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Episode 135 - From First Triplex to 47-House Deal: Lessons From Justin Foster's Real Estate Career

by Criterion, Braden Cheek, Brian Duck
January 22nd 2024

Today hosts Braden Cheek, Brian Duck and Joel Thompson sit with special guest Justin Foster to discuss his rise in real estate utilizing private money, as well as his philosophies behind work &... More

I'm not in love with real estate. You guys like as much as I'm sorry, next guest. Alright. What is up and welcome back to another awesome episode of a invest in commercial real estate. And as you can see today, we have a guest, Justin Foster, right? I got that right. I got that. I'm always nervous introducing people every single time. But anyway, we will get into Justin and his background and his company and his super exciting story, super interesting about how he got started. Um And it's awesome for me because a lot of people look at this stuff and it's just unrelatable, right? Like how can I buy a $7 million shopping center? How do I get that million dollar industrial deal or, or whatever it is? And I think the goal of this podcast is to break it down in reasonable bite size steps to where people can walk away from this. I think, man, I think I can invest in commercial real estate in some sort of. Exactly before we get into that as you can see from our social media pages, the Facebook and the Instagram, we have been doing our cold plunge Challenge, which is over by the time this is released. But you will see us getting in 32 degree water in some longer than 7 to 9 degree air temperature and all uh full of ice chunks.

Definitely check out that video. It was extreme to say the least. I don't understand. You guys want people to listen to you and you guys got into 32 degree water. You think like that's gonna like really prop you up? Yeah, maybe not for this show. They're gonna think we're a bunch of idiots. Yeah, it's fun. You know. Uh like Joel always says, we, you have to get comfortable being uncomfortable, you know, you, you've got to do the hard thing. I, I think you posted the other day and it's just a testament of, you know, a lot of this stuff is, is not hard, but it's a mental fatigue going through deal after deal or researching the knowledge on how to do this. But I mean, doing the hard thing can lead to benefits and there's tons of medical benefits on, on cold punches. It's, it's super awesome. Plus it's freaking insane like going in your pool when it's snowing, it's seven degrees. And I bet you guys feel like you, you drank like five cups of coffee after that and you're just ready to go. It was great. It was nuts. It was nuts. I'm still trying to warm up. Um Other than that we, we have a lot going on, so we, we finished out last year strong. Um, we ended with a couple of deals last year. The, um, Calloway's nursery development we're doing down in Houston, um, and the Jacksonville, Florida Starbucks build a suit.

We've been talking about that one. Um, the loan got delayed on both of those. I mean, it's kind of the world we're living in these days. Loans are just inherently harder to get. Um, both of those loans have been finalized and both of those assets are, are now closing. I know we've called down all of the Calloway's nursery funds. Um, but the Jacksonville Starbucks investors, you'll definitely be getting an email here in the next couple of weeks, call the funds down and we'll close on both of those assets assets by the end of the month. I like it sounds good. Awesome. So, without further ado, Justin, let's get into your background. Why are you here? Why are, why are you on the show? Tell us a little bit about um your story and how you got involved in investing and, and you know, just get us going right on, man. Well, I'm glad to be here and my, uh my story started way back in the day with you Joel. I didn't have any idea of what I wanted to do in real estate. I met you through my wife and you had been in this real estate game for a while and I had gotten hooked on, you know, just the standard rich dad, poor dad got the bug.

Thought I could get out of it. We're talking seven years ago, I think when we met approximately. Yeah. So I was 20 nine or something. I wasn't even 30 yet. I was working in the oil and gas industry full time doing kind of some technical stuff and I got into sales. I was in my W-2 and I, I really didn't resonate with what I was doing in oil and gas ultimately. And I thought I need a vehicle to kind of get me out of the grind, get me out of the rat race. I wanted to achieve some, some level of financial success and financial independence. And so we sat down together and you were like, read Brian Tracy. I know it's not the only author I said, so I actually got on to some Brian Tracy but, but you got, um you helped me out, you met me where I was and I was looking at some deals and the principle that I started to kind of adopt was, I don't know how to do this. Other people have done this before me. I need to meet with the people around me that are doing what I wanna do and just copy what they do. And that became like my whole thing is like, I'm not an original person, I'm not trying to recreate the wheel I wanna find successful people who have done uh what I want to do or have gone to where I wanna go and I just want to submit to their instruction and go out there, take action and then get feedback based on that action.

