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  • 956 » Deals Gone Bad #19 – Buying Houses At The Height Of The Market, Before The Crash – Brad Weimert

We grow the most through the pain because when we figure out that we’ve fallen on our face, we never want to do that again. At the height of the market, before everything crashed in 2006, Brad Weimert bought a couple of multifamily units in Indianapolis, Indiana. Everything looked like it was going to go up forever, and the banks were happy to loan him the money for what he thought was a great deal.

It took Brad a little while to figure out that just purchasing real estate wasn’t building a passive income. The quad barely cash flowed even when it was full, and he certainly hadn’t taken into account the cost of repairs or capital improvements. If a property is only bringing in money when it’s full, that’s a massive red flag for any functional investor. But as a newer investor, Brad didn’t have a mentor to point that out.

Is it reasonable to think that the value of the property will increase? Sure. But it won’t increase forever, and if it starts out overvalued, then it won’t ever increase enough to make up for the overvaluation. Now if a property is cash flowing, then what the property is worth is irrelevant. Still, Brad held on hoping things would turn around for the property.

For 8 years, Brad paid tenants to live in his units. He worried that if he stopped paying, then his tenants would get evicted. He thought that he should keep his word to the bank. And he lost tens of thousands of dollars a year.

Avoiding an expensive mistake like this is in your best interest. Don’t take advice from some 23-year-old investor, no matter how confident and smart he sounds. Older investors can help you see the market cycle and avoid the trap of properties that suck the profits out of your business.

Watch and Learn:

Listen and learn:

What’s inside:

  • In the lending world, the appraisal can send your loan in the wrong direction.
  • Does morality figure into paying off the banks on an overvalued property?
  • Taking advice from a seasoned mentor can help you see a property through the lens of the market cycle.

Mentioned in this episode:


Download episode transcript in PDF format here…

Joe: What is going on, everybody, happy Thanksgiving tomorrow as I'm recording this today's Wednesday, tomorrow's Thanksgiving. Hope you're doing well. Welcome to the Real Estate Investing Mastery podcast. And on this series, this is Episode 19 of our Deals Gone Bad series. I've got about three or four more lined up. And then the next series we're going to do because you can only talk about bad deals so much because then you get depressed like, oh my gosh, everybody that was talking to you is bad deals. But I've learned an incredible amount of valuable lessons that I'm hoping you guys are getting out of this as well. Valuable lessons on what not to do and how to do things differently, because, guys, history always repeats itself.

Joe: And we have a really special guest on today. I'm going to be talking about that. Don't think that what we saw in 06 will never happen again. No, it will. Right? It will. We always go through cycles. The market has been on a tear for the last eight years or so. It's not going to stay like that forever. You will see some dips. And so we're going to be talking to somebody who's been in the business a long time, a good friend of mine. His name is Brad Weimert. He's going to be talking about, I think, four different houses he bought at the worst time you could have ever bought them in 06. And then what happened over the years following and how upside down he got. So this is going to be really interesting and we're going to be asking him lots of questions on what would you have done differently? What would you do differently next time?

Joe: Also, real quick, I want to say this. A lot of you guys are watching this right now on the YouTube's in the Facebook. So hello there. We will be rebroadcasting this later on as an audio podcast. But if you're watching this right now in YouTube or Facebook or whatever, please give me a thumbs up or say hello. Tell us where you're from. Say hi. We'd love to see you. And we'll pop you up on the screen here and subscribe to the YouTube channel. And like the video, give it a thumbs up, share it if you want. This has been a really, really good series and we're getting a lot of incredible value out of that. And a lot of people that ask me, hey, how can we get the notes?

Joe: Well, you can get the notes by texting the word bad to thirty-onethirty-onethirty-one. Text the word bad, the thirty-onethirty-onethirty-one or go to JoeMcCall.com/bad. Every episode we take notes on lessons learned and what it could have done, what it could have showed us, and some really incredible valuable resource. Right now all of the notes are in a mind map. Pretty soon we're going to be putting them into a PDF or a book or something like that. So if you want it for free, JoeMcCall.com/bad or text the word bad to thirty one thirty one thirty one. Cool. And look, we've already got Cheryl in the house. Hi, Cheryl. How are you?

