Jason Hartman talks about the low number of housing inventory in the country but encourages his investors saying that the linear markets they are in great shape. Later he is joined by CPA, Dan Franks, as they do a client case study. Dan is also a podcaster and discusses his story as a listener for over a decade.
Jason Hartman 0:54
Welcome to Episode 1485 1485 Thank you for joining me today listeners in 189 countries worldwide. And hey, there’s a little bit of a difference in opinion as to how many countries we have in the world. But we know for sure we have one more in the middle of Seattle. Yes, we do. We have one more country, and I doubt any of those morons are listening to this brilliant show. At least I hope they’re not because then they do would become, well, no, they they would definitely not be listening because they would become landlords. And, you know, they don’t think paying rent is fair. They think just having everybody else build everything and they come in and destroy it. That’s fair. Yes, that’s fair. That’s fair. I just interviewed Richard de wolf. And He is a professor and a self proclaimed Marxist. Yes. As you know, I’ve said that Karl Marx is The most influential economist in world history. As much as I don’t agree with Karl Marx, he is definitely the most successful economist. compare them to Adam Smith or compare them to more modern economists by john Maynard Keynes, or hyack, you know, or whoever Galbraith I mean, you know, there’s so many like Karl Marx foreign ways, the most successful influenced the world in a much bigger way. But we did make some really interesting new distinctions. And that interview is not today, by the way, but it’ll be coming up maybe in about, we’ll probably have that one up in about two weeks. But it was quite fascinating to debate, Marxism versus capitalism with Richard D. Wolf. So we’ll have that interview coming up for you. And I think you’ll really really enjoy it. I sure did. But I gotta tell you folks, housing inventory is press pressed. We just don’t have enough houses on the market. Look at this, folks. So this is According to realtor.com, and usually usually at this time of year, okay, now, if you look at 2019 2018 2017 at this time of year, there are about and I’m looking at a graph here. So you know, it varies year to year, but there’s gonna be about one over 1.4 million homes on the market for sale, you know, at any given point in this segment of the year, right in June, but right now, we have a monumental shortage of those homes. And we only have about 1 million just over 1 million homes for sale. And that is causing raging bidding wars in many parts of the country. Now of course, this includes high density areas, low density areas, high priced areas, low priced areas, cyclical markets, linear markets, hybrid markets. It’s All complicated, and in a country as large and diverse as the United States, it’s complicated. You really got to peel this onion back to find out what’s really going on. But the net of it on the broader view of the marketplace, there’s just not that many houses for sale. And with that you’re seeing the great American move underway with a vengeance. If there’s going to be any more lockdowns, quarantines, people want to be stuck in a nicer house. And as you know, as I’ve been talking about over the past few months here, I am really enjoying the homebody life. I like it quite well, actually. And yesterday, I did something really amazing. I went to, I went met my friend Mitch Russo, the author of two great books. He’s been on the show before some of you met him at prophets in paradise. He was on stage for a little while with us, and we have lunch at a A restaurant. Yeah, it was a weird experience. Boy, strange. I haven’t been to a restaurant in months. I think that’s, I think that’s the longest restaurant sabbatical I’ve had in my entire adult life. And I’m getting Well, I’m not getting in better shape, but I’m eating better.
