In this episode of The Tactical Empire, Jeff Smith and Shawn Rider dive into real estate investment strategies through a mix of personal stories and tactical advice. From a family trip to North Carolina to analyzing a property deal in Wisconsin, they break down how to assess real estate opportunities, use tools like HELOCs and inspections, and evaluate market conditions. The conversation emphasizes decisive action, leveraging capital wisely, and staying ahead of market shifts. If you're looking to sharpen your real estate game, this episode is packed with insights you can use now.
In this episode of 'The Tactical Empire,' host Jeff Smith is joined by Sean Rider to discuss strategies and tools for achieving financial freedom through real estate. They begin by sharing personal anecdotes and experiences before diving into a detailed discussion about leveraging equity for property investments. The episode breaks down a real-life scenario involving a member of their group looking to invest in a rental property. Jeff and Sean analyze the situation, offering advice on inspections, financing, and potential outcomes. They emphasize the importance of taking decisive action and explore various ways to maximize investment returns. The episode rounds off with the benefits of participating in a mastermind group and leveraging expertise to make informed decisions.
00:00 Introduction and Welcome
00:35 Family Vacation Recap
02:22 Current Location and Activities
03:43 Real Estate Questions and Strategies
04:19 Analyzing a Real Estate Deal
16:52 Financial Tools and Strategies
25:29 Conclusion and Call to Action
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[00:00:00] How do you find the will to fight back against the world that wants to keep you sedated? S stuck plates? Join us for the tools and strategies you need to create a life of abundance, discipline, and high achievement. This, this is the tactical implied with Jeff Smith.
Jeff Smith: Welcome to another episode of The Tactical Empire. I'm joined by Sean Rider. How are you my friend?
Shawn Rider: I am fantastic. The family, me, my wife, my kids, and then my dad and his wife. Went down and utilized our blowing rock, North Carolina Airbnb for the first time in, in a while. So that was really nice. We love the house, we love the area.
The weather was perfect. We went to watch, uh, two App State versus James Madison baseball games and that's our inner family rivalry. 'cause I went to app and my [00:01:00] wife went to JMU. So, uh, three games. It was a three game series. We went to game two and, and halfway through game three. So we saw app win. Game two after they won game one.
And then we, JMU, uh, was winning when we left game three and they ended up winning. So, uh, we root for both teams, but it was really cool. Never been to a college baseball game. That was awesome.
Jeff Smith: Yeah. Yeah. Great experience. That's a great town. So I'm sure you guys had a ball. It's a fantastic, your pictures looked good.
Shawn Rider: We love it. Yeah. I mean, Boone and Blowing Rock are, are like two different, you get the same like blowing rock's like smaller to explore, but it's, it's, um. A little more bougie if you would. A little bit, yep. More, I, I hate to say higher class, but, but it is true that it is, uh, the real estate there is way more expensive than in Boone, even though they're only 10 minutes from each other.
So, uh, you can go down downtown Boone and it's [00:02:00] more informal, more relaxed, and then you go to blowing rock and you got some nicer stuff depending on what you wanna shop for. But we got a nice little, uh. Park on Main Street in Blowing Rock that we always take the kids to pretty much every single day. As soon as they wake up, they're like, when are we going to the park?
Yeah. So it's a good way to have the kids burn energy before we explore the rest of the day. How are you and what are you doing?
Jeff Smith: Oh, I am in, we're, we're actually staying at Camp Lajeune. I'm in, uh, we're staying at Anslow Beach, North Carolina. So we, uh. We were right on the beach. So the kids, speaking of waking up and having things to do, they wanna leave and go to the beach immediately.
Uh, 'cause it's like a hundred yards away and, yeah. Yeah. That creates its own set of problems for me to get stuff done and things like that, which they don't understand why we're not going to the beach. And I'm like, we need to wait an hour. Can we wait an hour? So, um, but it, it's a lot of fun. It's a, it's a great, [00:03:00] great location.
So. Gonna be fun. We're here a week and then I don't know where we're off to somewhere else
Shawn Rider: here. Kids put your floaties on and, uh, go to the beach.
Jeff Smith: Well, I, I, in the mornings you can go down the beach a little ways and the marine recons are down there doing training, uh, trying to qualify for recon. And so they're, they're out in the surf and full bdu getting smoked.
Um, it's, uh, it's interesting to watch the, the next generation of war fighters come up and, uh, they look like babies.