Joe: So if you're on Facebook or YouTube, please say hi. And I'm just going to type something in there right now. And I just sent out a text or chat of my own. But if you're one of those channels, you can type them, say hi, tell us where you're from. Cool. All right, enough of that. Let's bring on Brad. Brad Weimert. How are you, sir?

Brad: I'm relatively good. I successfully got a positive covid-19 test two days ago.

Joe: So welcome to the club. I got mine two and a half weeks ago, sorry to hear that. How are you feeling?

Brad: I'm good, man. You know, like I'm a little sick, but no big deal and I'm excited to be done with it.

Joe: So, yeah, it's frustrating. I had it for, like, I was kind of sick for a day or two, but the stinking thing's been lingering for about three weeks now. Just kind of feel congested right here, you know, but everybody's different. It's a crazy thing. I heard a joke. Maybe it's not a joke. This isn't a laughing matter, but I heard a joke. Why do the Amish not get covid? Because they don't watch TV. They don't. They don't.

Brad: I like it. I like it.

Joe: All right. So, Brad, you've been in the business for a long time. You've been in the industry for a long time. You're doing a lot of cool things today. And we'll talk about that later. But you when did you start getting into real estate?

Brad: So really, I got into real estate at the best time ever, which is around 2006. So I was doing looking at kind of some flips and some longer term holes. What part of the country were you in the Midwest, which is also a wonderful place to be doing such things. But Indiana, where you know, so I'm from Michigan from Ann Arbor, Michigan, originally moved to Austin about six years ago.

Joe: OK, yeah. The market crashed in the Midwest, didn't it, too? Not as bad as California, but. Yeah. All right. So you started investing in real estate in 06. Were you like me at that time looking at the historic appreciation of real estate and thinking it will never go down like real estate always goes up. Over the last fifty years, it's gone up an average of six percent or whatever. You remember those days?

Brad: Of course. Yeah. Yeah. Well, I think that there are just a whole host of lessons through mistakes, which I love. The when you originally posted this idea of, hey, does anybody have stories they want to share about terrible real estate deals like, oh, this is a great concept because unfortunately. The narrative that gets pushed specifically through the new dynamics of media with social are all positive. Everybody just wants to show all the good stuff that's happened. And the fact of the matter is, we grow the most through pain, not through success. We grow the most when we fall on our face and figure out, well, that was a terrible thing. I want to do that. Yeah, you're absolutely right. Yeah. So it was one of the lessons right away for me was to look at history and look at the past. I mean, it's like it is all cyclical. So how you open today was great because you're right, it's just a matter of time before we go through another wave.

Joe: Yeah. OK, so how did you get started in real estate? What got you interested in it?

Brad: So my background is really hardcore sales and I hit a point with sales where I was like, OK, I'm doing this transactional selling thing. I need to find the next thing in my life. And so I built a list of criteria of things that were important to me. It was like no cap on income, residual by nature, location, independent, tech, focused business to business. But one of the things on the list was the ability to make a lot of money fast. And ultimately I got into credit card processing. So I started this company, Easy Pay Direct, which is a huge chunk of my time today.

Joe: But we are happy customers, by the way. If you all are looking for a good merchant provider. Check out EasyPayDirect.com. I don't get it from that, but I love it.

Brad: So Merchant Services does not provide the owner the ability to make a lot of money fast. We are making pennies per transaction and it's contingent on a large aggregate portfolio. So it's a long bill. So while I was doing that, I also had a tremendous amount of interest, kind of always in real estate, but flipping houses. And one of the reasons that I have such interest in it is I'm a very tangible person. So I like having a solid physical asset that I can go back to it processing as ones and zeros and hopefully more than just zeros, but things in the ether. Right. And I like having physical land. So but from a checklist perspective, I could flip houses and make chunks of cash. So I was flipping houses while I was selling merchant services as an agent in 06. And it gave me the ability to build up a residual, but pay for lifestyle at the same time. So I was flipping these houses to get chunks of cash to kind of in retrospect, where the story is going is not good. And so in retrospect, I had to look at that as a loan while I was building the company. In the moment I looked at it as making a bunch of money while I was also building my credit card processing company.

Joe: OK, how long did it take you to actually get into to specifics? For how long did it take you to actually start generating enough revenue in your processing business, credit card processing business? How long did it take you to do that?