Jason Hartman 5:20
I’m not going to the gym either. So, you know, it’s a double edged sword this this quarantine stuff. But But yeah, you know, people want bigger homes, they want more space. They want the kind of properties you dear investors have to rent to them. And so that’s the inventory side of the picture, right? That’s the supply side. But what is happening to the prices or the prices are going up. So this is average price per square foot in the entire United States. Again, this is complicated. You got to peel the onion back. We’re not doing that today. So we’re oversimplified, but we If at all said I’m going to tell you, okay, and back in 2017, you would expect to pay about $117 per square foot. Again, I’m looking at a graph, so that’s not perfectly exact. And then it went up and up and up. And just later that you’re, you’d be paying $125 a square foot. And then in January of 2018, prices went down per square foot to just over 120 bucks. And then they just surged, surged, and went way up to $135 per square foot. And by about middle of 2018, they leveled off a little bit, then they had another big surge in 2019. That’s last year went up to $145 a square foot and then you know, soften just a little bit and then starting in about January of this year, they started climbing Climbing, climbing, climbing, climbing up, up and away. And right now you are looking well, no sorry, this is not right now this is as far as the chart goes, the chart only goes to the chart probably goes to March, I’m guessing because it doesn’t say the last data spot on the chart is January and I’m guessing I’m guesstimating. That’s March, where they’re saying price per square foot. According to the this, the Federal Reserve Bank survey, by the way, is $153 per square foot. So you can see that in just three years, we went from 117 to 153 per square foot. And if you think that’s a bubble, you are right, if you are talking about cyclical markets, and if you think that’s a bubble and you are talking about linear markets, you are wrong, wrong, wrong. Wrong. Don’t be wrong. Don’t be wrong. You want to be right. Okay, you want to be right. Yeah, because those houses have actually gotten cheaper as the interest rates have gone down, that may be the dollar cost per square foot, but it’s not the monthly costs per square foot. And almost everybody buys it based on a monthly cost per square foot. In other words, a mortgage payment, okay, they buy it on a payment, not a price. So very important to know there. I want to talk to you, hopefully one day this week about the history of hyperinflation. We might go all seven days again this week, we’ll see how it goes. We got a lot of content to get out to you. I know we went seven days last week, maybe we’ll just do five days this week. But the history of hyperinflation chart very, very interesting. could it happen again, it’s possible but you know there are all these cross currents right. So we will have to see we will have to see, but I’ve got a really good chart I want to talk to you about there. Okay, today we are going to have Dan Franks, our client a client case study and I met Dan Several years ago, and he started a conference called podcast movement. It’s great conference. I went to the very first one a few years back, and it has grown significantly. But Dan told me that he discovered podcasting by listening to this very show, I believe, I believe he said back in 2007, or something like that. So, yeah, we’ve been around a while, folks, we sure have and, and Dan had been listening for years and then he finally started investing in properties. So you’ll hear his great story today. And his plan to develop a nice sized real estate portfolio. He already has a very successful business and he’s a CPA as well. We will go ahead and get into that now. And we are busy here planning and working on our meet the Masters virtual conference that we are very excited about coming up in less than a month. We’ll have that registration link for you soon. Also, a lot of you over the weekend. caught our way webinar on Southwest Florida. And we are still running that. So we’ve got some more times open. Go to Jason Hartman comm slash webinar and check out the Southwest Florida market. Very nice, quick webinar only 32 minutes long. And let’s get to our client case study. As we talk to Dan Franks.
Jason Hartman 10:24
It’s my pleasure to welcome Dan Franks to the show. He is a client. I’ve known him for quite a few years before he became a client through the podcasting industry, which is, by the way, an industry largely thanks to him and his business, and we’ll talk about that in a moment. Also, Dan has a background in finance. He’s a CPA. And so we’re gonna dive into his story and how he became acquainted with us a long, long time ago. Dan, welcome. How are you?
Dan Franks 10:53
Thanks for having me on. Jason. I’m great. Yeah, it’s definitely quite a full circle thing after listening to us for so many years and Working with you over the past year or so on on the real estate side of things. Yeah, it’s awesome to finally be a guest.
Jason Hartman 11:06
I believe you told me a few times over the years that I was the first podcast you ever listened to. Is that true?
Dan Franks 11:14
That is true. Yeah. You mentioned I was in an accountant, lots of paper pushing and busy work going on in the accounting field. And then yeah, I decided there had to be some good way to pass the time outside of listening to music and maybe learn at the same time and somehow through iTunes at the time is what I was using. I came across your show and became the first show I listened to that was in 2008.
Jason Hartman 11:38
That’s fantastic. Wow. 2008, so 12 years ago. And what’s amazing about that, I mean, a lot of people, maybe we are the first podcast they found maybe not. But the amazing thing is, you are really a legend in the podcasting industry. And maybe that’s not because of your own podcast, but it’s because of You started you lose quite literally started a movement in the podcasting world. Tell us about that.
Dan Franks 12:06
Yeah, I think maybe legend is is a little overstating it I don’t not sure. I would claim legends not
Jason Hartman 12:11
too much. You’re so humble, but you really have done some big stuff.