Shawn Rider: Oh, no. Going through the same stuff that you did. All right. Oh my man, my man. We have had quite a few people ask us specific real estate questions, uh, based on their situations, experiences, and, uh.
I don't wanna say risk toler tolerance, but just their skill sets and how they view real estate. So I wanted to work through [00:04:00] these with you. Uh, we got two on this episode. Then I'll talk specifically about one that I'm thinking of for my dad on the next mm-hmm. Episode. Mm-hmm. So are into real estate or wanna see how we work through, uh, different contextual situations.
Uh, this will be two good episodes. So the first one. As a guy in the group, he was a, a teacher for 15 years. Uh, got out of that, created his own business, built that business up, used the, uh, used the winnings, the, the money from that business, the success of that business, and spun off a complimentary business that's in the same industry, but slightly different.
Um, customer avatar and service. And now he's still sitting on extra money and he wants to put it to work in something that's not as active from that business building sense. And so he's got a friend that has a long-term rental in his area, which is [00:05:00] up in Wisconsin that he's gonna wanna liquidate. And the short of the matter is.
It is a long-term rental. It's a house that's gonna be worth about $210,000, but the person's gonna sell it to him for 150,000 just to get out from it. It needs a little bit of work, but the work isn't pertinent or necessary. It's got a family that is, has been in it for a few years, but it's a family of six.
They want to extend the lease. So he was talking about how to think about buying the property, how he should buy it, when he should buy it, what he should do with it in regards to what money to use, should he fix it up and then refinance? Should he just wait until they break the lease or not resign for another year?
You kind of know some more of the details, but. You had a really good response to him. I don't know if you want to just talk about it verbally or if you want me to read your response on, uh, Facebook Messenger. [00:06:00]
Jeff Smith: Well, I mean, I, I'd rather talk through like the things, the mindset that you should approach a deal like this with, um, roll with it.
Because, because, 'cause for me, my mind always goes to like, what, what are the what, what are the potential issues? Right? Right. It, in my mind, in my experience, it is a potential issue to take on a tenant. If you bring in a tenant that you're, um, inheriting you, you are potentially inheriting problems. And so you wanna be clear on that.
Um, and and to be fair, we get paid to solve problems. So there's there, I I'm not telling you that if in fact, uh, inheriting a tenant is a bad thing. Or it makes the deal a no. Um, even if it's a shit tenant and even if the tenant hasn't paid in six months or something like that. Uh, because there, there's reasons to take on these problems because of the [00:07:00] upside.
Um, so I. My mind is thinking, okay, are they paying rent? You would need to check that against a, a bank statement. Like if he says they're paying $1,500 a month or $2,000 a month, I'd wanna see that deposited in sub checking account in some sort of way over the past few months, um, to, to just get congruency in that.
So I'd want to know exactly what they were paying. I'd wanna see a lease if they have one. Um, hopefully they do. Uh. And then I would wanna understand do they do want to extend according to him? But until you actually dig into the nuts and bolts and do the due diligence, like a business in this, you, you, it's all hearsay.
So you don't wanna just dive headfirst into these deals. The other thing is they're, they're admitted deferred maintenance on the property and which is totally normal with a long-term renter that's been in there years. 'cause you're not gonna disrupt their lives and go in and like. Repaint the house [00:08:00] while they're in it with all their stuff.
And so, um, this deal sounded totally normal to me. Um, now he's, he's getting it with 20 plus in 20 plus percent equity on the way in with the buying purchase price. That's before we even start to negotiate, which is amazing. The guy's gonna let him do an inspection. So I, I would a hundred percent throw up the money to do an inspection.
See if you could find any bigger issues that may need to knock down the price even more. Because like, what you don't want to do is take a 60 to thousand dollars discount on a property and then your inspection returns that you need a roof, you got foundation issues and you've got a full new HVAC that needs replaced.
'cause then you've eaten, eaten up that entire equity that we're talking about. Um, and so you wanna be clear on that, on the way in, just to be sure. I mean, these guys in this situation are acquaintances, [00:09:00] friends, whatever. So they're doing a transaction because one person is done with real estate and one person is like, this looks like a good deal.
I'd like to get into real estate. And so it could be mutually beneficial, but we need to make sure it's gonna be mutually beneficial, right? Mm-hmm. So in his situation, he was asking about using a HELOC that he's got, 'cause he's got a home equity line of credit on his house that is not tapped into currently.