Brad: Yeah, so as a as an independent salesperson, I was selling for another company at the time. And so like we have a sales program inside of Easy Pay Direct now. I was doing that for another company in 06 and it probably took me 18 months to two years to get to a point where I was generating maybe eight to ten grand a month, which was kind of the number that would cover costs.

Joe: And so real estate was also then providing some extra income for you. That, you know.

Brad: That was the core purpose. You know, when I had a fifteen hundred dollars a month residual or a nine-hundred-dollar month residual, that's not paying for my bills. So real estate gave me this opportunity to get ten grand on a deal or twenty grand on a deal or 50 grand on a deal and buy myself times that I could focus on building a residual with payments.

Joe: All right. So you were just fixing and flipping. Is that what you're doing?

Brad: Well, that was the idea.

Joe: That was the idea. Did you do it successfully during that time?

Brad: Yeah, well, so we fixed and flip. But what I did, that got me in trouble was I fixed in reified.

Joe: You weren't the only one. A lot of people were doing that. Everybody was. At the time that's how you made money, right? You bought a property at a little discount and then when you needed some cash to pay the bills, you just cash out, refinance, right. Sometimes at one hundred and five percent. 110 percent. Sometimes.

Brad: It's insanity. And I mean, let me be clear in saying that appraisals are a ridiculous joke anyway. But certainly in that moment, appraisals were even more of a joke than they are normally.

Joe: Yeah. All right. So you were buying houses to fix and flip and you were cashing out refinance. Doing cash out refinances, right?

Brad: Yeah. So the economics on these, I ended up with, I think, four houses and we were buying them at auction and they were I think it had maybe let's call it two single families, a duplex and then a quad. And the quad. I probably the quad was the worst of them because I bought it for probably less than ten grand. These are also in Indianapolis, Indiana. We bought it for less than ten grand, put maybe eighty grand into it with a loan and refinanced it for like two hundred and five now with an appraisal, of course. So there was an appraised value of two hundred and five and it barely cash flowed. If it was full, if it was and if it was full is a is a major criteria in some areas. And so other major, lots of red flags around this right now. If you're, if you're a functional investor listening to this and if you're not a functional investor listening to this, you just want to be those are red flags. So, yeah, barely cash flow if it was full and when the economy crashed.

Joe: Before we get to that, were you thinking like were you thinking our prices will go up? We always go up. Just appreciate just kind of sit on it. It's OK if it's negative cash flow for a little bit.

Brad: Well, yeah. So yeah. So I'm glad you said that. So look, there are areas of the country, California in particular, but any hot area in any cycle like this where investors functionally buy on what we should be considered speculation, there's a time and a place for that. I have I have still bought things and still do with some consideration to speculation like I live downtown Austin. Is it reasonable to think that a property in the center of downtown is going to increase in value over time? Yeah, it's reasonable. But you you have to balance that against the other thing. So, yeah, the idea is that over time the value of the property would increase. Now, I did not realize at the time how out of whack the appraisal was. I also didn't factor in vacancy well enough. And when you only have four units, one of them empty is a big deal.

Joe: Oh yeah. And did you have reserves set aside for vacancies and maintenance and repairs?

Brad: No, I mean not adequate anyway. We had budgeted in everything but vacancy rate. We had budgeted some ongoing maintenance cost, but not enough. The other thing for me was the area that these were in more lower income areas. And so if you are investing in lower income areas, your maintenance budget has to be higher because statistically properties get beat up quicker in those areas.

Joe: All right. So you did you do the rehab, get all of it, get did you get it rent ready then?

Brad: Oh, yeah. Yeah. So the quad is the biggest problem at the end of this, but the dynamics are the same. So we can focus on the quad and I'll give you the answer to that.

Joe: But what else did you buy some other properties at this time then?

Brad: Yes, there was a quad there, there was a duplex and there were two single families, I believe, and the formula was the same with all of them, which was bought them at auction, rehabbed, refinanced and then rented them. One of them, I think one or two were Section eight properties, which for those that don't know, means that it's a government subsidized program. And so the government is paying the check directly to the landlord, which is great. But there are you also have a specific demographic that are qualified to have Section eight and Section eight assistance from the government. And you can have great Section eight tenants. You can also have some very strange characters that that have no money. I mean, that like scraping together two hundred dollars a month is a huge ordeal for them and that makes for strange interactions.

Joe: As a landlord, were you managing these properties yourself then?

