp of gentrification where big comps are. Do it a half mile out, a mile out and pull those comps to you. These are also the properties that double and triple in value, cuz we can buy 'em lower. So you can just make a lot more money in the C class and have a lot of control. The pros outweigh the cons.

Average Joe Finances: 32:25

Yeah. I love that Brian, cuz even like you said too, like you're doing some of these half mile away from some of the other neighborhoods that are B and A class properties, right? Where the home values are higher and that's helping that area raise up in valuable what's that gonna do the next block over, right? Now that you've raised the value over here, it's gonna raise the value there, right? Yeah. And when you have that much control and you're buying that much in bulk, you can completely change the entire neighborhood. You could change the home values of that neighborhood because you're building it all up, right? And you're helping, restore that area. That's huge. Yeah. that goes back to what you were doing originally with the hey, like, buying bulk and you can save more. You get those discounts when you buy in bulk, right? Like you said. That's huge, man. I really love that. Brian, I really love what you're doing. I love the communities that you're helping. You're actually, not only are you creating affordable living and affordable housing for people, but you are creating, opportunities for people in these neighborhoods to have a better, safer place to live. So that's amazing. Okay, I wanna transition this into something that we call the final round. I'm gonna ask you four questions, and they're hard hitting questions but it gives us and the listeners a better understanding of who you are as a person and how you attack the problems that you face. So if you're ready to go, we'll get this party started.

Brian Grimes: 33:39

Let's do it.

Average Joe Finances: 33:40

All right, Let's go. So the first question is, what's the biggest mistake you've ever made?

Brian Grimes: 33:44

When it comes to real estate, the biggest mistake I'd say I ever made was really, it was really that contractor experience, it was really, not wanting to get close to it being too white collar. Coming from a white collar blackground, not understanding this blue collar game and trying to treat real estate like a white collar business. I got news for you guys. There ain't no HR department you can call and none of that stuff's happening. So you need to familiarize yourself with the blue collar mindset. Another reason why I keep that hard hat there, because it just is a reminder that, when you're playing in this game, you gotta put your hard hat on. You have to put your boots on the ground and get out and get in these properties and get into the mindset of a contractor in order to be successful. It's just a different world. There's a different jargon, but anybody can do it. You don't need a degree to do it. You don't need a ton of cash to do it. You just need a ton of knowledge and experience, and the best way to get that is to just get out there and make it happen.

Average Joe Finances: 34:38

Yeah, Brian, love that. And mindset is huge. We didn't even really touch on that too much, but I know your mindset, man you're where you need to be. That's a hundred percent fact.

Brian Grimes: 34:46

Yeah.

Average Joe Finances: 34:46

Okay. All right. So the next question I want to ask you is, what is something that you've learned that you wish you knew when you first got started?

Brian Grimes: 34:54

I wish I knew that there's not a real way to cut corners, right? So when I first started, one iteration we didn't talk about is, what I'll call is like the lipstick iteration, where it's like you're just gonna go and just, we're gonna touch up this property, we're gonna try to save everything. What can we save? Let's not get rid of anything that we don't have to. And it's completely the wrong mindset. I would call even 99% of the time, is you go in with the mindset, I'm gonna save everything, which means the deal's only gonna make sense if you can save everything. And then you find out you can't save everything. You can't save as much as you thought you could. And when you start changing things, you end up having to change more, and you blow right through your budget almost every time. If you do cut those corners by the time you put a tenant. Everything breaks and you don't get any cash flow because you're constantly having to fix things. It becomes a management nightmare. Just knowing that full gut is the way, because most of these major cities were built in the 1910s, 1915s. The properties are hundred years old. They need rehab desperately. They need people with that knowledge and that expertise. So go and do a gut or a gut like rehab and then have a property that you can set and forget. It's just the best way to go.

Average Joe Finances: 36:04

Yeah. No, that's a great point. Cuz home's that old, your wiring needs to be replaced, deploying to everything because Yeah that's very fair point. All right. Awesome. All right the next question I have ties into that as well, and that is, do you have any tips or tricks that you would recommend to someone that is just getting started?

Brian Grimes: 36:22

I still love the house hack. I still think nothing beats a good old house hack. My best tip for using like a FHA to get your first deal, use your FHA if you haven't already, to get the biggest multi-family property that you can afford that will cash flow you and then negotiate a seller's assist. As part of your initial offer, you wanna negotiate as sellers assist. The sellers assist can be up to 6%, but when FHA is usually capped around 3%, but you, so for a hundred thousand dollars property, the seller can credit $3,000, 3% of that to your closing costs. It allows you to bring less to the table and therefore get more, get a bigger property with less capital. So that's the tip and trick, but that's my advice. Do the house hack. Go get a multi, use your FHA and get started that way. Learn how to monetize. Learn how to be a landlord. So many people focus on building HGTV Property Brothers. Flip this house. Learn how to be a landlord. If you don't like being a landlord, there's no reason to get in the game, so don't go for the building. First, learn how to be a landlord and monetize, and then if you love it, then keep going.