Dan Franks 12:15
But yeah, what we created was, like you mentioned it was called, it’s called podcast movement. And it was really intended to be a movement of hobbyists, independent podcasters, who were doing amazing things on their own, with maybe a small audience, a small, dedicated audience, something like that. I mean, very similar to how your show was when you started. But the shows that have such loyal followings a loyal fan base as loyal listener ships, we felt like there was an opportunity for everyone to get together, learn from each other network and grow together. That’s really what podcast movement started as and started, you know, we’ve talked about many times together, talking about in person events and conferences and things like that. And that’s how it started. It was just it was a small Kickstarter crowdfunded conference. Have a bunch of independent podcasters getting together. And it’s just grown into even more of a movement than we ever thought it would be when we named it that. And now we’ve got, you know, over 36,000 people in our Facebook group and our events are attended by 3000 4000 people a year. And you know, a daily newsletter that’s going out to 15,000 people every morning. So it’s really turned into, like I said, way more of a movement than we ever intended it to be.
Jason Hartman 13:25
That’s fantastic. Congratulations on your success. That’s just really, really phenomenal to create a movement like that. And it’s is quite literally a movement. I went to your very first conference and I think you have maybe you know, I want to say like 400 people there or something. And I think that was in Dallas was that Dallas first it was
Dan Franks 13:43
my home my hometown in Dallas. Yeah, I 150 people if we’re if we’re being exact okay. Yeah, yeah, yeah, but the it’s definitely grown quite a bit since then. And you know, this you’ve run small events, large events, medium sized events, and those in person gatherings. They take on different personalities based on the number of people that are at them and the makeup of them. So you know, right now we’re in the middle of, you know, an event that’s causing us not to be able to have these in person gatherings. And I really, I know, you talk about the FOMO, or not having the FOMO fear of, you know, being kind of happy, you don’t have to get out of the house. But I do think eventually, a lot of people are going to kind of have that urge to get back together. And whatever the new normal is, still want to get together and gather and hang out, rub shoulders in a safe way with their peers or their you know, people they’re trying to learn and network with.
Jason Hartman 14:30
Absolutely. My statements on that won’t last forever. It’s just a nice break right now. That’s all but I’ll get antsy and want to get out of the house too. But you have been diversifying your financial life. And you started investing in real estate with us just like a year ago. So you’re fairly new at it still right now. Tell us about that.
Dan Franks 14:49
Yeah, it’s funny to think back that I’ve been listening to your show and believing in what you teach and what you’re espousing to the listeners for 12 years now, but it took me 11 of those years to actually Do it myself. So, yeah, I went to my first meet the Masters last year and brought my wife with me and just told her like, Hey, we’re finally going to do this, I want you to come with me and hear what Jason and his speaker say, and like, Let’s meet with some of these local market specialists. And then let’s, you know, put the pedal to the metal and start going and so that was just about a year and a half ago now, maybe not even that much. And now we’ve got five properties and the sixth one is under construction and should close within the next month or so. So she was like, wow, you weren’t kidding. When you said like this meet the master is going to be the start of this thing. And it’s kind of you know, been non stop ever since.
Jason Hartman 15:35
That’s a great story. I love it. I love it. So where did you buy first year in two or three markets now? Right?
Dan Franks 15:42
Yeah, that’s correct. So we are in the the Pennsylvania market, I guess it’s considered like South Central Pennsylvania. So, you know, I think that meet the Masters was kind of their first introduction to to your network, and I met with them there and really, I was kind of intrigued by by the Arm have some of their older houses that they were, you know, renovating and putting on the market and being from, you know, Dallas, and then all of our houses kind of our, you know, the same ranch style house different sizes and stuff, but there isn’t just a whole lot of charm or personality. So just from that standpoint, just seeing what they’re, you know, the aesthetics of the the properties they were working with up there intrigued me enough to look into it. And going up there, a lot of those houses are over 100 years old, but like, that’s the entire city, the entire city. Some of them, all the houses are like that. And, you know, seeing the quality of the work that they were doing. That was just what really interested us. We went to several different markets before we pick the first one to invest in, physically went to several different markets and did the tours.