So I took some action. I, I bought a triplex here in Tulsa, um, still working in my job and that ended up being a decent little deal for us. It was in a good area. Well, let's talk about that because I think what we're trying to do is bridge the gap between the people working their day job that's not residing with them. They're making 60 grand a year. They're paying 20% of that in taxes. They're barely making ends meet and they're like, ok, how do I get into to real estate? And I don't know what you were making in August, maybe you were making 80 grand or 100 grand. But in the event like I was making 50. Yeah, I don't know. Yeah, but, but the thing is ok, so uh how big was that triplex? How much cash did it take? What were you, what did it cash flow? You because that was your first deal? Yeah. And I think that's super, super important, right? Because coming up the down payment money, I love everybody's strategy like Joel is, I applied for 10 credit cards in one day. Like you always get a juicy one, you said your advice was but don't do that. Yeah. Um So on that deal, I actually we were fortunate. Our start in real estate was we sold a house in, in uh Colorado and we were able to take some equity out of that and we had this little seed money.

So I raised some private money from somebody that I knew, but I brought most of the cash on the purchase and then they funded the rehab. So it was like 100 and it was like 100 and $20,000 all in. We brought 80 but then I refinanced it out because I only had $80,000 and that's not only $80,000 that's a lot of money, you know, for sure. But you, you can do a lot with that kind of as you paid for that first triplex and then you fix it up with someone else's cash and then you went back and pulled most of that out after you. I love the pre inflation numbers too, right? Like it's 80,000, 100 and $20,000 triplex all in post rehab. And yeah, so it's over there by the Pearl District if you're in Tulsa. But basically that um ended up, I got hooked on this idea of like, OK, I got three doors. They're all paying me $200 a month in free cash flow. Now, what's the number that I need to get to? And I had this number in my head of ok, this is what's gonna replace my income. And then the next thing I did was a friend of mine who again, I took that deal to you Joel.

And I was like, hey, do you think this is like a good deal? And you're like, yeah, you should just do that. And then I took it to another friend of mine and he said that was doing had been building a portfolio and he said, well, if you're not going to buy it, I'll buy it. So that had all the confirmation in the world. I'm gonna leap in. I'm gonna pull the trigger. That was the hardest, the hardest. Yeah, but you can't underestimate that advice, right? Like, hey, you went out to somebody who has commercial real estate experience and then they said it was a good deal and you're like, ah, this is still not good enough. Let's try another one. You know, going to that second opinion and verifying, hey, is this a good deal? And people saying yes, you should do that. If you don't do that, I will do that. I think people underestimate the value of that and everyone does that. Everyone calls a guy or a girl. They know and says, hey, what do you know about this area? What do you know about this deal? I don't know enough. And if you're not doing that, you're wrong. A couple of things real quick. Not not to interrupt. But, uh, you know, when I started, I called people on a couple of the first apartment deals I did and they, they told me I shouldn't do it. I should have listened to them because it actually, it wasn't a great deal. But I didn't want to hear that. I, I just wanted, I just wanted to act, uh, but uh, step one, ask for advice.

Step two, listen to that advice. The other thing I wanna say is when Justin came and talked to me, I obviously had moved on from single family homes. And so I, I really wasn't in a position to give him a lot of really good advice just starting out. But what I remember telling him and what I'll tell anybody that comes to me for advice is I remember telling you you can do this and I really wanted to encourage you like you're gonna run into obstacles, you're not gonna have all the answers you can do this. And that's what I want everybody else to hear is if you're contemplating getting involved in real estate, you can do it as well. The hard, the first deal was the hardest, the fear is overwhelming. But if you'll just get in the game, you will figure it out. And, and so that's the, the thing that kept me going is all my mentors in the books and C DS and everything that I was looking to. They all told me, I can do it. Bankruptcy might be there. Failure is gonna be there but you're gonna be on the other side and you're gonna, you're gonna be rich and, and, and it's gonna work out and you just need that positive feedback to get you through that 1st, 2nd deal. Once you had that first one and you got that, you're making cash flow and then it's easy.