And, and what we do at the Tactical Empire is we take your profits and your liquidity from your businesses and we turn them into cash flow. And so that's what we're doing with him. So he's got a couple hundred grand sitting in a HELOC that is not being used right now. My response to him was, if the inspection comes back and it's fine, um, you might try to knock the guy down a couple more bucks and say, Hey, I'm taking this off your hand to get it for one 40 instead of one 50, or whatever.
Um, the inspection will certainly return some things. There's no doubt in my mind about that. Um. And so you [00:10:00] then you just decide if you want to negotiate based on that or if there's actually any huge red flags. And if it's the inspection comes back and it's not a full walkaway like this, thing's got too much wrong with it, then you figure out a final price, then you go take it down.
And the reason that you want to do that, you, you want to take it down with the heloc. The things that he didn't understand really are that speed matters and then like securing the actual asset are what matters. So like we can figure, he was trying to get into the weeds on like long-term conventional financing and shit like that.
None of that matters until you've actually secured the asset. And this applies to businesses, it applies to real estate, it applies to anything. Now you go in, you do your D due diligence, but once you have enough information, you have to act and you have to take the thing down and bring it into your possession.
And then once your name is on the title for the business, A as the owner or the [00:11:00] owner of the real estate or whatever this investment is, in this particular case, it's a house. Then you can mess with the levers of ways to finance it, long term structure, the deal, blah, blah, blah. Right? This is part of the reason that I really don't like SBA loans unless that it's the best way to go get things done.
Because the runway on SBA loans and things like that are, is just long. So in this particular situation, it makes sense for him to go in with his line of credit, buy the thing, a hundred percent cash, take it down in two weeks if the inspection comes back. Because what he doesn't understand not being in real estate or not really paying attention and just learning at this point, is that.
We have a housing shortage that is astronomical, right? We also have a very volatile economy right now, and there is a fight going on with the administration [00:12:00] and the Federal Reserve, and at some point somebody is gonna balk in that like back and forth and interest rates are gonna move. They're either gonna move up or they're gonna move down, or they're gonna stay the same.
I don't know, but. I think they're probably gonna move down at some point, and when they do, the housing market is going to adjust in a way that people are unprepared for because everyone thinks housing is gonna crash. Everyone thinks things are so expensive. Everyone thinks that like we've been on this artificial inflationary trajectory with housing, but the fact is it's just simple supply and demand and we don't have enough housing and.
In the month of March, we had the lowest number of actual starts, construction starts that we've had since prior to 2020. And so builders are not building right now, or they're building at the lowest level in five years, [00:13:00] six years, right? So what do you think that's gonna do for the supply on the backside of that?
Right? So what. I'm projecting we're gonna see is interest rates are gonna drop if they do. If they don't drop that, no big deal, right? I could be wrong about that. But when they do drop, you will see a price adjustment that will increase in a way that probably mimics what we saw during like covid. So you're gonna see a another spike in pricing because of the lack of supply.
So I, I mean, it doesn't take a rocket science to figure out if you take interest rates from six to four, that there's gonna be a lot more buyers out there. It's gonna unlock all this capital that's been locked up with all these homeowners for five years that have been sitting on their hands, holding on to their 3% interest rates.
If they can get close within striking distance, at this point, they've had two more kids. They need a bigger [00:14:00] house. There's just a lot of reasons that you'll see this market shift. We've got more people in the country than we had six years ago. We, we've got less housing than we had during that time, and it's just, it's a, it's a powder keg for another 20 or 30% increase in overall retail prices.
And so this gentleman. Like, I don't care how good of friends he is with this guy. If interest rates drop, let's say they drop more than I even think they're gonna drop, like, then you're gonna see a huge curve on retail pricing. And if this guy's property goes from 210,000 to 275,000 overnight, like. He's likely not gonna sell it to him for one 50 anymore, or now there's more prospective buyers for this [00:15:00] particular house because now everybody's super bullish again, 'cause interest rates are dropping.
We're about to go into this bull run type thing. I mean, we're stuck in this malaise right now where we're, we're pseudo in a recession or we are in a recession. Whatever you want to say it is, but. Now is the time to buy. And so when I, when I'm talking to him about using his HELOC and he's like, well, I'll just go get conventional financing.