Brad: No. So I wasn't. I had a manager who was a good friend of mine, but that introduces a whole nother set of challenges, which is any time you're doing property management, the way to make the most money is to have your own property management company. Right. But if you're going to farm that out, you better make sure that they're good.

Joe: Yeah, I recommend having your own assistant do it for you. That's what I've always done. Just get an assistant to manage them for you. Buy them landlording for dummies. There's one hundred books out there that you can get. Right. Go buy everything from Mr. Landlord Dotcom and you can get really good courses that give you all the procedures and stuff like that and give it to an assistant to have your assistant manager properties for you. Just a lesson learned personally for me. I've found that that works best. All right. So how did you get these loans? Was that the time? Was that the stated income, stated assets? No doc loans.

Brad: Yeah. I want to piggyback on the previous statement for a second. I've got a friend in town, David Osborne, who is a real estate beast. He is the largest Keller Williams broker on the planet. So he owns just a huge chunk of the Keller Williams empire. And he also has a large portfolio of single-family homes that he's built over time. And to your point, what you just said, what he ultimately did for the single-family homes after he had I think he's ordered a hundred plus single-family homes, is he brought somebody on to just run the entire thing. And that person has a few hundred grand a year salary plus upside, which keeps them incentivized and in place. And now he's not in the day to day.

Joe: The great thing about that is that person is only focused on your properties.

Brad: You got it, because they're also their properties, right, because they feel like they have ownership in the deal.

Joe: Yeah, that's really good. All right. So the stated income, stated assets, no docs. Is that how you got the loans back then?

Brad: Yeah. And I had some assets which helped. So the loans weren't as big of a deal. But as I recall, when we got like, like the first and second property, not that big of a deal because we're also were funding the rehab. And so that was also a thing. But the third and fourth property and my property manager friend, the person also was doing the same thing at the same time. And we found a local bank that basically you just sold them on what you were doing. And they were like, yeah, great, let's do it.

Brad: The problem is what we stated earlier, which is that the banks had the same mentality that the individuals did was it's real estate, it's stable, it's solid, it always goes up. It'll never go down. Let me give a reasonable parallel. So, like, how that could be good. So I live in a highrise right now. I bought a condo in a High-Rise downtown and through a variety of annoying circumstances, I bought it at the same time as a commercial building. And so I had to put a lot down on the high rise to get it financed. Just a DTI thing. And so I put like 70 percent down. They still wanted an appraisal on the high rise. Well, that doesn't make any sense. If it meant 70 percent down, I'm sure you could be so far off of the appraisal and the loan is still fine. Yeah, right. But they needed to check a box. So that's a scenario where in appraisal and looking at it is totally irrelevant. So I think that, like in the lending world, we've gone in both directions, like we overcorrected to great extent. But in that era, everybody got so loose with it and they're like, fine, let's just give them money, OK?

Joe: And so these are rental properties. They were Section eight. All of them were they weren't all Section eight, but they could have been OK because you're talking about vacancies. And even though somebody doesn't understand Section eight, do you still need to worry about vacancies with the Section eight home?

Brad: Less so. I mean, you have you have a captive audience or Section eight.

Joe: It's easy to get people there because there's a low inventory of Section eight. All right. So then what happens? You start hearing rumors of the market going down. What did you do? You remember as it happened what was going on?

Brad: I mean, I think that the when you're looking at contingency planning, which I'm much, much better at these days, as a result of that, we can totally relate to everything you're saying right now. You want to look at worst case scenario. And I today am a firm believer that it's really important to plan for the worst, hope for the best, and recognize that neither are likely to happen. And so the contingency plan with any real estate is look at it's cash flowing. The value is irrelevant. Write the ups and downs in the market of what you could sell for in an instant is irrelevant unless you need that liquidity. What's relevant is can it pay for itself or are you going to get yourself in a bind where you're bleeding every month and you have to do something about it? And so the challenge of these properties became vacancy and repairs. Challenge became that I was even if they were full, I was across four properties making when they're full of a thousand dollars a month. But if I had one vacancy or one repair, yeah, that's gone much less a big repair.

Joe: You had eight doors. Right. And over at any one time.

Brad: No, ten doors.

Joe: At any one time. How many vacancies would you have?

Brad: The quad, the duplex. You're right, eight. So one or two.