You're gonna motivate yourself. The other thing I love is the leverage point which I don't think maybe we're appreciating like you, you were talking about the risk of bankruptcy, right? Like he had $80,000 and he went and invested $80,000 on something without a lien and wouldn't get a joint venture, not debt, right? So this guy's money, girls, money is also at risk too. So it was a really strong position for you to be in, in a first deal, which is probably what made it so painful, right? You had to invest so much cash for it was, but, you know, there's an, there was a game that I didn't realize that I was playing that worked to my advantage, which was I was starting to, I need to get some experience, you know, and so as I got some experience, I was really fortunate that I was able to raise that money from that person. And I went through the process of actually securing their debt. I did a note and a mortgage so they were in a first position. And from there, what I realized is I can raise money and to do this, I don't have to just have millions of dollars to invest. I can go out there and I can raise private money from other people to go buy the assets that I wanna buy control of the deal.

And it gave me that kind of the learning wasn't like me going on to youtube. How do you do a note mortgage? It was, I'm filling out this note and mortgage with this first note and mortgage and now I can explain it to you Joel. And if you wanted to invest with me, I can show you how your money is going to be secure. And so that I think the principle that we're talking about is just like instruction, the learning really comes from the results, you know, after you get the instruction and you take action, then you get the result. That's your education. And I think we get it backwards. A lot of times people get stuck in podcast and no offense. But, you know, you know, you get stuck in books, you get stuck in whatever and they, they don't go and take the action to get the result to get educated because that's where it really matters. You know what I mean? Yeah. At some point when I first started, I had, I had read books and I had listened to tapes and C DS and all of it in my car and at some point you just have to say, you know, enough of this like I have to just go force myself put an offer on a property, figure out how to close that property, close that property, not figure out how to manage that property.

You just gotta get yourself in and force yourself to to learn. Um Alright, so you got your first one, the triplex you're you're making 5 $600 a month in cash flow. Uh tell us though. Now you have over 40 houses and and some commercial tracks of land and some commercial buildings. So how what was the next step for you? You had one winner? What what followed? So it's kind of interesting I the next deal that I did was a package of 10 homes. So immediately um we were able to do and I I bought those deals at a, at a at a really good deal and so we were able to get into those, those houses still while I had my W-2. So I went from kind of this little micro side hustle to more of a legitimate side hustle and I got really, really excited at that point and I thought, ok, like I'm not there yet, but I could see how I could get to my financial number, but what's limiting me is the time that I'm spending on this job and I started to like reframe. How am I looking at my employer? Like I realized that I was in business with my employer, like, like they're my customer.

But I also have these customers over here in this business and it really changed my mindset of, you know, I really want to work on my fortune over here more than serving this customer over here because I can see the how many more people I could serve, how much more I could grow and then how much more wealth ultimately that I could build. That's huge. I mean, that's, I've never heard that approach to time before. But you're, you're saying you're essentially selling that time to your employer, but you're another time that you're selling to your other businesses is way more profitable. So why, why are you selling that time to your employer so cheap? Why are you doing that? Everybody's in business? You're in a W-2, your, your employer is your customer. That's the way that you should approach it. And then you could go out and find other customers just by serving them. And, and I think it's important, you know, we call it fuck you money. And it's important, I think as an employee to go get that money, not as a disrespect to your employer. But because what it, what it's interesting as I started getting more and more passive income and building wealth in my job, I started like just telling everybody what I thought.

I didn't care what you thought. And then it was kind of like the office, you know, where the guy goes in there and he's like, you know, gutting the fish on his desk and he doesn't give a shit and he gets a raise. Um, that's exactly what happened, uh, within my, my, you know, kind of, I was in a corporate job and I won't get into it, but everybody was scared to say what they thought, you know, and I talked to a vice president and I'm like, this is a dumb idea. Why are we having this meeting? I don't even understand why we're here and, and then, you know, that became a valuable thing right? Within that kind of culture. But anyway, I, I quit right before um COVID and I just wanted to make a run at being a full time real estate investor. I didn't have enough money to justify leaving like I couldn't pay for the diapers or anything, but I thought I gotta figure it out. So what I focused on it, I thought if I could find one skill in real estate and again, I had some mentors speaking into my life at this time. If I could just focus on one thing, what would I focus on? I decided to focus on finding the deal. That's not, that's not rehabbing the deal, that's not analyzing the deal, that's not making the deal and being creative.