Jason Hartman 16:42
It’s kind of rare. You know, most of our clients don’t go to the markets, they don’t visit they just buy virtually, I mean, everybody’s doing everything virtual nowadays, but we’ve been doing that for 16 years virtually. So yeah, well,
Dan Franks 16:53
yeah. And they told us that too, but you know, I mean, I’ll say it’s good to build and I’ve learned this through you You know, business in general, not just this, but it’s good to build rapport with the people who you’re going to be working with. And I felt like we were able to build more rapport than we would have been able to just talking over the phone. And you know, we still obviously Sarah’s Sara’s, our investment counselor, and we still everything, you know, we work with her and go through her and everything, we always have her there by our side, but also having that rapport with the boots on the ground, has really helped us if you know, issues come up or during the closed process, or maybe just to say, Hey, is there any, are there any houses, you know, coming down the pipeline that we might need to keep our eyes on? Just to me, like, that’s one of my biggest things and businesses, anyone that’s any part of the business, you know, cycle, whether it’s investment or whether it’s our own business, you know, being able to know who to pick up the phone and call or just having that relationship and they can put a face to, to the name and they, you know, know about our kids or whatever it is like we’re friends on Facebook now. So, yeah, really, they told us that and then several of the other markets we visited said maybe like, 5% of the clients, they work ever go to those markets. So it’s a small investment. But I want to say we flew out in the morning and flew back in the afternoon or evening. So we didn’t even have to pay for a hotel and southwest based here in Dallas. It was like $200 worth of plane flights in a day off work and it was well worth it.
Jason Hartman 18:15
Good stuff. Okay, so Pennsylvania was your first market and where else
Dan Franks 18:20
Pennsylvania was the first market. We’ve actually we’re up to four, four houses up there now. And then Jacksonville. So Jim and his team over there. So we’ve got one new build in Jacksonville. We’re about to get our first tenant in there. And we’re pretty excited about that. And then we are a part of their new townhome complex. They’re building in the Atlanta suburb, so staying also with Jim’s group. So those will be our next two markets. Those
Jason Hartman 18:44
all sound like great decisions. Dan, what are some of the well, maybe we’ll go kind of in chronological order here. For the listeners. You started listening to the podcast back in 2008. And why why real estate what got you Interested in real estate
Dan Franks 19:01
you know, I don’t know if it was as much real estate that got me first started was I mean the the show was called creating wealth. So that intrigued me and I kind of had my first batch of podcasts I listened to at that time while I was you know, listening on the job. And they were some of them were about stock market investing and some of more about personal finance and this one was about real estate but then everything around real estate obviously as well. And just something about you know, when you talk about the the steady nature of real estate, the buy and hold type strategy that you can go through here, you get through real estate, and then all of the, you know, the benefits with the tax deferred depreciation and, you know, leveraging other people’s money with the, you know, mortgages, just kind of all of those things that you kind of stack one reason on top of the other on top of the other, that real estate just made so much sense. Really kind of it was nice to have that foundation I want to say even though through work and stuff was putting I was putting money in the 401k and the IRAs and all But knowing in the back of my head, like, what, where I felt like the smart, the smart place to put that money eventually would be, that’s kind of the biggest thing I would say that I got out of real estate was just, you know, all of those reasons, it’s like any one of those reasons that you always talk about with your commandments, any one is a good argument for real estate, but when you just start stacking them on top of each other, I think that was just that compounding effect that, you know, made me believe it and and I think the biggest one is just being able to if you want to drive out and look at your asset and put your hands on your asset, you can like it’s there, it’s physically there and you know, it’s it’s protected by insurance and all those things. So like it’s there, and if it’s not there, then you’re, you know, you’ve got the safety net, whereas, you know, with stocks and everything else, it’s especially now with this pandemic, and all the funky things that’s happening with the, you know, you see the jobless reports going up, but then the stock market going up as well. It’s like that math doesn’t add up. Whereas with real estate, you know, it adds up a little bit more to me.
Jason Hartman 20:56
It’s such a great multi dimensional asset class, so Obviously, I couldn’t agree with you more on all that stuff. Okay, so you got interested you you felt you were just interested in creating wealth and investing. And then really real estate was the thing outside of your own business that you were well that you started several years later, when you were doing accounting. Did you have your own business at all? Did you have your own CPA practice? Or were you always with a company?