Joe: Yeah. Because that's the same thing I had. I had about thirteen doors in 2006. I bought between like two thousand six and seven and eight maybe and I couldn't understand. I thought the key to getting out of the rat race was you get a lot of debt, you buy a lot of properties of it, just cash flows. One hundred, two hundred bucks a month. You're fine. Right. And that's I wasn't even figuring in we're talking about vacancies maintenance, repairs and stuff like that. And I remember getting so frustrated because every single month it was always something. There was a vacancy. There was a repair that I had to make. And all of the money that I had set aside or tried to set aside was just completely disappearing. And then it got for me to a point where I stopped. I had to stop making my own mortgage payments so I could pay these properties mortgage payments because I didn't want to have to evict the tenants or whatnot. And I knew I was a complete disaster for me. But how did you know you were starting to get in trouble then? How is it affecting you in your personal life?

Brad: So what you just said is an interesting dynamic. And what most people did in that environment was just foreclose and they just said, I'll foreclose. And what actually happened with most is many people didn't even need to foreclose because they could drag it out so long without it actually happening. Or they could play catch up or they drag it out so long and then it would foreclose, but either way there was much more runway and seven and eight than ever before for the foreclosure process because the banks, well A, the banks didn't want it. They didn't want the properties, and B, they didn't have the infrastructure to handle that influx. So personally, the biggest challenge that I had in that moment was that I did have assets.

Brad: And so I had a portfolio like a stock portfolio, mutual funds stuff in the market sitting in because I had those assets, I couldn't I couldn't foreclose. I would be giving up all those assets in order to pay off the debt if I did that. So that's that was an unfortunate reality for me. So I saw over time these four properties what was happening as I was bleeding a thousand to two thousand or three thousand dollars a month, depending on vacancies and repairs, etccetera, through 07, 08, 09, et cetera.

Joe: How long did you keep these then?

Brad: So I think that 07, 08, despite the crash, my mentality was still like, look, we'll go through this volatility as long as that cash flow, I'm fine. Let me just focus on making sure the properties are full and functional. And then as time went on and part of this is a management thing, right? As time went on, I recognized manager what was in keeping the properties full. They weren't his properties and he was busy dealing with his properties. So it was probably 2014. Wow. Right. When I realized it again, I couldn't foreclose on so I couldn't get rid of them in the values were so underwater with. So let me look at numbers on this.

Joe: So like you said, you couldn't foreclose on them. What do you mean like you couldn't let the bank foreclose on them. Why not? Because they would look at because they would take my other assets to pay the debt first. Right. So it's all right. We'll foreclose and you're going to lose this amount of money and we're going to get we're going to pursue you with this money from your other assets that you have, OK?

Brad: Exactly. Exactly. So2014. I had been losing twenty-five to thirty five grand a year, probably call it twenty to twenty to thirty five grand a year in the values of the homes. We're like let's call it sixty-five grand. Seventy grand. Eighty grand on the smaller ones which now collectively had values or each had values of like twenty five grand. Twenty-two grand. Eighteen grand. Right. So huge gaps. And then the quad that I had appraised for two hundred and five was now worth forty maybe. Right. And so through 10, 11, 12, 13, 14, I'm looking at this and it's like I just need to make them work, I need to make the cash flow thing work. And I hit the point in fourteen where we did the math on it and where we did the math on how much I had lost up to that and the deficiency. And we said, look, had I just sold them, even with the deficiency, at least I wouldn't have had the cash flow loss. Right.

Brad: So the cash the loss had at this point after five years exceeded the deficiency in value. And that's a hard pill to swallow. But it's math. So the nice thing about math is it's just black and white. So I reached this point in the end. Here's one of the major lessons is had this property, had any of these properties been in a better area with higher growth? I wouldn't have had the problem because even if they dipped in value, it would have come back. But being in a in somewhat inner city Midwest declining town and I actually don't know the economics of Indianapolis, but I certainly know the areas that we were. We're not accelerating in appreciation. Had I been in a different space, it would have been fine. But I looked at this and said, hey, the values in Indianapolis are not going to accelerate to the point where it's going to offset this or get it back to the appraised values. So I wrote some large checks and took it on the chin in 2015.

Joe: So you didn't even, you still didn't do foreclosures or short sales on them? You paid the banks back. Were these private lenders or were these big banks?