Average Joe Finances: 37:26

Brian, that is a fair point. And you know what, I wrote that down before too, and I was just looking at that with what you were saying, about the whole house hacking experience itself in general. And when you got that first, when you did your first house hack, that seller credit that you negotiated, I want, I wanted to ask you this, so this is, I'm gonna go off beat here for a second, but, with that being your first deal, how did you know to ask for that?

Brian Grimes: 37:47

Being a student of the game, I definitely had buddies who were in the game and we were constantly talking, but just being a research nut and something came across my desk and sellers assist, What is that? How can I use that? And then asking the realtor, What is the sellers assist? How can I use it? How much can I do? Can I ask for 10%? Can I get a house for free? Where's the limit to this thing and just exploring. So I just stumbled upon it in conversation and putting out offers in learning and putting out a offer and then trying to add a seller assist and then having my realtor say, No, you can't do that. You already offered, You can't add it after the fact. So you just learned the process through, like I said, trial and error. Get out there, take the next logical step, bump your head against the wall. You will figure this thing. You don't have to be a rocket scientist to do real estate, and that's why we all love it. Those of us who are in it.

Average Joe Finances: 38:33

Yeah. Okay. Awesome. Awesome. Okay, back on track to the final round here. I just wanted to add that.

Brian Grimes: 38:37

Yeah, no, that's perfect.

Average Joe Finances: 38:38

All right. Brian, do you have a favorite business investing or real estate related book or podcast or both?

Brian Grimes: 38:45

I have a one my favorite book for people who are wanting to learn how to break free from the nine to five and just think differently about Money is The Richest Man in Babylon. And I'm a audio book guy, so I'll listen to a lot of audio books. You can YouTube The Richest Man in Babylon, and there's a audio book on YouTube that you can just tap in and listen to. Listen on 2X to Speed, you'll blast through it in three or four hours, but the principles in that book are phenomenal and if you listen to it deeply and a few times you'll definitely start creating a money plan to save, to put your money to work for you instead of constantly working for your money. \ Average Joe Finances: Yeah. No, I absolutely love that book. It's one of my favorites. I actually, I probably like that one even more than Rich Dad, Poor Dad hundred percent. That book is just so foundational. Crazy

Average Joe Finances: 39:30

and my kids will read it when they are old enough to understand the these and the those. Yeah. And not get confused when they're reading it, but yeah. That's awesome. Yeah. Okay. Hey, so that's it for the final round, Brian, but I do have one more question for you, and this is the most important question of all, because the people that have been listening to this episode are like, Man, Brian is out there killing the game, crushing it. Love what he's doing. I wanna learn more about him and what he has to offer here. If you could Brian, share where people could find more information about you? Do you have a website you could share with us? Any social media, anything like that? We'd love to know.

Brian Grimes: 40:01

Yeah, so I'm pretty easy to get a hold of on social media. If you're an Instagrammer, you can find me, briangrimes_247cfu for the Cashflow University. You can find me on LinkedIn, Brian Grimes Real Estate. You can find me on Facebook. Brian Grimes. You can find me on YouTube. Brian Loves Cash Flow and that's easy to remember because I love cash flow. If you wanna tap into my free training, I put together a free real estate training for you guys that'll show you how to acquire properties for pennies on a dollar all across the country. You can tap into that at www.workwithgrimes.com/ cashflow. And if you find me through any of the social media platforms, TikTok is Brian Grimes as well. You can back link to that free training as well. Hop on a phone call with me one on one. We'll talk about how do you can get started in real estate. You can tap into my VIP mentorship program as well. So that's all available for you guys. We also have a program where we're building properties for some of our students in Philadelphia. So we're building properties, deep BRRRR strategy, full gut renovations on big multifamily properties for our students and we have some people even from outside of the country from your neck of the Woods. Woods mic from Hawaii, all the way through Canada. All the way down south and all along the east coast we're building properties for people. You definitely tap into that if you're looking to get some good cash flow built, but you're still at the nine to five and you don't have time to really tap in and do this thing like I'm doing.

Average Joe Finances: 41:20

Yeah, Brian absolutely love that. So everybody that's listening that's where you could find Brian Grimes go check him out on social media. Go check out his website, go check out his course and we'll make sure we make it easy for you. All those links will be in the show notes and all you gotta do is copy and paste or click away, but don't do it if you're driving. But hey Brian, this has been an absolute treat, man. I feel like this was a great interview. I had a great time talking with you. Just hearing your story, seeing what you're doing you're killing it, man. You're absolutely killing it. So thanks again for joining us on the show.

Brian Grimes: 41:48

No, thanks for having me. I really like, like I said before, I really appreciate it and it's a pleasure. Pleasure was all mine.

Average Joe Finances: 41:53

All right, Brother. Aloha from Hawaii.