Dan Franks 21:23
So I started out with big four for two years. And that was a lot of busy work. That’s but what I can credit that with is listening to your podcast, I discovered a lot of things to do to pass the time while I was doing that busy work at the at the big for public accounting firm. But then I left that went to a small firm, and that was a whole lot more. I felt a little bit more like a business owner and entrepreneur at that small firm. So while I wasn’t a partner, per se, they really did kind of give me the freedom to actually learn what the heck I was doing, which I wasn’t getting at the big firm. And you know, I did start to build my I guess you would call it my book of business and went out and Know friends, families appears, those types of people I was able to, you know, bring on as paying clients and kind of manage those relationships. I think that was, that was pretty important to me and learning before I launched my own business, just seeing how businesses ran, being so hands on with the financial aspects of business, really, how better to learn how a business functions where it’s strong, where it’s weak, then, you know, looking at what matters most and that’s the money coming into the business and going out of the business. So that was kind of the most important thing to me. And my journey that led me to running my own business was that ability to, you know, learn from from what other people were doing. So there’s a long way of saying I didn’t run my own business, but a lot of aspects that someone running their own accounting firm. I did learn that in terms of like the clients I was working with and the assistance I was providing them
Jason Hartman 22:49
and what was your Did you have a specialty as a CPA mean? were you doing tax returns on it, you know, probably very different at the Big Four accounting firm versus the small company. What did you do?
Dan Franks 23:00
So our core business was taxes and bookkeeping. So a lot of our clients we’re doing, you know, full cycle, accounting, everything from helping them with their payroll to their taxes to their bookkeeping. But the other interesting thing that we did was I guess now it’s got the name like outsourced CFO, is what they call a that’s really basically, it’s really popular. Yeah, it’s very popular and anyone who doesn’t know what that means that it’s pretty self explanatory, but if you’ve got a business, and you know if you’re a bricklaying business, or whatever it is where you, you know, you need to hire the people in house that physically do the important work for the business. But you realize that you as the business owner aren’t capable of responsibly managing the finance, financial operations of your business, you hire, whether it’s a firm or an individual to kind of be a part time CFO for you, and that includes everything from you know, managing the books to filing the quarterly to managing payroll, and really hopefully being, you know, a big picture adviser to what’s happening financially with the business. So, you know, maybe you as the operator If the business or the owner of the business might be in the weeds of the core function of the business, but you’ve got somebody else who knows what they’re doing on the financial side that’s, you know, helping you out and being that responsible set of eyes and ears around the financial thing. So we did a lot of that. And again, that was before that was such a buzzword, the outsourced CFO was, but you know, looking back, it’s like, wow, that’s what I was doing for these companies. And, again, that’s like I said, that’s, that’s what really kind of got me interested in doing my own thing was seeing other people doing their own things. Mm hmm.
Jason Hartman 24:30
Good stuff. Well, before we get back to real estate investing, and a little more of your client case study, and all of our listeners always appreciate when real clients come on the show to share their stories. So thank you for doing that. But I’ve got kind of an oddball question before we get back to that, because you’re a CPA, a lot of our listeners and we’ve had many CPAs on the show over the years, I’m sure you’ve heard them. A lot of our listeners ask for referrals and they say things like, Well, my CPA doesn’t know Enough about real estate or they don’t know enough about deductions or, you know, you hear this constantly. And it’s a it’s a little bit of a risky word to use, but they’re not creative enough. Do you have any advice for people on, you know, finding a good CPA or, you know, because a lot of CPAs they really kind of don’t know, you sort of need a one that knows real estate, right? Hopefully, they’re actually investing in real estate themselves, and so they understand the asset firsthand. But any advice you can share on that?