Brad: I mean you know how mortgages go. It was like fifteen different banks by the end of the game.

Joe: And they probably didn't even know who you were. Right.

Brad: And truthfully, there was at some point the moral consideration, moral. And I think that the notion of morality is a different conversation altogether. But that that idea popped in my head at some point and said, hey, I made a commitment. Do I follow through with it? Ultimately, I kind of let go of that idea because you have to play the game that you're a part of and the reality of a game, the game that we were a part of is the winners in the game were the banks for sure, despite the fact that some went under, the banks made a killing throughout the whole process. So for me, the the only thing that that any of this was founded on was the idea that a I the if I kept the bleeding going, it was going to last forever and I wasn't going to get out of it. B, they'd come at. The rest of my assets, most likely if I went to foreclose and I couldn't bankrupt for the same reason and I needed the bandwidth to be back, I needed to not be thinking about this. And that's the other major asset. Whether you're a real estate investor or an entrepreneur in any other sense of the word, your focus and your bandwidth is the most valuable thing you have. And if you have something that's sucking it up and pulling you away from what you should be using to multiply your efforts, you've got to get rid of it.

Joe: Very, very good. How much would you say you lost in total on these properties, four properties in total?

Brad: Well, I think that I think I wrote a total of two hundred and fifty grand in checks to get out of the properties. And then I probably then whatever the bleed was over the course of five years, I mean, we're probably in the four hundred grand range. 500 grand range. I don't know.

Joe: You were paying your tenants to live in your house for free.

Brad: Yeah, that's an infuriating reality.

Joe: When I figured that out, that's when I said, I'm done, I'm done. Which is a really important lesson learned. You talk about the morality of all that. You know, there's a point where, like you have to accelerate the splat, you're falling. And there's a certain point and I extended it as long as I could. It affected me personally. It affected my family. I should have never let it get that far, you know, especially when it comes to business. Sometimes if, you know, you got to rip that Band-Aid off, the sooner the better, the faster the better. And you have to accelerate the splat. You're going to hit the ground sometime, right? Just get it over with and do it fast. There's a story I heard one time of whether you whether you like Trump or not, this person I heard this story from, somebody who did not like Trump.

Joe: They were in New York. This person worked for a big news organization. And they were Trump was there. This was probably ten years ago. Trump was there. And this guy was going through a lot of issues with his own personal investment properties or whatever. And he asked Trump after the filming was done, what would you do if you owned these properties? And Trump looked at him like, are you an idiot? Just walk away. And he was real offended by that because he was a liberal. And Trump just says, you should just walk away. No wonder he's such an idiot. But later on, he learned, you know what? He's probably right. I mean, there is the moral thing of this. I don't want to get into the left or right political stuff, but when it comes to business, that's what's so great about our country. Right? Like as a country, we are. The reason why entrepreneurship and small business owners are so successful is they have permission to fail in our economy. So anyway, that's one of the big lessons I took from what I went through. It sounds similar to you. So what are some other big lessons learned Brad that you would have done differently if you were back then again?

Brad:  Again, you know, there is, I mentioned this in the beginning, but there is a a one way to look at the whole situation for me is that this was a loan. Right. So, yes, I paid for a hundred thousand dollars or whatever. But what it allowed me to do was start a credit card processing company that serves thousands upon thousands of small businesses and generates millions upon millions of dollars. And I had this loan. Now I could have just gotten the loan. That probably would have been a less stressful way to do this. But with my goals in the moment that it made sense. And also I think that you frequently other people are better at learning from others than I am. I'm really good at falling on my face, getting up, falling on my face again, getting up and maybe falling in my face a third time before I get it and stop falling on my face. And so I appreciate the lessons. And so what would I have done differently?

Brad: I probably would have polled the audience a little more before I jumped into the deals, meaning I probably would have looked for a more seasoned mentor in the space and I would have. And what do you think that seasoned mentor would have told you? Pay attention to the cycles of history. None of this was the writing was on the wall for all of this. It wasn't. And there were people that were both smart enough. But also the other thing that it takes in these situations is not just being smart, it's having a strong character and being comfortable with confrontation because the entire world was saying, you know, put it all on black. The real estate side going down. The whole world was. With the exception of this tiny group.