That's like going out there and just finding people who need to sell their house or sell their assets in exchange for the convenience of me buying it. So I go about doing that. How did you find people that needed to sell their house? Yeah, it's a good question. I sent out marketing. So um we ended up building a company that was marketing a number of different channels in Oklahoma City and Tulsa. Um we were sourcing over 100 deals a year. Most of those, I was selling to other investors. A lot of those we were keeping uh some of those we were keeping for ourselves for our own portfolio. So that's how I built the portfolio rather quickly, you know, over a couple of years. And then, and then, so we kind of scaled finding deals, sending out lots and lots of marketing and then having all these conversations directly with sellers buying directly from them at a discount. Um And that's a great idea, by the way, I mean, it's essentially like wholesaling, you're, you're better at the Yeah, we were wholesaling. Yeah, we were, we were in and we weren't complicating like we didn't make it complicated just like show up, be the person who's gonna show up and solve this problem, you know, and it was an interesting, it was an interesting ride.

But what I realized is I got, I kind of started buying some packages of homes too. And so I was actually making more money doing one big deal than running a seven figure wholesale business in between Tulsa and Oklahoma City. And, and so the net profit that I was getting off of those deals and the equity I was building off of those deals was huge. I bought one deal in 20 21. There's 47 homes and I took 21 of the best homes. This is a, this is an investor kind of like you that, yeah, he's going through a divorce. Like people have problems just because you've got money doesn't mean that you ain't got no problems, right? Just because you have a big net worth doesn't mean that you can't find somebody who has a problem who needs to sell. And so this guy was going through a divorce real nice guy, but he needed to sell all 47 houses. Obviously not that nice of a guy. Well, you know, I mean, this is awesome. So, uh, 47 houses, he wanted to sell all of them. Well, he had to, he had to liquidate because he's going through this real nasty. It was terrible. You know, he's going through this nasty. Probably not that nice of a guy.

Sell everything. Now, spend the money, he's selling it because they have to split the cash and, you know, Braden's reading into it. We're not, we're not judging people to get divorced in this show. Braden. I'm just kidding. Well, yeah, and that's the whole thing. It's like my, my, my deal on that deal was, there's not very many people who are gonna be able to do this. Like here's what we can do. We walked, we walked with him through and we bought it like we would almost like an apartment complex, but I actually wholesaled like 28 houses and then I kept the other ones and that you took the best stuff, man. So I kind of double closed this deal and then I made, I made a good amount of money and equity on the, the better part of that. And so, so like just that move right there, like you don't have to do that many big deals. I realized to like really level up your game. You don't have to buy one at a time and it was much easier to do 47 than it was to do like one at a time to get there by far. You know, it goes, it goes to show you guys, uh you know, when Justin, you first met me and he's wanting to buy his first house, like to me, I, I can't invest that much time because $200 a month to me or $10,000 flipping a house to me isn't, isn't worth it, but it was to you.

And it was to me at one point too. But once you get in the game, you're, you're gonna, you bought a package of 10 and then you're on 47 you don't even want to look at a single family home because once again, it's the same time, deals are deals and, and so don't let you know, don't be discouraged if your starting at point is a house. Get in the game, right? Uh You may not get a lot of people to help you on a house because it's just not that exciting, but get in the game. And then once you, once you get a little bit of money coming in, the anticipation builds, the excitement builds and that further motivates you to do more and more. Yeah. And it's the skills, right? I mean, you're investing in yourself and building these skills and so one little triplex and I know how to fill out this note and mortgage. Then I go and I raise private money on this, you know, whatever, $1.5 million deal. That was an easy raise because I bought it right? And I learned the skill of how to buy, right. You know, it, it, those, those things start compounding like and one skill of finding a deal can make you as much money in this business as you ever wanna make.

Just that skill. Like if you only do that 11 skill of raising money can make you all the money you ever want to make in this business? Hunter Thompson doesn't, isn't that the guy that just raises money for deals? He doesn't he doesn't know deals. He just, he has guys that have deals and then he's really good at the money and he just connects them and that's, that's his whole fortune. Yeah. I mean, he, he manages a fund. That's, that's what a fun does. It's, it's beautiful. I, I think there's a lot, I mean, how long is the time frame of all this? Is it seven years from when you started? 55, between those two deals? Yeah, the triplex 2018 and I bought, no, I bought the package in 2021. So that's uh three years. Yeah, the whole investing career is, is 67 years. Yeah. And, and you had a job at that time. So again, just relating this back to the basics of how to get involved in commercial real estate. It's, it's stories like these, I love hearing and, and it's so humbling. It makes me feel like an I at the same time because I'm like, why am I, why am I not doing this? I, you know, I, I watched Netflix last night.