Dan Franks 25:31
Yeah, I think it a lot of it is like you just said the relatability. So whatever it is that you’re specializing in, and I’m assuming a lot of these a lot of listeners it will be a real estate, finding someone that, you know, doesn’t just own their house, but and you know, because a lot of people just own their primary residence thinks that’s, you know, their most important investment, but you listen to Jason you know, and find out that maybe your personal residence isn’t actually an investment at all right? Like you might be better off renting your personal residence or whatever. So almost finding somebody that understands That difference, you know, owns their own real estate. That’s great. That’s the easy one. But I almost say like, you know, if you’re listening to this podcast, you’ve obviously picked up some of the lingo and whether it’s some of you know, your invented phrases Jason or whether it’s just things that, okay, you kind of have to be, you know, talking the talk, once you start listening to these podcasts and you understand phrases that you only would use if you’re intimately familiar with the process of buying, owning and renting real estate, or flipping real estate or whatever it is you’re doing. And you know, seeing if the if the accountant is familiar with that lingo, seeing if some of that verbiage or some of those phrases that you use, if you get that blank, look back when you use it, or if they, you know, they just keep going with the conversation because they know what you’re saying. I really feel like that’s the biggest thing. So when I was bringing on clients as an accountant, you know, one of the things I specialized in with some of these people as meeting through the podcast space that were running their large scale podcast businesses, they would tell me Wow, like my old CPA, they weren’t even familiar with PayPal or they weren’t even They’re with some of these other, you know, payment processors or Patreon, which is a really big thing in the podcast space, all of the things that podcasters like this terminology, these tools that podcasters were using, that were revenue, you know, revenue generating tools, their old accountants had no idea what it was. So they felt like they were having to train the people that were responsible with helping them with their finances, to then properly, you know, treat these financial things, and they felt like that was backwards. So the fact that when they talked to me, I knew what they were talking about, I potentially often had relationships with people at these companies and and, you know, maybe even was the user of some of those tools myself, that was so comforting to them that I was most likely more expensive than some of those other, you know, CPAs that they had talked to are previously used. But the fact that I talked the talk that they talked, really made a big difference. So I kind of equate that same thing to real estate where, you know, if you say something that makes sense to you, and it doesn’t make sense to your accountant. That’s a pretty big red flag. It is. Yes, that’s true. So if you bring up 1031 exchange, and you ask specifically Questions about it or depreciation recapture or any of the lingo real estate lingo that we talk about all the time? They don’t know about it, you’re probably not talking to the right person. So that’s, that’s good. Yeah, don’t even accept, like, even if they say, Oh, you know, because one of our biggest things is if a client would ask us a question, and we wouldn’t know the answer, we’d say, they would teach you Well, you know, it’s good to admit if you don’t know something, because then you can turn that in, you know, saying, you know, kind of reassuring the client of, you know, I’ll look into that, and I’ll make sure to put some time and effort into researching that for you. But if they say that, then you don’t want to be there. You don’t want to be their test dummy, or you don’t want to be their learning experience, especially if it’s, uh, you know, if you’re interviewing, you know, a new CPA or something like that. So, if you’re already working with a CPA and you might bring a new concept or or something like that to them, then maybe that’s okay. But if you haven’t signed the dotted line to work with someone yet, definitely kind of throw out all those terms and ideas on the front end, right and throw
Jason Hartman 28:54
them out as a test. So he see if they gobble them up, or if they say, Well, let me get back to On that type of thing yeah good stuff well eight as you embarked on your real estate investing business and I think it is a business I think people should really look at this as though you have podcast movement you have and I don’t know if you still do CPA stuff if you still do tax or not maybe you could tell us and then you have your real estate investing business and it really is a business because I think you plan to build a big portfolio and you know, share with us some of your goals and thoughts and maybe challenges or things you’ve learned or you know, anything you can do to help the learning curve for the listeners.