Joe: And that tiny group was, they were not ignoring the fundamentals and the fundamentals were there. And I ignored them. Of cash flow. And you gotta figure for maintenance and vacancies and repairs and future repairs. And today repairs. Like you got to. And if it doesn't, cash flow after those expenses. And if you don't have a reserve, it's not a good deal to buy. And it was easy back then, wasn't it, to just ignore those kinds of fundamentals? Totally, yeah. What about buying in those areas? Would you have still bought? In those sounded to me like you're maybe in some class C, class D neighborhoods.

Brad: There is zero chance that I will be in those areas ever again in my life. Zero. Here's the thing. What's sexy about real estate to people in addition to the tangible component of it, is a variety of other things. Is the notion of appreciation buying in areas where the appreciation has a higher likelihood of coming to fruition just makes sense. If I have the choice of buying in downtown Austin and now the pandemic Corona, et cetera, opens up questions about that. But the trend in our life has been gravitation toward cities and ironically, the trend just before our lives was a departure into suburbia. So we have the interesting dynamics about what where the appreciation is likely to happen. But where I won't be buying are in sort of, like you said, C, D class neighborhoods. Lower super, super low income, government subsidized areas.

Joe: All right. Any other final lessons learned that you want to share from this?

Brad: Yeah, I mean, from a real estate investing perspective, I think the fundamental life lessons here that we've got to talking about for real estate investing perspective, make sure the math works and run the deal by multiple objective people. If you think you already know what their answer is going to be, maybe that's not the right person to run it by. Right. Maybe run it by somebody that you actually are going to get confrontation from and then listen to them.

Joe: Excellent advice. Some of the best advice anybody can take from this, I think is you got to get somebody who is a seasoned vet who understands the business, been through the market cycles. Be real careful of getting advice from somebody who's only been investing in real estate for the last seven or eight years.

Brad: Be careful in general of people giving advice. Right. I had a twenty-three-year-old working for me, and he was the most brilliant combination of arrogance and ignorance. And if you didn't realize that he was twenty-three, you would think that he knew his shit. But then you realize he's twenty-three and you're like, oh it's not even possible that you know what you're talking about. So to your point, like if they haven't been through it just and I'd say be very, very careful of that like all the way across the board. And the same thing is true of residential versus commercial. Look, somebody can have tremendous experience in residential and they can speak on commercial as if they know what they're talking about. Be careful.

Joe: Yeah, very good. All right, Brad, how can somebody get a hold of you? Talk about easy pay direct a little bit. Is that is that your main focus right now?

Brad: Yeah, I'm always playing with real estate like real estate, and that's always of interest. But BradWeimert.com is where I try to keep my my personal world alive and kicking. Certainly, I think I'd probably say presence in the social world on Instagram more than anything. And EasyPayDirect.com is a way to accept payments for really anybody. But we specialize in e-commerce and any time the card is not present. So we work with tons of people that sell information about real estate, that have software companies, SaaS. People that sell supplements, people who sell widgets online, whatever.

Joe: EasyPayDirect.com. And Brad Weimert.com. Nice. Hey, Brad, thanks for being on the show. Appreciate you. And I love Austin. In fact, I might be going down there to visit my wife's family end of December.

Brad: I should be clear of the rona by then.

Joe: Yeah, they're building or they built a new Kalahari up near Round Rock or Pflugerville. Is that right?

Brad:  Those I know those words.

Joe: That's like it's a different world. If you're living in downtown Austin, like you don't really know much about what's going on in the suburbs, etc..

Brad: If you're past twelfth, I'm like, yeah, how.

Joe: Whatever. All right. Thanks again for being on the podcast. Guys, again, check out Easy Pay Direct Dotcom if you want to get more information about Brad's payment processing company. I'm a customer. I've been a customer for years. Great company. Or BradWeimert.com. Don't forget, if you want all the notes for these podcasts and our typed lessons learned notes from all the episodes we've done, go to JoeMcCall.com/bad or text the word bad to thirty-onethirty-onethirty-one. And we've got a lot of people here saying, hi, here's James Jackson. What's up, James? Cheryl, thanks. You too. Tom Croll's in the house says hi. Bam. That's his signature. Audio designs. Hey, it's Darren from Jacksonville, Florida, and Jose from San Diego, California. What's going on? Everybody here. And that's it. All right. We're out of here. See you, Brad.

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