I'm like, what am I doing? You know, and, and it's, it's, I don't wanna say it's that easy because I know you worked really hard for that and it took you a decent amount of time. But guys, I mean, seven years is, is nothing like seven years is nothing. If you, if you said, hey, do you want to be financially free in a in a commercial real estate investor in seven years from now, you just gotta go through a little bit of shit. A lot of people would say yes and like, and it's, you can make it fun. Like my whole deal was this hustle is a season, not a lifestyle. Like I'm not really interested in, I'm not, I'm not interested in real estate being like, I'm not in love with real estate. You guys like as much as I'm sorry, next guest, but I'm interested in my time, man. That's, this is a vehicle for me to buy back my time and be with my family and, and, and so I'm not always be in the game but like, yeah, it's worth going through that season, a hustle to get to a place where, you know, you can buy back your time and then if you want to do a deal, you can do a deal.

Hey, look guys, if you're listening to this, that is all of our motivation is, is time and freedom. I guess those two things because you can have a lot of time, homeless people have tons of time. Uh So I I'm just saying like you need, you need to have money and time to have the freedom to do what whatever you wanna do. Uh But I got in this game for time freedom, right? Going to the day job every day and trading 10 hours of my day away from the people that I love most in order to make basically you're making your employer more money. They're paying me for it. But they're, they're, they're, they're winning that game, not, not me. And I just, I wanted that time, freedom back. And so, yeah, this is just a means to an end. Real estate is one of those unique things where you can make as much money as you want and you can work as little as you want, depending on how you set it up. We could, like Rayden said, he watched Netflix last night, right? We, we could do more, we could be hustling more Netflix and hustle your entire life. Want to buy 47 houses at some point, more money is more, money's not worth the trade at some point at some point.

And so you have to take time and enjoy the lifestyle, but there is a season for the hustle and most people aren't willing to grind that out in order to, to have what they really want, which is that time and freedom. I Yeah, and, and again, just to recap. I mean, it, it's so like a lot of people are going to own a home. A lot of people are going to be in a possession where they sell a home and they have $80,000 right? And they have a big decision to make. What do I do with this? $80,000? And most people just, it's their fatal flaw. They, they, they go and get a bigger mortgage. They reset that 30 year mortgage way past retirement that they're like, oh, well, we got 8000 from the seller's house. Let's go buy a bigger house and lock ourselves down even more in the day job rat race. But, but just like we just heard it right. You can take that opportunity. Put $80,000 into an investment, like real estate, like commercial real estate, like a triplex, right? And through seven years, through not seven years, but a few years, you can begin to flip that and flip that and flip that and get sweat equity piece after sweat equity piece in a few deals.

A year, a dozen deals, a year, one deal, that's 47 deals like this crazy guy. I mean, that, that, that and, and you flip it and then you just look down one day in your Excel Net worth sheet and it's like holy cow, I think I'm worth a million dollars and it, it won't feel real because you don't have a million dollars, but it'll be there. You've done the deals, you've done the work to make you financially free and you, you just have to wait and, and not mess it up. But like it's so easy and most of us will have that opportunity in our life in the United States, right? To be able to sell a home, walk away with $80,000 it's a very real scenario. Alright, so we did not get into all of uh Justin's successes in in real estate. He has many more stories to tell Justin Foster. Uh what company are we promoting today? Fixed lending, fixed lending? He does a lot of of lending for people that are wanting to get into the single family uh game. Uh Both I'm sure purchase and rehab funds. Uh but but hit Justin up uh to get more of his story. Let him maybe be a mentor to you and anything else today guys on the show, Braden?

No, I don't think so until next time. Thanks guys. Super fun.

Episode 135 - From First Triplex to 47-House Deal: Lessons From Justin Foster's Real Estate Career
Episode 135 - From First Triplex to 47-House Deal: Lessons From Justin Foster's Real Estate Career
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