Dan Franks 29:33
Yeah, so I don’t do taxes anymore I take I don’t know if you’d call it pride or just It feels good to if I have a question or get a tax document in the mail I can pass it on to my CPA now yeah I’m it’s nice to some of that stuff not to have to not to have to be on top of all the all the fine print all the time like I was back in the day but yeah, absolutely do treat it as a business. So even though I do you know often refer to them as my investments than being the houses the properties. I sit down Once a month and do the books just like I do for like I did for podcast movement, I do the books for the houses, I make sure I understand all the money going out all the money coming in. Whenever the monthly reports come in from the property managers, I make sure that you know everything that’s on there something I already expected, or and if it’s not, then I get to the middle of it. So yeah, I mean, I do treat it as a business and I think you kind of need to unless you really want it to be, you know, as Super passive as possible. And you’re just I think that’s possible to be a little more passive about it, but I feel like that’s not necessarily the most responsible way to do things and especially if you’re looking to build something and and not just build it, but you know, but grow it and put it in the best position to succeed. Yeah, I feel like you do just have to treat it like a business and like I said, with the books I sit down just like I do for the regular business I have, like I was mentioning with the local market specialists I have probably more communication and more I’m staying in touch with them then maybe they would prefer but I feel like again as a responsible business owner. It’s better to be, you know, proactive and getting ahead of some of the issues that might come up. We’ve had a property that was not getting a tenant put into it as fast as I thought it should. And we were, you know, kind of what we were seeing was that the market was hot, and that people were, you know, the days on the market for some of these vacant rental houses were pretty low, but ours was seemingly higher than it should be. So we, you know, we stayed on top of it, and Sarah helped us there are, you know, our team member from from Platinum helped us stay on top of it and figure out what was happening and get to the root of the issue. I think we even tagged you in on several things, Jason? Yeah. But that’s one of the best things about working with you all is, is having that support system. I think I’ve mentioned to you in the past that before we started purchasing properties through you all, we did our toes in the water with another group. And we kind of felt like we were thrown to the wolves a little bit. So when we talked to that group, and they referred us to a local market specialist. And then we kind of felt like the cord was cut and we weren’t put out there on our own and we just were not ready for that. So when we you know came back and started working with you all for the first time, it just felt like it was so different. So I feel like you guys are holding our hands when we need us to, or when we need you to. But on the flip side, we do have some of that autonomy and that connection to the local market specialist and to the, you know, the property managers and all that to where once we are ready to go out there on our own and start talking to them, and we don’t, you know, need Sara support to figure out why the tenants not being placed or something like that, then we have that autonomy. So I feel like you know, working with you guys, it’s just been a really good balance of having your help when we need it, but also having, you know, kind of being able to be on our own where I have spoken to some friends who worked with other groups. And I think a lot of times, like the contacts with those local market specialists are like safely guarded. So you’re never allowed to actually talk to the person who’s selling you the house, and what’s really just scary. And now what Yeah, really weird. It’s really weird. And like even they kind of discourage you from going out and visiting the local market specialists and visiting some of the markets you want to invest in because they want to own those relationships and They don’t want anyone else to, you know, know these people. It was really bizarre to hear that and just so thankful that that’s not how it is working with you.
Jason Hartman 33:06
Yeah, yeah, well, I’m glad you feel that way. And, you know, one of the things Dan, we really pride ourselves in is we really go to bat for clients. And you’ve got a balance in any business, the relationship between both sides of the equation, the vendor, or in this case, the seller and the buyer, right? You’ve got to, if you’re a store, you got to manage your relationship with your suppliers, you got to manage your relationship with the customers that come in and buy things. And I just feel like the person who is the one spending the money really deserves kind of, you know, a lot of assistance and and help that does cost us sometimes, because the sellers want us to push people into deals. And, you know, I remember this one that came up, you know, a few years ago was really kind of huge. You know, they’re they’re like, why are you guys you know, just telling the client to just do it. I’m like, Because we don’t want them to do the deal like that, you know, you’ve got, you’ve got to fix the property, it was over some repair issue or something and, and they just couldn’t believe that, that we, we weren’t just telling our client and pushing them into the deal pushing the buyer into the deal. I mean, they’re both clients but pushing the buyer into the deal. So we just think that play the long game, that’s what I always think is the best investment. Sometimes, you know, you have some short term costs over playing the long game, but I think it’s a better strategy overall. Any particular tools you’d like to use or you know, systems you have or anything you want to share with people as we wrap it up? Damn,
Dan Franks 34:36
yeah, I mean that, you know, for me, QuickBooks I know, like the back of my hand. So it’s just been so easy to start using that for the rental properties. But most people
Jason Hartman 34:44
don’t know QuickBooks like you because you’re a CPA, and that was probably something you’ve lived in for many years, right?