Like the other reason, the other strategic reason to do this is because if he buys it cash, now he can negotiate a lower price, get a little bit more skin on there and have a bigger equity capture. But the other huge thing is there's so many unknowns with that tenant in place, the long-term tenant. That if he takes it down with his heloc, he still remains able to, let's say they move out in six months.
You go into the property and you realize the property's got $30,000 worth of repairs that need to happen on it. At that point, he [00:16:00] can do a refinance on it, which will pay for the rehab. Take his HELOC out, refill his HELOC up, pay for his rehab costs, and then put it into long-term debt service, and he will still not be touching his actual money.
Right. So he's using other people's money to do the entire transaction as opposed to like the conventional financing route where he's gonna throw cash at the thing to put a down payment on. Then they move out in six months and then it's got $30,000 worth of damage. Then he's gotta go try to do a cash out refi, or he is got a pony up his own capital to do it.
Shawn Rider: Right.
Jeff Smith: Right. So I can't say all that over Messenger because that would've taken me a freaking day to write. But that, that's, that's the thought process I went through on that whole deal.
Shawn Rider: Well, we can send, we can send this episode to him specifically, but the, the, you know, now that Jeff got his rocks off for real estate economics, [00:17:00] the lessons that need to be pulled out there is it, it does come back to the seven levels of financial freedom that we teach to all the members in the tactical empire levels three, four, and five specifically.
Uh, now this gentleman already set up his family bank through life insurance. He has a very large, outstanding loan. On that 5.5% loan, he lent that money for a real estate deal, private money at 15%. So he's making about a nine and a half, 10% delta on that as a financial tool. Then he has his other financial tool with, which is about a 200 and.
$8,000 home equity line of credit that is trapped equity in a home that is getting access and increasing liquidity via that fi financial tool that Jeff mentioned. That's level three of our, uh, of our seven levels of. Now when you pull your heloc, that's your equity, but that's not your money. That is the bank's money.
You're using someone else's money to go put it, to work, to to take down this asset, as Jeff said. And if he [00:18:00] can take down a $210,000 asset by using only $150,000 of a heloc, he is gaining $60,000. Inequity on a property that is, uh, that is what 30% equity capture. That, that, that 60 grand goes to his net worth statement, which again, the, the equity doesn't put money in his pocket, but the asset will, he can take that down.
Like Jeff said, if they stay six months or they stay a year, once they come out, if it needs $30,000 of repairs, he still has room on his heloc. To pull the 30,000, do the repairs and then refinance. At that time, the property might be worth two 50 or 300. So if he can do 80% Yeah. Or more, yeah. If, let's just say it's 300,000, if he can get an 80%.
Mortgage on that, that's $240,000. And he only put about 180 into it. He'd walk away with, uh, he'd walk away with 60 grand. 60 and he'd [00:19:00] still have the equity. So, uh, this seems like, again, as long as there's nothing on the inspection that is like a done deal breaker, this seems like a really good first property to get in with not using his money, even if he has to use his heloc.
To grab it. That is the ideal situation based on what we responded to him with.
Jeff Smith: Yep. A hundred percent. There's so many, there's so many directions to take it. It's a good deal though. I mean, it it, this just goes back to everything that, like we talk about in real estate all the time, a deal's a deal. Like he could pick that up for 150 and sell it and be, and not even close on it and sell it to someone else, probably in our group for 170 and walk away with 20 k.
Like Sure. The options. Options. There's a million options and like when you, when you have a deal secured, you can go any direction with it.
Shawn Rider: [00:20:00] Yeah, I wanna say this. There are zero options without the action first, and you can, you can almost hear it in the, in the way that this gentleman, again, he's newer to the group, so, and he actually, he sent us a, he did a six and a half minute recording to explain this property to us, which I appreciated.
But the first minute and a half was him telling us how awesome the meetup was. 'cause he is gotten to so many different mastermind meetups and he's like, this one was so different. I appreciate it. So I wanna throw that out there as a personal testimonial. Um, but it, it's almost as if like, he's so worried about this one specific action to take, that he's missing the plethora of options he will get from taking this single action.
And that's what you do really good at Jeff, is expanding people's minds on. Hey, take this action. Then you're gonna see like, there's other chapters to this book that you haven't even like seen yet in, in, in your quote reading of, uh, you know, real estate investing. So [00:21:00] I, I, I recognize that from you as a mentor and I appreciate that.