Dan Franks 34:50
Yeah, it was. So it was an easy transition. I even tried, you know, I tried to convince myself that some of these tools out there might be able to do what I wanted, but ultimately, when you kind of know how the sausage is Do you want to then be involved with it in terms of the bookkeeping? Yeah. So you want to be able to, you know, tweak it exactly like you want it. Whereas some of these other tools, they’re made for people that don’t necessarily want that kind of control or know how to do it. Yeah, you know, some of the tools like are really nice and shiny, and they can pull in your bank accounts, and they can pull in, you know, even connect to the property management systems. But like even some of those I found, like they were double counting some of the deposits and double counting charges, because they were almost too fancy and pulling together, you know, too many pieces of information. So, I definitely tried a few but you know, if you know, how to keep books and you that’s something you’ve done before, it ends up at least in my case, like saving time compared to trying to those automated systems ended up requiring more manual work than anything else. Right. Good.
Jason Hartman 35:44
What are your goals with your real estate portfolio?
Dan Franks 35:47
Yeah, good question. You know, we had the goals that we wanted to get. I think we just wanted four properties in the first year and we ended up being exactly four but with two that were kind of already in the pipeline. They just happened to be new builds instead within that first year. But I just want to you know, keep responsibly growing it kind of ideally, when the cash flow from the houses, starts, you know, building up enough money to then reinvest that money, I think that’s going to be something that’s really, really cool when we are able to generate and cash reserve from the how the cash flow coming in from the current houses to then buy a new one, that’ll be the biggest thing, because right now is, you know, our savings and investments and other kind of cash reserves that we’ve used to, to purchase these six houses. But I think whenever the houses start generating enough revenue to then purchase other houses, that’s kind of going to be a really cool kind of milestone for us and something that we’re looking into and then it’s not only you know, they’re not only sustaining themselves, but then they’re making enough money to to keep growing the portfolio. So, you know, I think the next big goal would be for my wife and I each to be able to get those 10 those 10 properties in our name, right.
Jason Hartman 36:51
So 10 to work right 20 to
Dan Franks 36:52
10 each. So right now. Yeah, so right now we’ve kind of been splitting them up in the primary, you know, our primary residences in my name, so my wife will be about To get up to 10 investment properties in her name, nine more in my name. And then, you know, I think to me when you hit that, that wall of Okay, now we’ve kind of maxed out this way of, you know, financing the properties. I guess you could look at that as a bad thing, because then obviously you have to get creative and do some different things.
Jason Hartman 37:18
You can’t get good Fannie Mae, Freddie Mac loans anymore is what you’re referring to. But
Dan Franks 37:24
yeah, exactly. But then it also like, to me a milestone of like, Wow, look at what we’ve built the point where now we have to start getting more creative. Now we have to look at alternate, right? Like, to me, that’s almost like a good thing. Because it’s like, wow, look what we’ve built and well, you know,
Jason Hartman 37:36
good problem to be facing. Yeah, you’re moving into the big leagues. Yeah. So that’s, that’s a good problem to have that you need to get alternative financing. So get the 10 each, that’s kind of the next goal is for your wife to get 10 and you to get 10 then you’ll have 20 and then you can go from there, right? Yep, exactly.
Dan Franks 37:52
And then maybe we’ll be able to have meet the Masters again. So then I can go meet some folks there that can teach me what to do next.
Jason Hartman 37:58
And it is going to be virtual This time, we just, we just figured if we keep waiting, we’re going to be bumping up against our profits and paradise event which is in the fall every year. And so we just got to do it virtually this time. And by the way, thank you, Dan, for your advice on virtual events, and you provided a couple of really need referrals and stuff too. So we appreciate that and all of our listeners who attend virtual meet the Masters will appreciate that you had a hand in helping us helping us do that. So thank you very much for that I appreciate
Dan Franks 38:31
you’re welcome all I’ll be there. Whatever, whatever the meet the Masters networking sessions look like I’ll be there to to meet everyone else virtually. So I’m excited for whatever comes of it.
Jason Hartman 38:40
Good stuff. Well, hey, thank you so much for sharing your story today. It’s always great to have a client case study, and we just appreciate your business and we appreciate you sharing too. Thanks again, Dan.
Dan Franks 38:51
Thanks. Look forward to seeing you at the virtual meet the masters.
Jason Hartman 38:59
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