So, uh, is there anything else you wanna say about that situation? I am gonna push the other situation to another episode just so we can stretch the sound a bit and separate out specific situations. But anything else about this particular one? All in all, if you have access to capital and you're not utilizing that capital now, if you have an inkling that the fed's gonna drop rates, we've been saying it for a year and a half.
So the longer it goes, the closer we get to that opportunity, whether it's gonna take another month or another year and a half, it doesn't matter when the rates go down. With the lack of supply in this country, prices will go up.
Jeff Smith: Huh? Yeah, I mean, the, the other thing, the other opportunity. In this particular deal that I thought of when he said, Hey, it, it's probably gonna take $50,000 to repair it.
In my mind that sounded like, whoa. Like he's thinking along the lines of like, how over rehabbed he was gonna do that property? So I need to talk to him about that. But it brought up something else for me. [00:22:00] 'cause I was like, well if you're gonna buy this thing for one 50 and you're gonna put $50,000 into it, I guarantee it's a $300,000 house at that point.
So at that point, does it make sense to sell it? Then, right. And then make a hundred grand and walk away in 90 days instead of mess with any of this shit. Like, so, because I, I'm, I'm positive having it been his first deal, I was like, when these people move out, you're probably only gonna have to do a rehab of like, I don't know if they damage it a lot, maybe 20 grand.
Like, just because you only want to get it rent ready. You don't want to get it like retail ready.
Shawn Rider: Well, that's the thing that stuck out to me when he's like, Hey, they allowed us to walk through the property and you know, it definitely needs a lot of work. It's like, dude, you walk through a house that's got six people living in it.
Like of course it looks like it needs a lot of work, but take all of their shit out of there. Paint the damn thing, clean the carpets, and you might change your mind. Again, retail sale is different than rent Ready. I [00:23:00] think that's a very good takeaway from this episode.
Jeff Smith: Yep. But it, but it was just another angle, like getting a great deal.
I mean, there might be a way for him to make six figures in six weeks instead of like holding the property. So like every deal's different, every strategy's different, but like ultimately a deal is a deal and you could find a buyer for it if you have an a true deal and you shouldn't pass it up. Love it.
Jeff does. Jeff, the one comment that
Shawn Rider: I, I screenshotted, if anyone wants to see, I screenshotted. Your response to him and, and, and Facebook Messenger. I put it on my Facebook as a first time real estate investment and made a piece of content on it. The last phrase was, this is a guy inside the inner circle.
He sent a Facebook message and video. He got a response from us in less than 24 hours. That simple response from you, if he takes action from that, is going to yield an [00:24:00] uncalculable value to his family. Either in perpetuity, and it doesn't matter if he holds the property in perpetuity. If you can sell a property in six to eight weeks and make a hundred thousand dollars, what can that money do for you for the next 40 years?
Yeah. That and all, all from having access to asking you a question. And I, I want people to recognize that because they look at masterminds, they're like 300 bucks a month, whatever, $500 a month. That's crazy. Yeah. But what are you gonna do with the investment? And are you gonna ask the questions you need to ask?
And are ultimately, are you gonna take the action that you need to take to get a 1000 x multiple of your investment in the group? And that's important takeaway from this episode.
Jeff Smith: I mean, just a simple action he could take. If he called me and said, Hey, I don't wanna be involved in re real estate. I don't want to be in, like, it's, it's too hands on for me, but I've got this deal.
If he gave me that exact same deal, I would tell him to flip it. Take the a hundred grand, put it in Brandon's fund, and Brandon's fund would pay him a thousand dollars a [00:25:00] month forever. A thousand dollars a month forever if he did that. Yep. In for the next, for the next quarter of his life. For not none of his life.
Sorry. The next quarter, 90 days. Yeah, he could have that deal completely done, make the a hundred grand, invest it in a passive vehicle and make a thousand dollars a month for the rest of his life for his family. It just like that. Yeah. Boom. Let's go, Jeff. Appreciate you. Send the people out. Yeah, man. Join the Tactical Empire Facebook community.
It's a free community. We post a lot of content in there. If you have questions, come join us. Uh, you can DM Sean or I on Instagram. That's the best way to reach us, probably. Thank you guys for listening. Send this to a friend that it may be helpful to. I would love more questions from you guys 'cause it just gives us more content and we can help you move forward in your life.
So go win the fucking week and we will talk to you [00:26:00] soon.